OGE Energy Corp (NYSE:OGE) Q2 2022 Earnings Conference Call August 4, 2022 9:00 AM ET Corporate Participants Jason Bailey - Director, Investor Relations Robert Trauschke - Chairman, President and Chief Executive Officer Bryan Buckler - Chief Financial Officer Conference Call Participants Constantine Lednev - Guggenheim Partners Cody Kiechle - Bank of America Insoo Kim - Goldman Sachs Brandon Lee - Mizuho Group Gregg Orrill - UBS Operator Good day and thank you for standing by. Welcome to the OGE Energy Corp ...

[FORM 10-Q Filing Details](index=1&type=section&id=FORM%2010-Q%20Filing%20Details) This section details the Form 10-Q filing specifics for OGE Energy Corp. and Oklahoma Gas and Electric Company - Filing Type: Quarterly Report (Form 10-Q) for the period ended June 30, 2022[1](index=1&type=chunk) - Registrants: OGE Energy Corp. (Commission File Number 1-12579) and Oklahoma Gas and Electric Company (Commission File Number 1-1097)[1](index=1&type=chunk) - OGE Energy Corp. Common Stock: Trading Symbol **OGE**, registered on New York Stock Exchange[3](index=3&type=chunk) - Filer Status: OGE Energy Corp. is an Accelerated Filer; Oklahoma Gas and Electric Company is a Non-accelerated filer[5](index=5&type=chunk) Shares Outstanding (June 30, 2022) | Registrant | Shares Outstanding | | :--------- | :----------------- | | OGE Energy Corp. | 200,202,672 shares | | Oklahoma Gas and Electric Company | 40,378,745 shares (all held by OGE Energy Corp.) | [Table of Contents](index=2&type=section&id=TABLE%20OF%20CONTENTS) This section describes the overall structure of the report, including its main parts and key financial and informational sections - Report Structure: Divided into Part I - Financial Information (Items 1-4) and Part II - Other Information (Items 1, 1A, 2, 6)[8](index=8&type=chunk) - Key Sections: Includes Financial Statements, Management's Discussion and Analysis, Market Risk, Controls and Procedures, Legal Proceedings, Risk Factors, and Exhibits[8](index=8&type=chunk) [Glossary of Terms](index=3&type=section&id=GLOSSARY%20OF%20TERMS) This section provides definitions for abbreviations and key terms used throughout the Form 10-Q - Purpose: Provides definitions for abbreviations used in the Form 10-Q[10](index=10&type=chunk) - Examples: Includes terms like APSC (Arkansas Public Service Commission), FERC (Federal Energy Regulatory Commission), GAAP (Accounting principles generally accepted in the U.S.), OCC (Oklahoma Corporation Commission), OG&E (Oklahoma Gas and Electric Company), and OGE Energy (OGE Energy Corp.)[11](index=11&type=chunk) [Filing Format](index=4&type=section&id=FILING%20FORMAT) This section clarifies the combined filing structure and responsibilities for OGE Energy and OG&E, including debt obligations - Combined Filing: Separately filed by OGE Energy and OG&E[14](index=14&type=chunk) - Responsibility: Each Registrant is responsible for its own information; OG&E makes no representation for other OGE Energy affiliates[14](index=14&type=chunk) - Debt Obligations: OGE Energy and its non-OG&E subsidiaries have no obligation for OG&E's debt securities, and vice versa[14](index=14&type=chunk) [Forward-Looking Statements](index=4&type=section&id=FORWARD-LOOKING%20STATEMENTS) This section identifies forward-looking statements, outlines associated risks, and clarifies the registrants' non-obligation to update them - Nature of Statements: Forward-looking statements are identified by words like "anticipate," "believe," "expect," and are subject to risks, uncertainties, and assumptions[16](index=16&type=chunk) - Risk Factors: Factors that could cause actual results to differ include general economic conditions, capital market access, rate relief, commodity prices, competition, technological advancements, weather, environmental laws, regulatory decisions, and geopolitical events (e.g., COVID-19, hostilities)[17](index=17&type=chunk)[19](index=19&type=chunk) - No Obligation to Update: Registrants undertake no obligation to publicly update or revise forward-looking statements[18](index=18&type=chunk) [Part I - Financial Information](index=6&type=section&id=PART%20I.%20FINANCIAL%20INFORMATION) This part presents the comprehensive financial information, including unaudited statements, management's discussion, market risk, and controls and procedures [Item 1. Financial Statements (Unaudited)](index=6&type=section&id=Item%201.%20Financial%20Statements%20(Unaudited)) This section presents the unaudited condensed financial statements for OGE Energy Corp. and its subsidiary, Oklahoma Gas and Electric Company (OG&E), including statements of income, comprehensive income, cash flows, balance sheets, and changes in stockholders' equity. It also includes combined notes detailing significant accounting policies, regulatory matters, and other financial disclosures [OGE Energy Corp. Consolidated Condensed Financial Statements](index=6&type=section&id=OGE%20Energy%20Corp.%20Consolidated%20Condensed%20Financial%20Statements) This section presents the unaudited consolidated condensed financial statements for OGE Energy Corp [Condensed Consolidated Statements of Income](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Income) This section presents OGE Energy Corp.'s unaudited condensed consolidated statements of income OGE Energy Corp. Condensed Consolidated Statements of Income (Unaudited) | Metric (In millions, except per share data) | Three Months Ended June 30, 2022 | Three Months Ended June 30, 2021 | Six Months Ended June 30, 2022 | Six Months Ended June 30, 2021 | | :---------------------------------------- | :------------------------------- | :------------------------------- | :------------------------------- | :------------------------------- | | Operating revenues | $791.0 | $564.5 | $1,369.1 | $2,185.5 | | Fuel, purchased power and direct transmission expense | $393.3 | $200.0 | $649.0 | $1,546.8 | | Operating income | $156.6 | $129.5 | $239.7 | $178.1 | | Gain (loss) on equity securities | $(39.6) | — | $242.7 | — | | Equity in earnings of unconsolidated affiliates | — | $33.5 | — | $86.7 | | Net income | $73.1 | $112.9 | $352.6 | $165.6 | | Basic Earnings Per Average Common Share | $0.37 | $0.56 | $1.76 | $0.83 | | Diluted Earnings Per Average Common Share | $0.36 | $0.56 | $1.76 | $0.83 | - Net income decreased by **$39.8 million** (from $112.9 million to $73.1 million) for the three months ended June 30, 2022, compared to the same period in 2021[22](index=22&type=chunk) - Net income increased by **$187.0 million** (from $165.6 million to $352.6 million) for the six months ended June 30, 2022, compared to the same period in 2021[22](index=22&type=chunk) [Condensed Consolidated Statements of Comprehensive Income](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Comprehensive%20Income) This section presents OGE Energy Corp.'s unaudited condensed consolidated statements of comprehensive income OGE Energy Corp. Condensed Consolidated Statements of Comprehensive Income (Unaudited) | Metric (In millions) | Three Months Ended June 30, 2022 | Three Months Ended June 30, 2021 | Six Months Ended June 30, 2022 | Six Months Ended June 30, 2021 | | :------------------- | :------------------------------- | :------------------------------- | :------------------------------- | :------------------------------- | | Net income | $73.1 | $112.9 | $352.6 | $165.6 | | Other comprehensive income, net of tax | $0.9 | $0.7 | $8.7 | $4.2 | | Comprehensive income | $74.0 | $113.6 | $361.3 | $169.8 | [Condensed Consolidated Statements of Cash Flows](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) This section presents OGE Energy Corp.'s unaudited condensed consolidated statements of cash flows OGE Energy Corp. Condensed Consolidated Statements of Cash Flows (Unaudited) | Metric (In millions) | Six Months Ended June 30, 2022 | Six Months Ended June 30, 2021 | | :------------------- | :------------------------------- | :------------------------------- | | Net cash provided from (used in) operating activities | $8.1 | $(767.8) | | Net cash provided from (used in) investing activities | $173.7 | $(356.8) | | Net cash (used in) provided from financing activities | $(176.9) | $1,123.5 | | Net change in cash and cash equivalents | $4.9 | $(1.1) | | Cash and cash equivalents at end of period | $4.9 | — | - Operating cash flow improved significantly by **$775.9 million**, primarily due to decreased vendor payments, including those for Winter Storm Uri fuel costs in 2021[191](index=191&type=chunk)[192](index=192&type=chunk) - Investing cash flow increased by **$530.5 million**, driven by proceeds from the sale of Energy Transfer's limited partner units, partially offset by increased power delivery investments at OG&E[191](index=191&type=chunk)[192](index=192&type=chunk) - Financing cash flow decreased by **$1,300.4 million**, mainly due to lower proceeds from long-term debt and decreased short-term debt compared to 2021[191](index=191&type=chunk)[192](index=192&type=chunk) [Condensed Consolidated Balance Sheets](index=9&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) This section presents OGE Energy Corp.'s unaudited condensed consolidated balance sheets OGE Energy Corp. Condensed Consolidated Balance Sheets (Unaudited) | Metric (In millions) | June 30, 2022 | December 31, 2021 | | :------------------- | :------------ | :---------------- | | Total current assets | $1,703.7 | $613.6 | | Equity securities investment in Energy Transfer | $382.0 | $785.1 | | Net property, plant and equipment | $10,118.0 | $9,832.9 | | Regulatory assets | $505.1 | $1,230.8 | | Total assets | $12,838.0 | $12,606.4 | | Total current liabilities | $2,125.4 | $1,089.6 | | Long-term debt | $3,547.6 | $4,496.4 | | Regulatory liabilities | $1,205.3 | $1,231.1 | | Total liabilities | $8,581.1 | $8,550.1 | | Total stockholders' equity | $4,256.9 | $4,056.3 | - Total assets increased by **$231.6 million** from December 31, 2021, to June 30, 2022[29](index=29&type=chunk) - Current assets increased significantly by **$1,090.1 million**, largely due to the reclassification of the Oklahoma Winter Storm Uri regulatory asset as current and increased accounts receivable[29](index=29&type=chunk)[196](index=196&type=chunk) - Total current liabilities increased by **$1,035.8 million**, primarily due to the reclassification of **$999.8 million** in long-term debt maturing within one year[32](index=32&type=chunk)[198](index=198&type=chunk) [Condensed Consolidated Statements of Changes in Stockholders' Equity](index=11&type=section&id=Condensed%20Consolidated%20Statements%20of%20Changes%20in%20Stockholders'%20Equity) This section presents OGE Energy Corp.'s unaudited condensed consolidated statements of changes in stockholders' equity OGE Energy Corp. Condensed Consolidated Statements of Changes in Stockholders' Equity (Unaudited) | Metric (In millions) | Balance at Dec 31, 2021 | Net Income (Q1 2022) | Other Comprehensive Income (Q1 2022) | Dividends Declared (Q1 2022) | Stock-based Compensation (Q1 2022) | Balance at Mar 31, 2022 | Net Income (Q2 2022) | Other Comprehensive Income (Q2 2022) | Dividends Declared (Q2 2022) | Stock-based Compensation (Q2 2022) | Balance at Jun 30, 2022 | | :------------------- | :---------------------- | :------------------- | :----------------------------------- | :--------------------------- | :---------------------------------- | :---------------------- | :------------------- | :----------------------------------- | :--------------------------- | :---------------------------------- | :---------------------- | | Total Stockholders' Equity | $4,056.3 | $279.5 | $7.8 | $(82.3) | $1.4 | $4,262.7 | $73.1 | $0.9 | $(82.1) | $2.3 | $4,256.9 | - Retained earnings increased from **$2,955.4 million** at December 31, 2021, to **$3,143.6 million** at June 30, 2022, reflecting net income less dividends[34](index=34&type=chunk) - Accumulated other comprehensive loss improved from **$(24.8) million** to **$(16.1) million**[34](index=34&type=chunk) [Oklahoma Gas and Electric Company Condensed Financial Statements](index=12&type=section&id=Oklahoma%20Gas%20and%20Electric%20Company%20Condensed%20Financial%20Statements) This section presents the unaudited condensed financial statements for Oklahoma Gas and Electric Company [Condensed Statements of Income and Comprehensive Income](index=12&type=section&id=Condensed%20Statements%20of%20Income%20and%20Comprehensive%20Income) This section presents OG&E's unaudited condensed statements of income and comprehensive income Oklahoma Gas and Electric Company Condensed Statements of Income and Comprehensive Income (Unaudited) | Metric (In millions) | Three Months Ended June 30, 2022 | Three Months Ended June 30, 2021 | Six Months Ended June 30, 2022 | Six Months Ended June 30, 2021 | | :------------------- | :------------------------------- | :------------------------------- | :------------------------------- | :------------------------------- | | Operating revenues | $803.7 | $577.4 | $1,393.0 | $2,208.0 | | Fuel, purchased power and direct transmission expense | $393.3 | $200.0 | $649.0 | $1,546.8 | | Operating income | $157.2 | $131.2 | $241.1 | $180.3 | | Net income | $100.7 | $85.1 | $139.7 | $96.3 | | Comprehensive income | $100.7 | $85.1 | $139.7 | $96.3 | - Net income increased by **$15.6 million** (**18.3%**) for the three months and **$43.4 million** (**45.1%**) for the six months ended June 30, 2022, compared to the same periods in 2021[177](index=177&type=chunk) - Operating revenues increased by **$226.3 million** (**39.2%**) for the three months, primarily due to more favorable weather and capital investment recovery[178](index=178&type=chunk)[179](index=179&type=chunk) - Operating revenues decreased by **$815.0 million** (**36.9%**) for the six months, mainly due to the elevated fuel and purchased power costs from Winter Storm Uri in 2021[178](index=178&type=chunk)[179](index=179&type=chunk) [Condensed Statements of Cash Flows](index=13&type=section&id=Condensed%20Statements%20of%20Cash%20Flows) This section presents OG&E's unaudited condensed statements of cash flows Oklahoma Gas and Electric Company Condensed Statements of Cash Flows (Unaudited) | Metric (In millions) | Six Months Ended June 30, 2022 | Six Months Ended June 30, 2021 | | :------------------- | :------------------------------- | :------------------------------- | | Net cash provided from (used in) operating activities | $32.2 | $(782.8) | | Net cash used in investing activities | $(450.8) | $(353.5) | | Net cash provided from financing activities | $423.5 | $1,136.3 | | Net change in cash and cash equivalents | $4.9 | — | | Cash and cash equivalents at end of period | $4.9 | — | - Operating cash flow improved by **$815.0 million**, primarily due to decreased vendor payments related to Winter Storm Uri in 2021[39](index=39&type=chunk) - Capital expenditures increased to **$450.8 million** from **$353.5 million** in the prior year[39](index=39&type=chunk) - Financing activities included **$332.6 million** in changes in advances with parent and **$90.9 million** increase in short-term debt[39](index=39&type=chunk) [Condensed Balance Sheets](index=14&type=section&id=Condensed%20Balance%20Sheets) This section presents OG&E's unaudited condensed balance sheets Oklahoma Gas and Electric Company Condensed Balance Sheets (Unaudited) | Metric (In millions) | June 30, 2022 | December 31, 2021 | | :------------------- | :------------ | :---------------- | | Total current assets | $1,674.8 | $605.1 | | Net property, plant and equipment | $10,111.9 | $9,826.8 | | Regulatory assets | $505.1 | $1,230.8 | | Total assets | $12,317.2 | $11,688.0 | | Total current liabilities | $1,384.4 | $575.8 | | Long-term debt | $3,497.8 | $3,996.5 | | Regulatory liabilities | $1,205.3 | $1,231.1 | | Total liabilities | $7,573.2 | $7,085.2 | | Total stockholder's equity | $4,744.0 | $4,602.8 | - Total assets increased by **$629.2 million** from December 31, 2021, to June 30, 2022[42](index=42&type=chunk) - Current assets increased by **$1,069.7 million**, primarily due to the reclassification of the Oklahoma Winter Storm Uri regulatory asset as current[42](index=42&type=chunk)[62](index=62&type=chunk) - Regulatory assets decreased by **$725.7 million**, mainly due to the reclassification of Oklahoma Winter Storm Uri costs to current assets in anticipation of securitization[42](index=42&type=chunk)[62](index=62&type=chunk) - Total current liabilities increased by **$808.6 million**, driven by increases in short-term debt, advances from parent, and long-term debt due within one year[45](index=45&type=chunk) [Condensed Statements of Changes in Stockholder's Equity](index=16&type=section&id=Condensed%20Statements%20of%20Changes%20in%20Stockholder's%20Equity) This section presents OG&E's unaudited condensed statements of changes in stockholder's equity Oklahoma Gas and Electric Company Condensed Statements of Changes in Stockholder's Equity (Unaudited) | Metric (In millions) | Balance at Dec 31, 2021 | Net Income (Q1 2022) | Stock-based Compensation (Q1 2022) | Balance at Mar 31, 2022 | Net Income (Q2 2022) | Stock-based Compensation (Q2 2022) | Balance at Jun 30, 2022 | | :------------------- | :---------------------- | :------------------- | :---------------------------------- | :---------------------- | :------------------- | :---------------------------------- | :---------------------- | | Total Stockholder's Equity | $4,602.8 | $39.0 | $0.8 | $4,642.6 | $100.7 | $0.7 | $4,744.0 | - Retained earnings increased from **$3,031.1 million** to **$3,170.8 million**[47](index=47&type=chunk) [Combined Notes to Condensed Financial Statements](index=17&type=section&id=Combined%20Notes%20to%20Condensed%20Financial%20Statements) This section provides combined notes detailing significant accounting policies, regulatory matters, and other financial disclosures for both registrants [Index of Combined Notes to Condensed Financial Statements](index=17&type=section&id=Index%20of%20Combined%20Notes%20to%20Condensed%20Financial%20Statements) This section provides an index to the combined notes, indicating applicability to OGE Energy and OG&E - Combined Presentation: Notes are a combined presentation for OGE Energy and OG&E[50](index=50&type=chunk) - Applicability: A table indicates which registrant(s) each note applies to (e.g., Note 8. Common Equity applies only to OGE Energy)[51](index=51&type=chunk) [Note 1. Summary of Significant Accounting Policies](index=17&type=section&id=Note%201.%20Summary%20of%20Significant%20Accounting%20Policies) This note outlines the significant accounting policies, including business segments, regulatory accounting, and fair value measurements - OGE Energy is a holding company with electric utility (OG&E) and natural gas midstream operations[52](index=52&type=chunk) - OG&E generates, transmits, distributes, and sells electric energy in Oklahoma and western Arkansas, regulated by OCC, APSC, and FERC[53](index=53&type=chunk) - Natural Gas Midstream Operations: Post-December 2, 2021, includes OGE Energy's investment in Energy Transfer's equity securities (less than **2%** ownership, accounted for as an equity investment at fair value); OGE Energy intends to exit this segment[54](index=54&type=chunk) - Condensed financial statements are unaudited and prepared per SEC rules, with certain GAAP information condensed or omitted[55](index=55&type=chunk) - OG&E's accounting records are maintained according to FERC's Uniform System of Accounts and are subject to accounting principles for rate-regulated activities, allowing deferral of certain costs as regulatory assets or liabilities[58](index=58&type=chunk)[59](index=59&type=chunk) Regulatory Assets and Liabilities (OG&E, In millions) | Category | June 30, 2022 | December 31, 2021 | | :------- | :------------ | :---------------- | | Total current regulatory assets | $1,041.0 | $182.6 | | Total non-current regulatory assets | $505.1 | $1,230.8 | | Total current regulatory liabilities | $4.6 | $2.5 | | Total non-current regulatory liabilities | $1,205.3 | $1,231.1 | - Oklahoma Winter Storm Uri costs (**$750.5 million**) reclassified as current regulatory assets at June 30, 2022, in anticipation of securitization completion in July 2022[62](index=62&type=chunk) - OGE Energy accounts for its investment in Energy Transfer's equity securities at fair value under ASC 321[68](index=68&type=chunk) - OGE Energy recognized a pre-tax unrealized loss of **$46.3 million** for Q2 2022 and a pre-tax unrealized gain of **$67.0 million** for H1 2022 related to its Energy Transfer investment[68](index=68&type=chunk)[69](index=69&type=chunk) - Distributions received from Energy Transfer: **$13.3 million** (Q2 2022) and **$30.0 million** (H1 2022)[69](index=69&type=chunk) - OGE Energy intends to exit the midstream segment; through July 2022, **$812.6 million** pre-tax net proceeds from **73.3 million** units sold[68](index=68&type=chunk)[214](index=214&type=chunk) OGE Energy Accumulated Other Comprehensive Income (Loss) (In millions) | Metric | Balance at Dec 31, 2021 | Reclassifications (H1 2022) | Settlement Cost (H1 2022) | Balance at Jun 30, 2022 | | :----- | :---------------------- | :-------------------------- | :------------------------ | :---------------------- | | Total | $(24.8) | $0.6 | $8.1 | $(16.1) | [Note 2. Accounting Pronouncements](index=22&type=section&id=Note%202.%20Accounting%20Pronouncements) This note discusses the impact of new accounting pronouncements on the financial statements - ASU 2021-10 "Government Assistance": Requires additional annual disclosures for government assistance; effective January 1, 2022; Registrants are assessing its impact[79](index=79&type=chunk) - Other Standards: Not expected to have a material impact on financial position, results of operations, or cash flows[80](index=80&type=chunk) [Note 3. Revenue Recognition](index=23&type=section&id=Note%203.%20Revenue%20Recognition) This note details the recognition of revenues from contracts with customers for OG&E OG&E Revenues from Contracts with Customers (In millions) | Customer Classification | Three Months Ended June 30, 2022 | Three Months Ended June 30, 2021 | Six Months Ended June 30, 2022 | Six Months Ended June 30, 2021 | | :---------------------- | :------------------------------- | :------------------------------- | :------------------------------- | :------------------------------- | | Residential | $289.3 | $178.5 | $516.1 | $746.7 | | Commercial | $193.4 | $108.3 | $321.5 | $415.8 | | Industrial | $81.4 | $37.5 | $138.8 | $184.2 | | Oilfield | $79.0 | $28.7 | $132.2 | $189.5 | | Public authorities and street light | $71.1 | $37.0 | $119.1 | $160.1 | | System sales revenues | $714.2 | $390.0 | $1,227.7 | $1,696.3 | | Integrated market | $43.0 | $128.3 | $65.8 | $430.4 | | Transmission | $32.9 | $36.7 | $68.7 | $73.0 | | Total revenues from contracts with customers | $791.0 | $564.5 | $1,369.1 | $2,185.5 | - Operating revenues for H1 2021 were significantly increased due to higher fuel, purchased power, and direct transmission expenses resulting from Winter Storm Uri, which are generally recoverable from customers[82](index=82&type=chunk) [Note 4. Related Party Transactions](index=23&type=section&id=Note%204.%20Related%20Party%20Transactions) This note describes transactions between OGE Energy, OG&E, and related parties like Enable/Energy Transfer - OGE Energy charges operating costs to OG&E based on direct assignment or allocation methods (e.g., "Distrigas" method)[83](index=83&type=chunk) Operating Costs Charged by OGE Energy to OG&E (In millions) | Period | 2022 | 2021 | | :----- | :--- | :--- | | Three Months Ended June 30 | $33.2 | $33.4 | | Six Months Ended June 30 | $66.1 | $69.1 | - Prior to December 2, 2021, OGE Energy charged Enable for support services (**$0.1 million** for Q2 2021, **$0.2 million** for H1 2021)[85](index=85&type=chunk) - Enable (now Energy Transfer) provided gas transportation and imbalance services to OG&E[86](index=86&type=chunk) Related Party Transactions between OG&E and Enable (In millions, Six Months Ended June 30, 2021) | Transaction Type | Amount | | :--------------- | :----- | | Electricity to power electric compression assets (Operating revenues) | $5.9 | | Natural gas transportation services (Fuel, purchased power and direct transmission expense) | $14.0 | | Natural gas purchases (sales) (Fuel, purchased power and direct transmission expense) | $(20.6) | [Note 5. Fair Value Measurements](index=24&type=section&id=Note%205.%20Fair%20Value%20Measurements) This note explains the fair value hierarchy and measurements for financial instruments - Fair Value Hierarchy: Categorizes inputs into Level 1 (quoted prices in active markets), Level 2 (observable inputs other than Level 1), and Level 3 (unobservable inputs)[89](index=89&type=chunk)[90](index=90&type=chunk)[91](index=91&type=chunk) - OG&E: Had no financial instruments measured at fair value on a recurring basis[92](index=92&type=chunk) OGE Energy Financial Instruments Measured/Disclosed at Fair Value (In millions) | Financial Instrument | June 30, 2022 Carrying Amount | June 30, 2022 Fair Value | Classification | | :------------------- | :------------------------------ | :----------------------- | :------------- | | OGE Energy investment in Energy Transfer's equity securities | $382.0 | $382.0 | Level 1 | | OGE Energy Senior Notes | $499.9 | $487.3 | Level 2 | | OGE Energy Term Loan | $49.8 | $50.0 | Level 2 | | OG&E Senior Notes | $3,853.0 | $3,720.9 | Level 2 | | OG&E Industrial Authority Bonds | $135.4 | $135.4 | Level 2 | | OG&E Tinker Debt | $9.3 | $7.8 | Level 3 | - OGE Energy sold **57.1 million** of the **95.4 million** Energy Transfer limited partner units it received as of June 30, 2022[93](index=93&type=chunk) [Note 6. Stock-Based Compensation](index=25&type=section&id=Note%206.%20Stock-Based%20Compensation) This note details the stock-based compensation expense and related tax benefits for both registrants Stock-Based Compensation Expense (In millions) | Registrant | Metric | Three Months Ended June 30, 2022 | Three Months Ended June 30, 2021 | Six Months Ended June 30, 2022 | Six Months Ended June 30, 2021 | | :--------- | :----- | :------------------------------- | :------------------------------- | :------------------------------- | :------------------------------- | | OGE Energy | Total compensation expense | $2.3 | $2.3 | $4.6 | $4.8 | | OGE Energy | Income tax benefit | $0.6 | $0.6 | $1.2 | $1.2 | | OG&E | Total compensation expense | $0.7 | $0.6 | $1.5 | $1.0 | | OG&E | Income tax benefit | $0.2 | $0.2 | $0.4 | $0.3 | - OGE Energy issued **27,278 shares** of new common stock and an immaterial amount of treasury stock for restricted stock unit payouts during H1 2022[95](index=95&type=chunk) [Note 7. Income Taxes](index=25&type=section&id=Note%207.%20Income%20Taxes) This note describes the income tax filing and allocation policies for OGE Energy and OG&E - Consolidated Filing: OGE Energy files consolidated income tax returns; OG&E is part of this[96](index=96&type=chunk) - Tax Allocation: Income taxes are generally allocated based on stand-alone taxable income or loss[96](index=96&type=chunk) - Tax Credits: OG&E benefits from deferred federal investment tax credits and federal/state production/investment tax credits from wind and solar facilities[96](index=96&type=chunk) [Note 8. Common Equity](index=25&type=section&id=Note%208.%20Common%20Equity) This note provides details on common equity, including earnings per share calculations for OGE Energy - Automatic Dividend Reinvestment and Stock Purchase Plan: No shares issued by OGE Energy during Q2 or H1 2022[97](index=97&type=chunk) - Basic EPS: Net income attributable to OGE Energy divided by weighted-average common shares outstanding[98](index=98&type=chunk) - Diluted EPS: Basic EPS adjusted for potentially dilutive securities (performance units and restricted stock units)[98](index=98&type=chunk) OGE Energy Basic and Diluted Earnings Per Share (In millions, except per share data) | Metric | Three Months Ended June 30, 2022 | Three Months Ended June 30, 2021 | Six Months Ended June 30, 2022 | Six Months Ended June 30, 2021 | | :----- | :------------------------------- | :------------------------------- | :------------------------------- | :------------------------------- | | Net income | $73.1 | $112.9 | $352.6 | $165.6 | | Basic average common shares outstanding | 200.2 | 200.2 | 200.2 | 200.1 | | Diluted average common shares outstanding | 200.7 | 200.4 | 200.6 | 200.2 | | Basic earnings per average common share | $0.37 | $0.56 | $1.76 | $0.83 | | Diluted earnings per average common share | $0.36 | $0.56 | $1.76 | $0.83 | [Note 9. Long-Term Debt](index=26&type=section&id=Note%209.%20Long-Term%20Debt) This note discusses long-term debt compliance, new credit agreements, and industrial authority bonds - Debt Compliance: Registrants were in compliance with all debt agreements at June 30, 2022[102](index=102&type=chunk) - OGE Energy Credit Agreement: Entered a **$100.0 million** floating rate unsecured three-year credit agreement in May 2022 (**$50.0 million** revolving, **$50.0 million** term loan), borrowing the full **$50.0 million** term loan for refinancing and general corporate purposes; Weighted-average interest rate for term loan: **2.17%** during Q2 2022[103](index=103&type=chunk) - OG&E Industrial Authority Bonds: Tax-exempt pollution control bonds with optional redemption provisions (**$135.4 million** redeemable within 12 months), classified as Long-Term Debt due to intent and ability to refinance[104](index=104&type=chunk)[105](index=105&type=chunk) [Note 10. Short-Term Debt and Credit Facilities](index=27&type=section&id=Note%2010.%20Short-Term%20Debt%20and%20Credit%20Facilities) This note details short-term borrowing activities, credit facilities, and the impact of credit ratings - Short-Term Borrowing: Registrants borrow via commercial paper and revolving credit agreements[106](index=106&type=chunk) Short-Term Debt Balances (In millions) | Registrant | June 30, 2022 | December 31, 2021 | | :--------- | :------------ | :---------------- | | OGE Energy short-term debt | $425.4 | $486.9 | | OG&E advances from OGE Energy | $263.8 | $101.3 | Revolving Credit Agreements at June 30, 2022 (In millions) | Entity | Aggregate Commitment | Amount Outstanding | Weighted-Average Interest Rate | Expiration | | :----- | :------------------- | :----------------- | :----------------------------- | :--------- | | OGE Energy | $550.0 | $334.5 | 2.06% | Dec 17, 2026 | | OGE Energy (new facility) | $50.0 | — | —% | May 24, 2025 | | OG&E | $550.0 | $91.3 | 2.06% | Dec 17, 2026 | | Total | $1,150.0 | $425.8 | 2.06% | | - Credit Ratings Impact: Downgrades could increase borrowing costs but would not result in defaults or accelerations[109](index=109&type=chunk) - OG&E Regulatory Approval: Approved to incur up to **$800.0 million** in short-term borrowings at any one time through December 31, 2022[110](index=110&type=chunk) [Note 11. Retirement Plans and Postretirement Benefit Plans](index=27&type=section&id=Note%2011.%20Retirement%20Plans%20and%20Postretirement%20Benefit%20Plans) This note outlines the net periodic benefit costs and regulatory accounting for pension and postretirement plans - Pension Plan Settlement Charges: A one-time settlement charge is required when lump sum payments or other settlements exceed service and interest costs; H1 2022 saw an increase in settlement charges due to more employees electing retirement and lump sum payments, accelerating future pension expenses without requiring a cash outlay[111](index=111&type=chunk) OGE Energy Net Periodic Benefit Cost (In millions) | Plan Type | Metric | Three Months Ended June 30, 2022 | Three Months Ended June 30, 2021 | Six Months Ended June 30, 2022 | Six Months Ended June 30, 2021 | | :-------- | :----- | :------------------------------- | :------------------------------- | :------------------------------- | :------------------------------- | | Pension Plan | Total net periodic benefit cost | $4.9 | $4.5 | $18.8 | $31.9 | | Pension Plan | Settlement cost | $2.8 | $5.3 | $16.0 | $31.7 | | Restoration of Retirement Income Plan | Total net periodic benefit cost | $0.6 | $0.7 | $1.0 | $0.9 | | Postretirement Benefit Plans | Total net periodic benefit cost | $(0.3) | $(0.6) | $(0.2) | $(0.9) | - Regulatory Asset/Liability: OG&E defers the difference between actual pension/postretirement medical expenses and approved rates as a regulatory asset or liability[113](index=113&type=chunk) Regulatory Asset/Liability Related to Pension/Postretirement Expense (In millions) | Jurisdiction | Metric | Three Months Ended June 30, 2022 | Six Months Ended June 30, 2022 | | :----------- | :----- | :------------------------------- | :------------------------------- | | Oklahoma | Increase of regulatory asset related to pension expense | $0.4 | $2.3 | | Oklahoma | Deferral of pension expense related to settlement charges | $2.0 | $6.7 | | Arkansas | Deferral of pension expense related to settlement charges | $0.2 | $0.6 | | Oklahoma | Increase (decrease) of regulatory liability related to postretirement expense | $0.1 | $(0.2) | [Note 12. Report of Business Segments](index=30&type=section&id=Note%2012.%20Report%20of%20Business%20Segments) This note presents financial results by business segment, including Electric Utility and Natural Gas Midstream Operations - Business Segments: Electric Utility (OG&E) and Natural Gas Midstream Operations (post-merger, includes OGE Energy's investment in Energy Transfer's equity securities and legacy Enable costs)[120](index=120&type=chunk) OGE Energy Net Income (Loss) by Segment (In millions) | Segment | Three Months Ended June 30, 2022 | Three Months Ended June 30, 2021 | Six Months Ended June 30, 2022 | Six Months Ended June 30, 2021 | | :------ | :------------------------------- | :------------------------------- | :------------------------------- | :------------------------------- | | OG&E (Electric Utility) | $100.7 | $85.1 | $139.7 | $96.3 | | OGE Holdings (Natural Gas Midstream Operations) | $(18.9) | $32.2 | $211.2 | $70.1 | | Other operations | $(8.7) | $(4.4) | $1.7 | $(0.8) | | OGE Energy net income | $73.1 | $112.9 | $352.6 | $165.6 | - Midstream Segment Comparability: Results are not comparable due to the Enable-Energy Transfer merger (December 2, 2021), changing accounting from equity method (Enable) to equity securities (Energy Transfer)[120](index=120&type=chunk)[188](index=188&type=chunk) [Note 13. Commitments and Contingencies](index=32&type=section&id=Note%2013.%20Commitments%20and%20Contingencies) This note describes commitments and contingent liabilities, including environmental matters and legal proceedings - Consistency: Current commitments and contingencies are substantially similar to those in the 2021 Form 10-K[125](index=125&type=chunk) - Environmental Laws and Regulations: Registrants are subject to stringent federal, state, and local environmental laws, which can impact business activities and costs; Management believes operations are in substantial compliance[126](index=126&type=chunk)[127](index=127&type=chunk) - Materiality: Reasonably possible losses in excess of accrued amounts from pending or threatened lawsuits are not expected to be quantitatively material to financial statements[128](index=128&type=chunk) [Note 14. Rate Matters and Regulation](index=33&type=section&id=Note%2014.%20Rate%20Matters%20and%20Regulation) This note details significant regulatory and rate matters, including securitization of Winter Storm Uri costs and general rate reviews - Arkansas 2021 Formula Rate Plan: APSC approved a settlement agreement for an annual electric revenue increase of **$4.2 million**, effective April 1, 2022[130](index=130&type=chunk) - Oklahoma Winter Storm Uri Securitization: OCC approved financing for up to **$760.0 million** in bonds (Dec 2021), approved by Oklahoma Supreme Court (May 2022), and issued by ODFA (July 20, 2022); OG&E received ~**$750 million** proceeds to recover costs, with customer charges starting Aug 1, 2022, over 28 years[131](index=131&type=chunk)[132](index=132&type=chunk) - FERC Proceedings - Sponsored Transmission Upgrades (SPP): FERC ordered SPP to refund Z2 payments for 2008-2015; OG&E estimates a **$13.0 million** refund liability (net of amounts paid to other utilities), with **$5.0 million** impacting Registrants and **$8.0 million** impacting OG&E customers; Matter remains pending at FERC[136](index=136&type=chunk)[137](index=137&type=chunk)[138](index=138&type=chunk) - APSC Proceedings - Winter Storm Uri: OG&E filed to recover **$83.9 million** regulatory asset balance over 10 years using a weighted average cost of capital instead of securitization; a hearing is expected December 2, 2022[144](index=144&type=chunk) - OCC Proceedings - 2021 Oklahoma General Rate Review: Joint Stipulation and Settlement Agreement proposes a **$30.0 million** base rate revenue increase (subject to OCC approval); OG&E implemented an annual interim rate increase of **$30.0 million** on July 1, 2022, subject to refund[149](index=149&type=chunk)[150](index=150&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=38&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides a comprehensive analysis of OGE Energy's financial condition and results of operations, covering its business segments, strategic objectives, recent developments, and liquidity. It highlights the impact of the Energy Transfer merger on midstream operations, the securitization of Winter Storm Uri costs, and ongoing regulatory matters affecting the electric utility segment [Introduction](index=38&type=section&id=Introduction) This section introduces OGE Energy's business structure, including its electric utility and natural gas midstream operations, and associated risks - OGE Energy Structure: Holding company with electric utility (OG&E) and natural gas midstream operations[154](index=154&type=chunk) - Electric Utility: OG&E generates, transmits, distributes, and sells electricity in Oklahoma and western Arkansas, regulated by OCC, APSC, and FERC[155](index=155&type=chunk) - Natural Gas Midstream: Post-merger (Dec 2, 2021), includes OGE Energy's investment in Energy Transfer's equity securities (less than **2%** ownership); OGE Energy intends to exit this segment[156](index=156&type=chunk) - Risks: Energy Transfer is subject to risks like reliance on drilling decisions, commodity price volatility, and macroeconomic pressures (COVID-19, inflation)[156](index=156&type=chunk) [Overview](index=38&type=section&id=Overview) This section provides an overview of OGE Energy's strategic objectives and recent developments, including the Winter Storm Uri securitization and rate review [Strategy](index=38&type=section&id=Strategy) This section outlines OGE Energy's strategic goals, including EPS growth, midstream exit, dividend policy, and credit ratings - Purpose: Energize life, providing essential services, reducing environmental impact, strengthening communities, and ensuring effective corporate governance[157](index=157&type=chunk) - Shareholder Value: Target **5-7%** consistent EPS growth in the electric utility, driven by load growth and low-risk infrastructure projects[158](index=158&type=chunk) - Midstream Exit: Plans to fully exit natural gas midstream operations by prudently selling Energy Transfer units[158](index=158&type=chunk) - Dividend: Expects to grow the dividend, targeting a **65-70%** payout ratio[158](index=158&type=chunk) - Financial Objectives: Maintain investment-grade credit ratings and provide a strong, reliable dividend[158](index=158&type=chunk) [Recent Developments](index=39&type=section&id=Recent%20Developments) This section highlights key recent events, including the Oklahoma Winter Storm Uri securitization and the 2021 Oklahoma General Rate Review - Winter Storm Uri - Oklahoma Securitization: OCC approved securitization bonds up to **$760.0 million** (Dec 2021), approved by Oklahoma Supreme Court (May 2022), and issued by ODFA (July 20, 2022); OG&E received ~**$750 million** proceeds, with customer charges starting Aug 1, 2022[160](index=160&type=chunk)[161](index=161&type=chunk) - 2021 Oklahoma General Rate Review: Joint Stipulation and Settlement Agreement reached June 30, 2022, proposing a **$30.0 million** base rate revenue increase (subject to OCC approval); OG&E implemented an annual interim rate increase of **$30.0 million** on July 1, 2022, subject to refund[162](index=162&type=chunk) - Global Macroeconomic Pressures: Geopolitical events (COVID-19) cause raw material inflation, logistical challenges, and component shortages, potentially delaying capital projects[163](index=163&type=chunk) [Summary of OGE Energy Operating Results](index=40&type=section&id=Summary%20of%20OGE%20Energy%20Operating%20Results) This section summarizes OGE Energy's net income and diluted earnings per share for the reported periods OGE Energy Net Income (In millions, except per diluted share) | Period | 2022 | 2021 | Change | | :----- | :--- | :--- | :----- | | Three Months Ended June 30 | $73.1 ($0.36/share) | $112.9 ($0.56/share) | $(39.8) ($(0.20)/share) | | Six Months Ended June 30 | $352.6 ($1.76/share) | $165.6 ($0.83/share) | $187.0 ($0.93)/share) | [2022 Outlook](index=40&type=section&id=2022%20Outlook) This section provides the 2022 earnings guidance for OG&E and clarifies OGE Energy's consolidated guidance - OG&E 2022 Earnings Guidance: Unchanged at **$375 million** to **$395 million**, or **$1.87** to **$1.97** per average diluted share[167](index=167&type=chunk) - Performance Expectation: Expected to be in the top half of the guidance range due to warmer-than-expected weather in H1 2022[167](index=167&type=chunk) - Consolidated Guidance: OGE Energy did not issue 2022 consolidated earnings guidance[167](index=167&type=chunk) [Results of Operations](index=40&type=section&id=Results%20of%20Operations) This section analyzes the drivers behind changes in OGE Energy's net income for the reported periods by segment - Drivers for OGE Energy Net Income Change (Three Months Ended June 30, 2022 vs. 2021): - OG&E (Electric Utility): Net income increased **$15.6 million** (**$0.08/share**) due to higher operating revenues (favorable weather, capital recovery), partially offset by higher depreciation and income tax[168](index=168&type=chunk) - OGE Holdings (Natural Gas Midstream): Net income decreased **$51.1 million** (**$0.25/share**) due to a **$39.6 million** pre-tax loss on Energy Transfer equity securities and elimination of Enable equity earnings, partially offset by Energy Transfer distributions and increased tax benefit[168](index=168&type=chunk) - Other Operations (Holding Company): Net loss increased **$4.3 million** (**$0.03/share**) due to partial reversal of a consolidating tax benefit[168](index=168&type=chunk) - Drivers for OGE Energy Net Income Change (Six Months Ended June 30, 2022 vs. 2021): - OG&E (Electric Utility): Net income increased **$43.4 million** (**$0.22/share**) due to higher operating revenues (favorable weather, recovery from Guaranteed Flat Bill program loss in 2021, capital recovery), partially offset by higher depreciation, income tax, and O&M[168](index=168&type=chunk) - OGE Holdings (Natural Gas Midstream): Net income increased **$141.1 million** (**$0.70/share**) due to a **$242.7 million** pre-tax gain on Energy Transfer equity securities and **$30.0 million** in distributions, partially offset by elimination of Enable equity earnings and higher income tax[168](index=168&type=chunk) - Other Operations (Holding Company): Net income increased **$2.5 million** (**$0.01/share**) due to a consolidating tax adjustment, partially offset by increased net interest expense[168](index=168&type=chunk) OGE Energy Key Financials (In millions, except per share data) | Metric | Three Months Ended June 30, 2022 | Three Months Ended June 30, 2021 | Six Months Ended June 30, 2022 | Six Months Ended June 30, 2021 | | :----- | :------------------------------- | :------------------------------- | :------------------------------- | :------------------------------- | | Net income | $73.1 | $112.9 | $352.6 | $165.6 | | Diluted earnings per average common share | $0.36 | $0.56 | $1.76 | $0.83 | | Dividends declared per common share | $0.41000 | $0.40250 | $0.82000 | $0.80500 | [Results by Business Segment](index=41&type=section&id=Results%20by%20Business%20Segment) This section details the financial performance of OGE Energy's Electric Utility and Natural Gas Midstream Operations segments [OG&E (Electric Utility)](index=42&type=section&id=OG%26E%20(Electric%20Utility)) This section analyzes the operating revenues, expenses, and net income for OG&E's electric utility segment OG&E (Electric Utility) Key Financials (In millions) | Metric | Three Months Ended June 30, 2022 | Three Months Ended June 30, 2021 | Six Months Ended June 30, 2022 | Six Months Ended June 30, 2021 | | :----- | :------------------------------- | :------------------------------- | :------------------------------- | :------------------------------- | | Operating revenues | $803.7 | $577.4 | $1,393.0 | $2,208.0 | | Fuel, purchased power and direct transmission expense | $393.3 | $200.0 | $649.0 | $1,546.8 | | Operating income | $157.2 | $131.2 | $241.1 | $180.3 | | Net income | $100.7 | $85.1 | $139.7 | $96.3 | - Net income increased by **$15.6 million** (**18.3%**) for Q2 2022 and **$43.4 million** (**45.1%**) for H1 2022[177](index=177&type=chunk) - Operating revenues increased **$226.3 million** (**39.2%**) for Q2 2022, primarily due to a **60.0%** increase in cooling degree days (favorable weather) and increased recovery through rider mechanisms[178](index=178&type=chunk)[179](index=179&type=chunk)[180](index=180&type=chunk) - Operating revenues decreased **$815.0 million** (**36.9%**) for H1 2022, primarily due to the significant increase in fuel, purchased power, and direct transmission expenses in 2021 from Winter Storm Uri[178](index=178&type=chunk)[179](index=179&type=chunk) - Fuel, purchased power and direct transmission expense increased **$193.3 million** (**96.7%**) for Q2 2022, mainly due to higher fuel prices and increased MWhs purchased from SPP; It decreased **$897.8 million** (**58.0%**) for H1 2022, primarily due to inflated fuel costs in 2021 during Winter Storm Uri[182](index=182&type=chunk)[183](index=183&type=chunk)[184](index=184&type=chunk) - Other operation and maintenance expense was flat for Q2 2022, increased **$5.2 million** (**2.3%**) for H1 2022, driven by payroll and benefits, materials and supplies, and fleet transportation, partially offset by capitalized labor[185](index=185&type=chunk)[186](index=186&type=chunk) - Depreciation and amortization expense increased **$8.7 million** (**8.5%**) for Q2 2022 and **$17.4 million** (**8.6%**) for H1 2022, due to additional assets in service and increased amortization of regulatory assets[186](index=186&type=chunk) - Income tax expense increased **$7.0 million** (**74.5%**) for Q2 2022 and **$13.2 million** for H1 2022, reflecting additional income taxes primarily related to higher pre-tax income and decreased federal production tax credit generation[187](index=187&type=chunk) [OGE Holdings (Natural Gas Midstream Operations)](index=44&type=section&id=OGE%20Holdings%20(Natural%20Gas%20Midstream%20Operations)) This section discusses the financial results of OGE Energy's natural gas midstream operations, noting comparability changes post-merger - Comparability: Results are not comparable for Q2 and H1 2022 vs. 2021 due to the Energy Transfer acquisition of Enable (Dec 2, 2021)[188](index=188&type=chunk) - Segment Composition: Post-merger, includes OGE Energy's investment in Energy Transfer's equity securities and legacy Enable pension/postretirement costs[188](index=188&type=chunk) - Income Tax Benefit (Q2 2022): Increased **$8.3 million** due to lower pre-tax income and Energy Transfer unit sales, partially offset by state deferred tax adjustments[190](index=190&type=chunk) - Income Tax Expense (H1 2022): Increased **$37.6 million** due to higher pre-tax income and state deferred tax adjustments, partially offset by unit sales[190](index=190&type=chunk) [Liquidity and Capital Resources](index=45&type=section&id=Liquidity%20and%20Capital%20Resources) This section examines OGE Energy's cash flows, working capital, future cash requirements, and financing activities [Cash Flows](index=45&type=section&id=Cash%20Flows) This section analyzes the changes in OGE Energy's operating, investing, and financing cash flows OGE Energy Cash Flows (In millions) | Activity | Six Months Ended June 30, 2022 | Six Months Ended June 30, 2021 | Change | % Change | | :------- | :------------------------------- | :------------------------------- | :----- | :------- | | Operating activities | $8.1 | $(767.8) | $775.9 | >100% | | Investing activities | $173.7 | $(356.8) | $530.5 | >100% | | Financing activities | $(176.9) | $1,123.5 | $(1,300.4) | >100% | - Operating cash flow change: Primarily due to a decrease in vendor payments, including for fuel and purchased power costs related to Winter Storm Uri in 2021[192](index=192&type=chunk) - Investing cash flow change: Primarily due to proceeds from the sale of Energy Transfer's limited partner units, partially offset by increased investment in power delivery projects at OG&E[192](index=192&type=chunk) - Financing cash flow change: Primarily due to decreased proceeds from long-term debt (May 2021 issuance) and decreased short-term debt[192](index=192&type=chunk) [Working Capital](index=45&type=section&id=Working%20Capital) This section discusses the key drivers and changes in OGE Energy's working capital components - Working Capital Drivers: Accounts receivable, accounts payable, commodity prices, customer collections, maintenance/expansion spending, inventory levels, and fuel recoveries[193](index=193&type=chunk) - Accounts Receivable and Accrued Unbilled Revenues: Increased **$119.8 million** (**52.7%**) due to higher seasonal usage and receivables from Energy Transfer unit sales[194](index=194&type=chunk) - Fuel Inventories: Increased **$40.0 million** (**98.5%**) due to higher prices and volumes of coal and gas purchases[194](index=194&type=chunk) - Other Current Assets: Increased **$792.7 million**, primarily due to reclassification of Oklahoma Winter Storm Uri regulatory asset as current[196](index=196&type=chunk) - Long-Term Debt Due Within One Year: Increased **$999.8 million**, due to reclassification of debt maturing in May 2023[198](index=198&type=chunk) [Future Material Cash Requirements](index=46&type=section&id=Future%20Material%20Cash%20Requirements) This section outlines the primary future cash requirements for facility investments and their funding sources - Primary Requirements: Acquiring/constructing new facilities and replacing/expanding existing facilities at OG&E[199](index=199&type=chunk) - Funding Sources: Cash from operations, short-term borrowings (bank borrowings, commercial paper), and permanent financings[199](index=199&type=chunk) [Capital Expenditures](index=46&type=section&id=Capital%20Expenditures) This section details OG&E's capital expenditure estimates and focus areas for infrastructure investments - Estimates: Unchanged for 2022-2026, detailed in 2021 Form 10-K[200](index=200&type=chunk) - Focus: Customer-focused investments to improve safety, reliability of distribution/transmission grid and generation fleet, enhance extreme weather performance, and serve growing customer base[200](index=200&type=chunk) - Future Investments: Evaluating incremental infrastructure investments for new generation capacity (per OG&E's October 2021 IRP) and grid resiliency[200](index=200&type=chunk) - Risk: Supply chain disruption may cause delays in construction and equipment deliveries[200](index=200&type=chunk) [Financing Activities and Future Sources of Financing](index=46&type=section&id=Financing%20Activities%20and%20Future%20Sources%20of%20Financing) This section describes OGE Energy's current and future financing strategies, including debt and equity sources - Funding Sources: Cash from operations, long- and short-term debt, common stock sales, and distributions/proceeds from Energy Transfer unit sales[201](index=201&type=chunk) - Short-Term Borrowings: Used for temporary working capital and interim financing[201](index=201&type=chunk) - OGE Energy Revolving Credit Agreements: Unsecured five-year facilities totaling **$1.1 billion** (**$550.0 million** for OGE Energy and **$550.0 million** for OG&E)[203](index=203&type=chunk) - New Credit Agreement: OGE Energy entered a new **$100.0 million** floating rate unsecured three-year credit agreement in May 2022 (**$50.0 million** revolving loan, **$50.0 million** term loan)[203](index=203&type=chunk)[207](index=207&type=chunk) - OG&E Long-Term Debt: Expects to issue **$300.0 million** to **$400.0 million** in long-term debt in H2 2022 or H1 2023 to fund capital investments[208](index=208&type=chunk) [Securitization of Oklahoma Winter Storm Uri Extreme Purchase Costs](index=47&type=section&id=Securitization%20of%20Oklahoma%20Winter%20Storm%20Uri%20Extreme%20Purchase%20Costs) This section details the approval, issuance, and repayment structure for the Oklahoma Winter Storm Uri securitization bonds - Financing Order: OCC approved a settlement agreement for securitization bonds up to **$760.0 million** in December 2021[209](index=209&type=chunk) - Approval & Issuance: Oklahoma Supreme Court approved bonds in May 2022; ODFA issued bonds on July 20, 2022[209](index=209&type=chunk) - Proceeds & Repayment: OG&E received ~**$750 million** from the sale of securitization property on July 20, 2022, to recover costs; OG&E will collect winter event securitization charges from customers to repay bonds over 28 years, starting August 1, 2022[210](index=210&type=chunk) [Security Ratings](index=48&type=section&id=Security%20Ratings) This section discusses the impact of credit ratings on financing costs and recent rating updates for OGE Energy and OG&E - Impact of Ratings: Lower ratings lead to higher financing costs; downgrades could increase short-term borrowing costs and potentially require collateral if below investment grade[211](index=211&type=chunk) - S&P Global Ratings Update (May 17, 2022): Revised outlook for OGE Energy and OG&E from negative to stable, affirming all ratings[212](index=212&type=chunk) [Distributions by Energy Transfer](index=48&type=section&id=Distributions%20by%20Energy%20Transfer) This section reports the distributions received by OGE Energy from its investment in Energy Transfer Distributions Received by OGE Energy from Energy Transfer (In millions) | Period | Amount | | :----- | :----- | | Three Months Ended June 30, 2022 | $13.3 | | Six Months Ended June 30, 2022 | $30.0 | - Future Distribution: Energy Transfer announced a **15%** increase in its quarterly cash distribution to **$0.23** per unit, payable August 19, 2022[213](index=213&type=chunk) [Sale of Energy Transfer's Equity Securities](index=48&type=section&id=Sale%20of%20Energy%20Transfer's%20Equity%20Securities) This section outlines OGE Energy's strategic plan and progress in divesting its Energy Transfer equity securities - Strategic Exit: OGE Energy intends to become a pure-play electric utility by exiting its investment in Energy Transfer's equity securities[214](index=214&type=chunk) - Unit Sales: Sales commenced in April 2022[214](index=214&type=chunk) Energy Transfer Unit Sales (as of July 2022) | Metric | Amount | | :----- | :----- | | Units Sold (through July 2022) | 73.3 million | | Pre-tax Net Proceeds (through July 2022) | $812.6 million | | Remaining Ownership (as of July 2022) | Less than 1% | [Critical Accounting Policies and Estimates](index=48&type=section&id=Critical%20Accounting%20Policies%20and%20Estimates) This section highlights the critical accounting policies and estimates that significantly impact the financial statements - Estimates and Assumptions: Financial statements rely on management's estimates and assumptions, which can materially affect reported amounts[215](index=215&type=chunk) - Key Judgment Areas: Pension Plan assumptions, income taxes, contingency reserves, asset retirement obligations, regulatory assets and liabilities, unbilled revenues, and allowance for uncollectible accounts receivable[216](index=216&type=chunk) [Commitments and Contingencies](index=48&type=section&id=Commitments%20and%20Contingencies) This section addresses contingent liabilities from lawsuits and claims, assessing their potential financial impact - Contingent Liabilities: Arise from lawsuits or claims by third parties, including governmental agencies[217](index=217&type=chunk) - Loss Assessment: Management consults legal counsel and experts to assess claims and accrues probable losses as per GAAP[217](index=217&type=chunk) - Materiality: Reasonably possible losses in excess of accrued amounts are not expected to be quantitatively material to financial position, results of operations, or cash flows[217](index=217&type=chunk) [Environmental Laws and Regulations](index=49&type=section&id=Environmental%20Laws%20and%20Regulations) This section discusses the impact of federal and state environmental laws and regulations on OG&E's operations [Air](index=49&type=section&id=Air) This section details regulatory requirements and OG&E's efforts related to air quality and greenhouse gas emissions - Regulatory Environment: OG&E's operations are subject to stringent federal and state air quality laws (e.g., Federal Clean Air Act)[222](index=222&type=chunk) - Greenhouse Gas Emissions: Biden Administration policies aim for **50-52%** reduction in economy-wide net greenhouse gas emissions by 2030 and full decarbonization of the electric power industry by 2035; OG&E has reduced CO2 emissions by over **40%** since 2005 and expects to reach **50%** reduction by 2030[225](index=225&type=chunk) - Cross State Air Pollution Rule: EPA proposed a federal implementation plan to reduce interstate NOx emissions, potentially limiting emissions budgets for ten of OG&E's units starting in 2023[224](index=224&type=chunk) - Regional Haze: ODEQ is developing a revised SIP for visibility impairment impacts to the Wichita Mountains, with EPA findings expected by August 31, 2022[224](index=224&type=chunk) [Endangered Species](index=50&type=section&id=Endangered%20Species) This section discusses potential impacts of proposed endangered species listings on OG&E's projects - Proposed Listings: Proposed rules to list Lesser Prairie Chicken (endangered/threatened), Alligator Snapping Turtle (threatened), and reclassify Northern Long-Eared Bat (endangered) could restrict or delay OG&E's projects or require expensive mitigation[227](index=227&type=chunk)[228](index=228&type=chunk)[229](index=229&type=chunk)[230](index=230&type=chunk) [Waste](index=51&type=section&id=Waste) This section describes OG&E's waste management practices, particularly ash recovery and reuse - Waste Management: Over **95%** of ash from Muskogee and Sooner facilities recovered and sold for concrete/cement industries; River Valley also entered ash reuse agreement in 2021[232](index=232&type=chunk) - Environmental Benefit: Ash reuse helped avoid over **three million tons** of CO2 emissions in 14 years[232](index=232&type=chunk) [Water](index=51&type=section&id=Water) This section addresses water-related regulations and OG&E's water conservation efforts - Effluent Limitation Guidelines: EPA revised guidelines for power plants under the Federal Clean Water Act, with compliance by 2023; OG&E is evaluating impacts[234](index=234&type=chunk) - Water Conservation: OG&E uses treated municipal effluent for cooling water at Redbud and McClain facilities (approx. **2.5 billion gallons/year**), offsetting fresh water needs[235](index=235&type=chunk) [Site Remediation](index=51&type=section&id=Site%20Remediation) This section discusses potential liabilities for site cleanup costs under environmental laws - Liability: OG&E could be liable for cleanup costs under CERCLA due to hazardous substance releases, but no significant impact is anticipated at this time[236](index=236&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=52&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) This section states that there have been no significant changes in the market risks affecting the Registrants from those discussed in their 2021 Form 10-K - No Significant Changes: Market risks remain consistent with those disclosed in the 2021 Form 10-K[238](index=238&type=chunk) [Item 4. Controls and Procedures](index=52&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that the Registrants' disclosure controls and procedures were effective as of the end of the reporting period. No material changes to internal control over financial reporting occurred during the quarter - Disclosure Controls and Procedures: Management concluded they are effective as of the end of the reporting period[239](index=239&type=chunk) - Internal Control Over Financial Reporting: No material changes occurred during the most recently completed fiscal quarter[240](index=240&type=chunk) [Part II - Other Information](index=53&type=section&id=PART%20II.%20OTHER%20INFORMATION) This part provides additional information, including legal proceedings, risk factors, unregistered sales of equity securities, and exhibits [Item 1. Legal Proceedings](index=53&type=section&id=Item%201.%20Legal%20Proceedings) This section refers to the 2021 Form 10-K for a description of pending legal proceedings and states that there are no new significant cases or material changes to previously reported proceedings, except as detailed in Note 14 - Reference to 2021 Form 10-K: For description of certain legal proceedings[242](index=242&type=chunk) - No New Significant Cases: No new significant cases to report, nor material changes to previously reported proceedings, except as described in Note 14[242](index=242&type=chunk) [Item 1A. Risk Factors](index=53&type=section&id=Item%201A.%20Risk%20Factors) This section states that there have been no significant changes in the Registrants' risk factors from those discussed in their 2021 Form 10-K - No Significant Changes: Risk factors remain consistent with those disclosed in the 2021 Form 10-K[243](index=243&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=53&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) There were no unregistered sales of equity securities or use of proceeds to report for the period - No Reportable Activity: None[244](index=244&type=chunk) [Item 6. Exhibits](index=53&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed with the Form 10-Q, including the Securitization Property Purchase and Sale Agreement, certifications, and the new Credit Agreement - Exhibits List: Includes Securitization Property Purchase and Sale Agreement (Exhibit 10.01), Certifications (Exhibits 31.01, 31.02, 32.01, 32.02), Credit Agreement (Exhibit 99.01), and Inline XBRL documents[245](index=245&type=chunk) [Signature](index=54&type=section&id=Signature) This section provides the signatory details and date for the Form 10-Q filing - Signatory: Sarah R. Stafford, Controller and Chief Accounting Officer[248](index=248&type=chunk) - Date: August 3, 2022[248](index=248&type=chunk)

OGE Energy Corp (NYSE:OGE) Q1 2022 Earnings Conference Call May 5, 2022 9:00 AM ET Company Participants Jason Bailey - Director, IR Robert Trauschke - Chairman, President & CEO Bryan Buckler - CFO Conference Call Participants Constantine Lednev - Guggenheim Securities Wayne Lee - Mizuho Securities Operator Good day, and thank you for standing by. Welcome to the Q1 2022 OGE Energy Corp. Earnings Conference Call. [Operator Instructions]. I would now like to hand the conference over to Jason Bailey, Director o ...

We Energize Life Q1 2022 Earnings and Business Update Conference Call May 5, 2022 Safe Harbor Some of the matters discussed in this presentation release may contain forward-looking statements that are subject to certain risks, uncertainties, and assumptions. Such forward-looking statements are intended to be identified in this document by the words "anticipate," "believe," "estimate," "expect," "intend," "objective, "plan," "possible," "potential," "project," "target" and similar expressions. Actual results ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2022 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from _____to_____ | | Exact name of registrants as specified in their charters, address of | | | --- | --- | --- | | Commission File Number | principal executive offices and ...

OGE Energy Corp. (NYSE:OGE) Q4 2021 Earnings Conference Call February 24, 2022 9:00 AM ET Company Participants Jason Bailey - Director, Investor Relations Sean Trauschke - Chairman, President and CEO Bryan Buckler - Chief Financial Officer Conference Call Participants Constantine Lednev - Guggenheim Partners Cody Clark - Bank of America Insoo Kim - Goldman Sachs Travis Miller - Morningstar Brandon Lee - Mizuho Operator Good day and thank you for standing by. Welcome to the Q4 2021 OGE Energy Corp. Earnings ...

We Energize Life Q4 2021 Earnings and Business Update Conference Call February 24, 2022 Safe Harbor Some of the matters discussed in this presentation may contain forward-looking statements that are subject to certain risks, uncertainties, and assumptions. Such forward-looking statements are intended to be identified in this document by the words "anticipate," "believe," "estimate," "expect," "intend," "objective," "plan," "possible," "potential," "project," "target" and similar expressions. Actual results ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K ☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2021 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from _____to_____ Exact name of registrants as specified in their charters, address of principal executive | Commission File Number | | --- | offices and registrants' telephone nu ...

We Energize Life Q3 2021 Earnings and Business Update Conference Call November 4, 2021 Safe Harbor Some of the matters discussed in this news release may contain forward-looking statements that are subject to certain risks, uncertainties and assumptions. Such forward-looking statements are intended to be identified in this document by the words "anticipate", "believe", "estimate", "expect", "intend", "objective", "plan", "possible", "potential", "project", "target" and similar expressions. Actual results ma ...

OGE Energy Corp. (NYSE:OGE) Q3 2021 Earnings Conference Call November 4, 2021 9:00 AM ET Company Participants Jason Bailey - Director of Investor Relations Sean Trauschke - Chairman, President & Chief Executive Officer Bryan Buckler - Chief Financial Officer Conference Call Participants Constantine Lednev - Guggenheim Cody Clark - Bank of America Insoo Kim - Goldman Sachs Travis Miller - Morningstar Wayne Lee - Mizuho Operator Ladies and gentlemen, thank you for standing by and welcome to the OGE Energy Cor ...