OGE Energy Corp. Q2 FY2026 earnings call

• Operational response to severe weather

  • The company team completed a safe, swift response to severe weather in June and July 2026, demonstrating strong commitment to customer reliability and service.
  • The company set a new all-time system peak demand of over 6,800 megawatts in July 2026, exceeding the prior 2024 record by ~180 megawatts.

• Regulatory and policy milestones

  • The Google Special Contract filing in Oklahoma has an established procedural schedule and is expected to resolve by the end of 2026.
  • The Oklahoma Large Load Tariff filing, aligned with new state legislation and the White House Ratepayer Protection Pledge, includes strict customer protections: 100% upfront grid connection cost funding, 15-year minimum customer commitments, collateral/termination fees, a regulatory backstop charge, and a $25-$30 million annual residential customer benefit for a 1 gigawatt data center, designed to support economic growth while protecting existing ratepayers.
  • A positive proposed order for the Frontier Storage project is expected to be adopted imminently.

• Capacity expansion progress

  • 550 megawatts of new capacity will be added to the grid in 2026 via the Horseshoe Lake and Tinker projects, with an additional 300 megawatts from Frontier Storage in 2027, and 450 more megawatts from additional Horseshoe Lake units.
  • The company has averaged 300-400 megawatts of annual capacity additions, and will need to increase this rate to meet growing system demand.
  • Multiple generation RFP-related filings are expected by the end of 2026, with a possible filing as early as Q3 2026.

• Financing

  • All planned 2026 financing activities are complete. The company continues to target a FFO-to-debt ratio of ~17% over the planning horizon to maintain credit supportive metrics.

Consolidated: Net income of ~$116 million (56 cents per diluted share) in Q2 2026, up from $108 million (53 cents per diluted share) in Q2 2025. Core electric utility segment: Net income of ~$120 million (58 cents per diluted share) in Q2 2026, up from $108 million (53 cents per diluted share) in Q2 2025, contributing ~103% of consolidated net income (offset by the holding company loss). Holding company segment: Reported a net loss of ~$4 million (2 cents per diluted share) in Q2 2026, wider than a loss of less than $1 million in Q2 2025, contributing -3.4% of consolidated net income.

• Management reaffirmed its 2026 consolidated earnings guidance range, and remains confident in the full-year outlook despite near-term timing shifts, with nearly 70% of expected annual earnings remaining in the second half of the year.
  • Customer growth of approximately 1% continues as expected across the service territory, with strong overall demand.
  • Capital updates will be provided incrementally throughout the remainder of 2026 as projects advance and regulatory approvals are received, with corresponding updates to the company's financing strategy.
  • Rebasing of long-term CAGR guidance will be considered as opportunities are finalized, with updates provided in chunks as milestones are achieved, to clearly communicate the opportunity set and financing plans to investors.

• Exact load ramp timing for large new customers is uncertain: two large customers have shifted 200 megawatts of scheduled load ramp to later in 2026 due to customer-side issues, though customer commitments remain in place.
  • The timing of the SPP Notice to Construct (NTC) for transmission projects is not fully under company control, which impacts the timeline for public announcement of project details.
  • Final routing and cost split for the Seminole to Shreveport transmission line are still under negotiation, with details to be finalized when the NTC is issued.
  • Oklahoma has not yet clarified rules regarding right-of-first-refusal (rofer) for new transmission projects in the state, creating uncertainty around project allocation.

Q: What is the scope of the upcoming Q3 2026 Oklahoma rate review, and will it include the Horseshoe Lake units 13 and 14? How will the pending Supreme Court ruling impact the case?

A: The Q3 2026 rate case only includes routine, normal-scope distribution system and substation expansion. Generation capacity additions like Horseshoe Lake 13 and 14 follow a separate pre-approval process, so they are not included in this rate case. The Supreme Court ruling will be handled through a separate docket if it overlaps with the pending rate case.

Q: Stricter renewable capacity accreditation rules are being implemented. Will this change the type of generation selected in the 2026 RFPs?

A: Directionally, more stringent accreditation increases the effective cost of renewable capacity, which does bias the RFP evaluation toward natural gas thermal generation. The final selection still focuses on overall product price, but the new accreditation rules shift the advantage to thermal assets.

Q: What is the status of large load customer negotiations, and when will you next update capital expenditure and earnings guidance?

A: There are 6-7 active large load negotiations currently in progress, and the new Large Load Tariff filing has provided needed clarity for customers, so negotiations are progressing as planned. Updates to CapEx and earnings guidance will be released incrementally as regulatory approvals and project milestones are achieved, rather than in one large consolidated update, and will include clear details on earnings impact and financing plans for each update.

Q: Will you allow temporary FFO-to-debt drops below the 17% target to support new large capital projects, or will you continue to use tools like PPAs to maintain the target?

A: PPAs have been used to bridge capacity gaps during construction, not to manage FFO-to-debt credit metrics. The company remains committed to maintaining the 17% FFO-to-debt target over the long term, with some expected minor near-term ebb and flow. A full suite of financing tools including CWIP financing for transmission projects and equity issuance will be used to keep metrics near target.