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Good day and thank you for standing by. Welcome to the Unitil's Second Quarter 2023 Earnings Conference Call. At this time all participant are in a listen-only mode. After the speaker’s presentation there will be a question-and-answer session. [Operator Instructions] Please be advised that today's conference is being recorded.
I would now like to hand the conference over to your speaker today, Todd Diggins, Chief Accounting Officer. Please go ahead.
Good morning and thank you for joining us to discuss Unitil Corporation's second quarter 2023 financial results. Speaking on the call today will be Tom Meissner, Chairman and Chief Executive Officer; and Dan Hurstak, Senior Vice President, Chief Financial Officer and Treasurer. Also with us today is Bob Hevert, President and Chief Administrative Officer.
We will discuss financial and other information on this call. As we mentioned in the press release announcing today's call, we have posted information including a presentation to the Investors section of our website at unitil.com. We will refer to that information during this call.
Moving to Slide 2, the comments made today about future operating results or events are forward-looking statements under the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements inherently involve risks and uncertainties that can cause actual results to differ materially from those predicted. Statements made on this call should be considered together with cautionary statements and other information contained in our most recent annual report on Form 10-K and other documents we have filed with or furnished to the Securities and Exchange Commission. Forward-looking statements speak only as of today, and we assume no obligation to update them.
This presentation contains non-GAAP financial measures. The accompanying supplemental information more fully describes these non-GAAP financial measures and includes a reconciliation to the nearest GAAP financial measures. The company believes these non-GAAP financial measures are useful in evaluating its performance.
With that, I will now turn the call over to Chairman and CEO, Tom Meissner.
Thanks, Todd. And good morning, everyone. Thanks for joining us today.
Beginning on Slide four, today we announced net income of $4.2 million or $0.25 per share for the second quarter of 2023. Through the first half of 2023, net income was $28.3 million or $1.76 per share, representing an increase of $0.11 or approximately 7% over the same period in 2022. Earnings growth was achieved through execution of our regulatory agenda and are focused on cost control.
Decoupled rate structures, which now apply to the majority of our customers help support and stabilize revenue through the first six months of the year. Our disciplined approach to cost management has resulted in lower operation and maintenance expenses relative to the first half of 2022, a noteworthy accomplishment considering the current inflationary environment. We believe that for the balance of the year O&M expenses will remain consistent with 2022 levels.
As we'll discuss in greater detail, our regulatory agenda remains active with the base rate case for Northern utilities main division currently underway. Rate cases are also being prepared for a Massachusetts Electric and Gas divisions. We continue to see strong financial and operational performance through the first half of 2023, which is consistent with our investor value proposition of low risk, sustainable growth, and we again reaffirm our long term earnings guidance of 5% to 7%.
Turning to Slide five, I'd like to touch on the underlying economic strength in our service areas. In May, New Hampshire's unemployment rate was tied for the lowest in the nation, at a record low of 1.9%. In addition, both Maine and Massachusetts have lower unemployment rates in the national average. Strong labor markets are likely one of the reasons that the areas we serve are consistently cited as some of the most desirable places to live in the nation. The strong economies within our territories have continued to drive the demand for housing in areas that are already experiencing tight supply.
This dynamic has led to customer growth that was slightly trailed historical trends, but construction employment and new housing permits are on the rise to help meet the strong housing demand. More specific to Unitil, the local economies in areas we serve have held up well through recent economic conditions. Similar to other parts of the country, our customers have experienced higher than normal energy prices. Although energy supply costs are a pass to expense for the company, we're well aware of the increased energy burden on our customers.
In previous calls, you've heard me praise our customer service efforts as reflected in our strong customer survey results. We take a proactive approach to communicating with our customers and offering assistance, including budget billing, payment plans, arrearage, management plans, and information on other available assistance programs. Our continued focus on customer service and communication, along with the strong local economic conditions in our service areas are reflected in lower customer account write offs in 2023 compared to prior years.
With that, I'll now pass it over to Dan who will provide greater detail on the quarterly in year to date results. Dan?
Thank you, Tom. Good morning, everyone. I'll begin on Slide six.
As Tom mentioned, today, we announced second quarter earnings per share of $0.25. For the first six months of the year, net income increased $1.9 million or $0.11 per share, compared to the same period in 2022. This earnings per share growth is the result of higher sales margins, and lower operational maintenance expense, partially offset by higher other operating expenses.
As a reminder, the second quarter and first half results for 2022 included the recognition of recruitment amounts related to the company's New Hampshire rate case orders, which positively affected margin by approximately $2.4 million. Recoupment refers to the regulatory practice in Hampshire, whereby permanent rate case awards are reconciled back to the effective date of the temporary rate award.
Through the first six months of 2023, our decoupled rate structures in Massachusetts and New Hampshire have provided revenue stability, and supported earnings by approximately $0.25 per share. Our results for the first half of 2023 are consistent with the quarterly earnings per share distribution chart that we provided earlier this year. And we expect the results for the remainder of 2023 will also be consistent with this chart.
Turning to Slide seven, I will discuss our electric and gas adjusted gross margins. I will start with our electric operations. Electric adjusted gross margin was $50.9 million for the six months ended June 30 2023, an increase of $2.7 million compared to the corresponding period in 2022. This increase in electric margin reflects higher distribution rates and customer growth. Electric unit sales were down for both residential and commercial industrial classes, as a result of warmer than normal winter weather and lower average usage partially offset by customer growth.
The company's electric distribution revenues are substantially decoupled, which eliminates the dependency of distribution revenue on the volume of electricity sales. Through the first six months of 2023, we estimate revenue decoupling support electric margin by $0.06.
As we mentioned during the last call, year-over-year, electric meter growth was slightly lower than historical trends due to a mass meter conversion that effectively replaced approximately 200 residential meters with only a few commercial meters. This conversion was included in the most recent Unitil energy systems rate case settlement, and had no effect on distribution revenue. Absent this meter conversion, electric customer growth was largely in line with historical growth rate.
Moving to our gas operations, gas adjusted gross margin was $84.2 million dollars for the six months ended June 30 2023, an increase of $4 million compared to the same period in 2022. This increase in gas margin reflects higher rates and customer growth, partially offset by the unfavorable effects of warmer winter weather in our Maine service area. Based on weather data collected in the company's gas service areas, on average, there were approximately 9% fewer effective degree days in the first six months of 2023 compared to the same period in 2022.
In Maine, our only non-decoupled service area weather normalized sales increased 2.1% in the first six months of 2023 compared to the corresponding period in 2022. We have added approximately 800 new gas customers compared to the same period in 2022. Through the first six months of 2023, we estimate that revenue decoupling supported gas margin by approximately $0.19 per share.
On Slide 8, we provided an earnings bridge comparing year-to-date 2023 results to the same period in 2022. For the first half of 2023, adjusted gross margin increased combined $6.7 million, primarily resulting from higher distribution rates in customer growth, partially offset by warmer winter weather. As a reminder, the results for the six months ended June 30 2022, included the recognition of recruitment amounts related to the company's New Hampshire rate case orders, which positively affected margin by approximately $2.4 million.
Operation and maintenance expenses decreased $0.5 million, largely due to lower labor costs and professional fees partially offset by higher utility operating costs. The lower labor costs primarily reflect lower retirement benefits, service costs, and lower restricted stock compensation expense. Depreciation and amortization expense increased by $3 million, reflecting higher levels of utility planning service, and higher amortization of rate case costs and other deferred costs.
Taxes other than income taxes increased by $0.6 million due to higher property taxes on higher utility planning service and higher payroll taxes. Interest expense increased $1.6 million, reflecting higher interest expense on short term borrowings, partially offset by lower interest expense on long term debt and higher interest income on regulatory assets. Other expenses decreased by $1.4 million, largely due to lower retirement benefit costs.
And lastly, income taxes increased $1.5 million, reflecting higher pretax earnings in 2023, as well as higher flow back of excess accumulated deferred income taxes in the first half of 2022 as a result of the company's New Hampshire Electric and Gas rate case orders.
Moving to Slide 9, I would like to provide an update on our Northern utilities Maine division base rate case proceeding, which is progressing as planned. In May, we filed a rate request of approximately $11.8 million reflecting proposed rate base of approximately $320 million, an equity layer of 52% and a return equity of 10.35%. The filing includes an attrition adjustment, which looks to the expected revenue deficiency based on rate year ended January 2025.
We believe the rate application balances the needs of all stakeholders, including both customers and investors. Technical conferences were held in June to address the company's pre filed testimony. An intervening testimony was filed in July, with more technical sessions scheduled in August. We will provide additional updates during our next earnings call.
Turning to Slide 10. We are currently preparing face rate filings for the Fitchburg electric and gas divisions. The notices of intent were filed on June 30 2023 and we expect to file both rate cases this August. Similar to the base rate proceeding in Maine, we will provide additional updates regarding our Fitchburg rate cases during our next earnings call.
Moving to Slide 11, our investment outlook remains strong and capital spending has increased in 2023 by $12.3 million as compared to 2022. The 2023 capital spending level is consistent with our capital investment plan. Over the past three years, despite labor shortages and supply chain constraints, our rate base growth has been approximately 7.1% which is within our anticipated long run rate base growth rate of 6.5% to 8.5%. I also want to mention that the Kingston Solar project is progressing as expected, and we recently finalized the contract with the site developer.
Turning to slide 12, our balance sheet remains strong and credit metrics continue to support our investment grade credit ratings. In July, we issued $25 million of senior unsecured notes at our Fitchburg gas and electric subsidiary. The proceeds of this debt offering were used to refinance short term borrowings and for other general corporate purposes.
We primarily rely on our credit facility to find construction work in progress and working capital requirements, such as purchase power. Although our borrowings under the credit facility have increased, we have several offsets for short term interest expense, including the allowance for funds used during construction, and interest income generated by various regulatory assets resulting from under collected regulatory mechanisms, many of which earn interest are prime rate or a short term borrowing rate.
I'll now turn the call back over to Tom.
Great. Thanks, Dan. Ending on Slide 13, halfway through the year, we continue to deliver solid results we're focused on operational and financial excellence. Our dividend yield coupled with strong earnings growth offers an attractive total return for our shareholders. We believe the continued execution of our strategic plan, including investments related to the Clean Energy Transition, will position us to deliver sustainable value for all stakeholders for many years to come.
With that, I'll turn the call back over to Todd.
Thanks, Tom. That wraps up the material for this call. I will now turn the call over to the operator who will coordinate questions.
[Operator Instructions] And I'm currently showing no questions at this time. This does conclude today's conference call. Thank you all for participating. You may now disconnect.