We will then open the lines for questions. We ask that you kindly restrict your questions to two then requeue if you have any additional questions to allow others the opportunity to participate. And with that, I’ll turn it over to Chris.
Chris Huskilson — Chief Executive Officer
Thank you, Brian, and good morning, everyone. Thank you once again for your interest in Algonquin and for supporting us through our strategic transformation journey. Before I jump into our regular quarterly update, it’s my distinct pleasure to introduce Roderick West, our incoming CEO. Rod has over 25 years of experience at Entergy, where he was responsible for leading Entergy’s regulated utilities and helped engineer that company’s transition from an integrated utility to a pure-play regulated one.
I’m confident Rod has the right set of leadership skills, expertise, experience, and vision to lead Algonquin to new heights as a regulated utility. As of noon today, Rod will be stepping into the chief executive officer position. I will be resuming my prior place as a member of the board of directors, and I’m committed to facilitating a smooth transition. Rod, I can say without a doubt that everyone here, from our employees to the board, is extremely excited to start this new chapter with you.
Welcome. We’re delighted to have you here.
Rod West — Chief Executive Officer
Well, greetings and good morning, everyone. It’s a pleasure to be here, and thank you, Chris, for your kind introduction. Under your leadership, Algonquin has made significant strides in paving the way for a brighter future. I’m very much aligned with the strategic direction taken by the company under your and the board’s leadership.
And as I considered joining Algonquin, I saw a unique opportunity to create sustainable value with a diversified utility asset base, and I also saw a company that’s making significant customer-centric investments, with a focus on operational performance and safety, which, in my view, is foundational to a successful pure-play utility. And what I found compelling personally is the tremendous opportunity to create value. I’m excited to bring my experience and background to Algonquin as we look to drive value for our stakeholders. The company has undergone tremendous change in a short period of time.
Now, as a pure-play utility, Algonquin is primed to focus on accelerating its performance to all of its stakeholders. We’re focused on improved customer service, of course, creating value, and ultimately returning to a sustained growth trajectory. I’ll let Chris and the team summarize the company’s recent results, but I’m excited to dive right in on transforming Algonquin. And my aim is to come back to shareholders in approximately 90 days or so to provide more transparency on our outlooks and detail on our performance acceleration plan.
I want to personally thank Chris and the team for all the work getting us to this point, and I am tremendously excited by the future and the opportunity in front of us. Chris, back to you.
Chris Huskilson — Chief Executive Officer
Well, thank you, Rod. And as I said, we’re very excited. On that same note, let me also briefly touch on the CFO transition. As previously announced, Darren has accepted an offer to join Canadian Tire as its chief financial officer, and today will be his last as CFO of Algonquin.
I’d like to extend my sincere appreciation to Darren, who helped steer Algonquin through its most significant transformation. The company and I were fortunate to benefit from his strong leadership through this period. Thank you, Darren. With Darren’s upcoming departure, the company has engaged a national firm as part of a comprehensive search process for a permanent CFO.
And while this search is underway, our VP of investor relations, Brian Chin, has agreed to step into the interim CFO role. Brian has more than two decades of utilities experience as a senior executive in several finance roles here at Algonquin and American Water and as the lead North American utilities equity analyst for both Bank of America Merrill Lynch and Citicorp. I’m confident Brian has the right capabilities to help ensure a smooth transition for our finance and executive teams. Thank you, Brian, for taking on the role.
Now, turning to the closure of our 2023 strategic review. The company set out to achieve a few key objectives. These include the sale of our renewables business, uplifting our regulated utilities, and applying a greater degree of focus and discipline to the company overall. At this stage, the company has completed the sale of its renewables business, as well as its stake in Atlantica, marking two major milestones in its transition to a pure-play regulated utility company.
Now, the critical focus points for the company remain continuing to improve our utilities; optimizing and leveraging our IT platform, which we completed last year; streamlining how we operate; and driving operational efficiency and customer service. When I look at the opportunity within the regulated utilities business, I believe Algonquin has a great portfolio of assets in attractive jurisdictions and commodities. These investments were made by our employees for the benefit of our customers. While Algonquin is authorized to achieve a 9.2% ROE, its actual earned ROE is several hundred basis points below that allowable target.
This requires improvement. The company is aiming to achieve its allowed returns on equity with all possible speed. To bridge this gap, we must accelerate reductions in regulatory lag and improve our operational efficiency. This means uplifting and upskilling the regulated utilities and improving our focus and discipline to capture the tremendous opportunity ahead of the company today.
We’re committed to improving and enhancing our efficiency and effectiveness for the benefit of our customers, communities, and investors. It’s been a privilege to lead Algonquin during this momentous period, and I want to thank Algonquin employees, whom I have had the honor of working alongside during this short but significant time. With that, let me now turn to operational updates, of which there have been several since our last call. Let’s start with Atlantica and the renewables business.
The Atlantica transaction resulted in net proceeds of approximately $1.1 billion, which we used to reduce debt, as referenced in our balance sheet as of year-end. From the sale of renewables business, we expect to receive proceeds of approximately $2.1 billion, which reflects our originally announced value of $2.5 billion after subtracting taxes, transaction fees, and other preliminary closing adjustments and less the $220 million cash earnout. Darren will discuss this in more detail later. I’ll turn now to our regulatory updates for the quarter.
I’m pleased with the progress we’ve made in several cases. In our Missouri water case, the commission approved an all-party settlement and new rates are effective March 1st. In our Arkansas water case, the commission there also approved a previously reached settlement and new rates are effective also March 1st. In our gas New Brunswick rate case, we received an order in December approving new rates, which took effect January 1st this year.
In our Arizona proceedings that involved four small water utilities, we reached a settlement agreement. The parties in this case agreed to full consolidation of all four water systems, which is consistent with our plan to streamline our business. Next steps include a settlement hearing and a recommended order from the assigned judge. We also recently received a constructive staff-proposed order with regards to depreciation deferrals for our Sarival wastewater treatment facility and our Litchfield Park utility.
Our CalPeco rate case filed in September 24th is proceeding on schedule. Our New Hampshire Granite State rate case has reached an all-party settlement, which is now in front of the commission. A hearing is scheduled for March. Despite the progress in these other cases, I’m disappointed with the initial filing of our Empire Electric Missouri rate case, where we’ve recently had to delay our timetable.
In short, the late revision to our tariff calculations has prompted us to restart the case, meaning the case is now expected to be resolved in the first half of 2026 rather than the late portion of 2025, as previously expected. Additionally, the Missouri Commission has announced an investigation into customer service and billing issues. We view this as driven partially by our recent implementation of our IT platform, and we take this investigation seriously and intend to work with the commission to address these concerns. We are committed to getting this done right for our customers.
We understand the commission’s frustration with our initial customer experience, and we welcome this opportunity to show the improvements that the new system will allow to our customer experience. Ultimately, we are confident this system will lead to better customer service. Shifting to transmission. As many of you are aware, the Southwest Power Pool is conducting an integrated transmission planning process.
The SPP board of directors approved its plan in October of ’24 and in February of ’25 approved a series of projects in our Empire Electric footprint, along with several other utilities. The total projects that have been approved by SPP for Empire’s service territory total over $700 million in cumulative capital spending over the potential five — next five to seven years. We are currently in the 90-day window in which we will respond as part of SPP’s process. So, we expect to provide more updates on this as material developments occur.
As part of the process, we expect our next steps are to develop detailed plans, submit them to SPP, and accept the notices to construct. These projects could represent an exciting multiyear opportunity to invest in our communities and infrastructure to improve reliability for our customers. And with that, I’ll hand things over to Darren to review the quarter’s financial results. Darren.
Darren Myers — Chief Financial Officer
Thanks, Chris, and good morning, everyone. As a reminder from last quarter, we separated our results into continuing operations and discontinued operations. Our continuing operations include our regulated business, hydro business, and ownership stake in Atlantica, which was sold during the fourth quarter. It also includes all debt except debt specific to our renewables business, which has been netted into assets held for sale.
We have recorded our ownership stake in Atlantica and the final associated dividend in continuing operations in accordance with generally accepted accounting principles. Starting with EBITDA. Q4 consolidated adjusted EBITDA was $248.6 million, down 5.2% from the prior quarter — prior year, pardon me. Fourth quarter adjusted EBITDA was lower, driven by an $18 million year-over-year decline in our corporate segment as a result of the lower dividend from Atlantica and certain corporate allocations, which, under discontinued operations, cannot be allocated to our renewables business.
Our regulated adjusted EBITDA was $234.4 million in the quarter, up 2.4% from 2023. On a full year basis, our consolidated adjusted EBITDA was approximately $1.04 billion, up 2.6% from 2023. Our consolidated adjusted EBITDA was negatively impacted by the reduced Atlantica dividend in the fourth quarter, while we delivered regulated adjusted EBITDA of $940.2 million, up 4.2% from 2023. Our increased regulated EBITDA was driven by new rates in the year and higher HLBV on weather normalization, which more than offset higher operating expenses, which included approximately $18 million in nonrecurring expenses that were recorded in 2024.
Fourth quarter adjusted net earnings were $45.2 million, down from $81.3 million in 2023. The decline in adjusted net earnings is primarily attributable to lower consolidated adjusted EBITDA, $8.5 million of higher depreciation as a result of continued capital expenditures, approximately $6 million in higher interest expense, and $8.6 million in higher adjusted taxes. Our actual year-over-year increase in interest expense was $13.6 million, but it includes approximately $7 million relating to a reclass of the margin loan, with no impact on net income. It’s worth noting that the $6 million increase in interest was primarily related to funding of the renewables business, which has not been recorded in discontinued operations based on generally accepted accounting principles.
Full year adjusted net earnings were $232.1 million, down from $279.4 million in 2023. Growth in adjusted EBITDA was more than offset by $41.7 million of higher depreciation, $29 million of higher interest expense, and $11.4 million in higher adjusted taxes. Our actual year-over-year increase in interest expense was $55.1 million and included $26 million relating to a reclass of the margin loan, with no impact on net income. We estimate approximately $16 million of the increased interest expense related to the funding of the renewables business.
Moving to our earnings per share. Q4 earning — adjusted net earnings per share were $0.06, versus $0.12 in the prior year, while full year adjusted net earnings per share were $0.30, versus $0.39 in 2023. The year-over-year decline for both periods was driven by reduced adjusted net earnings, as well as the higher share count as a result of the equity unit conversion in mid-2024. With regards to our balance sheet, our December 31st balance sheet included the effects of the Atlantica sale but excluded the January 8th closing of our sale of our renewables energy business.
On our year-end balance sheet, we have $6.7 billion in continuing operations debt and a further $1.35 billion in debt related to discontinued operations for total GAAP debt of $8.05 billion. Let me provide some further color on the proceeds from the $2.5 billion sale of our renewables business, which closed on January 8, 2025. As a reminder, the sale includes a $220 million earnout associated with the performance of certain wind assets. Against our year-end balance sheet, we expect to receive $2.1 billion in proceeds after customary transaction costs and estimated remaining construction costs for certain projects.
Adjusting for the consolidation of certain construction debt in the fourth quarter, the 2.1 billion represents the high end of the range we provided last quarter. Approximately $150 million of the net proceeds are expected to be received later in 2025 upon monetization of certain tax attributes. Putting this all together, you should expect our year-end GAAP net of approximately 8.05 billion to be reduced by an estimated 1.95 billion, with a further $150 million to be received later in 2025. As a last point, let me touch on our rate base.
As of year-end 2024, we estimate our rate base to be approximately $7.8 billion, up from $7.2 billion a year earlier. As a reminder, our rate base estimate represents our authorized rate base plus prudently invested capital for the benefit of our customers, on which we aim to both recover and earn a rate of return. Our rate base increased by approximately $740 million due to spending and invested capital in 2024, offset by approximately $350 million in depreciation and increases in accumulated deferred income taxes. The remainder of the increase primarily relates to pre-2024 spending on our IT platform software, whose implementation was completed earlier this year and is now included in our estimate of rate base.
Let me conclude with some final comments on my time with Algonquin. It has been a privilege to serve as CFO during such a transformational period for the company. While we have faced challenges, we have made significant progress to reposition Algonquin through decisive actions. Although there is still more work to be done, I am confident the company is now in a stronger position, with great opportunities in front of it.
I look forward to seeing the company accelerate its performance and earnings. Thank you to the entire Algonquin team and all of our investors. I’ll now hand things over to Brian to provide some forward-looking commentary. Brian.
Brian Chin — Vice President, Investor Relations
Thanks, Darren. Two key adjustments to remember looking ahead versus 2024 are that our continuing operations will no longer have dividends from Atlantica and our interest expense will be affected by proceeds used from both the renewables and Atlantica transactions. As I remember, the December 31st balance sheet reflects proceeds from the Atlantica sale, but the interest expense reductions related to that sale were only for a few weeks. For operating expenses, we expect normal inflationary pressures to continue next year, and we will be working down the dis-synergies associated with exiting our renewables business.
Against this backdrop, we will be aiming to accelerate our operating efficiency measures, particularly as this will essentially be our first year as a pure-play regulated utility. Please note that we’re not providing guidance at this time, but as Rod mentioned, we expect to provide substantially more detail in our outlook and our plan in the coming months. We very much see 2025 as a transition year, and we believe that, off that base, Algonquin has the opportunity to grow earnings above peer averages, with substantial longer-term opportunities to grow our rate base for the benefit of our customers through prudent investments in our service territories. With regards to capital expenditures, we also intend to provide a more fulsome update, but for now, we’ll say that we plan to continue to exercise discipline, which we expect will result in directionally lower capital spend year over year.
We also intend to provide more color on our financing plans. As a general principle, we continue to favor financing self-sufficiency while we work to improve our asset returns and lower our cost of capital. Last, I’ll comment on some high-level thoughts on the opportunity in front of us. We estimate our earned ROE stands in approximately the mid-5% range, excluding HLBV, on our 2024 average rate base of 7.5 billion.
To be clear, our goal is to substantially improve our earned ROE to move it much closer to our authorized ROE weighted average of 9.2% and achieve or improve upon our previously stated comments related to our targeted dividend payout ratio of 60% to 70%. In closing, it’s a privilege and a responsibility to take on this role, and I’m looking forward to accelerating our progress. And with that, I’ll turn things back to Rod for some quick closing remarks.
Rod West — Chief Executive Officer
Well, thanks, Brian, and thank you, everyone, for joining us on the call this morning. I am, as I stated before, excited to begin leading the team here at Algonquin in just a few hours, and I truly believe that there is significant opportunity ahead. And we’re looking forward to your questions. Back to you, operator.
Operator
Thank you. [Operator instructions] And with your first question, this comes from the line of Sean Steuart from TD Cowen. Your line is open.
Sean Steuart — Analyst
Thank you. Good morning, everyone, and congratulations to Rod, Darren, and Brian. I want to start first, I guess, for Chris or Rod. The optimization of the utility platform, as mentioned, is an ongoing effort.
Inside of the rate case docket, including the three big initiatives, can you give us a little more context on what are the focus areas for improvement, how concentrated it is, its specific utilities, or is it still an ongoing broader effort?
Chris Huskilson — Chief Executive Officer
Yeah. I mean, I think, first of all, from our overall perspective, it is about working on our service cos. You know, we do have quite a complicated service co-arrangement as we are today. And so, we see that as the location of our biggest opportunities.
And we’re putting together a plan to actually execute a reduction of the overall overhead on the various utilities. The other thing that we’re doing, which, you know, Sarah could speak to in more detail, but the other thing that we’re doing is actually changing the accountability structure within the organization as a whole. So, we’ve — as I think I said from day one, we’ve raised up the utilities. They are now our primary focal point.
We’ve put utility leaders, utility presidents in place, and they are accountable for all aspects of the businesses that those utilities have. And we’re moving that forward quite rapidly. And so, when we put those two things together, we can see tremendous operational efficiency and improvements in our customer experience, and those are the two primary things we’re focused on right now.
Sean Steuart — Analyst
OK. Thanks for that, Chris. And then a question for Brian or Darren. Brian, you touched on your perception that the company’s long-term EPS growth potential will outpace the peer group.
What time frame are you thinking of when you talk about that potential? Presumably, it’s not a 2025 story. But do you have any parameters you can put around on time frame and what EPS growth potentially you might think is reasonable over the long run?
Brian Chin — Vice President, Investor Relations
Yeah, thanks for the question, Sean. So, at this point, no comments on time frame, but let me remind everybody what we’ve said in the past. We indicated previously that our targeted dividend payout ratio of 60% to 70% could be achieved in a few years’ time. That time frame hasn’t changed.
In fact, if anything, we think there’s a possibility to accelerate that, particularly given the arrival of Rod and his just tremendous experience. With regards to the opportunity to grow our EPS, I can put it no more simply than we’re an under-earning utility. But for the first time in the company’s history, we’re now singularly focused on a single business model. The opportunity for us to execute here is tremendous, and we need to get it right.
So, I think that, you know, we’re excited about being able to talk about the future, but first, we’ve got to make sure that Rod has a chance to come in and take a look and see where we have additional opportunities in front of us.
Sean Steuart — Analyst
OK. That’s all I have for now. Thanks, everyone.
Chris Huskilson — Chief Executive Officer
Yeah. Thanks, Sean.
Operator
Thank you. Our next question comes from the line of Nelson Ng from RBC. The line is open.
Nelson Ng — RBC Capital Markets — Analyst
Great. Thanks. And, Rod, congrats on your new role. I think, Darren, best of luck at Canadian Tire.
And, Chris, I guess we’ll — we look forward to your continued involvement on the board. First question just relates to the hydro sales process. Are you able to provide any kind of high-level comments on how that process is going?
Chris Huskilson — Chief Executive Officer
No more detail than we would have had last time, which is that, you know, within this half year, we will at least go to market and take a look from an indicative perspective. But I would repeat what I’ve repeated — what I’ve said in the past, which is that we’re not going to do any more dilutive transactions. At the end of the day, if we can achieve an accretive transaction by selling the hydro, we will do so. If not, it is, on the one hand, not reducing our position as a pure-play.
You know, we have greater than 90% of our business that is in the regulated space. And secondly, you know, we continue to need Canadian income, and so it definitely helps in that area as well.
Nelson Ng — RBC Capital Markets — Analyst
OK. That’s great. Thanks, Chris. And then question for Darren.
So, Darren, you talked about the rate base at the end of the year. And obviously, the rate base growth year over year, it looks like it was quite a bit higher than the growth capex. I think you mentioned that there were some adjustments related to spend prior to 2024 that you decided to include. Are there any other spend prior to 2024 or other periods that you haven’t included into your rate base that could be included this year or any other further adjustments that could take place this year?
Darren Myers — Chief Financial Officer
Yeah, Nelson, that was really the — our IT platform. So, as they sit in corporate, we don’t include them in the rate base. But as the programs push out, then they’re included. So, that’s, you know, really the lion’s share.
There’s nothing more significant that’s going to come forward like that.
Nelson Ng — RBC Capital Markets — Analyst
OK. And then just one related question. In terms of the transition, I think, in Q4, there were some kind of one-off expenses. Maybe this is a question for Darren or Brian.
But do you expect to see any kind of material transition expenses this year related to the sale of renewables.
Brian Chin — Vice President, Investor Relations
So, Nelson, as you may recall from my prepared remarks, we did see some associated costs related to the synergies on the renewables that occurred in 2024. So, it will take us a little bit of time to work that down in 2025. But part of the reason why we called that out is because, you know, those are not ongoing costs that we see as part of the value of the business. So, we just want to reiterate that point.
Darren Myers — Chief Financial Officer
And, Nelson, maybe the other thing I’d just add, in the quarter, as I called out, there are certain allocations, kind of indirect allocations that hit the continuing operations. So, part of that dis-synergy is already in the run rate of the fourth quarter continuing operations.
Nelson Ng — RBC Capital Markets — Analyst
OK. Yup. Thanks, everyone. I’ll leave it there.
Chris Huskilson — Chief Executive Officer
Yeah. Thanks, Nelson.
Operator
Thank you. Our next question comes from the line of Rob Hope from Scotiabank. The line is open.
Robert Hope — Analyst
All right. Good morning, everyone. Yeah, congrats to Rod and Brian on the new roles. And, Chris and Darren, it’s been a pleasure working with you both, so all the best as well.
Chris Huskilson — Chief Executive Officer
Thank you, Rob. We appreciate it.
Robert Hope — Analyst
I guess maybe the first question is, you know, I understand you’re not providing a 2025 outlook or capital. You know, looking back at the Q3 call, you were expecting to provide an update with the Q4 call. I’m just wondering what has changed. Is this just, you know, a function of a new manage — or a new CEO coming in and some time to take a lay of the land, is it the uncertainty of the Missouri delay, or are there any other factors driving that?
Brian Chin — Vice President, Investor Relations
No, Rob, thanks for asking the question. When Rod’s announcement was first made, the thought process at the time was that we would be on track to provide a baseline outlook as of the timing of the Q4 call. That actually hasn’t changed in that we do have a baseline outlook as of now. But what has changed on further reflection was our recognition that with Rod’s insight and fresh eyes, the opportunity to have him take a look at what we were doing and perhaps find ways to accelerate that progress really meant that we needed to give him time to see what opportunities we could capture and put into the outlook.
The developments in Missouri, the developments in any of our other operations did not have any factor with regards to the timing of when we have chosen to give an out guidance.
Chris Huskilson — Chief Executive Officer
Yeah. And, Rob, I would just say that, you know, when you think about it, Rod truly has not started yet. He’s starting at noon today. And so, we really do need to be fair to him and give him time to get his feet on the ground and understand the business so he can put his stamp on it, and then you, folks, can rely on what he’s saying.
Robert Hope — Analyst
Fair point. Busy first day. Maybe turning over to Missouri, can you maybe add a little bit more color on the customer solutions technology platform problems that you’re seeing there, kind of the path forward there, as well as the Missouri investigation on the billing practices?
Sarah MacDonald — Chief Transformation Officer
Sure. Hi, Rob. It’s Sarah MacDonald. You know, the customer investigation is something we’re spending a lot of time on, but our SAP implementation was a massive undertaking.
We changed out all — almost all of the systems we use to run our business, not just finance, not just customer, and the majority of those are working well. But it doesn’t take away from the billing issues we’ve experienced. We’re disappointed with the pace at which we’ve been able to fix these issues, and we understand the frustration our customers are experiencing. We understand the frustrations the commission is experiencing.
And frankly, we’re frustrated as well. So, we’re — we are encouraged because the pace of improvements has increased. And through the investigation, we’ll be able to share our progress to date and our plan to complete all the improvements with the commission in the coming weeks. So, we’re welcoming the opportunity to share our improvements.
Chris Huskilson — Chief Executive Officer
Yeah. And I think, you know, the other point that I would make is that it has taken more time than we had hoped to get the system working the way it is. But as we’re seeing the system start to work, we’re seeing the opportunity that exists there, and we’re absolutely convinced that this will be a better customer experience in the end. You know, it’s unfortunate, and we apologize to customers for how long it’s taken.
But for sure, it will be better in the future.
Robert Hope — Analyst
I appreciate the color. Thank you.
Chris Huskilson — Chief Executive Officer
Yeah. Thanks, Rob.
Brian Chin — Vice President, Investor Relations
Thanks, Rob.
Operator
Thank you. Our next question comes from the line of Rupert Merer from National Bank. The line is open.
Rupert Merer — Analyst
Hi. Good morning, everyone. I’ll echo the sentiment of the other analysts. Congratulations to all.
Rod, if I could start with you. You’re going to come back with an outlook for us in 90 days. What are your key areas of focus for the first 90 days? How are you going to get into this business and then figure out everything you need to know?
Rod West — Chief Executive Officer
Yeah, it’s a great question, and I won’t get ahead of my — the conversations I’ll have with the — with my internal stakeholders here, but it starts with the people, getting them aligned on what good to great looks like. And beyond that, it’s focusing on the aspects of the business where we have the quickest opportunity to put productive capital to work. And as you think about what the mission is, as I come from an experience at Entergy, every decision we make at the end of the day will be assessed through the lens of its impact on our ability to create sustainable value for each of our four key stakeholders, starting with the customers, the employees, the communities we serve, and, at the end of the day, the outcomes that matter most to you. And I think communicating that in a clear, concise way to the employees will also help me get my hands around where my attention should be placed first, with the objective of accelerating the great work that Chris and his leadership team have been working so hard on.
So, when I come back in the next 90 days or so, I want to have the conviction that gives you confidence in the outlooks that we’ll ultimately lay out. And that’s my objective. And I don’t wish to be — to obfuscate the point that I like where this company is heading, and I think my objective at the end of the day is to try and help accelerate the benefits we’ve committed to you.
Rupert Merer — Analyst
And maybe it’s too early, but are there any high-level thoughts given the collection of assets that Algonquin has maybe a little more distributed than what you worked with previously? Any opportunities or challenges that you see with this asset base relative to where you’ve come from?
Rod West — Chief Executive Officer
No, it’s early to opine on that. Just know that I am looking to answer the question where can we put productive capital to work to create value and doing it as quickly as we can. So, I’ll be consistent with that theme.
Chris Huskilson — Chief Executive Officer
And the other thing I would just say, Rupert, is that Rod has tremendous regulatory experience. He’s been very focused on that over his career and especially in the last few years, and that’s clearly an area that the company needs some work. And so, you know, I look forward to just seeing how Rod takes that on and the improvements he can make as he works on that area. So, I’ll say that about where I think this will go.
Rupert Merer — Analyst
OK. Very good. And then secondly, we have a very dynamic political situation here in North America. And as I look at Algonquin, it’s now more than ever a company focused in the U.S.
with U.S. management. Do you see any potential for change in the way that companies run, meaning any potential to move headquarters either down to the U.S. and the opportunities that could surface from doing so?
Brian Chin — Vice President, Investor Relations
Yeah, Rupert, I think it’s premature to make any comments on that. I do think that you’re right to point out, it’s a pretty volatile environment out there. So, while I’m — I think that it’s a little premature to directly answer that question, I really do think that what’s interesting about our story is in spite of quite a bit of the macro volatility out there, this really is a self-help story. It’s one of the more unique aspects in the utility space, and that’s part of the simplicity of why the opportunity here is so interesting and unique.
Rupert Merer — Analyst
All right. Great. Thank you. I’ll leave it there.
Congrats to all.
Chris Huskilson — Chief Executive Officer
Thanks, Rupert.
Operator
Thank you. [Operator instructions] And our next question comes from the line of Ben Pham from BMO. Your line is open.
Benjamin Pham — Analyst
Hi. Thanks. Good morning. Just on your comment around the realized ROE and the difference between allowed, how does that compare to historical differences between the two?
Brian Chin — Vice President, Investor Relations
Thanks, Ben, for that question. The last time that the company provided color on the gap between the earned and allowed ROE, it was a few years back, as you recall from our investor relations materials. So, you can point — we can point to that. In terms of if you want to try and look at our numbers since then, the way that we calculated the mid-5s range is you can look at our segmented footnote in our notes to the financial statements.
You can see our regulated earnings before taxes. And if you want to assume a simplified tax rate on that and then divide that by our average rate base, you can actually get pretty close to the mid-5s number that I referenced in the prepared remarks. That segmented footnote does exist in all of our financials going backwards. There’s a few adjustments here or there, but this year is a relatively clean number, and so I’d advise you to take a look at that.
Benjamin Pham — Analyst
OK. Thanks, Brian. And maybe the next question is for Rod. As you think about the regulatory strategy, that big gap in realized versus allowed ROE, just based on your experience, what’s typically the best approach or step-by-step process to bridge that gap over time?
Rod West — Chief Executive Officer
Yeah. And I won’t go into too much detail, but I think Brian alluded to the story as a self-help story. And the things that you can do, first and foremost, internally is managing your overall cost structure because the regulatory process sometimes takes a while to play itself out. And so, the discipline around both capital and O&M, those are decisions that you can make without having to rely on any external party, and that, for me, was what I was alluding to when I said we’ve already made progress.
As I was looking outside in at this opportunity, I liked the direction that the company was headed in. And I’ll have more to say as I have an opportunity to assess some of the external levers. But internally, the self-help story is beginning to pay dividends, and it’s one of the reasons why I thought this was a viable opportunity to really accelerate the value proposition for the company. And that’s not limited to any of the commodities.
It’s inherent in successful premium valued utilities: water, gas, or electric.
Benjamin Pham — Analyst
OK. Got it. Thank you and congratulations to all four of you.
Brian Chin — Vice President, Investor Relations
Thanks, Ben.
Chris Huskilson — Chief Executive Officer
Thanks, Ben.
Operator
Thank you. Our next question comes from the line of Mark Jarvi from CIBC Capital Markets. Your line is open.
Mark Jarvi — Analyst
Yeah. Good morning, everyone. Welcome, Rod. Looking forward to getting to know you better.
And thanks, Chris and Darren, for your time and engagement over the last couple of years. You’ve been very helpful. Yeah, just on Missouri, obviously, you talked about the disappointment in the reset of the timelines. Does the billing investigation potentially further extend that horizon on that if it takes a little bit of time to work through that? And I guess if there is a further extension, even given with the current extension, would you seek some interim rates just given the fact that the decision has been pushed out, you know, a few months now?
Sarah MacDonald — Chief Transformation Officer
Hi. It’s Sarah again. So, no, we — you know, we’ll be fully cooperating with the investigators, we’ll take it seriously, and we’ll make sure we can figure out a way to restore trust. It has our full attention.
But the case stands on its own. So, we don’t see it further delaying it.
Mark Jarvi — Analyst
And anything on interim rates?
Sarah MacDonald — Chief Transformation Officer
At this time, I don’t believe so.
Mark Jarvi — Analyst
OK.
Chris Huskilson — Chief Executive Officer
The other thing to take into account, Mark, is that we’ve already answered an awful lot of DRs as we sit right now. And so, the rate case is developing quite well. The interveners are getting lots of information. And so, that, I think, is helpful in the restart to keep things moving along.
Mark Jarvi — Analyst
Yeah. Makes sense, Chris. Rod, you know, I know it’s early days, and you talked a bit about some of the things you want to accelerate and improve on. As you look at sort of the regulatory relationships there and the processes set up today, do you think there’s refinement that’s required? And then if you think about the billing issues, do you still believe that the current customer-first SAP system is adequate enough? Does it require further investments just in terms of beefing up systems and processes to improve the regulatory outcomes?
Rod West — Chief Executive Officer
Yeah, it’s early in the assessment, but I know enough to say this. The systems that we have deployed have been used in other utilities to success the process of technological deployment around AMI, communications system, the mesh networks. All of those things have bumpy experiences on the front end. I have lived through it at Entergy, as well as many in the space.
The objective, though, at the end of the day is tried-and-true improvements in customer experiences. And despite sort of the bumpy beginnings, my conviction in the direction that we’re headed for customers really gives me confidence that we will get it right. And so, I know it’s a bumpy start, but I like where this is headed.
Mark Jarvi — Analyst
Just to sort of get it to where you need it to be, does it require some incremental capital?
Rod West — Chief Executive Officer
I have no doubt about that because it’s — customer expectations are constantly evolving. And if I might properly use a hockey reference coming from my background, which is, you know, American football, we constantly have to skate to where the puck is going to be, and that’s going to require additional capex. It’s not a terminal investment proposition. It will be an evolving one as we adapt to evolving customer expectations.
So —
Chris Huskilson — Chief Executive Officer
Yeah. Just the other thing I would add, so we’re already in the capital budget for this year putting in a new IVR system. That IVR system will be extremely helpful, I think, to interfacing with our customers and making sure that we’re rapidly responding to them. And the only other thing I’d say about the SAP implementation in Missouri is it’s a much more complicated utility than the utilities that we had implemented before.
It has many more moving parts and, as Rod referenced, things like AMI and so on. And so, it just was a bit more of a complicated deployment, but that doesn’t change the fact that we’re committed to getting this working. We firmly believe that this will be better for our customer experience in the long haul. We just have to accelerate the improvement.
Mark Jarvi — Analyst
Understood. Thanks for your time today, everyone.
Chris Huskilson — Chief Executive Officer
Thank you.
Operator
Thank you. There are no further questions at this time. I will turn the call to Mr. Rod West.
Rod West — Chief Executive Officer
Well, I’ll simply say thanks for your interest and certainly for the well wishes this morning. Brighter days are ahead. I want to thank in advance the — to the employees who might be listening in. I look forward to engaging you.
And to the investment community, I commit to you, as my predecessor has, to be as transparent as I can, and I expect that you’re not going to be surprised by what we do because we’re going to bring you along on the journey, as we have before. So, thanks for your ongoing interest and continued support for us.
Chris Huskilson — Chief Executive Officer
Thank you, everyone.
Operator
[Operator signoff]
Duration: 0 minutes
Brian Chin — Vice President, Investor Relations
Chris Huskilson — Chief Executive Officer
Rod West — Chief Executive Officer
Darren Myers — Chief Financial Officer
Sean Steuart — Analyst
Nelson Ng — RBC Capital Markets — Analyst
Robert Hope — Analyst
Sarah MacDonald — Chief Transformation Officer
Rupert Merer — Analyst
Benjamin Pham — Analyst
Ben Pham — Analyst
Mark Jarvi — Analyst
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Algonquin Power & Utilities (AQN) Q4 2024 Earnings Call Transcript was originally published by The Motley Fool