Andrew Cooper
Thank you, Ted. And thanks again to everyone for joining us today. This morning, we reported our first quarter 2025 financial results. I will review those results and provide additional details on sales and financial guidance. For the first quarter of 2025, we lost $0.04 per share compared to earnings of $0.15 per share for the first quarter of 2024. The primary driver for this decrease was the sale of Bright Canyon Energy in 2024 and which was a onetime benefit of $0.15 in the first quarter last year.
Other negative drivers were higher O&M interest expense and depreciation and amortization, along with the positive amortization of an OPEB service credit rolling off in January. Partially offsetting these items were new rates that went into effect on March 8 of last year, providing a $0.29 year-over-year benefit this quarter. Other positive drivers were a gain from our El Dorado equity investment and higher transmission sales.
Briefly touching upon weather. We averaged to normal weather for the quarter with little impact on margin. We continue to see a consistent ongoing influx of customers into our region as customer growth for the quarter was again strong at 2.3%, near the high end of our annual customer growth guidance. In fact, according to the latest report by the US Census Bureau, last year, Maricopa County was the third fastest-growing county in the US by a numeric number and adjacent Panel County was the fifth fastest-growing county by percentage growth.
This trend of customer growth continues our need for investments in our system to ensure reliable service for all customers. Our current capital plan is designed to meet these needs, and our guidance remains unchanged. Our weather-normalized sales growth was 2.1% for the quarter, driven by strong C&I growth of 5.3% and caused by the continued ramp-up of both manufacturing and data center customers.
As extra high load factor customers have continued to grow as a proportion of our business, we have updated our procedures with respect to estimates of unbilled revenues for our customer classes. As a result, we had an adjustment in January to recalibrate accrued unbilled revenues, offsetting year-to-date sales growth by 1.9%.
Even with the change, we expect our overall weather normalized sales growth to meet our guidance expectations of 4% to 6% for the year. Arizona remains a diverse growth in investment time. As Ted mentioned, TSMC announced that they will nearly triple their original expected investments in Arizona for a total of $165 billion.
TSMC's first fabrication facility is already in full production. They recently stated that they've completed construction on their second facility and are working on accelerating the production start date and fab 3 has broken ground.
TSMC's expanded investment is expected to support 40,000 construction jobs over the next 4 years and create tens of thousands of high-paying high-tech jobs. As a reminder, these announcements are beyond our current long-term sales growth guidance of 4% to 6%, which is through 2027, but highlights the ongoing investments and opportunities in our service area. O&M was an anticipated drag on the first quarter.
The major outage of the Four Corners Power Plant drove larger planned outage costs when compared to Q1 of last year. Additionally, expenses associated with IT projects increased O&M for this quarter versus the prior year. Guidance for 2025 O&M remains unchanged as these items were already considered in our guidance and are anticipated to be offset over the balance of the year.
Turning to the balance sheet. We recently had positive conversations with all three credit rating agencies, resulting in no changes to our current ratings and stable outlooks. We are focused on maintaining solid ratings and metrics to the benefit of our customers as we continue to work with the commission and stakeholders on reducing regulatory lag through our upcoming rate case.
Our guidance for financing remains unchanged, and featuring a mix of debt and equity sources, intended to maintain a balanced capital structure. And as a reminder, we do not currently utilize or rely on the transferability of tax credits for any of the financing needs in our plan.
Finally, we are reaffirming all other guidance provided on our fourth quarter call and look forward to continuing to execute our strategy and reliably serving our customers as we head into the upcoming summer season. This concludes our prepared remarks.
I will now turn the call back over to the operator for questions.
Operator
(Operator Instructions) Nicholas Campanella, Barclays.
Nicholas Campanella
So I just wanted to ask, obviously, the TSMC customer additions are very notable, and you have this 3% to 5% large load C&I forecast in your long-term outlook. Can you just kind of remind us like how many fabs are in that outlook? Or if you were to kind of decomp that adding another plant, what would that do to that long-term forecast?
Andrew Cooper
Sure, Nick, it's Andrew. Thanks for the question. So clearly, fab 1 is in our forecast because it is -- this is actually the first quarter that it's at full volume production. And so certainly, part of that ramp-up that we saw in C&I sales this quarter is a combination of TSMC and some of the data centers ramping up. Recent announcements of TSMC on fab 2 and 3 suggests an acceleration.
And so we'll continue to work with our customer on what that looks like from an infrastructure build-out and sales forecast perspective. But certainly, their initial expectation was 2028 for fab 2 and by the end of the decade, so 2030-ish for fab 3. Expect some acceleration of both of those. Whether the acceleration of fab 2 would come into 2027 is something that we'll just have to continue to evaluate.
But really, the underlying fact is that the commitment to the six fabs and all of the other facilities that Ted mentioned really points to, at a minimum, the ability to have a pipeline that allows us to continue a pretty robust level of large C&I sales growth when you pair that ecosystem of semiconductor supply chain upstream and downstream with some of the other diverse manufacturing and data center growth that we're seeing.
Nicholas Campanella
And then you have a new disclosure on your CWIP balance, which definitely seems material at $3 billion to $3.5 billion. Can you just kind of confirm you get retail rate return on that and how exactly that would flow into the financials and when you kind of layer that in on top of your current rate base growth outlook, the fact that you're going to have new formula rates, what would the offset be that would kind of put you back within that 5% to 7% range.
Andrew Cooper
Yes, Nick. So we added that disclosure because we wanted to make clear that our pipeline of opportunities continues beyond the three-year plan that we provide. And in particular, if you think about like the strategic transmission plan that we filed last year, those are projects that are multiyear. If you look in our disclosures that go out through the end of the decade.
And those are the projects that are already in siting. There's a broader strategic transmission planning process that includes incremental projects as well as some of the generation we're building, for example, the Redhawk gas plant in service until '28, so it's outside that plant.
So we wanted to kind of give a sense for the scale relative to -- in disclosure, you also see what that level of up would have been the scale of projects that are under construction that may not be captured in the plan. There is AFUDC associated with it. But from a cash return perspective, that's not something that's in the plan.
And so ultimately, it's really more a matter of giving clarity around that track record that can extend beyond 2027, which is the period of current rate base disclosure. And so really between the strategic transmission projects. And then the overall investments in our self-build generation, whether that's the projects coming through our all-source RFP, investing in Palo Verde for the long term.
These are all things that we want to highlight, which may not be captured in the narrow window that we give. And so as we go through not only the rate case and understand how some of our other CapEx maybe put on even footing by having a formula rate in place. And then as we continue to bring things from our development pipeline, both on the generation and transmission side into the actual rate base disclosure, we'll be able to come back to you on what the base growth rate looks like.
But at a minimum, we wanted to be able to highlight that we are moving into these larger projects that meet the needs of the growth that we see in the service territory for the long term.
(technical difficulty)
Michael Lonegan
So obviously, you'll be filing the rate case midyear, probably get new rates late '26. Just wondering what we could expect in terms of regulatory lag on percentage terms in 2016 while the rate case is pending versus the 955 allowed ROE in the jurisdiction.
Theodore Geisler
Yes, Michael, this is Ted. Thanks for the question. Obviously, we're focused on addressing regulatory lag through this case. I think the commission is focused on that as well given that they recognize it adds cost to customers over time. And so that's a big focus for the formula rate plan. Our intent is to be able to put in a structure going forward after this case to where we can minimize regulatory lag in a respectable manner.
And so that's what the formula is designed to do is to have a dead band around solving to be able to earn your allowed ROE. Clearly, at this time, it's difficult to be able to do that. So I think the policy statement illustrated that where there is a dead band of being able to earn as close to that allowed ROE as possible. And outside of that dead band, you would then file for adjustment.
We're looking to work with the commission stakeholders to try to designed the mechanics of the formula rate plan to be able to meet the intent of the policy statement. It's too early to tell how that will work specifically. So I think the details through this general rate case will matter. But I think the commission, a lot of the stakeholders involved in the process and certainly, utilities are aligned, that's the intent.
And then you can work towards ensuring that the allowed ROE is measured to be competitive to peers and what's necessary to attract capital and your making construct is designed to allow you to earn as close to that allowed ROE as possible.
Michael Lonegan
And then Secondly, I was wondering if you could talk about your current pipeline of high load factor customers. I think in your last disclosure, you said you were committed to 4 gigawatts and had interest from another 10-plus gigawatts that you were working through a planning process with -- just wondering what's the latest on these numbers? And is the 4 gigawatts still what's baked into your plan?
Theodore Geisler
Yes, Michael, the 4 gigawatts is still what we've committed to are actively building out infrastructure to serve Obviously, a large portion of that will be coming online this year and into the coming years that's within our guidance range, but the full build-out of that 4 gigawatts extends beyond the guidance range. And then we do have a substantial and growing queue of customers that we're actively working to assess the timing and capacity needs of their projects.
It's at least 10 gigawatts and that's a continuous focus of our team is identifying their needs, identifying the infrastructure required to be able to build it out and what the timing of that infrastructure installation would be. Most of that infrastructure would likely be in the capital plan beyond the current guidance period. But as we get closer to those projects moving into the committed queue, we'll certainly update what that committed queue number is.
Operator
Julien Dumoulin-Smith, Jefferies.
Julien Dumoulin-Smith
Nicely done. Maybe just to follow up a little bit on where I think you left. How are you thinking about providing a longer-term view beyond the three-year period? I mean, notable the way that you responded on QIP, et cetera. I mean, is there a longer dated view coming here in a more comprehensive set as you think about rolling forward eventually here?
Andrew Cooper
Yes. Julien, it's Andrew. No, thanks for that question. And it's certainly something that we continue to evaluate, in particular, because we're doing larger projects that take that have longer lead time. And we have clarity on a pipeline of customers coming in that extends out further. So it's certainly something we'll look at. At the same time, though, getting through the formula rate design and proceeding then gives us clarity on the broader capital allocation decisions overall.
So you can look at how much are we doing in distribution and IT in the kind of core space where you're getting projects in service on much shorter time frames where it's sort of the day in, day out block and tackling stuff. And then giving clarity of disclosure about the large strategic transmission projects, the investment plan at Palo Verde, the projects that come out of the outsource RFPs, all those types of things that have -- take us into the 2030s.
The other piece you'll see is we're on a three-year cycle for our integrated resource planning. And so as we work through that process, the goal will be to link up. So that tends to be an actual window that's five-years of the 15 that we're talking about. So trying to link those two, I think, will be important as we do more of these long lead time projects. So it's a great question. It's something that we continuously look at.
Julien Dumoulin-Smith
Got it. It sounds like a little bit of a longer fuse but teeing up the entire organization there. And then if I can follow up as well on a related question here, you talked about fab 2 and 3, potentially, I think you even said accelerating themselves. And I don't think it was entirely clear as to whether that's contemplated within the three to five. When would you go out for procurement around potential resources there?
I mean you say it's longer dated, but let's put this way, 2030 and earlier is front and center and would need actions on procurement in the near term. How do you think about that as well as some of these other items like Mayo Clinic also playing into the outlook here? Just coming back to the table for another round of procurement and RFP or something like that?
Theodore Geisler
Yes, Julien, you're absolutely right. We're out to procurement right now for 2028 to 2030. We've got an RFP that recently concluded accepting proposals for a minimum of 2,000 megawatts a to be in service in the years 2020 to 2030. And so we're evaluating those proposals right now.
And as we look at how much volume we actually take from the RFP, we're taking into consideration as we work with TSMC, Amkor and frankly, a myriad of other recent economic development opportunities even outside the chip and data center sector to identify what are the total resource needs at the back end of this decade, and therefore, how much do we need to take from this RFP.
So that's actively in progress. We've been on an annual routine of these RFPs. And so we'll evaluate the proposals from this year and then likely be back out in the market again for another round of RFPs.
Julien Dumoulin-Smith
So bottom line, upsizing the present RFP, you said a minimum of 2 gigs, but there's potentially a real likelihood for a meaningful extension of that.
Theodore Geisler
That's definitely the potential similar to the last RFP where we ended up procuring a meaningful amount more than what we originally requested. It just depends on the quality of the proposals and the timing of their ability to execute. We're always clear to state the minimum that we need, but we've got the ability to be able to take more as necessary to ensure resource adequacy as long as their competitive projects, and we're going through those proposals now.
Operator
Travis Miller, Morningstar.
Travis Miller
More of a technical question here on the filing coming up. Is the filing going to be purely a formula rate plan such that they just get 1 filing or is there somewhat of a split here where you have to file our formulary plan option and a general rate case traditional option, technically thinking about that filing.
Theodore Geisler
Yes, Travis, the way we look at it is we're filing a traditional rate case based on a 2024 test year, but then included in that will be a filing proposal for how you implement a formula rate plan to ensure you're minimizing regulatory lag for future years. And so it will all be a part of one filing, but you first have to recover the revenue deficiency based on the 2024 test year.
And then the formula rate design included in our filing will be how to keep rates current and trued up on a go-forward basis once this case is processed and concluded. So that's how we're thinking about it.
Travis Miller
Okay. That makes sense. So there wouldn't be two rate adjustments that would be the traditional rate adjustment and then future years if approved, the formula rate plan.
Theodore Geisler
That's correct. And that's the intent of the commission is how do we go longer between rate cases, minimize regulatory lag and ensure rate gradualism for our customers. And so that's going to be all part of this initial filing.
Travis Miller
Perfect. And then on the O&M, if you strip out the outages and stripped out the RES DSM, how is that trending that core L&M? Is that trending towards your expectations in the first quarter? Or anything unusual in the first quarter on that side?
Andrew Cooper
Yes, Travis, it's Andrew. We're trending consistent with our plan for O&M for the year. The planned outage you referenced is lumpy and is a timing issue of doing a large outage at a plant like Four Corners. That was the first quarter -- first quarter event. There's also an O&M project I mentioned earlier in the prepared remarks that its big backbone IT project.
And so right now, it's in sort of that O&M phase and over the course of the year, it will transition to capital. And so that shows up and basically takes what could be straight line O&M over the year into a little bit of first quarter lumpiness. But we expect over the course of the year to be able to meet our O&M guidance range.
We were able to take a lot of proactive action last year coming out of the summer to plan in a multiyear fashion around O&M. And so we're seeing some of the benefits of being able to do that as we work through the year. So we expect to be on plan for O&M.
Operator
Sophie Karp, KeyBanc Capital Markets.
Sophie Karp
A little bit more on this O&M question. Do you need, I guess, offsetting items in the rest of the year to counter the lumpiness in the first quarter? Was this already contemplated when you issued guidance? Just to clarify.
Andrew Cooper
Yes. The latter, Sophie. We contemplated the planned outages as well as the design of the IT project, knowing that we'd get back to regular way O&M over the course of the year. And so we expect that will -- we're sort of done with it other than the normal outages at Palo Verde we're out of the planned outages at this point and ready to move forward.
Sophie Karp
And then a couple more questions I have on the, first on the transmission lines, right? I'm wondering if you ever contemplated the 645 kV line maybe in your territory? Or does that make sense ever? Because I noticed you don't go like that high involve and how early are they built, but more, -- a little bit more conversations about these types of lines now. So wondering where you stand on that.
Theodore Geisler
Yes. Sophie, the transmission engineering team evaluates all aspects of potential voltage, including even advanced conductors and new technology. Right now, we don't see a need for that level of voltage. We go currently up to 500 kV is the highest, but it is a part of the evaluation as we continue to look forward on service territory growth.
One of the limiting factors often time is what size right away do you need, and that oftentimes informs then what level of voltage you need to procure. But at this point, the majority of our transmission projects that are between now and the end of the decade are 230 kV, we've also got a substantial amount of substation build-out that ranges in voltage.
And then longer term, we certainly see more 500 kV expansion or new build. But at this point, that's the highest level of voltage that we think is necessary for the service territory.
Sophie Karp
Got it. And lastly for me, it seems like you have the rotator applications in your territories seem to be trending significantly lower versus the historical gas level. Does that impact you at all in what way?
Theodore Geisler
Yes. Certainly, we track that in terms of what level of offset rooftop solar or energy efficiency may have on organic sales. And so clearly, less rooftop solar applications may show less offset. We think this is just part of the natural market conditions, given that there's some level of saturation of rooftop solar already within the service territory. We've got one of the highest levels of penetration to rooftop solar already.
In addition to, obviously, the financing costs that a lot of our customers would have to absorb for installing rooftop solar and then the amount of creditworthy customers that remain that could take on a long-term contract. So we think these numbers are probably leveling off or normalization of the amount that's being installed, and we'll just continue to track it as a potential offset.
Right now, our growth trends for residential and C&I are in line with what we expect for the year, and that includes any offsets for energy efficiency or rooftop solar.
Operator
Paul Patterson, Glenrock Associates.
Paul Patterson
Almost a lot of questions have been answered. Just one quick on the Eldorado item that you highlighted on Page on slide 3. Just could you tell me what triggered that?
Andrew Cooper
Sure, Paul, it's Andrew. So just by way of background, Eldorado is the entity that Pinnacle West has to hold our nonutility non-PSA energy-related investments. It's a long-standing entity with a number of long-standing investments, including the one that created the gain this quarter. And frankly, this was an investment that has shown a higher degree of profitability recently. It's an electric switchgear company.
And recognizing that higher profitability, we recognized a gain on the investment this quarter, minority stake and certainly not core to the APS investment profile. But among some of the long-standing energy investments we have it has shown favorable economic trends recently. And so we did recognize that gain this quarter. But quarter-to-quarter, year-to-year, this is a very small -- the Eldorado business is a very small, mainly legacy type investments that we've made over time.
Operator
Ryan Levine, Citi.
Ryan Levine
On coal plant -- on the coal plant closure, can you give us an update post the executive order and commissioner comments if there's any reassessment of the potential restart for that plant?
Theodore Geisler
Yes. Ryan, Specifically, some of the comments mentioned on the executive order, we're referring to one of our legacy coal plants called Toa, which actually began its retirement process last decade with retiring a couple of units. And then the last remaining units were retired earlier this year in accordance, actually, the federal lawn requirement along with our state implementation plan. In addition, it's not an economic plan to continue to run.
So for those two reasons, the plant was on a track to retire, and we expect it to remain retired. We also already procured replacement generation in anticipation of that retirement both for this year and future years. What we are doing though is exploring how that site can be repurposed one day in the future for new generation, potentially new nuclear, potentially new gas generation.
So we think it's got great potential for investment, jobs and economic stimulus within that area, but as a new technology that will last for decades to come. And that's really the right purpose for that site as well as the most economic use of generation for our customers.
Ryan Levine
Okay. So the -- some of the legislative proposals and you don't anticipate changing the course of action for that plant, is that correct?
Theodore Geisler
That's correct.
Operator
Stephen D'Ambrisi, Ladenburg Thalmann.
Stephen D'Ambrisi
Just quickly, first on the sales growth. It sounded like you -- in the quarter, you sounded like you mentioned it in the script briefly, but I just wanted a little bit of clarity. On the residential side, it looks like usage implied is down a lot. And I just was wondering if that's noise or if you could talk a little bit about that. It sounds like maybe there is an accounting change that could have impacted it.
Andrew Cooper
Yes. That's right, Stephen. So the underlying sales growth trends for the quarter were very strong. On the C&I side, in particular, you're seeing the ramp-up of these customers. If you look at the underlying sales trends for residential, you had 2.3% customer growth, which contributed increased sales. And that was offset, as it often is by the continued trends around energy efficiency and just customer usage.
What I think particularly to the first quarter. And keep in mind, it's a very small quarter. So it kind of has an exacerbated effect is that we did make a one-time adjustment to how we account for estimates of unbilled revenues for all of our customer classes. For a long time, we looked at all revenue in a month that was being accrued kind of holistically across customer classes.
And we reached a point where extra high load factor customers have become a substantial enough part of our overall sales mix that we need to do estimates for that approval separately for each of those customers. And so this -- in January, we recognized that procedural change. And that led to a, as reported, offset to our sales growth for the quarter. we feel really comfortable about the 4% to 6% sales growth expectations for the year.
And the residential trends, which I know is where you were really focused are really on trend to what we've seen over the last span of quarters kind of post-COVID, which is continued strong sales growth with an offset from energy efficiency that takes you to somewhere either north or south of flattish growth. So this quarter, if you take out the impact of that accrual adjustment, you're really talking about like negative 0.2% and in some quarters, that's been positive, 0.5% positive 1%.
And so really in that range around zero is how our 4% to 6% sales growth is set. And we're seeing underlying trends notwithstanding the offset from that estimated revenue item that are really consistent with what we've been seeing for the last number of quarters.
Stephen D'Ambrisi
Okay. That's very helpful. And then just a follow-up to some of the questions around the rate case and the formula rate plan request. I guess my question is if the rate case just from a timing perspective, if you have like a 12, 14, 16 months' time clock and you get rates effective on the '24 test year step-up sometime at the end of '26 is it possible to turn around and get a formula rate step in '27 for the following year because presumably, you'll be underearning at that point? Or just like procedurally, how does it work?
Do you have to wait until '28 to get your first formula rate step
Theodore Geisler
Yes, it's a good question. The intent would be that you should have an opportunity under the scenario that you outlined to be able to have your first formula rate adjustment in 2027 and the formula rate plan is designed to be an annual adjustment. So in theory, if you conclude the case in '26, then '27 should be your first adjustment.
Obviously, the details and the timing will be subject to the outcome of this case. But what you outlined as the intent of the formula rate plan, and that's what we would pursue, is to try to keep that adjustment as timely as possible following the conclusion of this case.
Operator
That completes our Q&A session. Everyone, this concludes today's event. You may disconnect at this time and have a wonderful day. Thank you for your participation.
