Turning to Slide number 4, we have an outline for today's call, I will start reviewing some highlights and recapping the investment thesis for our shareholders at Southwest Gas Holdings'.
Moving to Slide number 5, we present a variety of highlights for our combined businesses.
We're very excited about this planned acquisition which is forecasted to be accretive to earnings in 2022.
Also separately today we filed a 14D-9 response to a tender offer for Southwest Gas Holdings shares presented last month by Carl Icahn.
The tender offer seek to secure shares of Southwest Gas Holdings at a price of $75 a share which and consultation with our outside investment bankers and attorneys, our Board has concluded is an adequate.
Next at our natural gas distribution company, we continue to see strong growth across our service territory having added 37,000 net new customers over the past year.
On the regulatory front, we saw a very promising decision from the Arizona Corporation Commission just this past week authorizing the recovery of $74 million in margin related to our customer owned yard line and vintage steel pipe replacement programs.
Also, third quarter operating margin increased by $18 million or 10% and we continued executing on our sustainability goals as seen with our partnership with Pima County in Arizona supporting the harvesting of renewable natural gas at the now operational Tres Rios RNG processing facility and walking the talk on the energy transition with our announced investment as a founding partner in the Energy Capital Ventures Fund.
Relatedly, we are excited to see Riggs Distler being selected as general contractor for the 880 megawatt Sunrise Wind offshore wind farm.
Overall, we saw Centuri's third quarter revenues increased by $52 million or 9% and we're also eager to explore the opportunities that Centuri may have to capitalize on as part of the federal government's infrastructure spending plans.
With the simultaneously announced planned retirements of Mr. Melarkey and Mr. Comer at our May Annual Meeting, year-on-year we anticipate the average tenure of Southwest Gas Holdings Directors will decrease from 10.3 years to 8.
A comprehensive Questar Pipeline's asset brings high quality contracted customers with an average relationship length of 49 years.
2020 EBITDA is five times that experience just 10 years ago while this business could have been sold two, four or six years ago it's continued growth under the stewardship of the Holding Board has allowed continued polish of this gem of a business, while EBITDA valuation multiples for the infrastructure services sector have expanded dramatically over those same periods.
For the 12 months ended September 30, 2021 net income was $234 million or $4.02 per diluted share compared to net income in the prior-year period of $220 million or $3.97 per diluted share.
For the third quarter of 2021, we reported a consolidated net loss of $0.19 per share compared to third quarter earnings per share of $0.32 in 2020.
As I previously mentioned current quarter results reflect the impact of a $5 million legal reserve.
Operating margin increased nearly $18 million including $13 million associated with rate relief in all three states, as well as $2 million from customer growth, reflecting 37,000 first-time meter sets over the past 12 months.
The increase in O&M expenses includes $2.2 million of incremental temporary staffing, training and stabilization cost associated with our new customer information system which we implemented in May 2021.
The timing of vacation, other time off and miscellaneous employee benefits were up $2.5 million between quarters.
Excluding the $5 million legal reserve, O&M for the third quarter of 2021 only increased 5.2% cumulatively or 2% -- 2.6% annually since the third quarter of 2019, which was pre-COVID.
The $9.7 million increase in depreciation, amortization and general taxes reflects the impact of the $574 million or 7% increase in average gas plant in service including the new customer information system.
I should note this customer information system is a 100 plus million dollar project with a 15 year depreciable life.
The $6 million decline in other income reflects no change in the cash surrender value of company-owned life insurance or COLI policies this quarter compared to net income of $4.5 million in last year's quarter.
Centuri our utility infrastructure services segment results for the third quarter were impacted by one-time transaction cost associated with the Riggs Distler acquisition of $13 million.
Revenues increased $52.5 million or 9% between quarters including $49.5 million from Riggs Distler following the August 27 acquisition.
The $5.8 million increase in depreciation and amortization is primarily attributable to costs added with the Riggs Distler acquisition as other equipment placed and service to support the higher volume of Centuri's businesses.
The $4.3 million increase in interest expense reflects the higher level of borrowings under Centuri's expanded credit facility utilized to acquire Riggs Distler.
This slide depicts the components of the $26.1 million increase in natural gas operations, net income between 12-month periods.
The $72 million or 7% improvement at operating margin reflects $52 million combined rate relief in Arizona, Nevada, and California.
Continuing customer growth provided $13 million of the improvement in overall operating margin.
The increase in O&M reflects $7.3 million of service related pension costs and $1.1 million of higher bad debt allowances.
The $31.9 million increase in depreciation, amortization and general taxes reflects the impacts of $579 million or 7% increase in average gas plant and service and the incremental Arizona property taxes that are ultimately recovered under our regulatory tracking mechanism.
Slide 15 shows the components of the $9.9 million decrease in Centuri's net income between 12-month periods.
As shown, $14 million of one-time transaction costs associated with the acquisition of Riggs Distler caused the decline in earnings.
Revenues increased nearly $188 million or 10% between periods, reflecting $129.5 million of incremental electric infrastructure revenues from both Linetec, which we acquired in November 2018 and Riggs Distler, which we acquired in August 2021.
Depreciation and amortization increased $10.7 million primarily attributable to incremental costs related to electric infrastructure including $4.7 million from Riggs Distler following the acquisition.
As John mentioned earlier, we anticipate $600 million of revenue growth from Riggs Distler through 2024.
On the right side of the slide, are the key terms of Centuri's amended and restated credit facility at $1.145 billion Term Loan B that we utilize to finance the acquisition.
Slide 18 highlights our most recent rate case outcomes that will contribute to an increase in revenues of approximately $66 million during the course of calendar year 2021.
As part of our most recent rate case decisions Arizona saw a 46% increase in rate base, Nevada at 20% increase, which was also on the heels of an over 30% increase in 2018 and a 73% increase in California.
The request includes the proposed increase in revenues of $30.5 million resulting from an increase in rate base of nearly $250 million and almost 20% increase.
And we are requesting recovery of over $6 million of revenue related to the deferral of late payment charges, we're requesting to recover this amount over a period of two years.
We anticipate the test year ended August 2021, and we plan to request for approval of an adjustment for up to 12 months post test year plan.
Based on our proposals, we anticipate a proposed increase to rate base of about 35% to 40%.
Last week, the ACC approved 100% of the requested revenue requirement associated with our COYL and VSP filings that John mentioned.
The $14 million associated with the COYL program will be recovered over a period of one year starting this month.
And the $60 million related to the VSP program will be recovered over three years, beginning March of 2022.
In a survey of customers conducted through a third-party research firm, our customer satisfaction scores were an impressive 95% on a 12-month rolling average.
These survey results are a testament to the excellent quality of service we provide our customers and a primary reason why 91% of customers surveyed in Arizona, California and Nevada indicated that they want natural gas in their homes.
In fact, we added 37,000 first-time meter sets over the past 12 months as people continue to move to the Desert Southwest.
We have a $400 million revolving credit facility and a $250 million term loan.
As of the end of September, we have nearly $523 million availability of combined borrowing capacity and cash.
To serve new customer growth and ensure the safe and reliable natural gas service our customers expect, we anticipate capital spending of approximately $2.1 billion over the 3-year period.
We plan to fund the $2.5 billion combined capital investment and stockholder dividends with 50% from operation cash flows.
We expect to grow rate base from approximately $4.5 billion at the end of 2020 to $6.5 billion at the end of 2025, which translates into a 7.5% compound annual growth rate.
You can see that we have a stockholder dividend of $2.38 per share.
The dividend has increased each year for the past 15 years, and we have a compound annual growth rate for the past five years of 5.8%.
We target a payout ratio of between 55% and 65%.
As we approach the final quarter of 2021, we have refined our previous guidance to a range of $4 to $4.10.
At the natural gas operations, we expect operating margin to increase 6% to 8%, pension costs to be relatively flat, operating income to increase 4% to 6%, up from a previous range of 3% to 5%; COLI earnings to be $5 million to $7 million and capital expenditures to be $650 million to $675 million.
At the Centuri Infrastructure business, revenues, excluding Riggs Distler for 2021, are expected to be 1% to 3% greater than the record 2020 amount.
And operating income, excluding Riggs Distler, is expected to be 5% to 5.4% of revenues.
Meanwhile, Riggs Distler is expected to generate revenues of $150 million to $170 million with an operating loss of $11 million to $13 million from the date of acquisition.
Total interest expenses increased to a range of $19.5 million to $20.5 million due to the term loan and credit facility in connection with the Riggs Distler acquisition.
Finally, we anticipate transaction-related expenses at the corporate and administrative level due to the Questar Pipelines acquisition and activism response of approximately $25 million to $30 million.
At the Southwest Gas Holdings level, we are announcing an earnings per share growth range for 2022 and 2023 of 5% to 8% based on adjusted 2021 earnings per share guidance.
We also expect equity issuances of $600 million to $800 million over the three years ending in 2023 and as I previously mentioned, a target dividend payout ratio of 55% to 65%.
At the regulated natural gas utility, we expect capital expenditures to be approximately $3.5 billion over the five years ending in 2025 and a 7.5% compound annual growth rate for rate base for that same period.
At the infrastructure services business, we expect revenues to increase 27% to 33% in 2022 with a full year of Riggs Distler operations.
And 2023 revenues are expected to increase 7% to 10% over 2022.
Operating income is expected to be 5.25% to 6.25% of revenues during 2022 and 2023.
And EBITDA is expected to be 11% to 12% of revenues during that same period.
Wrapping up on Page 31, we believe that Southwest Gas Holdings offers a compelling value proposition for our investors.

Summary:
We're very excited about this planned acquisition which is forecasted to be accretive to earnings in 2022.
For the third quarter of 2021, we reported a consolidated net loss of $0.19 per share compared to third quarter earnings per share of $0.32 in 2020.
As I previously mentioned current quarter results reflect the impact of a $5 million legal reserve.
Revenues increased $52.5 million or 9% between quarters including $49.5 million from Riggs Distler following the August 27 acquisition.
As we approach the final quarter of 2021, we have refined our previous guidance to a range of $4 to $4.10.