Financial Data and Key Metrics Changes - The consolidated earnings for Q1 2023 were reported at $0.19 per share, a decrease from $1.39 per share in Q1 2022, which included $1.15 per share from natural gas midstream operations that were exited in 2022 [8][9] - The Electric Company achieved net income of $40 million or $0.20 per diluted share in Q1 2023, compared to $39 million or $0.19 per share in the same period of 2022, primarily due to increased recoveries of capital investments and strong load growth [8][9] Business Line Data and Key Metrics Changes - The Electric Company reported a net income increase attributed to strong load growth and capital investment recoveries, despite higher operational and maintenance costs [8][9] - Other operations, including the holding company, reported a loss of $1.5 million in Q1 2023 compared to a net income of $10 million in Q1 2022, mainly due to a prior year tax benefit that reversed [9] Market Data and Key Metrics Changes - Customer growth was approximately 1%, with weather-normalized load growing at a rate of 3.9% compared to Q1 2022, indicating a robust economic environment in Oklahoma and Arkansas [10] - The commercial sector experienced its third consecutive quarter of double-digit year-over-year increases in weather-normalized load [10] Company Strategy and Development Direction - The company is focused on expanding generation capacity to meet growing demand, with plans to file for approval of multiple RFPs this summer [6][10] - Investments in grid and weather hardening are aimed at improving operational performance and reliability, especially in light of severe weather events [4][6] - The company is pursuing opportunities through the Infrastructure Investment and Jobs Act (IIJA) and the Inflation Reduction Act (IRA) to enhance clean energy initiatives [6][7] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's strong start to the year, highlighting the positive economic development in their service areas and the potential for continued growth [3][12] - The company anticipates a long-term earnings per share growth rate of 5% to 7% at the Electric Company, supported by a solid balance sheet and strong fundamentals [12] Other Important Information - The company reported a fuel under-recovery balance of approximately $370 million at the end of March, a reduction of $145 million since year-end [11] - The Oklahoma Corporation Commission approved the 2021 fuel prudency audit, and the company is evaluating the timing of its next rate review, which could be filed in the second half of the year [7] Q&A Session Summary Question: Can you talk about some of the offsets that you're embedding in the reiterated guidance? - Management acknowledged a negative impact from mild weather but emphasized strong tailwinds from load growth and sales mix, maintaining a bullish outlook for 2023 [14][15] Question: Can you provide more details on the latest round of solar RFPs? - Management indicated ongoing negotiations and emphasized the importance of cost, timing, and risk in the RFP process, with plans to file results this summer [21][22] Question: How do you perceive the sustainability of the 4% to 5% load growth trajectory into 2024 and beyond? - Management expressed optimism about sustained growth, citing diverse economic development and a solid base of residential customers [24] Question: Can you clarify the timeline for the outstanding RFPs? - Management confirmed plans to file for approval in the summer, with a potential approval timeline of up to 240 days in Oklahoma [35] Question: How are you thinking about the level of the rate increase? - Management emphasized a focus on affordability and a goal of avoiding large rate spikes, indicating a commitment to keeping rates attractive for continued growth [36][38]

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, 2023 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 | | | I.R.S. Employer Identification | | --- | --- | --- | --- | | Commission File Nu ...

OGE Energy Corp (NYSE:OGE) Q4 2022 Earnings Conference Call February 23, 2023 9:00 AM ET Company Participants Jason Bailey - Director, IR Robert Trauschke - Chairman, President & CEO Bryan Buckler - CFO Conference Call Participants Paul Zimbardo - Bank of America Merrill Lynch Aditya Gandhi - Wolfe Research Wayne Lee - Mizuho Securities Operator Good day, and thank you for standing by. Welcome to the Q4 2022 OGE Energy Corp. Earnings Conference Call. [Operator Instructions]. Please be advised that today's c ...

Financial Performance - OG&E's total electric operating revenues for 2022 were $3,375.7 million, a decrease of 7.6% compared to $3,653.7 million in 2021[36]. - System sales in 2022 reached 30.0 million MWh, representing an 8.3% increase from 27.7 million MWh in 2021[33]. - The electric energy sold in 2022 was 31.1 million MWh, up from 29.3 million MWh in 2021[36]. - OGE Energy targets a consistent growth of earnings per share of 5% to 7% at the electric company, supported by strong load growth and low customer rates[29]. Customer Base - In 2022, OG&E served approximately 889,000 customers, with residential customers accounting for 756,751[31]. Generation and Energy Mix - OGE Energy's generation (exclusive of station use) decreased to 13.6 million MWh in 2022 from 16.3 million MWh in 2021[36]. - OG&E's generation mix in 2022 consisted of 60% natural gas, 30% coal, and 10% renewable energy sources[51]. - OG&E's total generation capability is 7,240 MWs, with 67.7% from natural gas and 21.2% from coal[55]. Fuel and Supply Management - The weighted average cost of fuel in 2022 was 5.480 cents per kilowatt-hour, a decrease from 6.833 cents in 2021[53]. - OG&E has coal supply agreements covering 100% of its expected coal requirements for 2023 through 2025 for its Sooner and River Valley facilities[58]. - In 2022, OG&E purchased 3.1 million tons of coal from sub-bituminous suppliers and 0.011 million tons from bituminous suppliers[58]. - The company expanded its natural gas storage capacity in 2022 by entering into two storage service contracts to protect against price volatility[56]. Dividend and Payout Strategy - The company aims for a dividend payout ratio of 65% to 70% over the next five years[29]. Safety and Employee Engagement - OGE Energy was named the 2 Best Employer in Oklahoma for 2022, highlighting its commitment to employee safety and well-being[66]. - OGE Energy has reduced its 5-year averages for OSHA recordable injuries by 73% and its Days Away, Restricted, Transfer Rate (DART) by 78% since the 2011 baseline[75]. - The company aims for zero safety incidents annually and has implemented extensive training on safety culture[72]. - OGE Energy's employee engagement surveys are used to gather feedback and enhance employee engagement based on survey results[71]. Diversity and Workforce Development - The company is focused on diversity, with an upward trend in hiring members from gender, racial, and ethnically diverse communities over the past three years[77]. - OGE Energy has established partnerships with educational institutions to create talent pipelines for recruitment[68]. - The company engages in ongoing succession planning discussions to address workforce turnover due to retirements expected in the next five to ten years[70]. Risk Management and Financial Oversight - OGE Energy's Risk Oversight Committee, which includes the Chief Financial Officer, is responsible for managing significant risk management activities and reports periodically to the Audit Committee[277]. - The Registrants manage interest rate exposure primarily related to variable-rate debt and commercial paper, with no current intent to utilize interest rate derivatives[279]. - The fair value of the Registrants' long-term debt is based on market prices and current rates for similar issues, with a focus on managing interest rate exposure[280]. Debt Management - OGE Energy has a fixed-rate debt principal amount of $500.0 million with a weighted-average interest rate of 0.703%[281]. - The variable-rate debt principal amount is $50.0 million with a weighted-average interest rate of 5.375%[281]. - OG&E's fixed-rate debt principal amount is projected to reach $3,894.3 million by 2027, with a weighted-average interest rate decreasing to 3.980%[281]. - The variable-rate debt principal amount for OG&E is expected to be $135.4 million with a weighted-average interest rate of 3.840%[281]. - A hypothetical change of 100 basis points in the underlying variable interest rate incurred by OG&E would change interest expense by $1.4 million annually[282].

OGHE® We Energize Life Q3 2022 Earnings & Business Update Conference Call November 3, 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 resul ...

OGE Energy Corp. (NYSE:OGE) Q3 2022 Earnings Conference Call November 3, 2022 9:00 AM ET Company Participants Jason Bailey - Director, Investor Relations Sean Trauschke - Chairman, President, and Chief Executive Officer Bryan Buckler - Chief Financial Officer Conference Call Participants Julien Dumoulin-Smith - Bank of America Brandon Lee - Mizuho Gregg Orrill - UBS Adithya Gandhi - Wolfe Research Constantine Lednev - Guggenheim Operator Good morning and thank you for standing by. Welcome to the OGE Energy ...

[Cover Page](index=1&type=section&id=Cover%20Page) - The report is a **Quarterly Report (Form 10-Q)** for the period ended **September 30, 2022**, filed by OGE Energy Corp. and Oklahoma Gas and Electric Company[1](index=1&type=chunk) - OGE Energy Corp. is classified as a **Large Accelerated Filer**, while Oklahoma Gas and Electric Company is a **Non-accelerated filer**[5](index=5&type=chunk) **Outstanding Common Shares (September 30, 2022):** | Registrant | Shares Outstanding | | :----------------------------- | :----------------- | | OGE Energy Corp. | 200,202,672 | | Oklahoma Gas and Electric Company | 40,378,745 | [Table of Contents](index=2&type=section&id=TABLE%20OF%20CONTENTS) [Glossary of Terms](index=3&type=section&id=GLOSSARY%20OF%20TERMS) - The glossary provides definitions for frequently used abbreviations throughout the **Form 10-Q**, including regulatory bodies (**APSC, FERC, OCC**), accounting standards (**ASC, ASU, GAAP**), and company entities (**OG&E, OGE Energy**)[10](index=10&type=chunk)[11](index=11&type=chunk) [Filing Format](index=4&type=section&id=FILING%20FORMAT) - This is a **combined Form 10-Q** filed separately by OGE Energy and OG&E, with each registrant filing information on its own behalf[14](index=14&type=chunk) - Neither OGE Energy nor its other subsidiaries have obligations for OG&E's debt securities, and vice versa, emphasizing the **separate financial responsibilities**[14](index=14&type=chunk) [Forward-Looking Statements](index=4&type=section&id=FORWARD-LOOKING%20STATEMENTS) - The report contains **forward-looking statements**, identified by terms like 'anticipate,' 'believe,' 'estimate,' and 'expect,' which are subject to various risks, uncertainties, and assumptions[16](index=16&type=chunk) - Factors that could cause actual results to differ materially include **general economic conditions, capital market access, regulatory decisions, commodity prices, competitive factors, environmental laws, and cybersecurity risks**[16](index=16&type=chunk)[17](index=17&type=chunk) - The Registrants do not undertake any obligation to publicly update or revise these **forward-looking statements**[18](index=18&type=chunk) [Part I - Financial Information](index=6&type=section&id=Part%20I%20-%20FINANCIAL%20INFORMATION) This section presents the unaudited financial statements for OGE Energy Corp. and Oklahoma Gas and Electric Company, including statements of income, comprehensive income, cash flows, balance sheets, and changes in stockholders' equity. It also includes detailed notes to the financial statements, management's discussion and analysis of financial condition and results of operations, quantitative and qualitative disclosures about market risk, and controls and procedures [Item 1. Financial Statements (Unaudited)](index=6&type=section&id=Item%201.%20Financial%20Statements%20(Unaudited)) This section provides the unaudited condensed financial statements for OGE Energy Corp. and its subsidiary, Oklahoma Gas and Electric Company (OG&E), for the three and nine months ended September 30, 2022 and 2021, along with 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) **OGE Energy Corp. Net Income and Diluted EPS:** | Period | Net Income (Millions) | Diluted EPS | | :-------------------------------- | :-------------------- | :---------- | | Three Months Ended September 30, 2022 | $262.8 | $1.31 | | Three Months Ended September 30, 2021 | $252.5 | $1.26 | | Nine Months Ended September 30, 2022 | $615.4 | $3.07 | | Nine Months Ended September 30, 2021 | $418.1 | $2.09 | **OGE Energy Corp. Key Balance Sheet Items (Millions):** | Item | September 30, 2022 | December 31, 2021 | | :-------------------------- | :----------------- | :----------------- | | Cash and cash equivalents | $456.2 | $0.0 | | Total current assets | $1,712.8 | $613.6 | | Equity securities investment in Energy Transfer | $0.0 | $785.1 | | Regulatory assets | $493.9 | $1,230.8 | | Total assets | $12,604.0 | $12,606.4 | | Total current liabilities | $1,876.0 | $1,089.6 | | Long-term debt | $3,548.2 | $4,496.4 | | Total stockholders' equity | $4,440.7 | $4,056.3 | - Net cash provided from operating activities for OGE Energy Corp. significantly increased to **$767.8 million** for the nine months ended **September 30, 2022**, from net cash used of **($494.1) million** in the prior year[27](index=27&type=chunk) [Oklahoma Gas and Electric Company Condensed Financial Statements](index=12&type=section&id=Oklahoma%20Gas%20and%20Electric%20Company%20Condensed%20Financial%20Statements) **OG&E Net Income:** | Period | Net Income (Millions) | | :-------------------------------- | :-------------------- | | Three Months Ended September 30, 2022 | $253.1 | | Three Months Ended September 30, 2021 | $223.8 | | Nine Months Ended September 30, 2022 | $392.8 | | Nine Months Ended September 30, 2021 | $320.1 | **OG&E Key Balance Sheet Items (Millions):** | Item | September 30, 2022 | December 31, 2021 | | :-------------------------- | :----------------- | :----------------- | | Cash and cash equivalents | $2.1 | $0.0 | | Total current assets | $1,451.2 | $605.1 | | Regulatory assets | $493.9 | $1,230.8 | | Total assets | $12,233.8 | $11,688.0 | | Total current liabilities | $1,051.8 | $575.8 | | Long-term debt | $3,498.4 | $3,996.5 | | Total stockholder's equity | $4,997.9 | $4,602.8 | - Net cash provided from operating activities for OG&E was **$843.9 million** for the nine months ended **September 30, 2022**, a significant increase from net cash used of **($529.6) million** in the prior year[38](index=38&type=chunk) [Combined Notes to Condensed Financial Statements](index=17&type=section&id=Combined%20Notes%20to%20Condensed%20Financial%20Statements) [Note 1. Summary of Significant Accounting Policies](index=17&type=section&id=Note%201.%20Summary%20of%20Significant%20Accounting%20Policies) This note outlines the organizational structure of OGE Energy Corp. and its subsidiary OG&E, detailing their electric utility and natural gas midstream operations. It also covers the basis of financial statement presentation, accounting records, allowance for uncollectible accounts, and the accounting treatment for investments in equity securities (Energy Transfer) and unconsolidated affiliates (Enable) - OGE Energy is a holding company primarily focused on electric utility operations through OG&E, having sold all its Energy Transfer limited partner units by **September 30, 2022**[51](index=51&type=chunk) - OG&E's rates are regulated by the **OCC, APSC, and FERC**, and its accounting records adhere to the **Uniform System of Accounts**, allowing for deferral of certain costs as regulatory assets or liabilities[52](index=52&type=chunk)[57](index=57&type=chunk)[58](index=58&type=chunk) **OGE Energy Corp. Gain on Equity Securities (Millions):** | Period | 2022 | | :-------------------------------- | :----- | | Three Months Ended September 30 | $39.4 | | Nine Months Ended September 30 | $282.1 | [Note 2. Accounting Pronouncements](index=22&type=section&id=Note%202.%20Accounting%20Pronouncements) This note discusses the adoption of ASU 2021-10, 'Government Assistance,' effective January 1, 2022, which required additional annual disclosures for government assistance. It highlights the accounting treatment for the $750 million securitization funds received from the ODFA for Winter Storm Uri costs, analogizing to the grant model under International Accounting Standards 20 - The Registrants adopted **ASU 2021-10, 'Government Assistance,'** prospectively on **January 1, 2022**, requiring additional annual disclosures for government assistance[79](index=79&type=chunk) - OG&E received approximately **$750 million** from the **ODFA** in **July 2022** from securitization bonds to fund extreme fuel and purchased power costs incurred during **Winter Storm Uri**, accounted for by analogy to the grant model[79](index=79&type=chunk) [Note 3. Revenue Recognition](index=23&type=section&id=Note%203.%20Revenue%20Recognition) This note disaggregates OG&E's revenues from contracts with customers by classification (residential, commercial, industrial, oilfield, public authorities, and street light, integrated market, transmission, and other) for the three and nine months ended September 30, 2022 and 2021 **OG&E Revenues from Contracts with Customers (Millions):** | Classification | 3 Months Ended Sep 30, 2022 | 3 Months Ended Sep 30, 2021 | 9 Months Ended Sep 30, 2022 | 9 Months Ended Sep 30, 2021 | | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | Residential | $512.3 | $365.5 | $1,028.4 | $1,112.2 | | Commercial | $305.5 | $203.4 | $627.0 | $619.2 | | Industrial | $109.8 | $79.9 | $248.6 | $264.1 | | Oilfield | $101.8 | $68.0 | $234.0 | $257.5 | | Public authorities & street light | $109.8 | $75.0 | $228.9 | $235.1 | | System sales revenues | $1,139.2 | $791.8 | $2,366.9 | $2,488.1 | | Integrated market | $69.8 | $17.2 | $135.6 | $447.6 | | Transmission | $36.9 | $30.8 | $105.6 | $103.8 | | Other | $3.8 | $8.4 | $13.4 | ($5.8) | | **Total** | **$1,250.6** | **$848.2** | **$2,619.7** | **$3,033.7** | - Operating revenues for the nine months ended **September 30, 2021**, were significantly higher due to increased fuel, purchased power, and direct transmission expenses resulting from **Winter Storm Uri**, which are generally recoverable from customers[81](index=81&type=chunk) [Note 4. Related Party Transactions](index=23&type=section&id=Note%204.%20Related%20Party%20Transactions) This note details the operating costs charged between OGE Energy and its subsidiary OG&E, as well as historical transactions with Enable prior to its merger with Energy Transfer **OGE Energy Operating Costs Charged to OG&E (Millions):** | Period | 2022 | 2021 | | :-------------------------------- | :--- | :--- | | Three Months Ended September 30 | $31.7 | $32.2 | | Nine Months Ended September 30 | $97.8 | $101.3 | **OGE Energy Operating Costs Charged to Enable (Millions):** | Period | 2021 | | :-------------------------------- | :--- | | Three Months Ended September 30 | $0.1 | | Nine Months Ended September 30 | $0.3 | **OG&E and Enable Related Party Transactions (Millions):** | Item | 3 Months Ended Sep 30, 2021 | 9 Months Ended Sep 30, 2021 | | :-------------------------------- | :-------------------------- | :-------------------------- | | Electricity to power electric compression assets | $4.1 | $10.0 | | Natural gas transportation services | $9.4 | $23.4 | | Natural gas purchases (sales) | ($7.7) | ($28.3) | [Note 5. Fair Value Measurements](index=24&type=section&id=Note%205.%20Fair%20Value%20Measurements) This note describes the fair value hierarchy (Level 1, 2, 3) used for financial instruments and discloses the fair value and carrying amounts of OGE Energy's previous investment in Energy Transfer's equity securities and the Registrants' long-term debt. It highlights OGE Energy's divestiture of all Energy Transfer units by September 30, 2022 - OGE Energy's investment in Energy Transfer's equity securities, previously valued at **$785.1 million (Level 1)** at **December 31, 2021**, was fully sold by **September 30, 2022**[91](index=91&type=chunk)[92](index=92&type=chunk) - Long-term debt for both OGE Energy and OG&E is primarily classified as **Level 2** fair value measurements, with OG&E Tinker Debt being **Level 3**[92](index=92&type=chunk) [Note 6. Stock-Based Compensation](index=25&type=section&id=Note%206.%20Stock-Based%20Compensation) This note presents the pre-tax compensation expense and related income tax benefit for stock-based compensation (performance units and restricted stock units) for OGE Energy and OG&E for the three and nine months ended September 30, 2022 and 2021 **Total Stock-Based Compensation Expense (Millions):** | Entity | Period | 2022 | 2021 | | :------------- | :-------------------------- | :--- | :--- | | OGE Energy | Three Months Ended Sep 30 | $2.3 | $2.3 | | OGE Energy | Nine Months Ended Sep 30 | $6.9 | $7.1 | | OG&E | Three Months Ended Sep 30 | $0.8 | $0.6 | | OG&E | Nine Months Ended Sep 30 | $2.3 | $1.6 | - During the nine months ended **September 30, 2022**, OGE Energy issued **27,278 shares** of new common stock under its Stock Incentive Plan[94](index=94&type=chunk) [Note 7. Income Taxes](index=25&type=section&id=Note%207.%20Income%20Taxes) This note explains that OGE Energy files consolidated income tax returns, with income taxes allocated based on stand-alone taxable income. It also mentions the deferral and amortization of federal investment tax credits and the earning of federal and state tax credits from wind and solar facilities - OGE Energy files **consolidated income tax returns**, and income taxes are generally allocated to each company in the affiliated group based on its stand-alone taxable income or loss[95](index=95&type=chunk) - Federal investment tax credits are deferred and amortized over the life of the related property, and OG&E earns **federal and state tax credits** from its wind and solar generating facilities[95](index=95&type=chunk) [Note 8. Common Equity](index=25&type=section&id=Note%208.%20Common%20Equity) This note details OGE Energy's common equity, including information on its Automatic Dividend Reinvestment and Stock Purchase Plan and the calculation of basic and diluted earnings per share - No shares of common stock were issued under OGE Energy's **Automatic Dividend Reinvestment and Stock Purchase Plan** during the three and nine months ended **September 30, 2022**[96](index=96&type=chunk) **OGE Energy Corp. Basic and Diluted EPS:** | Period | Basic EPS 2022 | Basic EPS 2021 | Diluted EPS 2022 | Diluted EPS 2021 | | :-------------------------------- | :------------- | :------------- | :--------------- | :--------------- | | Three Months Ended September 30 | $1.31 | $1.26 | $1.31 | $1.26 | | Nine Months Ended September 30 | $3.07 | $2.09 | $3.07 | $2.09 | - Potentially dilutive securities for OGE Energy consist of **performance units and restricted stock units**[97](index=97&type=chunk) [Note 9. Long-Term Debt](index=26&type=section&id=Note%209.%20Long-Term%20Debt) This note confirms the Registrants' compliance with debt agreements and details OGE Energy's new $100.0 million floating rate unsecured three-year credit agreement (including a $50.0 million term loan) entered in May 2022. It also provides information on OG&E's tax-exempt pollution control bonds, which are subject to optional redemption - OGE Energy entered into a **$100.0 million floating rate unsecured three-year credit agreement** in **May 2022**, including a **$50.0 million term loan**, with a weighted-average interest rate of **3.23%** at **September 30, 2022**[102](index=102&type=chunk) - OG&E has **$135.4 million** in tax-exempt pollution control bonds that are subject to optional tender by holders within the next **12 months** but are classified as long-term debt due to the intent and ability to refinance[103](index=103&type=chunk)[104](index=104&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 describes the Registrants' short-term borrowing methods, including commercial paper and revolving credit agreements. It highlights OGE Energy's decrease in short-term debt and OG&E's regulatory approvals for short-term borrowings - OGE Energy had **no short-term debt** at **September 30, 2022**, a decrease from **$486.9 million** at **December 31, 2021**[105](index=105&type=chunk) - The Registrants have unsecured **five-year revolving credit facilities** totaling **$1.1 billion** (**$550.0 million** for OGE Energy and **$550.0 million** for OG&E)[106](index=106&type=chunk) - OG&E has regulatory approvals to incur up to **$800.0 million** in short-term borrowings through **December 31, 2022**, and has requested approval for up to **$1.0 billion** for **2023-2024**[109](index=109&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 details the net periodic benefit cost components for OGE Energy's Pension Plan, Restoration of Retirement Income Plan, and postretirement benefit plans. It explains the recognition of a one-time settlement charge for pension plans due to increased lump sum payments to retirees and the regulatory treatment of pension and postretirement medical costs - The Registrants recorded **pension plan settlement charges** due to an increase in employees electing lump sum payments upon retirement, which accelerates future pension expense without requiring a cash outlay[110](index=110&type=chunk) **OGE Energy Total Net Periodic Benefit Cost (Millions):** | Plan | 3 Months Ended Sep 30, 2022 | 3 Months Ended Sep 30, 2021 | 9 Months Ended Sep 30, 2022 | 9 Months Ended Sep 30, 2021 | | :-------------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | Pension Plan | $4.6 | $3.5 | $23.4 | $35.4 | | Restoration of Retirement Income Plan | $0.4 | $2.1 | $1.4 | $3.0 | | Postretirement Benefit Plans | ($0.1) | ($0.4) | ($0.3) | ($1.3) | - OG&E defers the difference between actual pension and postretirement medical expenses and the amount approved in its last Oklahoma rate review as a **regulatory asset or liability**[111](index=111&type=chunk) [Note 12. Report of Business Segments](index=30&type=section&id=Note%2012.%20Report%20of%20Business%20Segments) This note presents the financial results of OGE Energy's two business segments: electric utility (OG&E) and natural gas midstream operations. It highlights that the natural gas midstream operations segment is not comparable year-over-year due to the divestiture of Enable and Energy Transfer investments - OGE Energy reports operations in two segments: **electric utility (OG&E)** and **natural gas midstream operations**[119](index=119&type=chunk) - The natural gas midstream operations segment's results are not comparable between **2022** and **2021** due to the **December 2, 2021 merger of Enable and Energy Transfer**, and OGE Energy's subsequent sale of all Energy Transfer equity securities by **September 30, 2022**[119](index=119&type=chunk)[186](index=186&type=chunk) **OGE Energy Net Income (Loss) by Segment (Millions):** | Segment | 3 Months Ended Sep 30, 2022 | 3 Months Ended Sep 30, 2021 | 9 Months Ended Sep 30, 2022 | 9 Months Ended Sep 30, 2021 | | :-------------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | OG&E (Electric Utility) | $253.1 | $223.8 | $392.8 | $320.1 | | OGE Holdings (Natural Gas Midstream Operations) | $16.1 | $30.8 | $227.3 | $100.9 | | Other operations | ($6.4) | ($2.1) | ($4.7) | ($2.9) | | **Total OGE Energy net income** | **$262.8** | **$252.5** | **$615.4** | **$418.1** | [Note 13. Commitments and Contingencies](index=32&type=section&id=Note%2013.%20Commitments%20and%20Contingencies) This note states that the Registrants' material commitments and contingent liabilities are largely consistent with those reported in the 2021 Form 10-K, with additional details provided for environmental laws and regulations. It asserts that any reasonably possible losses from pending or threatened lawsuits are not expected to be quantitatively material - The Registrants' operations are subject to numerous stringent **federal, state, and local environmental laws and regulations**, which can impact business activities and costs[124](index=124&type=chunk)[218](index=218&type=chunk) - Management believes that all operations are in **substantial compliance** with current federal, state, and local environmental standards[124](index=124&type=chunk)[218](index=218&type=chunk) - Based on available information, any reasonably possible losses in excess of accrued amounts arising from pending or threatened lawsuits or claims are not expected to be **quantitatively material** to the condensed financial statements[126](index=126&type=chunk)[217](index=217&type=chunk) [Note 14. Rate Matters and Regulation](index=33&type=section&id=Note%2014.%20Rate%20Matters%20and%20Regulation) This note provides updates on completed and pending regulatory matters affecting OG&E's rates and operations in Arkansas and Oklahoma, including the approval of securitization bonds for Winter Storm Uri costs, the 2021 Oklahoma General Rate Review, and ongoing proceedings related to fuel costs, SPP transmission upgrades, and environmental regulations - The **ODFA** issued securitization bonds in **July 2022**, providing OG&E with approximately **$750 million** to recover extreme fuel and purchased power costs incurred during **Winter Storm Uri**[129](index=129&type=chunk)[130](index=130&type=chunk) - The **OCC** approved a **Joint Stipulation and Settlement Agreement** on **September 8, 2022**, for the **2021 Oklahoma General Rate Review**, resulting in a base rate revenue increase of **$30.0 million** for OG&E, effective **July 1, 2022**[131](index=131&type=chunk)[132](index=132&type=chunk) - OG&E estimates a potential refund of **$13.0 million** (net of amounts paid to other utilities) plus interest related to **FERC's order on sponsored transmission upgrades (Z2 charges)**, with **$5.0 million** impacting Registrants and **$8.0 million** impacting customers[138](index=138&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=39&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides a detailed discussion and analysis of OGE Energy Corp.'s and OG&E's financial condition and results of operations for the three and nine months ended September 30, 2022, compared to the same periods in 2021. It covers the company's strategy, recent developments, operating results by segment, liquidity, capital resources, and critical accounting policies [Introduction](index=39&type=section&id=Introduction) - OGE Energy is a holding company with **electric utility operations (OG&E)** and, prior to **September 30, 2022**, natural gas midstream operations[154](index=154&type=chunk) - As of **September 30, 2022**, OGE Energy sold all its Energy Transfer limited partner units, transitioning to primarily an **electric utility**[154](index=154&type=chunk)[156](index=156&type=chunk) - OG&E generates, transmits, distributes, and sells electric energy in Oklahoma and western Arkansas, with rates regulated by the **OCC, APSC, and FERC**[155](index=155&type=chunk) [Overview](index=39&type=section&id=Overview) - OGE Energy's strategy focuses on creating **long-term shareholder value** by targeting consistent **EPS growth of 5-7%** at the electric utility, supported by strong load growth and investments in lower-risk infrastructure projects[158](index=158&type=chunk) - The company aims to grow its dividend, targeting a payout ratio of **65-70%** in the next **five years**, with EPS growth expected to exceed dividend growth[158](index=158&type=chunk) - Long-term sustainability is predicated on **exceptional customer experiences, grid improvements, cleaner generation resources, environmental stewardship, strong governance, and supporting members and communities**[159](index=159&type=chunk) [Recent Developments](index=40&type=section&id=Recent%20Developments) - The **ODFA** issued securitization bonds in **July 2022**, providing OG&E with approximately **$750 million** to recover **Winter Storm Uri** costs[160](index=160&type=chunk) - The **OCC** approved a **$30.0 million base rate revenue increase** for OG&E on **September 8, 2022**, effective **July 1, 2022**, with no refund of interim rates required[161](index=161&type=chunk) - The **OCC Public Utility Division Staff** initiated a cause on **September 29, 2022**, to determine the appropriate methodology to recover OG&E's **$424.0 million fuel clause under recovery balance**, with updated fuel factors implemented **October 1, 2022**[162](index=162&type=chunk) - Global macroeconomic pressures, including **raw material inflation, logistical challenges, and component shortages**, are impacting the Registrants' operations and capital projects[163](index=163&type=chunk) [Summary of OGE Energy Operating Results](index=41&type=section&id=Summary%20of%20OGE%20Energy%20Operating%20Results) **OGE Energy Net Income and Diluted EPS:** | Period | Net Income (Millions) | Diluted EPS | | :-------------------------------- | :-------------------- | :---------- | | Three Months Ended September 30, 2022 | $262.8 | $1.31 | | Three Months Ended September 30, 2021 | $252.5 | $1.26 | | Nine Months Ended September 30, 2022 | $615.4 | $3.07 | | Nine Months Ended September 30, 2021 | $418.1 | $2.09 | - The increase in net income for the nine months ended **September 30, 2022**, was primarily driven by a **$126.4 million increase** at OGE Holdings (due to a **$282.1 million pre-tax gain** on Energy Transfer equity securities) and a **$72.7 million increase** at OG&E (due to higher operating revenues)[167](index=167&type=chunk) - OG&E is projected to earn **$417.0 million to $425.0 million ($2.08 to $2.12 per diluted share)** in **2022**, while the holding company expects a loss of **$2.0 million to $6.0 million ($0.01 to $0.03 per diluted share)**[167](index=167&type=chunk) [Results of Operations](index=42&type=section&id=Results%20of%20Operations) **OGE Energy Net Income and EPS:** | Period | Net Income (Millions) | Basic EPS | Diluted EPS | | :-------------------------------- | :-------------------- | :-------- | :---------- | | Three Months Ended September 30, 2022 | $262.8 | $1.31 | $1.31 | | Three Months Ended September 30, 2021 | $252.5 | $1.26 | $1.26 | | Nine Months Ended September 30, 2022 | $615.4 | $3.07 | $3.07 | | Nine Months Ended September 30, 2021 | $418.1 | $2.09 | $2.09 | **Net Income (Loss) by Business Segment (Millions):** | Segment | 3 Months Ended Sep 30, 2022 | 3 Months Ended Sep 30, 2021 | 9 Months Ended Sep 30, 2022 | 9 Months Ended Sep 30, 2021 | | :-------------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | OG&E (Electric Utility) | $253.1 | $223.8 | $392.8 | $320.1 | | OGE Holdings (Natural Gas Midstream Operations) | $16.1 | $30.8 | $227.3 | $100.9 | | Other operations | ($6.4) | ($2.1) | ($4.7) | ($2.9) | | **Total OGE Energy net income** | **$262.8** | **$252.5** | **$615.4** | **$418.1** | [OG&E (Electric Utility)](index=43&type=section&id=OG%26E%20(Electric%20Utility)) - OG&E's net income increased by **$29.3 million (13.1%)** for the three months and **$72.7 million (22.7%)** for the nine months ended **September 30, 2022**, compared to the same periods in **2021**[176](index=176&type=chunk) - Operating revenues increased by **$406.4 million (47.0%)** for the three months ended **September 30, 2022**, primarily due to higher fuel, purchased power, and direct transmission expense (recoverable), price variance from rate reviews, and increased cooling degree days[177](index=177&type=chunk)[178](index=178&type=chunk)[179](index=179&type=chunk) - Operating revenues decreased by **$408.6 million (13.3%)** for the nine months ended **September 30, 2022**, primarily due to lower fuel, purchased power, and direct transmission expense compared to the elevated costs during **Winter Storm Uri in 2021**[177](index=177&type=chunk)[178](index=178&type=chunk) - Fuel, purchased power and direct transmission expense increased by **$343.7 million** for the three months ended **September 30, 2022**, due to higher fuel prices and market prices for SPP purchases, but decreased by **$554.1 million** for the nine months ended **September 30, 2022**, due to inflated fuel costs during **Winter Storm Uri in 2021**[180](index=180&type=chunk)[181](index=181&type=chunk)[182](index=182&type=chunk)[183](index=183&type=chunk) [OGE Holdings (Natural Gas Midstream Operations)](index=45&type=section&id=OGE%20Holdings%20(Natural%20Gas%20Midstream%20Operations)) - Operating results for the natural gas midstream operations segment are not comparable between **2022** and **2021** due to the **merger of Enable and Energy Transfer in December 2021** and OGE Energy's subsequent sale of all Energy Transfer equity securities by **September 30, 2022**[186](index=186&type=chunk) - OGE Holdings' income tax expense decreased by **$4.6 million (48.4%)** for the three months ended **September 30, 2022**, due to lower pre-tax income[188](index=188&type=chunk) - OGE Holdings' income tax expense increased by **$33.0 million** for the nine months ended **September 30, 2022**, primarily due to higher pre-tax income and state deferred tax adjustments related to the Energy Transfer investment[188](index=188&type=chunk) [Liquidity and Capital Resources](index=46&type=section&id=Liquidity%20and%20Capital%20Resources) - Net cash provided from operating activities for OGE Energy increased by **$1,261.9 million** for the nine months ended **September 30, 2022**, primarily due to increased cash from customers, securitization funds from the **ODFA**, and decreased vendor payments[189](index=189&type=chunk)[190](index=190&type=chunk) - Net cash provided from investing activities for OGE Energy increased by **$919.8 million** for the nine months ended **September 30, 2022**, driven by **$1,067.2 million** in proceeds from the sale of Energy Transfer's limited partner units, partially offset by increased capital expenditures[189](index=189&type=chunk)[190](index=190&type=chunk) - OGE Energy intends to use the **$1,067.2 million** proceeds from the sale of Energy Transfer units to help repay **$1.0 billion** in senior notes due in **May 2023**[214](index=214&type=chunk) - OG&E expects to issue **$300.0 million to $400.0 million** in long-term debt in the **first half of 2023** to help fund its capital investments[208](index=208&type=chunk) [Critical Accounting Policies and Estimates](index=49&type=section&id=Critical%20Accounting%20Policies%20and%20Estimates) - Management exercises significant judgment in areas such as **Pension Plan assumptions, income taxes, contingency reserves, asset retirement obligations, regulatory assets and liabilities, unbilled revenues, and the allowance for uncollectible accounts receivable**[216](index=216&type=chunk) - The Registrants believe they have taken **reasonable positions** in using assumptions and estimates to minimize potential negative financial impacts[215](index=215&type=chunk) [Environmental Laws and Regulations](index=50&type=section&id=Environmental%20Laws%20and%20Regulations) - OG&E's operations are subject to numerous stringent **federal, state, and local environmental laws and regulations**, including the **Federal Clean Air Act, Endangered Species Act, Federal Resource Conservation and Recovery Act, and Federal Clean Water Act**[218](index=218&type=chunk)[221](index=221&type=chunk)[225](index=225&type=chunk)[230](index=230&type=chunk)[232](index=232&type=chunk) - OG&E has reduced carbon dioxide emissions by over **40%** and ozone-forming NO and SO emissions by approximately **70%** and **85%** respectively, compared to **2005 levels**, with a target of **50% CO reduction by 2030**[224](index=224&type=chunk) - OG&E is monitoring proposed **EPA rules** (e.g., **Cross State Air Pollution Rule, Regional Haze**) and **USFWS proposed listings for endangered species** (**Lesser Prairie Chicken, Alligator Snapping Turtle, Northern Long-Eared Bat, Tricolored Bat**), which could impact operations or require mitigation measures[223](index=223&type=chunk)[226](index=226&type=chunk)[227](index=227&type=chunk)[228](index=228&type=chunk)[229](index=229&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=53&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 since those discussed in their 2021 Form 10-K - There have been **no significant changes** in the market risks affecting the Registrants from those discussed in their **2021 Form 10-K**[237](index=237&type=chunk) [Item 4. Controls and Procedures](index=53&type=section&id=Item%204.%20Controls%20and%20Procedures) This section confirms that the Registrants' disclosure controls and procedures were effective as of September 30, 2022, and that no material changes in internal control over financial reporting occurred during the most recently completed fiscal quarter - The Registrants' disclosure controls and procedures were **effective** as of **September 30, 2022**[238](index=238&type=chunk) - No **material changes** in the Registrants' internal control over financial reporting occurred during the most recently completed fiscal quarter[239](index=239&type=chunk) [Part II - Other Information](index=54&type=section&id=Part%20II%20-%20OTHER%20INFORMATION) This section provides additional information not covered in Part I, including updates on legal proceedings, risk factors, unregistered sales of equity securities, and a list of exhibits filed with the report [Item 1. Legal Proceedings](index=54&type=section&id=Item%201.%20Legal%20Proceedings) This section refers to the 2021 Form 10-K for a description of certain legal proceedings and states that there are no new significant cases or material changes to previously reported proceedings, except as described in Note 14 of the financial statements - There are **no new significant legal cases or material changes** in previously reported proceedings, except as described in **Note 14** within 'Item 1. Financial Statements'[241](index=241&type=chunk) [Item 1A. Risk Factors](index=54&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 - There have been **no significant changes** in the Registrants' risk factors from those discussed in their **2021 Form 10-K**[242](index=242&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=54&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) This section indicates that there were no unregistered sales of equity securities or use of proceeds to report for the period - No **unregistered sales of equity securities** or use of proceeds to report for the period[243](index=243&type=chunk) [Item 6. Exhibits](index=54&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 Inline XBRL documents - Exhibits include the **Securitization Property Purchase and Sale Agreement** dated **July 20, 2022**, certifications pursuant to the **Sarbanes-Oxley Act**, and **Inline XBRL documents**[244](index=244&type=chunk) [Signature](index=55&type=section&id=SIGNATURE) - The report was signed by **Sarah R. Stafford, Controller and Chief Accounting Officer**, on behalf of OGE Energy Corp. and Oklahoma Gas and Electric Company on **November 2, 2022**[248](index=248&type=chunk)

Q2 2022 Earnings & Business Update Conference Call August 4, 2022 We Energize Lit © 2022 OGE Energy Corp. | 1 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 expres ...

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)