Vincent Sorgi
President and Chief Executive Officer at PPL
Thank you, Andy, and good morning, everyone. Welcome to our third quarter investor update. Turning to Slide 4. We had another solid quarter of financial results as we execute our Utility of the Future strategy. Today, we announced third quarter reported earnings of $0.24 per share. Adjusting for special items, third quarter earnings from ongoing operations were $0.41 per share compared with $0.36 per share a year ago. Based on our strong financial performance year-to-date, today, we increased the midpoint of our earnings forecast from $1.37 per share to $1.40 per share and narrowed our earnings forecast range to $1.35 to $1.45 per share. Our 2022 earnings guidance reflects a partial year estimate of contributions from Rhode Island Energy, which we acquired on May 25. Today, we also reaffirmed our projected compound annual earnings per share and dividend growth rates of 6% to 8% through at least 2025. Our per share growth target is based off the midpoint of our pro forma 2022 forecast range of $1.40 to $1.55 per share or $1.48 per share. The pro forma forecast reflects a full year of earnings contribution from Rhode Island Energy. We remain confident in our ability to achieve our growth projections, even in the current macro environment of rising interest rates, high inflation and high commodity costs. At the time when affordability is paramount for our customers, our strategy and strong balance sheet provide PPL significant resilience. Namely, our current business plan does not rely on rate cases to achieve our stated growth targets. We expect to recover about 55% of our current 5-year capex plan through riders and formula rates, reducing regulatory lag and supporting continued strong credit metrics.
And our strong balance sheet will support growth without the need for equity issuances over the plan period while providing financial flexibility to effectively manage market volatility. We also continue to execute our business transformation initiatives focused on driving efficiency, affordability and improved reliability for our customers. As we outlined in our Q2 call, this includes hardening the system, deploying smart grid technology and leveraging data science across our T&D operations, optimizing our generation outage schedules and non-outage maintenance costs and centralizing shared services while deploying common systems and platforms. We remain confident that we will achieve our planned O&M savings of at least $150 million through 2025 with the potential for additional upside beyond 2025. Bottom line, we believe we are well positioned to weather current economic conditions while driving substantial value for both customers and shareowners. Shifting to a few operational highlights on Slide 5. In Kentucky, we continue to evaluate opportunities to advance the transition of our generation fleet, the transition that will offer long-term value for our customers and help deliver the clean energy transition in Kentucky. We continue to expect to retire 1,000 megawatts of coal-fired generation by 2028, with the potential to retire an additional 500 megawatts due to EPA's Good Neighbor rule. In connection with these expected retirements, and following the RFP completed earlier this year, we're targeting a mid-December filing with the Kentucky Public Service Commission, which would include requests for Certificates of Public Convenience and Necessity, or CPCN, for any supply-side assets that would be owned by us. We're also updating our load forecast to reflect the recent economic development in our service territories, including Ford's EV battery plant as well as updating demand-side management and energy efficiency programs to fully address the demand side of the equation. As we evaluate our supply options, we're focusing on solutions that are least cost, and will ensure the reliability our customers need and expect.
We anticipate these least cost solutions will be a combination of company-owned resources and power purchase agreements and will include solar, energy storage and combined cycle natural gas. We also expect this generation replacement strategy to significantly improve the carbon intensity of our Kentucky generation fleet. Our mid-December filing will begin a regulatory review process that will conclude with an order from the KPSC. While there is no statutory timing requirement for the KPSC to review a CPCN filing, we would expect to conclude the regulatory review process by the end of 2023. In other updates, our Rhode Island Energy subsidiary expects to file several plans with the Rhode Island Public Utilities Commission by the end of Q4. That will support our customers' evolving energy needs. We've already filed our annual energy efficiency plan in late September, which is critical to our reliability, customer satisfaction, affordability and sustainability objectives. Within the next couple of months, we'll file the company's annual infrastructure, safety and reliability plans for both electric and gas, which will outline our plans to enhance the reliability of state's energy infrastructure while at the same time, preparing the electric grid for more renewable energy, including offshore wind and distributed energy resources. Costs approved through the ISR plan will be recoverable through the ISR rider mechanism, which reduces regulatory lag for these investments between base rate cases. By the end of the year, we also expect to file our advanced metering plans at the Rhode Island PUC, outlining the deployment of advanced meters to our electricity and gas customers in the state. PPL has experience installing almost three million advanced meters and realizing the benefits that those meters can provide. We will leverage this experience in Rhode Island and deliver this value for our Rhode Island customers as well.
Our advanced metering plan will be foundational for our grid modernization plan, which we also plan to file by year-end. The GMP is a longer-term strategic initiative we're developing in support of the needs of our customers as we deliver the grid capable of connecting 100% renewable energy by 2033, which is now a law in Rhode Island. Finally, in late October, we announced a strategic partnership with the Elia Group to support the development of transmission solutions for offshore wind in the New England region. Specifically, PPL and Elia signed a memorandum of understanding to jointly develop and propose innovative transmission solutions to integrate offshore wind to the onshore grid. We believe PPL and Elia are uniquely suited to support New England in this regard. Elia has been a clear pioneer in developing offshore transmission grid solutions through its subsidiaries in Belgium and Germany as the company has connected 14 offshore wind farms to the onshore grid. Meanwhile, PPL has established a proven track record of successfully citing, building and operating large transmission projects here in the U.S. Both of our companies are clear leaders in grid innovation and reliability. And we both share a strong focus on advancing the clean energy future, while keeping energy safe, reliable and affordable. Together, we recently responded to a request for information issued by five New England states that are seeking input on potential transmission system changes and upgrades to integrate future offshore wind generation with current estimates of as much as 30 gigawatts by 2050. Moving forward, we anticipate forming a joint venture with Elia to pursue any potential offshore transmission opportunities that may arise after the RFI. We expect an RFP for proposed transmission projects in New England could be issued as early as third quarter 2023.
Many offshore transmission projects stemming from this effort are expected to drive investments beyond 2026 and would be expected to be FERC jurisdictional projects under FERC formula rates. And while we are in the early stages of this process, we're excited to be participating in the process and are optimistic that PPL and Elia can develop innovative and cost-effective offshore transmission solutions for New England. Any investments made through this partnership would be incremental to the $27 billion of capital investment opportunities through 2030 that we highlighted at our Investor Day. With that, I'll now turn the call over to Joe for the financial update. Joe?