OGE Energy Corp. Q3 FY2026 earnings call

• Grid Reliability: The system performed exceptionally well during an unusually hot summer with over 45 days of triple-digit temperatures, hitting new peak loads four times without any calls for public conservation.
• Rate Review Initiatives: The Oklahoma rate review filing includes expanded assistance programs, such as senior discounts and low-income assistance, and introduces flexible payment options like 'Choose My Due Date' to help customers manage bills.
• Generation Expansion: Units 11 and 12 at Horseshoe Lake were completed ahead of schedule and $12 million under budget, adding 448 MW of capacity. Units 13 and 14 are under construction, adding another 440 MW.
• New Project Filings: Filed for pre-approval to construct a new 755 MW combined cycle plant at Horseshoe Lake Unit 15, with expected in-service in 2031 and an investment of approximately $1.75 billion.
• Community Support: Refreshed the 'Lend-a-Hand' bill assistance program with nonprofit partners and financial matching from the OGE Energy Corporation Foundation.
• Regulatory Strategy: Leveraging new Oklahoma legislation for CWIP recovery (saving customers >$900 million over asset life) and an 180-day regulatory review process for pre-approval filings.

The company reported consolidated net income of approximately $316 million ($1.52 per diluted share), up from $231 million ($1.14 per share) in the same period of 2025. The core electric utility segment achieved net income of approximately $321 million ($1.54 per diluted share), compared to $243 million ($1.20 per share) in the prior year, driven by significantly warmer third-quarter weather and partially offset by increased income tax expense. The holding company reported a loss of approximately $5 million ($0.02 per diluted share), an improvement from a $12 million loss in the same period of 2025, due to higher income from energy-related investments and lower interest expense.

• Raised 2026 Consolidated Earnings Guidance: Updated range to $2.62–$2.68 per share (previously implied lower or stable), assuming normal weather for the remainder of the year.
• Load Growth Outlook: Maintains healthy demand outlook with customer growth and normalized load growth at approximately 1%.
• EPS CAGR Update: Management will take a holistic fresh look at the long-term EPS compound annual growth rate (CAGR) next year, considering multiple upcoming regulatory and project milestones.

• Weather Volatility: While current warm weather boosted earnings, management notes that weather impacts tend to balance out over time, and future milder conditions could reduce cooling-driven usage.
• Regulatory Lag: There is inherent risk associated with regulatory lag between rate base growth and authorized returns, though management expects earned ROE to remain smooth through cost control and capital allocation.
• Construction & Execution: Although past projects were on-time and under-budget, future large-scale investments carry execution risks, particularly regarding the timeline and costs of the Horseshoe Lake Unit 15 project.
• Financing Dependency: The company relies on maintaining strong credit metrics while accessing equity markets via the new ATM program; failure to execute financing efficiently could impact balance sheet strength.

Q: Analysts asked about the likelihood of utility ownership versus third-party procurement for the remaining 1.1 GW of capacity needs and the rationale behind the $750 million ATM facility size. / A: Management affirmed intent to own and operate the majority of the remaining capacity to ensure reliability during extremes, using short-term bridge capacity only if necessary. Regarding the ATM, CFO stated the $750 million size was not tied to specific future opportunities but established to provide flexibility and align issuance with investment timing, noting OGE previously lacked an ATM tool.

Q: Analysts inquired about bridging the gap between 9.6% rate base CAGR and long-term earnings growth, specifically asking about regulatory lag basis points and how the Oklahoma rate review/QIP rider would close this gap. / A: CFO explained that historically, cost control and capital allocation have allowed the company to earn close to its allowed ROE. He emphasized that earned ROE should remain smooth rather than experiencing step-function changes, with plant-and-service accounting and load growth providing a natural bridge alongside the upcoming rate case outcomes.

Q: An analyst questioned the company's strategy regarding the upcoming SPP 2026 ITP board meeting and clarified whether the $160 million transmission addition included the Seminole line. / A: CFO indicated that closure on NTCs is expected later this year, following a cadence similar to the 2025 ITP. He clarified that the $160 million added to the base plan comes from the 2025 ITP (including smaller projects besides the major Seminole-to-Shreveport line) and is distinct from the 2026 ITP projects which will be addressed in subsequent meetings.

Q: Analysts sought details on the key factors for scrutiny in the Horseshoe Lake 15 pre-approval review and how cryptocurrency-to-AI load migration might affect resource plans. / A: CEO noted the review would focus on need, process adherence, capability, and economics, highlighting the strong track record of on-time/on-budget delivery and brownfield site benefits. CFO added that crypto-to-AI load conversion remains a theme; if it increases capacity needs relative to SPP rules, the 1.1 GW requirement would increase accordingly.

Q: Analysts asked about the technology mix for the remaining 1.1 GW needs and the cadence for future EPS CAGR updates amidst increasing capex buckets. / A: CEO stated the primary mix will be gas, potentially with some solar/storage combination, emphasizing sensitivity to cost per kW and value to customers. CFO reiterated that EPS CAGR updates will be taken holistically next year based on critical mass of project approvals and financing assumptions, rather than on a discrete project-by-project basis.