OGE Energy Corp. Q2 FY2025 earnings call

• Service area growth: Thunder's NBA championship, hosting 2028 Olympics events in Oklahoma City.
• Generation capacity: Adding ~550 MW, with Horseshoe Lake Units 11-12 operational next year and Units 13-14 planned for 2029 adding ~450 MW. Continues to explore generation options.
• Transmission: Next month, will accept an NTC for a line from Fort Smith, Arkansas to Muskogee to address reliability.
• Economic development: Oklahoma Innovation Expansion Program with 83 companies in service area, Tinker AFB expansion, retail/restaurant growth, and Thunder Arena plans.
• Legislative support: Passage of legislation for CWIP and PISA accounting to benefit customers, saving $190M on Horseshoe Lake Units 13-14.

For the second quarter, consolidated net income was $108 million or $0.53 per diluted share. The core electric company achieved net income of $108 million or $0.53 per diluted share. Year-over-year customer growth was near 1% in the second quarter. Weather-normalized load has grown 6.5% year-to-date. Year-to-date growth of residential customers was 1% and commercial was 25%, while industrial and oilfield load showed softness but expected growth.

• Expect to deliver in the top half of earnings guidance range.
• Confident in achieving consolidated earnings in the top half of guidance range for 2025.
• CWIP benefits from legislation to save customers $190M on Horseshoe Lake Units 13-14.
• Plan to file Oklahoma rate review by end of year, Arkansas to follow.
• Confident in 5%-7% consolidated earnings growth rate based on midpoint of 2025 guidance.

• Mild weather and higher interest/depreciation expense impacted core business net income.
• Industrial and oilfield load softness due to unplanned outages, but expecting growth from future opportunities.

Q: Can you please provide a little bit of color on what is driving the weaker industrial sales?

A: These types of customers are chunky, power-intensive, with maintenance cycles, but there's line of sight to many coming back online and incremental load in the foreseeable future.

Q: Excluding the midstream operations onetime legacy benefit, how can we think about parent drag for 2025? And how could that grow for the remainder of the forecast period as you finance your growth plan?

A: The onetime benefit is just that, a one-time benefit, so should largely ignore it from that perspective and are squarely on our guidance for this year, excluding that item.

Q: You're still exploring options for generation capacity additions into '29. You mentioned a few things, but I was wondering how could it end up shaping out for ownership versus PPA? And could there be an update on year-end?

A: We've expressed strong preference to own these assets. We're going through negotiations, and when finalized, we'll file for those.

Q: Congrats on a good quarter. Just real quick kind of piggybacking with the 450 megawatts of Horseshoe Lake coming on in 2029, is the company expected to be long capacity at the end of the decade? And if so, how do you see that need being filled?

A: I don't anticipate us being long. We've been consistent in saying we'll be in a continuous adding capacity mode, and we're doing that into the load growth, so any surplus will be de minimis and quickly filled by future growth.