OGE Energy Corp. Stock

Good day, everyone, and thank you for standing by. Welcome to OGE Energy Corp. 2026 Second Quarter Earnings and Business Update Call.

[Operator Instructions]

Please be advised that today's conference is being recorded. Now it's my pleasure to hand the conference to Casey Strange, Investor Relations Senior Manager, for opening comments.

Thank you, Carmen, and good morning, everyone, and welcome to our call. With me today I have Sean Trauschke, our Chairman, President and CEO; and Chuck Walworth, our CFO. In terms of the call today, we will first hear from Sean, followed by an explanation from Chuck of financial results. And finally, as always, we will answer your questions.

I would like to remind you that this conference is being webcast and you may follow along at oge.com. In addition, the conference call and accompanying slides will be archived following the call on that same website. Before we begin the presentation, I would like to direct your attention to the safe harbor statement regarding forward-looking statements. This is an SEC requirement for financial statements and simply states that we cannot guarantee forward-looking financial results, but this is our best estimate to date.

I will now turn the call over to Sean for his opening remarks. Sean?

Thank you, Casey. Good morning, everyone. Thank you for joining us today. This morning, we reported consolidated earnings of $0.56 per share. Before Chuck discusses our second quarter financial results, I'll spend a few minutes on the actions and milestones that are shaping the remainder of 2026. To start, I want to recognize our team for their stellar work following severe weather in June and July. In each instance, their response was both safe and swift and reflected the best of our company, a strong commitment to reliability and service to our customers, and I'm grateful for our crews, operations and customer service teams and everyone who is involved. We continue to make progress on several important filings that support our ability to serve growing customer needs while protecting affordability for our customers.

We filed the Google special contract on May 1 in Oklahoma and that filing now has a procedural schedule, and we're pleased to have a defined path forward and expect this matter to move toward resolution before the end of the year. On June 17, we also filed our Oklahoma large load tariff.

This filing establishes a framework for serving loads greater than 75 megawatts that is aligned with recently passed state legislation. Importantly, the tariff is designed to support economic development and new load growth while protecting existing customers. It also reflects the spirit of the White House Ratepayer Protection Pledge, which we recently signed. And I'll join the Oklahoma Governor and legislative authors in a couple of weeks in support of Oklahoma's Data Center Consumer Ratepayer Protection Act. We're approaching consumer protections from all angles and leading the way with our tariff, which goes further than any of these other measures. We're putting words in action by doing everything within our power to protect customers from increased costs.

The key components of the tariff include funding upfront 100% of the cost to connect to the grid, a minimum 15-year commitment, minimum billing and collateral requirements along with early termination and capacity reduction fees, a consumer protection charge, which provides a regulatory backstop if future impacts to existing customers emerge. And lastly, our proposed customer affordability charge would benefit residential customers to the tune of $25 million to $30 million annually for a typical 1 gigawatt data center.

Over time, we believe high energy demand customers like data centers can help bring down costs for all customers, but only when they connect to the grid under the regulated electricity model, which has consistently proven time and time again to provide the lowest cost electricity for all customers.

Our tariff proposal is one of the way we balance growth, reliability and affordability for the customers and communities we serve while remaining aligned with the laws in Oklahoma and Oklahoma Corporation Commission policies. Looking ahead, we remain focused on executing the key regulatory milestones that support our long-term plan. There is a positive proposed order for the Frontier storage project from Commissioner Bingman's office and we expect it to be adopted in short order.

In 2026 alone, we will add 550 megawatts to the grid with Horseshoe Lake and Tinker. We will add another 300 megawatts next year from the Frontier Storage project. The Horseshoe Lake units 13, 14 and 29 will add another 450 megawatts. We've averaged the addition of roughly 300 to 400 megawatts of capacity per year and we will need to increase that to meet the growing demand on our system. We intend to make multiple filings throughout the balance of this year as we finalize evaluations and negotiations out of the RFP and you could possibly see a filing this quarter.

We continue to prepare for an Oklahoma rate review this quarter as well, and we are also monitoring SPP transmission notices to construct currently expected in the fourth quarter. And there's certainly a lot to be excited about, and our regulatory filings and policy efforts are designed to position the company for long-term success while making sure customers continue to benefit from a reliable, affordable system. That foundation supports the next phase of investments needed to serve increasing demand across our service area. Thank you. And now I'll turn the call over to Chuck. Chuck?

Thank you, Sean, and thank you, Casey, and good morning, everyone. I'm pleased to review 2026's second quarter results with you today. Let's start on Slide 5. Consolidated net income was approximately $116 million or $0.56 per diluted share compared to $108 million or $0.53 per share in the same period of 2025. In our core business, the electric company achieved net income of approximately $120 million or $0.58 per diluted share compared to $108 million or $0.53 per share in the same period of 2025. The increase in net income was primarily driven by warm second quarter weather and lower depreciation and interest expense on assets placed in service, partially offset by higher O&M expense.

The holding company reported a loss of approximately $4 million or $0.02 per diluted share compared to a loss of less than $1 million in the same period of 2025. The increased loss was primarily due to higher interest expense and onetime benefit related to legacy midstream operations that was recognized in 2025, which was partially offset by increased other income. Stronger weather in the second quarter has offset a portion of the first quarter headwind. With nearly 70% of our expected annual earnings still ahead of us, we remain confident in our outlook and are reaffirming our 2026 consolidated earnings guidance range of $2.38 to $2.48 per share with a midpoint of $2.43.

We continue to see strong demand across our service area, along with steady customer growth of approximately 1%. Two current large customers have shifted portions of the ramp schedules thereby pushing a couple of hundred megawatts further into the year. While the timing has shifted, customer commitments remain firmly in place. And just last week, we set a new all-time peak of over 6,800 megawatts, exceeding the prior record set in August 2024 by roughly 180 megawatts. We're clearly excited about the opportunities ahead.

Turning to the capital plan. The initiatives Sean outlined continue to advance, providing greater clarity around future capital requirements. Together, they represent the next phase of our infrastructure investment needed to support increasing customer demand across our service area. By expanding system capacity and capability, these investments extend our growth runway and strengthen our long-term growth profile. They're also building momentum across our business and reinforcing the foundation for future value creation.

Over the balance of the year, we expect to further refine project scope, timing and capital needs as these initiatives move through the approval process. As projects advance and key approvals are received, we will expect to provide multiple capital updates and we'll update our financing strategy accordingly.

Turning to financing. We have completed all planned financing activities for 2026 and continue to target credit supportive metrics, including maintaining FFO to debt of approximately 17% over the planning horizon.

In closing, we continue to execute from a position of strength. We've reaffirmed our 2026 guidance and are advancing the regulatory and capital initiatives that will help shape the next phase of growth. We remain focused on balancing customer affordability with disciplined investment and believe we are well positioned to deliver sustainable value for our customers and shareholders for many years to come.

With that, I'll turn it back to Sean, and we'll be happy to take your questions.

[Operator Instructions]

Our first question is from Shar Pourreza with Wells Fargo.

This is Whitney Mutalemwa dialing in for Shar. So on the rate review now in the third quarter, can you frame the scope for us specifically, whether the CWIP request for Horseshoe Lake 13 and 14 could possibly sit inside that case? And if the Supreme Court rules while that case is pending, does CWIP get picked up there? Or does it need its own docket and if you could provide any other like update on the procedure?

Thank you for the question, Wendy. The rate case that we will file this quarter in Oklahoma will be generally distribution additions to our system and normal expansion. It does not include any generation capacity that was in there that's we go through a pre-approval process for those and 13 and 14 is captured in that process. So there will not be in the rate case, any generation. It will just be the normal course of business, run of the mill at distribution, substation additions, things like that. Chuck, you got anything to add to that?

No, I think that sums it up. It's really a separate issue.

Great. Obviously, on the tariffs, the protections are clearly built around the minimum billing demand over a long term. But how are you thinking about a large customer that wants to self-supply some of its load? And does the tariff as filed hold up in that case? That's it for me.

So thanks for the question. We have filed a large load tariff, which we think really goes above and beyond the legislation that was passed here in Oklahoma to protect customers from these large impacts of large loads and it's also really above and beyond the recently White House pledge in that area. So again, as Sean stated in his remarks, we believe that due to the network benefits of the fully regulated utility model that, that is the way to achieve the best outcome for all customer types, large data centers and traditional customers as well.

Our next question comes from the line of Nick Campanella with Barclays.

This is Michael Brown on for Nicholas Campanella. I know you're targeting to announce the NTC in the fourth quarter. Would that be before or after EI?

Well, we hope it'd be before EI, but we're not necessarily in control of the award of the NTC. So we'll certainly announce it when we receive it.

My next question is, could you clarify the 200 megawatts that was shifted into the year? Or is that correct, the ramp schedule of your customers?

Yes, Michael. So it's really like we've said all along with some of these large loads, it's difficult to pinpoint the exact quarter, the exact day that they start and to the extent that they -- that shift that obviously can have a little bit of an impact on the near term. But what I can say if it wasn't clear in my comments was that these customers are currently online. They just started to ramp a little bit later in the year than we originally anticipated, really due to some issues on their side. So -- but definitely, they're ramping up, and we have full confidence that, that load will come on shortly.

Our next question is from Julien Dumoulin-Smith with Jefferies.

It's Brian Russo on for Julien. Just to follow up on the Seminole to Shreveport line. Assuming you get the notice to construct as early as October, what are the next steps in terms of rights of way, construction timing and commercial operation date. I know it's preliminary. And then any updated cost estimates on that?

Yes. I think in the notice to construct, there's a process there where we would respond back to the SPP with the confirmation of the costs and the routing and the in-service timeline for final approval. And then once that's kind of ratified, we're off and running. And I think you should expect us to be able to deliver to you, kind of, what the cost or the investment schedule is by year, the timing and just kind of any financing needs that would be associated with that.

So I think there's -- so Brian, just to clarify that, there'll be some -- a lot more clarity when we get the NTC, but it's really going to be incumbent upon us to kind of ratify that with routing, schedule and costs.

Okay. Got it. Any thoughts on the upcoming SPP ITP for 2026, there's indications that it could be much larger than the 2025 ITP, which Seminole-Shreveport line was a part of, which was arguably lower than many of us expected. Just wondering where OG&E sits in Oklahoma to participate in the upcoming ITP?

Yes. I think there's certainly a lot of discussion about potential opportunities. The ultimate decision there hasn't been made and whether it's going to be '26, can be greater or smaller than '25. There's a lot of different thoughts, a lot of different discussions going on. So we're certainly engaged in those discussions, and we would expect to be a very active participant in the construction of transmission in Oklahoma.

Okay. One last question...

I don't know, Brian, we can't forecast that for you at this point.

Okay. And then just one last thing. On the SPP, the accreditations for renewables seem to be becoming more stringent. Does that like bias you towards gas generation in these pending 2026 RFPs?

I think so. I think directionally, that is a big criteria in terms of the dollar of a credit -- the dollar cost of accredited capacity. But we do focus on the price of the product, but I think it does kind of lend you towards more thermal assets.

Our next question comes from David Arcaro with Morgan Stanley.

I wanted to check in, has there been any progress on large load negotiations with new customers and potentially working towards converting those into contracts?

Yes. I think the short answer is yes. I think we continue to have those discussions. We're moving forward. And I think the submittal and the finalization of our large load tariff provides that clarity for those large loads to understand the -- how things are going to work in Oklahoma. So they are progressing, and we're not backing off of the 6 or 7 active negotiations we're in the middle of right now.

Got it. That makes sense. And any surprises just around what you're seeing in load growth or new customer interest in your service territory that would cause you to reassess, relook at the load growth outlook.

Not -- nothing is coming into mind right now, sitting here, Chuck and I are looking at each other and nothing came to mind. We're -- it's all systems go and full steam ahead.

Yes. Got you. And then could you maybe just refresh on your latest thinking on when the right time frame would be for revisiting the CapEx and the earnings outlook just as you chip away at some of the upcoming milestones?

Yes. I think your -- the way you said it there is we chip away at it. I think we would -- Chuck and I would -- it'd be neat if we could tidy all this up in one big release, but the opportunities and the growth, quite frankly, are just going to be continual. So we're going to continually update this. If we receive the approval for Frontier, you should expect an update there; on the NTCs, from the SPP, should expect an update there; approvals of these filings we're going to make over the balance of '26 for generation you could expect updates there. And obviously, just like we did last year, we'll lay that out for you in terms of the earnings impact and the financing plan. We'll make it easy.

Our next question comes from Aidan Kelly with JPMorgan.

Just want to pick up again on that growth outlook front. Clearly, you have a lot of upside opportunities as you outlined. And it's got many thinking about kind of upside bias to the prevailing CAGR. I guess my question is, how do you intend to kind of message that outlook moving forward? Do you see any possibility of re-basing or a plus mark after growth? Just what makes the most sense in this kind of this backdrop for you.

Thanks for the question. I think we're obviously going to take it one step at a time as these opportunities continue to roll in. And as Sean mentioned, we see really a long conveyor belt of opportunities, so some multiple chances for that. You mentioned re-basing, that's something that we have done already in the past where we've grown off of the higher trend line from previous year's guidance. So I think we'll take a look at all of those things. But I think what's paramount is that we effectively communicate to you the opportunity set that we have in front of us and how we're going to finance that. And that's -- I think that's probably the more clarity that you all need. So we'll definitely work on that front.

Great. And do you expect both the CapEx and equities to be increased piecemeal? Or do you kind of try and have more chunky updates in future years?

Well, we'll look at it as it comes through. But again, as Sean said, we're not going to be able to tie it all up in 1 big package. So yes, we'll look at it in chunks and discuss it as such as they come across.

Our next question comes from Paul Fremont with Ladenburg Thalmann.

Congratulations on a really great set. I just want to understand sort of -- you've got an FFO to debt target of 17%. In the past, what we've seen in order for you to maintain sort of the very strong credit metrics that you're targeting. You essentially used PPAs on some of the new construction to spread out some of the timing of new construction in order, I guess, in part to maintain a strong balance sheet. Should we continue to expect that would occur sort of on future spending? Or are you willing to sort of allow FFO to debt metrics, at least for a temporary period of time to go to lower levels until the projects are online and producing significant contribution.

Yes. Paul, maybe Chuck and I will tag team this one a bit. As it relates to our capacity planning, we've utilized some short-term bridge PPAs to get us through the construction cycle. And so that's what we use the PPAs for and it's not a mechanism we've been using to manage FFO or anything like that. And Chuck, maybe you could talk a little bit about your projection for FFO.

Yes. So Paul, as we indicate in our remarks, we do target 17%. Now obviously, as you know well, there's going to be some ebb and flow to that number. But that being said, it's important for us to maintain basically in that ZIP code. And we showed it with our equity deal we did last November, and we've also acknowledged that there's a whole host of tools out there to help with our capital stack, and we'll look at all of those in order to maintain that as well as taking advantage of items like CWIP financing for the large transmission project that we've been talking about earlier this morning. So we've got a lot of tools at our disposal in order to meet that commitment.

And then I guess in terms of turbine resources, do you see any issues for any of the RFPs that you're currently involved in, in terms of procuring the generation resources that are necessary in terms of the RFPs.

Yes. We're going through that evaluation right now, and we're doing it as quickly as we can. But we feel like we're in pretty good shape.

And then maybe last question for me. For Shreveport to Seminole, is there any sort of determination on the split and miles for construction between you and AEP?

Yes, we're still working through that.

So that would be known when they provide the NTC, we would sort of have the answer to that by then?

Absolutely. Absolutely. Because part and parcel of that is kind of the ultimate resolution of the routing.

[Operator Instructions]

We have a question from Steve D'Ambrisi with RBC Capital Markets.

Just had a quick one, kind of a follow-up on Brian's question about 2026 SPP, ITP process. Obviously, it's early, and I understand there's a lot of options that are being thrown around, but can you just remind us what, in Oklahoma, if there -- if you have a ROFR on transmission that ends up in your substations or in your service territory or how that works? I think there was some legislation, but maybe it went to the FERC because, you know, just looking at the map that -- some of these maps that are in these ITP presentations, it looks like a lot of these potential 765 lines terminate at your substations.

Yes. So I'm familiar with that map. So in general terms, to the extent that it is determined by the SPP that these are reliability projects, meaning we need to add transmission to support the reliability of the system, then the general rule is that is directed to the owners of the originating and terminating substation. And hence, that's the Seminole to Shreveport line. To the extent that there are lines that may be more economic or forward-looking, those would be a competitive opportunity. And so to the extent that a particular state has a ROFR, then that would probably trump the competitive direction that the SPP had. Does that help?

Yes. Did that get clarified in Oklahoma yet, whether or not you have a rule, I think?

Not yet.

Thank you so much. And this will conclude our Q&A session for today, and I will pass it back to Sean Trauschke for final remarks.

Well, thank you, Carmen, and thank you all for joining us today. Thank you for your support, and I hope everyone has a great day.

And with that, we will conclude today's conference. Thank you for participating, and you may now disconnect.

Good day, and thank you for standing by. Welcome to OGE Energy Corporation 2026 First Quarter Earnings and Business Call Update. [Operator Instructions] Please be advised that today's conference is being recorded.

I would now like to hand the conference over to your first speaker today, Casey Strange, Investor Relations Senior Manager.

Thank you, Stephanie, and good morning, everyone, and welcome to our call. With me today, I have Sean Trauschke, our Chairman, President and CEO; and Chuck Walworth, our CFO. In terms of the call today, we will first hear from Sean, followed by an explanation from Chuck of financial results. And finally, as always, we will answer your questions.

I would like to remind you that this conference is being webcast, and you may follow along at oge.com. In addition, the conference call and accompanying slides will be archived following the call on that same website. Before we begin the presentation, I would like to direct your attention to the safe harbor statement regarding forward-looking statements. This is an SEC requirement for financial statements and simply states that we cannot guarantee forward-looking financial results, but this is our best estimate to date.

I will now turn the call over to Sean for his opening remarks. Sean?

Thank you, Casey. Good morning, everyone. Thank you for joining us on today's call. This morning, we reported consolidated earnings of $0.24 per share, and the first quarter typically represents approximately 10% of our company's earnings for the year. Even with milder weather in the first quarter, we remain confident in our 2026 guidance and in the foundation we are building for 2027 and beyond. Chuck will discuss the first quarter financial results in more detail shortly.

Looking forward, our planned actions for the remainder of 2026 are setting the course for the rest of this decade. I'm pleased to let you know in the coming days, we will file long-term special contracts with Google to serve multiple previously announced data centers in Oklahoma with the Oklahoma Corporation Commission. Google is the customer previously referred to as customer X and their expected load and ramp rate is consistent with our 2026 IRP. We work closely with Google to ensure broad customer protections, including minimum charges. Google will also pay 100% of the cost to connect to the grid and its fair share to power the data center sites. We've also secured capacity from 2 solar facilities currently under construction. We look forward to creating similar opportunity for communities in the future as we leverage our low electric rates to drive investment and foster economic growth for many years to come.

As discussed last quarter, we are continuing to add generation through a thoughtful, measured approach. We commissioned the 98-megawatt tinker power plant in February and expect 450 megawatts of new CTs at Horseshoe Lake to come online in the fourth quarter. While also breaking ground on 2 additional 450-megawatt units. And we're still advancing the 300-megawatt Frontier Energy storage project. So including the aforementioned capacity agreements, this 1.7 gigawatts of capacity strengthens our system today and positions us well for continued growth ahead. These investments reflect a disciplined strategy to support customer growth while maintaining reliability and competitive rates.

Continuing on the regulatory front, 2026 remains an active year. In Oklahoma, we are finalizing a stand-alone large load tariff and expect to file it with the Oklahoma Corporation Commission no later than July 1, providing a clear, durable regulatory path for future large load activity. We continue to prepare for a rate review filing later this year with new rates anticipated in '27. In August, we expect preapproval of the Frontier Energy Storage project. And as projects emerging from the RFP process we are -- process are selected and negotiated, we also expect to seek pre-approvals on a rolling basis rather than waiting for the full portfolio of projects to be complete, and we anticipate filing for these preapprovals throughout the balance of this year. In October, we expect to complete the acceptance of the notices to construct on directly assigned SPP transmission projects.

So taken together, these investments underscore a deliberate forward-looking strategy to support customer growth and demand. The actions we are taking this year establish a clear foundation for the remainder of the decade while leveraging our low rates as a significant competitive advantage.

With respect to competitive dynamics, we continue to believe our in-state pricing is a meaningful advantage in driving new business that we will protect. Importantly, we have not seen the type of price escalation some have pointed to in other markets, and we have the customer protections, oversight and regulatory framework in place to ensure it does not develop that way here.

Last quarter, I updated you on recognition the company and our team received for our culture. And today, I can add another one to that list. In addition to being named a top workplace in Oklahoma, we were recently named the National Top Workplace by USA TODAY. We operate in a highly competitive labor market, and it's fulfilling to see our people, our culture, drive results, innovation and belonging. I couldn't be more proud to work alongside my outstanding colleagues. Their commitment to our purpose is evident every day and continues to drive excellence. and our commitment to making Oklahoma and Arkansas better places to live, work and play drives us to our North Star of delivering reliable electricity at low cost. Again, the steps we are taking in '26 will set the stage that drives our future success.

So with that, thank you. I'll now turn the call over to Chuck. Chuck?

Thank you, Sean. Thank you, Casey. Good morning, everyone. I'm pleased to review 2026's first quarter results with you and provide an update on our 2026 financial plan. Let's start on Slide 7 and discuss first quarter results. Consolidated net income was approximately $50 million or $0.24 per diluted share compared to $63 million or $0.31 per share in the same period of 2025. In our core business, the electric company achieved net income of approximately $58 million or $0.28 per diluted share compared to $71 million or $0.35 per share in the same period of 2025. The decrease in net income was primarily driven by mild first quarter weather and the timing of O&M year-over-year, partially offset by lower depreciation and interest expense on assets placed in service.

The holding company reported a loss of approximately $8 million or $0.04 per diluted share, consistent with the prior year. Although first quarter weather was soft, there is plenty of runway left in 2026. We expect to achieve our consolidated earnings guidance of $2.43 per share with a range of $2.38 to $2.48, assuming normal weather for the balance of the year. Our service area continues to perform well with customer growth just under 1%. Weather-normalized load was stable year-over-year, reflecting temporary outages at a few large customers, particularly offset by strength in the public authority and oilfield sectors.

Looking ahead, today's announcement reinforces a meaningful growth tailwind, building on a historically strong trajectory with approximately 24% load growth over the past 5 years. Underlying demand remains healthy, supported by strong local economies and our low-cost reliable business model. Against that backdrop, we continue to see strong momentum across our service area. As Sean mentioned, we will file energy service agreements with Google to serve its previously announced data center facilities in Muskogee and Stillwater. This is an important milestone and the result of a disciplined approach to structure, terms and risk allocation.

The addition of a large high load factor customer allows OG&E to spread fixed system costs over a significantly larger customer base, creating downward pressure on rates for existing customers. Equally important, agreements like these include robust long-term customer protections, including multiyear commitments with minimum charges and exit provisions to mitigate stranded cost risk and strong credit support to fully back customer obligations. Working with Google, we've secured generation capacity from 2 solar facilities that Google had previously announced and that are currently under construction. These facilities will provide 600 megawatts of nameplate capacity, and we will request preapproval from both Oklahoma and Arkansas commissions for these CPAs.

Turning to financing. In April, we completed a debt issuance at the electric utility, which satisfies our financing needs for 2026 under the current plan. As a reminder, we issued equity late last year to support incremental capital added to our long-term plan. And together, these actions position us well from a balance sheet perspective. We have flexibility between now and May 2027 to exercise the approximately 4.6 million shares in the forward equity agreements. We continue to target credit supportive metrics and expect to maintain FFO to debt around 17% over the planning horizon.

Turning briefly to credit. Last week, Moody's revised the outlooks for both OGE Energy and OG&E to stable from negative and affirmed all ratings. Moody's cited a generally constructive regulatory framework in Oklahoma and Arkansas, including improvements to cost recovery mechanisms. They also pointed to balance sheet actions, including the 2025 equity issuance as supportive amid a growing capital program. Notably and consistent with our planning outlook, Moody's lowered the parent level downgrade threshold to 17%. Later this year, we also expect additional clarity on several important projects.

In August, we anticipate an order in our Frontier battery storage pre-approval case. And this October, we plan to accept final notices to construct from SVP for our direct assigned transmission projects. As these projects are approved, we will roll them into our capital plan and communicate our financing strategy just like we did last year.

In closing, we remain confident in our financial plan and our ability to execute through 2026. The actions we're taking this year are setting the foundation for the next 5 years of results. We are advancing a disciplined strategy that balances customer affordability and prudent investment, supported by a balance sheet that remains a key strength. With our financing plan for the year complete, important regulatory filings moving forward and guidance affirmed, we believe the company is well positioned to deliver results consistent with our commitments.

With that, I'll turn back to Sean, and we'll be happy to take your questions.

[Operator Instructions] Our first question comes from the line of Shar Pourreza.

This is Whitney Mutalemwa on for Shar. So just to start off with the legislature process. Since the last update, HB 2992 has moved further along in Oklahoma and now it explicitly requires separate large load tariffs and cost causation protections. Does that legislation materially improve like your negotiating position with large load customers? Or were you already headed towards that substantially the same framework on your own?

Yes. I would -- Whitney, this is Sean. I think it's clearly supportive of the direction we've been heading in our discussions with not just Google, but other large load providers. Protecting the existing customer base has been paramount to us from day 1. And I think what's important about the legislation is both of the authors of the legislation and the Senate and the House, we have and had for many years, good relationships with them. And we all want the same thing. We want the protection for customers, and we want the continued economic development and growth for the state. And so I think there's great alignment there.

Of course. And just like as a mini follow-up, on the regulation side, obviously, you've pointed to an Oklahoma rate case review. Midyear and then potentially some Arkansas activity later in the year. So how are you thinking about just sequencing these rate filings so that you're preserving that like constructive recovery, but you're also avoiding the perception that large load-driven investment is crowding too much on customer bills at once?

Yes. I think your use of the word sequencing is a good one. We're going to take these bids we're getting back from the RFPs. We're going to look at those and try to file those as quickly as we can. As we said in our remarks, we're not going to provide a full portfolio filing. We're going to file them as the negotiation is complete. And then we're going to have to sequence in there those rate filings in Oklahoma and Arkansas as well. So there's a full agenda for sure. But again, our intention around the large load tariff is to actually protect those customers.

Our next call is Nicholas Campanella of Barclays.

It's Michael Brown on for Nicholas Campanella. My first question is, since you haven't filed the large tariff yet, can you discuss what you're looking for in this tariff? And what type of upfront capital commitments would you be requiring for your customers? And how can that kind of change your financing needs?

Yes. Michael, I didn't get the middle part of that you [indiscernible] out there. You talked about capital commitments. Can you repeat that?

Okay. Since you haven't filed a large tariff yet, can you discuss what you're looking for in this tariff? And what type of upfront capital commitments would you be requiring for your customers? And how can that change your financing needs?

Yes. So I think we would fully expect any large load customer to pay all those [indiscernible] payments, make those in advance. I think our tariff is consistent with the legislation in terms of looking for contract terms and security, looking for pricing structures and charge allocations such that you do preserve or protect the existing customer base and really setting a threshold around service eligibility in terms of what is a large load. Is it 75 megawatts? Is it 100 megawatts, things like that. But that's how we're thinking about it.

In terms of the initial upfront, the connection to our system, that wouldn't really change our financing plans. Obviously, as we begin adding additional resources to serve this load, that will change our financing plan. And as Chuck mentioned, once we get that approved, he'll share with you exactly how he's going to finance that.

My next question is when taking into account the multifaceted piece of the upside with Google, the transmission and the IRP, how are you thinking about the impacts to your EPS CAGR and when you would be ready to communicate the new plan to investors?

Yes, Michael, this is Chuck. It's going to be just like the playbook that we did last year. So these catalysts are -- some are coming this year and then some coming maybe early next year. But in terms of the transmission, we should have line of sight to that by Q4 of this year. And that's a pretty substantial opportunity and then coupled with the Frontier battery case as well. So as soon as that's buttoned up in terms of having an order on that, we'll be prepared to layer that into our plan and discuss financing and then how that impacts earnings as well. But again, it's not just a this year event, right? I mean, so those are two big opportunities, but then that will be shortly followed by the outcome of the generation RFP as well.

My last question is, can you provide the short-term and long-term load update?

Yes. So in terms of short term, we maintain our guidance for the year at 4% to 6%. And then longer term, that's going to be -- we haven't given guidance on that. But clearly, from this Google announcement and the knowledge that it was previously customer X, which was basically a gig in our plan by 2031 in relation to our system, we're somewhere just under a 7-gig system. And I think that can kind of give you an order of magnitude in terms of the size of this.

Our next call is from Julien Dumoulin-Smith of Jefferies.

I got to tell you, Stephanie is doing a great job with the name. She nailed yours. She named Shar. She's doing a great job.

Absolutely. I appreciate it very much. It's very kind. Well, look, let me take it from the top here. I mean let me ask you -- I mean, the 5% to 7% here, how are you thinking about that? You're already at the top end through '28 into the base plan. And right, you've got this incremental Frontier, you've got this SPP transmission. And then in theory, then you've got RFP participation, right? So -- and again, I suppose that's a little bit of an unknown in terms of how far that goes. But do you want to remind us here? I mean I didn't hear in your script any comment about 5% to 7%. So I don't mean to needle you here, but it seems like it might have been slightly omitted here.

Yes. Julien, this is Chuck. Thanks for the opportunity to address that. So you're right. I mean we didn't mention that because it's unchanged in the near term. So 5% to 7% and pointing to the upper end, upper half of that through the next few years. But really, the catalysts that we're talking about, those are going to take us beyond that period, right? So I think your observation is spot on that this really allows us to extend that runway. But again, keeping with our tone and philosophy, we're not really going to get into that until those projects are rolled into the capital plan. But clearly, those catalysts are out there to extend that expectation.

Right. Absolutely. And actually, Chuck, just sticking with the focus here on the financing plan. How do you think about this Moody's FFO to debt threshold, right? I mean kudos on finally getting that done. I know it's been in the cards for some time, getting that thing down to 17 from 18. You guys didn't blink. You held your line here. But how should we think about the common equity needed to fund the incremental CapEx above the base plan? I mean how do you think about that now and here? How do you think about JSNs at this point? But again, obviously, kudos on the move here in creating capacity?

Yes. Thanks for that comment, Julien. Yes, I mean, it is great confirmation of our plan. But again, I think it didn't just happen overnight. It's -- I think underlying that is our long-term track record. And so that means the onus is on us to extend that track record into the future and be prudent in that aspect. So it still means we got a lot to live up to, right? But clearly, I think coming at this point, when we've got these large opportunities in front of us, that coupled with our reaffirmed balance sheet strength, that's just -- it's like a multiplier effect, right? So yes, really, really, really pleased with that, and it's just great timing from that standpoint.

In terms of your question about forms of equity, look, I mean, we've always maintained that we've got the full toolbox at our disposal. We thought it was very important to do common equity next year. When it comes time for the next round, we'll evaluate that in the context of the market at that time, and we'll do what's right.

Awesome. Excellent. And then if I can go back a little bit on what you were alluding to earlier, but I just want to clarify this, right? Obviously, kudos on translating Google into a formalized construct. I feel like that's been in the cards for a little bit here. How do you think about the total gigawatts that are incurred there and the opportunity here? I just want to make sure we're hearing this right here. And as much as what is the ramp in gigawatts relative to what you guys have discussed previously? Is there something incremental to this, call it, 1.9 gigawatts, if I'm adding it up right, I mean there's a few different ways to read it. Is there something incremental there that one should be considering that would be ownable? I heard the solar comment about the capacity contracts that would be a purchase agreement. But beyond the 1.9, is there something incremental here with Google that we should be cognizant of?

So with this announcement, this announcement is consistent with what's in our IRP, okay? So this one by itself is not incremental. It's just consistent with the plan. In terms of the solar contracts, if you recall, the 1.9 was a winter need. It was the winter of [ '31-'32 ]. And the rough math from the SPP is it's going to be somewhere around a 20% accreditation on solar in the winter. So our kind of high-level estimate is that's going to change that 1.9 to 1.8 for that time frame. But that's just with this contract, obviously, anything additional to this would be above and beyond that.

Got it. Okay. Excellent. Fair enough. And then just specific, I'd love to hear the cadence of conversations, whether that's expanding Google further or other data center contracts. We've heard from some of your peers in adjacent states. Obviously, we saw this ERCOT update recently. How would you characterize the state of conversations for whether it's a further Google expansion or other contracts in as much as you all have been on a roll?

I would characterize it as continuing and consistent.

Our next call is from Aidan Kelly of JPMorgan.

I just wanted to go back on like the large load kind of developments here. And maybe just see if whether you kind of plan to indicate new resources CapEx as they get preapproved even or if they wait for full approval to add to the plan?

I'm sorry, I'm not sure I totally follow your question there. Could you repeat that?

Like do you plan to like telegraph like the new resources CapEx as they get preapproved?

Yes, yes, 1.5%. Yes. No, clearly, we are in the middle of an RFP right now. So there's not really any detail -- I mean, the bids haven't even been opened on that yet, but they will be soon. But yes, once those do the evaluation, do the selection, then we'll make the filing. So really, you'll have some pretty good indication as to what the possibility is once we make those filings. And then once they're actually formally approved, that's when we'll layer that in. But you'll actually get some pretty good color on that before they're approved.

Great. Appreciate the input there. And then just kind of want to go back to the 600 megawatts of nameplate capacity with the solar facilities. Just like a simple question here. Like is that in the plan? Is it separate from the IRP filing? Just any color on how that kind of coalesces with the generation opportunities?

Yes. So that's where I was going with on that previous question. So it's -- it was not -- it was not included as a resource in the 2026 IRP that showed a need of 1.9. And so again, since that was a winter number, adjusting for that's going to be lower that to about a 1.8 need. So that's kind of the walk forward on that.

Our next question is from Paul Fremont of Ladenburg Thalmann & Company.

Congratulations. I guess my questions are sort of mostly focused on the Seminole to Shreveport line. The SPP write-up sort of that came out at the end of last year is suggesting an in-service of mid-2028. Is that sort of a realistic time frame that this can all be done in? Or should we look for some delay in that?

Paul, this is Chuck. That's part of what we're still going through. I mean, yes, that was the SPP's date, but that didn't really -- that was more of a -- from a modeling perspective, that didn't take into account any expectations on an actual construction time line. So that's part of the process we're going through right now is firming that up, and that's what we'll have clarity on by the early Q4 time line this year.

Great. And would that be built on existing right of way? Or would you need to sort of put into place new rights of way?

So it's new. And so that's part of the process also is just doing the line routing on that.

And my understanding is you're still negotiating certain things with AEP. Is that -- how much of the line is going to be sort of Arkansas versus Oklahoma? Or what exactly sort of remains to be negotiated with AEP?

So on this one, it's really Oklahoma and then probably Texas into Louisiana, but it's -- that's part of what we're working on is where exactly those -- where that crosses state boundary. So that's going to play into that. So still work in progress.

And then my last question, with respect to the battery, how -- have you determined whether there's an additional equity need that will go with the battery?

Again, we -- since it's not approved yet, it's not in our plan. So we'll do -- because again, we'll probably have timing clarity on that right around the same time as the transmission. So we'll probably take a holistic view of it at that time.

So then the CapEx update that we should expect is more likely going to be third quarter versus, let's say, second quarter?

Yes, I think that's fair.

And at this time, we're going to make a final call for question. [Operator Instructions] And our next question will come from Stephen D’Ambrisi of RBC Capital Markets.

I mean, Julian took like six of them. So I really only have one question left. And I guess what I would say is just given what's happened with some of, call it, the capacity contracts, how do you think you're positioned to effectively win or what percent -- what are you messaging to the commission and to stakeholders about the benefits of having the potential incremental generation as opposed to working with developers and securing capacity contracts and just the risks and benefits that come with that?

Yes. Thanks, Steve. I think we've been consistent. We've certainly had this discussion with the commissions about this. It's our intent to own and operate these assets. There's reasons from time to time to layer in some of these capacity type agreements to kind of bridge you during construction. But thinking about some of the severe weather events going back to Winter Storm Uri, there was no doubt that the assets that we owned and we operated ran and performed very well. And I think that's what everyone is looking for. So it'd be our expectation that we own and operate these assets, whether we build them ourselves or we were to purchase them from somebody, though, I'm not sure really -- we get too excited about the difference there. What we're focused on is making sure that we're the ones holding the ball, so to speak, when the severe weather comes in.

This concludes -- we don't see any additional questions. So this concludes the question-and-answer session. And I'd like to now turn it back to Sean Trauschke.

Thank you, Stephanie. Great job today, and thank you all for joining us today and for your continued support. Have a great day.

Thank you for your participation in today's conference. This does conclude the program. You may now disconnect.

Good day, and thank you for standing by. Welcome to the OGE Energy Corp. 2025 Fourth Quarter Earnings and Business Update Call.

[Operator Instructions] Please be advised that today's conference is being recorded.

I would now like to turn the conference over to your speaker for today, J.C. Strange Investor Relations Senior Manager. Please go ahead.

Thank you, Lisa, and good morning, everyone, and welcome to our call. With me today, I have Shawn Croskey, our Chairman, President and CEO; and Chuck Walworth, our CFO. In terms of the call today, we will first hear from Sean, followed by an explanation from Chuck of financial results. And finally, as always, we will answer your questions. I would like to remind you that this conference is being webcast, and you may follow along at oge.com. In addition, the conference call and accompanying slides will be archived following the call on that same website.

Before we begin the presentation, I would like to direct your attention to the safe harbor statement regarding forward-looking statements. This is an SEC requirement for financial statements and simply states that we cannot guarantee forward-looking financial results, but this is our best estimate to date.

I will now turn the call over to Sean for his opening remarks. Sean?

Thank you, Casey. Good morning, everyone, and thank you for joining us today. It's certainly great to be with you. 2025 was another strong year and a continuation of the momentum we are building and setting the foundation for a long runway of future growth with generation and transmission opportunities. This morning, we reported consolidated earnings of $2.32 per share for the year, including $2.47 per share at the electric company and a holding company loss of $0.15. This time last year, we talked about how we would deliver in 2025, and we did, including delivering earnings in the top half of guidance, filed for recovery of generation needs to meet growing demand secured financing for long-term growth, leverage the strong local economies to drive job growth and investment in our service area.

We were named an Oklahoma Top Workplace and we were recognized by the Southeast Electric Exchange for our top-ranked safety performance. And we remain committed to our North Star were reliable electricity at some of the lowest costs in the nation. We met our commitments and more strengthen our financial position and continued investing in reliability and growth while keeping affordability front and center for our customers, lengthening that runway for continued future growth. Since our last call, we executed a well-subscribed equity offering filed for generation preapproval of the 300-megawatt Frontier energy storage project, issued 2 RFPs and a 2026 draft IRP.

And as I look ahead for the remainder of 2026, we will advance our transmission strategy and finalize the opportunities from the SPP ITP recognizing its critical role in reliability and its growing contribution to long-term investment opportunities. We'll secure approval for the Frontier energy storage project in both states and we'll file for generation preapproval in both jurisdictions following the results of the RFP we issued last month. And we do plan to file a rate review midyear in Oklahoma and we'll evaluate the timing of an Arkansas rate review later in the year. Building on these strong financial results, we continue to invest in our future and strengthen our commitment to the communities we serve.

In line with this momentum, tomorrow, we will host a ribbon-cutting for our new combustion turbines at Tinker Air Force Base. These new units showcase our ongoing investments in community partnerships to benefit all customers and in this case, provide vital support to our country's national defense. Over the last 10 years, we built and put into service approximately 1 gigawatt of generation. Tomorrow, we cut the first ribbon on the next 1.3 gigawatts of generation, we will build and put into service before the end of the decade.

Yesterday, we issued our draft 2026 IRP, which outlines our long-term resource strategy, and we are finalizing a 1-gigawatt contract with 1 data center customer referenced as customer X in the IRP, and we'll also file a large low tariff, both of these by midyear. Across these initiatives, our priority remains protecting residential customers, and we have built explicit consumer protection measures into that framework. In addition, we continue to advance our transmission strategy, and earlier this month, the SPP determined that several large transmission projects will be considered short-term reliability projects, meaning that OG&E was assigned a significant portion of the seminal Disreport-765 line.

After we work through the notice to construct process at SPP, we will update our investment timing and financing plans. We're discussing a number of exciting growth opportunities today, and I want to remind you that our sustainable business models foundation is our low rates. Our relentless commitment to affordability translates to our rates as the lowest in the states we operate, lower in our region and among the lowest rates in the country. And from a cost control perspective, our O&M per customer growth over the last decade is less than 1%. We remain committed to delivering reliable electricity to all those customers at low rates.

And finally, before I turn the call over to Chuck, I want to recognize our incredible employees whose dedication makes these results possible. Every day, they bring a relentless focus on efficiency and affordability, helping us deliver reliable service while keeping rates among the lowest in the nation for the communities we serve.

Next week, OG&E will celebrate its 125th birthday or a company innovating for the future with a solid foundation built over time.

With that, thank you. And Chuck, I'll turn the call over to you.

Thank you, Sean, and thank you, Casey. Good morning, everyone, and thank you for joining us today. We've delivered another strong year in 2025, finishing at the upper end of our original guidance range, and we're entering 2026 with solid momentum. This morning, I'll review our 2025 results introduce our 2016 outlook and walk through our long-term growth framework.

Starting with full year results. Consolidated net income for 2025 was approximately $471 million or $2.32 per diluted share compared to $442 million or $2.19 in '24 and ending the year, $0.05 higher than the midpoint is consistent with our message of delivering results in the top half of the guidance range. At the electric company, net income increased to approximately $500 million or $2.47 per share, up from $470 million or $2.33 per share, driven by a recovery of capital investments and strong load growth. At the holding company, the loss was $29 million or $0.15 per share, slightly higher year-over-year due to increased interest expense, partially offset by a onetime legacy midstream benefit. Fourth quarter details are included in the appendix.

Our service area continues to perform well. Customer growth was just under 1% and weather-normalized load grew approximately 7%, reflecting strong local economies and the strength of our sustainable business model, low rates, reliable service and communities that continue to attract investment.

Turning to 2026. We are guiding to consolidated earnings of $2.43 per share, with a range of $2.38 to $2.48. The midpoint represents a 7% increase from the 2025 midpoint. We are also setting our long-term EPS growth target of 5% to 7% and off of this higher starting point and continue to expect to deliver in the top half of the range in '27 and '28. Since becoming a pure-play electric company, we've consistently delivered at the high end of our guidance. Our track record of setting the bar higher and higher continues to compound into increased future earnings expectations.

We reliably deliver results, and over the past 10 years, we've achieved roughly 6% earnings per share compound annual growth and nearly 7% over the last 5 years. From a regulatory perspective, we plan to file a rate review in Oklahoma this summer with new rates in '27. We're also evaluating a potential filing in Arkansas by year-end.

Looking at growth drivers, we expect customer count to increase about 1% and weather-normalized load to grow 4% to 6% in 2026. This builds on a strong 5-year trend with total retail weather-normalized load up more than 24% since 2021.

Turning to financing. We expect to issue approximately $300 million of debt at the electric utility this year with no long-term debt issuance planned at the holding company. As a reminder, we issued equity last November to support the roughly $1 billion of incremental CapEx we added to our plan through 2030. This transaction, including the forward satisfies our equity needs through 2030 under the current plan. Our balance sheet remains a key strength. We expect FFO to debt of approximately 17% through 2030. We are targeting a 60% to 70% dividend payout ratio with a stable and growing dividend.

Earnings per share growth is expected to grow faster than dividends to support this goal. As always, we'll evaluate our plan each year in light of the company's growing investments. As we look ahead, 2026 includes several important catalysts, growth in our customer base and policy changes of the Southwest Power Pool are driving increased capacity needs. In January, we issued 2 draft RFPs and 1 for bridge capacity between 2027 and 2032, and a second, all-source RFP for accredited capacity available for 2032. We expect bid selection in the third quarter followed by preapproval filings before year-end.

Supporting that process, we issued a draft IRP identifying approximately 1.9 gigawatts of capacity needs by 2031, about 800 megawatts of that increase is driven by SPP policy changes. This 1.9 gigawatt need is incremental to the 300 megawatts from the Frontier energy storage project and we are seeking preapproval for in Oklahoma and Arkansas.

On transmission, SPP has finalized its 2025 ITP portfolio. OG&E was directly assigned a significant portion of the seminal to Shreveport 765 kV line. We were also allocated several additional transmission and substation projects. Next steps include developing refined project estimates and schedules for all of the 25 ITP projects. In the second half of the year, we would expect to accept NTCs and add the projects to our investment plan. Taken together, we see a compelling set of long-duration investment opportunities incremental to our plan. We'll be prudent by balancing affordability and execution, and we'll update you on capital and financing as projects receive approvals.

In closing, we remain confident in our financial plan with disciplined execution and a clear investment road map, we are well positioned to deliver results in the top half of our 5% to 7% EPS growth range through 2028 with meaningful upside ahead. It's an exciting path forward, and we're proud to support the customers and communities we serve.

With that, we'll open the line for your questions.

[Operator Instructions] Our first question today will be coming from the line of Shaw Perez of Wells Fargo.

This is Whitney Matalan on for Shaw. Great quarter. So investors can see the investment plan, and you've been clear you're funding major projects such as Horseshoe Lake but it's harder to translate that into a rate base trajectory without more explicit disclosure and timing and recovery mechanics. What's the best way to think about rate base growth versus the investment plan? Is it fair to assume a relatively tight linkage? Or are there meaningful timing recovery dynamics that make the conversion lumpy?

Yes. So great question. So we do have a slide towards the end of our packet that's got our investment plan laid out the current plan, and we've got a footnote on there that under that plan, that indicates rate base growth of about 9%. So obviously, in our remarks today, we talked about a lot of opportunities that would be incremental to that. But the plan as laid out on that slide equates to 9%. Does that help?

Yes, yes, that totally makes sense. And given that backdrop, your 4Q materials and recent Oklahoma discussions have emphasized outsized load growth and just a deeper large load opportunity set, along with the '26 outlook, what specifically has changed since the last update within the large load panel like how much is contracted, committed versus still in the advanced pipeline stages?

Yes. I don't think anything has changed. We still are in active negotiations with 6 to 7 large load customers in various stages. What we did disclose today is the customer X that's been identified in our IRP plans. We are finalizing those agreements, and we expect to have that filed with the commission along with a large low tariff by midyear. So in terms of what has changed, I think that is nearing the conclusion.

And our next question coming from the line of Julien of Jefferies.

It's Brian is from Lake Julian. Versus the 7.2% in 2025. I was just wondering if you can maybe break down the key customer class drivers. I'm sure the the commercial/crypto class has something to do with it.

Yes. Brian, I think this is really indicative of what we talked about all along in that these loads are not always super, super steady, and that there's some ebb and flow to that. So what I think I highlighted in my remarks is that when you look over a little broader scale since '21, we averaged about 5%, and going forward, that's kind of right what we're seeing this year. So in the grand scheme of things, I see us really quite in line with that. Again, you think about it really abnormally strong trend line relative to history. And then with the catalysts that we have going forward, clearly, that's a good positive sign going forward.

Okay. Good. So nothing structurally changed and it is also ex large data center customers.

Yes. So definitely, as Sean indicated, much more certainty around customer x as we prepare to finalize that.

Okay. Good. And could you comment on the disclosure in the IRP section of the 10-K regarding the Black Cattle energy storage capacity purchase agreement that was terminated due to some sort of event default. And I'm just curious, not knowing the details, but does that kind of support kind of the least cost, least risk scenario of more utility generation ownership in these 2 pending RFPs?

I think it does, Brian. I think we've been a strong proponent of being the owner and the operator of these assets, we're good at it. And we see how they perform in extreme conditions, and we want the ball, and this situation here, I think, to your point is exactly right. It just further validates that thesis.

Okay. Great. And then just lastly, the disclosure on the $7.3 million billion base capital plan, it still seems like you might evaluate capital prioritization, maybe pushing out some transmission and distribution spend due to kind of create some room for some more generation capacity to manage rates and the affordability narrative. Is there any more detail you can provide there because you have not done that yet?

Yes. I think we have tremendous flexibility in allocating capital, and we're certainly focused on the overall affordability metric because that's really what's been fueling this growth we're seeing in our service territories. So we're balancing all that. What Chuck was talking about though is, as you look forward, we are going to be looking for additional generation. We're going to be working through this transmission line when we get those finalized, we'll layer those in at that point. So that's probably the data point or the time period where you got to look for if we were to make any changes what they would be.

The next question is come from the line of Adela Gandi or Research.

I just wanted to start on the 765 kV transmission line. I believe SVP came out with a $2.4 billion estimate for that particular line. Recognize you're still going through updating the cost estimates and time line. But can you give us some initial sense of what OGE's portion of that project would be relative to the .

Yes, is -- thanks for the question. So I think, first of all, you laid it out exactly right. We're very early in the stages on that. The SPP just made that designation, which we hold heartedly supported. So I think we've got some work to do to kind of get through those points. But as I mentioned in the remarks, it's that line, and there's some other associated work. So I think at this kind of preliminary stage, I see it as probably something that's on the order of 20% of our current capital plan. But again, that's a preliminary kind of feel, and we will work with the SPP to fine-tune that and hope to get that buttoned up before the end of the year.

Yes. Aditya, this is Sean. Just 1 other point. The routing is still to be determined. And the direct routing of that line. So this will all get fleshed out, and we'll certainly disclose that later in the year.

Understood. That's helpful. And then I also wanted to touch on the data center contract that you're finalizing. Can you just remind us, for this 1 gigawatt, do you intend to meet those capacity needs for the RP process process that you're running right now as well as generation that's already in your plan? And then maybe can you just speak to some customer protections that you're building into that large low tariff framework?

Yes, Aditya. Yes, those -- so that contract, that customer is worked into the IRP numbers that was released today. So we do intend to approach that holistically through the RFP process. In terms of customer protections, it's -- we've been very clear on this ever since customer X has come up. In terms of customer protections that ensure that, that large customer pays its fair share, has minimum terms, collateral requirements all those types of things that you would expect. And we'll be happy to share more details around that once that regulatory filing gets made.

Our next question is coming from the line of Chris Hark of Mizzho.

This is Chris on for Anthony. How are you? My question is pretty similar to the last one, but I just want to get a little more insight on the customer class breakdown in the 4% to 6% number? And how much of that is being driven by customer X and then also the retail class?

So Chris, we don't have a whole lot of detail broken down in our filing. But what I can tell you is that customer really doesn't come on this year, right? So that's a little bit further out than this year. So that's not driving the 4 to 6 million. Other -- the key areas, obviously, we look at the residential is definitely a bellwether class, and we kind of see that as definitely as steady as always. So hopefully, that gives you a little bit of insight there. But customer X is not in that 4% to 6% for this year.

Super helpful. And then the next question I have was just -- more about the election and with Hyatt term ending in this upcoming January next year. What are your thoughts on the turnover in the commission and just the elections that are going on in your jurisdictions?

Great question. So there's -- we certainly have a governor's race and Attorney General's race and then we certainly have a corporation commission race. We've been involved and spoken to all the candidates. I think all the candidates for each 1 of those races would be constructive. And we'd be comfortable with, and we know that. And so I think essentially, that -- those races will be determined, I would expect in the June primary and we'll probably have a good idea of who the governor and the Attorney General and the Corporation Commission are going to be in June.

[Operator Instructions] Next question is coming from the line of Nicholas Campanella of Barclays.

This is Michael Brown on for Nicolas Campanella. So question is, recently, Irene announced a data center in Alo,Oklahoma. And we also noticed Garda IRP has 1.9 gigawatts of do needs by 2031. Can you confirm that this opportunity in Alba is in your service territory? And how are you framing what else is needed to get to ESAs with the counterparties in your territories, if it is in your territory?

So in the -- we've had a lot of discussion since the last IRP about what large customers are in and not. And you'll recall, we had 1 customer that was not in there but just again, trying to give folks a flavor of the type of customers we've been having discussions with. So this update of the IRP does not have another customer similar to customer X in it. Again, we are talking with other counterparties. But again, just keeping with our prudent conservative bent, we haven't included any of those at this time. So really, when you're looking at that 1.9%, recall that last year, we were solving for 2030 capacity needs. And the way our IRP works is we have a 5-year action plan. So we've essentially just shifted that out 1 year. And when you look at the impact of shifting it out 1 year, our load is up because of that.

The Black Kettle resource that we talked about earlier, moving that out that was in there before, and then just some kind of general odds and ends on the load forecast, that's what gets you to that number as well as the SPP policy changes that were enacted this year. That was about 800 megawatts. So a pretty substantial change there, too.

You said you plan to have a DC deal by midway through this year. How are you thinking about current legislation impacting that? And what your customers -- what does this customer need, whether it's permitting, water permitting to properly move forward with EFI?

Yes. Good question. So in terms of the first part of that, in terms of the legislation that seems to be popping up in every jurisdiction, we're certainly involved in that process, engaged in that dialogue and we'll stay focused on to make sure that there's adequate protection for the existing customers. In terms of customer X, what things they need to do to kind of move forward, I think the gating item that, quite frankly, is just finalizing our agreement. We're in pretty good shape.

Actually, I just have 1 more. With your rate base -- I just have 1 more question, Patrick, I'm sorry. With your base CAGR already at 9% and dilution at roughly 0.75% and coupled with the upside CapEx, I'm curious as to why your growth isn't better than 6.5%?

Yes. I think good question. And so what we try to do is make sure that we lay out for you exactly what has been approved through the regulatory arenas with a financing assumption. And so that is the assumption we -- those are the assumptions we put forward to you today. What we've highlighted is when we received. The final clarification on the total numbers around the ITP projects at the SPP, we will layer that in and tell you how we're going to finance it. When we receive approval for all of the generation that's coming out of these RFPs.

We will show you what that is, the time line and how we're going to finance and the earnings impact. So that's how we're doing that. We will layer these in. And obviously, that will have an impact on earnings.

And the next question is coming from the line of Steve D’'mbrisi of RBC Capital Markets.

Sean, I dialed in to Steve this time, so I didn't get a Stephanie. We noticed the same I figured I'd let you know. Yes. So just following up on the same line of questions. Obviously, I understand that you guys are a very conservative management team. But I just want to look, there are people in your service area. It seems like service territory, it seems like who are talking about having power secured? And just so can you talk about like what the time line is or what it looks like when you'll go to update -- the Street on potential other customers other than customer X, for example, because it just feels like there are, there is load out there that is substantial relative to your peak and that you may have to build for. And I just want to try and understand like how we have to feather that in over time.

Yes. I mean, to kind of put it in perspective, in our remarks, we said by the end of the decade, we'll add at 2.3 gigawatts and then the IRP is calling for another $1.9 million. So it's pretty substantial. I think what's going to have these large load customers as they materialize and we have line of sight to the finish line, we're going to announce it, and just like we did with Customer X here to give you some timeline. But 1.9 gigawatts is a lot to have in by the winter of 31, 32.

Yes. Totally understand. Not saying that's not a lot but it seems like there's even more.

No, I think you have to draw the line somewhere, Steve. And -- and so is -- and we're out there all the time talking to different people. I wrote the elevator this morning with somebody and they're telling me about another opportunity. So they're out there, and we're working hard to secure on.

Thank you. And that concludes today's Q&A session. I would like to turn the call back over to Sean Troska. Please go ahead.

Great. Thank you, and thank you, everyone, for joining us today as well as your continued support. Take care, and have a wonderful day.

This concludes today's program. Thank you so much. You have a great day. You may now disconnect.

Good day, and thank you for standing by. Welcome to the Third Quarter 2025 OGE Energy Corp. Earnings Conference Call. [Operator Instructions] Please be advised today's conference is being recorded. I would now like to hand the conference over to your speaker today, Jason Bailey. Please go ahead.

Thank you, Kevin, and good morning, everyone, and welcome to our call. With me today, I have Sean Trauschke, our Chairman, President and CEO; and Chuck Walworth, our CFO. In terms of the call today, we will first hear from Sean, followed by an explanation from Chuck of financial results. And finally, as always, we will answer your questions. I'd like to remind you that this call -- this conference is being webcast, and you may follow along at oge.com. In addition, the conference call and accompanying slides will be archived following the call on that same website. Before we begin the presentation, I'd like to direct your attention to the safe harbor statement regarding forward-looking statements. This is an SEC requirement for financial statements and simply states that we cannot guarantee forward-looking financial results, but this is our best estimate to date. I will now turn the call over to Sean for his opening remarks. Sean?

Thank you, Jason. Good morning, everyone, and thank you for joining us today. It's certainly great to be with you. We again delivered strong results in the third quarter, and we remain on track to deliver on our commitments. This morning, we reported consolidated earnings of $1.14 per share, including electric company earnings of $1.20 per share and a loss at the holding company of $0.06. Our solid performance is driven by continued operational excellence, laser-like focus on the customer and constructive regulatory outcomes.

As we head into the remaining 2 months of 2025, we remain confident in our plans to deliver in the top half of our earnings guidance range. As you know, on the regulatory front, we have a preapproval request in Oklahoma and expect an order in a few weeks. This will allow us to move forward with building 450 megawatts of natural gas generation, which should be operational by 2029. As a reminder, we have approximately 550 megawatts of combustion turbines under construction now, which will be operational next year on time and on budget. When Horseshoe Lake Units 13 and 14 come into service in 2029, we will have added approximately 2,000 megawatts over an 11-year period, and we anticipate more to come. When filing the preapproval case, we indicated that this was the first step of many.

In the filing, we updated our integrated resource plan, which showed we are still solving for our customers' future generation needs. We are now negotiating with existing bidders from the remaining from the last RFP, and we anticipate issuing more RFPs in future filings to address our customers' needs. We notified Oklahoma customers this week that they will see a decrease in their monthly bill with a reduction in the fuel cost adjustment beginning November 1. The average residential customer bill will be approximately $6.75 lower per month. Our customers benefit from OG&E having some of the lowest rates in the nation. We understand the competitive advantage our low rates offer, and it's one reason our demand has grown so consistently year-over-year.

We do everything we can to ensure our rates remain low in the future so that we can sustain the growth of the company and the communities we serve. While the electric power industry is entering an exciting new era, OG&E is uniquely positioned at the forefront. We've been experiencing load growth that far surpasses national trends and data center load will certainly be incremental to our already strong load growth. At the heart of that growth for OG&E is affordability. It's not a new concept to us. It's key to our community success and central to our planning as we move ahead. Over the past decade, we've delivered a 6% EPS CAGR, which is great news for our investors. Equally important for our customers, it's worth highlighting that our nonfuel rates have increased at less than half the rate of inflation during this time.

In a period when the cost of living continues to rise, we focused on what we can control, helping our customers and communities manage costs while supporting growth and reliability. As we build on our strong growth and performance, we experienced growing interest in our service area from data centers. Negotiations and conversations are progressing, and we hope to have something to share in the near future. Turning to economic development. We continue to see diversified business growth, including commercial and industrial. And just a couple of weeks ago, we celebrated the grand opening of a major expansion project for plastics manufacturer, which added 4.5 megawatts of load and created hundreds of jobs in Shawnee, Oklahoma. Our economies remain strong with unemployment in Oklahoma and Arkansas continuing to outpace the national average. For the 48th straight month, Oklahoma City unemployment rate is below 4% and Oklahoma's overall job growth is driven by gains in education, health care and construction.

The Council for Community and Economic Research ranked Oklahoma City as the most affordable among large cities in the U.S., a competitive advantage for continued growth. And our rates are a factor in keeping Oklahoma and Arkansas consistently ranked high for affordability. As I close, I want to emphasize that the business is doing very well. We've just completed another strong quarter, and I'm excited about the future. We remain confident in our ability to deliver on our commitments while continuing to grow the business. And as I mentioned, we have many positive updates to share in the quarters ahead. Thank you. I'll now turn the call over to Chuck. Chuck?

Thank you, Sean, and thank you, Jason, and good morning, everyone. We're 3 quarters through the year, and our steady execution positions us to deliver results in the top half of our 2025 earnings guidance range. It's our execution that will lead us to continued long-term success. I'm excited to review our financial performance with you today. Starting on Slide 5. For the third quarter, consolidated net income was $231 million or $1.14 per diluted share compared to $219 million or $1.09 per share last year. In our core business, the electric company achieved net income of $243 million or $1.20 per diluted share compared to $225 million or $1.20 per share last year.

The main driver of the year-over-year increase in net income was increased recovery of capital investments. Milder weather this summer compared to last year and higher O&M and income taxes partially offset the increase. The holding company reported a loss of $12 million or $0.06 per diluted share compared to a loss of $6 million or $0.03 per share last year. The change was primarily attributed to higher income -- interest expense, partially offset by an income tax benefit.

Let's turn our attention to our 2025 financial plan update on Slide 6. Year-over-year customer growth continued its healthy multiyear pace and was just under 1% in the third quarter. Our weather-normalized load growth was historically strong once again at 6.5% through the third quarter compared to the same period last year. We expect total retail normalized load growth of approximately 7.5% in 2025. Our execution keeps us firmly on plan to deliver on our consolidated earnings commitment. We continue to expect to be in the top half of 2025's earnings guidance range. Sean discussed how our local economies and communities are strong and our intentional efforts around economic and business development provide important support for growth.

In each quarterly update, we highlight how our sustainable business model works by attracting new customers to our service area with low rates and reliable electric service, helping our communities to grow and prosper. We've updated our capital plan to include the Fort Smith to Muskogee transmission line, which will address reliability and capacity issues in the Fort Smith, Arkansas area. This $250 million project is planned to go into service in 3 phases in 2027, '28 and '29. This higher voltage line will be primarily recovered through our FERC formula rate, and we have received approval to utilize CWIP recovery during construction of the project. The updated capital plan is included in the appendix.

Our financial position remains strong. Our balance sheet is one of the strongest in the industry and is an important competitive advantage, one we are committed to maintaining. We have requested CWIP recovery on Horseshoe Lake Units 13 and 14. The use of CWIP has important dual customer benefits; first, by reducing the long-term cost to customers; and second, by supporting the balance sheet during the construction phase of projects. As I close, let's review our guiding financial objectives. As we grow the company, we will maintain our competitive low rate advantage by focusing on our cost structure, minimize the time between investments and the return and recovery and grow the company by maintaining a highly credible total return proposition for our shareholders.

We've made great progress so far this year. Our steady execution keeps us on track to deliver in the top half of this year's guidance range. Our load growth remains historically strong. We've reached a settlement with a number of parties in the Oklahoma preapproval request. If approved, we will move our planned Oklahoma rate review from the end of this year to the second half of next year, and we will continue to assess the timing of the next rate review in Arkansas. We've updated our capital plan for the Fort Smith to Muskogee transmission line. Additional updates to our capital and financing plans will follow a determination in the preapproval case.

And finally, our results keep us as confident as ever in our ability to achieve a consolidated earnings growth rate of 5% to 7% based on the midpoint of our 2025 guidance. The strength of the current year's plan allows us to focus on the future, address our customers' expectations of a safe and reliable system and to deliver power at some of the lowest rates in the nation. As always, the foundation of our success is grounded on the dedication of our employees and their ability to get the job done. That concludes our prepared remarks, and we'll now open the line for your questions.

[Operator Instructions] Our first question comes from Shahriar Pourreza with Wells Fargo.

It's actually Constantine here for Shar. That's great to be back. Maybe starting off on the CapEx needs. We have the $250 million update today. And as we're building to the fourth quarter update, kind of with the pre-approval settlement out there and another 800 megawatts in the IRP, how quickly do you think those elements start rolling into plan? And is there kind of any acceleration in the RFP process that you're seeing kind of to address some of those needs?

Yes. Thanks, Constantine. This is Sean. I like that characterization there of rolling. I think that's how we're thinking about it. We're anticipating this approval for -- under the preapproval in a couple of weeks here, and then we're going to layer that in there. And then we're probably going to make some additional filings, as I mentioned in my remarks, with -- coming out of the last RFP. We'll make that filing. When we get approval for that, we'll layer that in there. We'll probably commence a new RFP to kind of continue down that road. And so I think your characterization of rolling, I think you should just consider it a continuous flow of updates.

Okay. So versus kind of the fourth quarter that we've typically seen, we should expect more periodic updates, right?

Yes. You'll see -- I mean, you'll see the normal update in the fourth quarter that should improve the approval of the last filing and it include the customary updates we always do. And then in addition to that, these generation adds, we'll add those as we receive approval.

Okay. Perfect. And in terms of the new regulatory constructs kind of that are in place now, how significant is the impact on that ROE lag, if you can quantify it at all? And do you anticipate including some of these benefits in '26 planning assumptions?

Yes. Constantine, it's -- I think we've always had a really good track record on minimizing lag on earned ROE. So this is obviously just accretive to that. You can see some of those impacts as disclosed in our 10-Q today in terms of some of those benefits, and we'll definitely lay that out whenever we come up with guidance for next year.

And just the last one related to kind of that '26 update, kind of given the ramp schedules for that C&I load, do you see the '26 load growth being higher than your planning assumptions as you roll into that year?

We'll bring you a full update in February. But clearly, we don't see any changes in the fundamentals that are driving the results that we see in our service area. But we'll address that fully in our February call.

Right, okay. And year-to-date has been healthy, so...

Next question comes from Julien Dumoulin-Smith with Jefferies.

It's Brian Russo, on for Julien. Just it's nice to see you add the SPP project to the CapEx. Could you maybe talk about the upcoming 2025 SPP ITP plan? I think there are expectations that it could be nearly double the 2024 plan. And I was just curious, it seems as if Oklahoma is one of the faster-growing states in SPP. So I'm just wondering what your competitive position is there to pursue more projects like the one you just added to CapEx.

Yes. Brian, this is Chuck. It's obviously something that we're very closely involved with our team at the SVP in that process. Yes, you're right. I think that they're looking at a pretty robust plan, but there's still a couple of milestones, a couple of SPP Board meetings that, that's got to go through before we really have something that we can give you a firm idea as to what the opportunity set really looks like. So it's an exciting area, I think, but more to come.

Okay. Great. And then I think as part of the pre-approval settlement filing, you plan to file a large load tariff with your next rate case. I was just curious, I assume that the contract negotiations are still going on with the Google Stillwater project.

Yes. I think that was the requirement in the settlement to file that large load tariff. But to the extent that we've finalized an agreement before then, we'll file it then.

Okay. Great. And then lastly, is the new load growth outlook of 7.5% for 2025, is that now at the low end of your prior range? Just wondering what's driving that.

Yes. So you're right. But as we've said kind of all along, some of these loads that we have are a little chunky and the timing can kind of -- it's really hard to nail it down, whether it's the start of this quarter, the beginning of next quarter. And so we've got a little bit of timing going on there. We have one customer in particular that's coming in about a quarter later than anticipated. So just really mainly a timing issue.

Our next question comes from Stephen D’Ambrisi with RBC Capital Markets. My apologies -- I apologize.

That's all good. That's all good.

We're going to enjoy that one for a while.

I know you will, Sean. I know -- it couldn't happen on a better call. I'm not going to lie...

Welcome back. Good to hear from you.

Good to hear from you too. Appreciate you guys let me on. Yes. So just quickly, a follow-up on how you guys are going to meet the 850-megawatt shortfall or capacity need that you have by 2030. Just when I'm thinking about where -- I think you have some of the RFP results still outstanding, but they feel like they might be a little stale now at this point.

And I know you're ongoing -- you have discussions ongoing. But do you think it's likely that you can get material capacity out of the prior RFPs? Or do we have to run new RFPs to really make up most of that capacity deficit? And then just like how long does that take to run a new RFP? Like what's the timing around announcements there?

Yes. So great question. And so the answer to your first question, yes, we do believe we have some capacity opportunities in the current RFP. And yes, we will file a new RFP to kind of meet this need. And this -- that 800 megawatts you referenced there, that largely depends on the ramp rate of "this customer X" that we disclosed in the IRP.

And so that's kind of a give or take number 2 in terms of how quickly or how slowly, you get to that number in 2030. But nevertheless, I think it's an answer of yes to both those questions. Yes, we're going to get some out of that last RFP. And yes, we're going to file a new RFP. And I would expect that the second RFP to move along at a quicker pace. We've kind of got it nailed down now, and I think everybody understands the rules.

Okay. That makes a lot of sense to me. And then just on the -- you covered the sales growth well. I kind of figured that it was timing. But just like -- just looking at where you're at year-to-date, I think sales growth is 6.5% year-to-date and you're still guiding to 7.5%. So I mean that implies a significant acceleration right into the fourth quarter. And then just, I guess, how does that set us up for sales growth into 2026, right? Because effectively, you're delaying customer. So all things equal, it should drive higher sales growth year-over-year into the back -- into next year?

Yes, Steve, I think your points are right. I mean we've seen this chunky growth before and how that can impact any particular quarter on an outsized manner. And obviously, you can kind of do your own math as to how that plays in the future years. But again, we'll be prepared to thoroughly discuss that with you at the next call.

Okay. That's all I had. I hope you guys get a kick out of that. I'm glad that it's going to be kept forever on the Internet. So love that...

[Operator Instructions] Our next question comes from Chris Hark with Mizuho.

I just had a question regarding the dividend growth rate. Should we be expecting that to be in line with the EPS CAGR?

Yes, Chris. So we've been very intentional about the dividend growth rate really in relation to the opportunity set that we've had for investments. So the past several years, we have kind of bifurcated the rates of those 2 with the dividend growing a little lower, and we're basically targeting growing into a 65% to 70% payout ratio. And so we're well on our way to getting to that target. And once we get to that target, we'll kind of reassess where we are versus, again, the opportunities that we have out there and make that capital allocation decision at that time.

Okay. Awesome. And then next question I had was really just around the cadence of rate filings. So if you push that back to second half of '26, should we be expecting that kind of similar time of year for the next 2 years through the 2-year period off the forecast period?

Yes. I guess I would say that really nothing has changed. Our philosophy maintains to be the same as it was. But clearly, this was part of the give and take of the negotiations for settlement agreement. So yes, we -- if approved, we would shift that forward per the terms of the settlement agreement. But I think going forward from that, we would still be operating under the same philosophy that we have been.

Our next question comes from Aditya Gandhi with Wolfe Research.

Can You hear me? Just maybe starting with the CapEx increase to your plan, the $250 million. Chuck, you've been clear that any capital increases will have an equity component to it and recognize that you'll sort of communicate your financing plans with the Q4 update. But are you willing to share sort of a rough rule of thumb for this $250 million? Should we assume it's 50-50, lesser than that? Just any color there?

Yes. Aditya, I think the plan remains the same. We thought it was only right to go ahead and roll this project in now since it's signed up. But with the -- really the biggest of the increase still pending out there, we're going to hold and get approval on that, and then we'll give you that clarity that we've been describing all along.

Got it. And then maybe just one on the data center front. Sean, you mentioned in your prepared remarks that you sort of hope to share updates soon or sort of in the coming quarters. Can you maybe give us more color on sort of what stage of discussions you're in? Is it reasonable to say that the discussions are at advanced stages now? And then can you just remind us how any potential announcement you make on the data center front would interplay with a special contract or data center tariff filing at the commission? And then how you sort of serve the capacity needs associated with any potential data center customer?

Yes. There's a lot in there. I think it's fair to characterize that we are in very serious negotiations. And I think my prepared remarks were optimistic that we would be in a position to announce something soon. In terms of the filing, yes, there would be some sort of announcement, and we would certainly follow that up with some sort of filing with the commission for approval of all that.

So I think that's normal and customary. In terms of your question about the capacity, how we'll fill that need. In our last IRP, we did provision for that and been thinking about that. Again, a lot of that goes back to kind of how the counterparty contemplates a ramp rate and what they're thinking in terms of that, in terms of meeting that capacity obligation, but I feel confident we're going to be able to meet that.

[Operator Instructions] Our next question comes from Nicholas Campanella with Barclays.

I just have one question. If you roll in the pre-approval generation and data center and the possible data center deal, how would that really increase your long-term EPS CAGR? Or are you just more confident in the 5% to 7% range?

Yes, I think all along, we've been looking at our 5% to 7% is in solid shape regardless of this deal or any other deal. And our philosophy really is that we take a good look at where we are every year before we put guidance out. And kind of like this year, we might choose to alter the trend line from the previous year, so to speak, and address it in that manner. So I think that's really more indicative of the philosophy that we have and the way that we've treated it in the past. So hopefully, that gives you a little color as to how we're thinking about it.

And I'm not showing any further questions at this time. I'd like to turn the call back over to Sean for any further remarks.

Okay. Thank you, Kevin. Well, thank you all for joining us today. I hope everyone has a great day and look forward to seeing everyone soon.

Thank you, ladies and gentlemen. This does conclude today's presentation. You may now disconnect and have a wonderful day.