OGE Energy (OGE) - 2025 Q2 - Quarterly Report

FORM 10-Q Filing Details This section provides details on the registrants, OGE Energy Corp. and Oklahoma Gas and Electric Company, for this Form 10-Q filing Registrant Information This section identifies OGE Energy Corp. and its subsidiary Oklahoma Gas and Electric Company (OG&E) as the registrants for this Form 10-Q, detailing their addresses, incorporation state (Oklahoma), and securities registered on the New York Stock Exchange. It also specifies the number of common shares outstanding for both entities as of June 30, 2025 - OGE Energy Corp. and Oklahoma Gas and Electric Company (OG&E) are the registrants. OGE Energy Corp. common stock is traded on the NYSE under symbol OGE[1] Shares Outstanding as of June 30, 2025 | Registrant | Shares Outstanding | Par Value per Share | | :-------------------------- | :----------------- | :------------------ | | OGE Energy Corp. | 201,395,142 | $0.01 | | Oklahoma Gas and Electric Company | 40,378,745 | $2.50 | Filing Status and Accelerate Filer Designation Both OGE Energy Corp. and OG&E confirm compliance with Section 13 or 15(d) of the Securities Exchange Act of 1934 and electronic submission requirements. OGE Energy Corp. is designated as a 'Large accelerated filer,' while OG&E is a 'Non-accelerated filer' and meets conditions for reduced disclosure format - Both OGE Energy Corp. and OG&E have filed all required reports and submitted Interactive Data Files electronically during the preceding 12 months[1] Filer Designations | Registrant | Filer Designation | | :-------------------------- | :------------------ | | OGE Energy Corp. | Large accelerated filer | | Oklahoma Gas and Electric Company | Non-accelerated filer | - Oklahoma Gas and Electric Company is filing with a reduced disclosure format as permitted by General Instruction H(2) of Form 10-Q[2] GLOSSARY OF TERMS This section defines frequently used abbreviations for regulatory bodies, environmental terms, and company-specific terms within the Form 10-Q - The glossary provides definitions for frequently used abbreviations within the Form 10-Q, including regulatory bodies (APSC, FERC, OCC), environmental terms (CO2, NOX, SO2, Regional Haze), and company-specific terms (OG&E, OGE Energy, Pension Plan)[5][6][7] FILING FORMAT AND FORWARD-LOOKING STATEMENTS This section clarifies the separate filing responsibilities of OGE Energy and OG&E and outlines the nature and risks of forward-looking statements Filing Format This section clarifies that the Form 10-Q is filed separately by OGE Energy and OG&E, with each registrant only making representations on its own behalf. It emphasizes that OG&E's debt security holders should not consider OGE Energy's financial resources, and vice versa, and that the report should be read in its entirety - The combined Form 10-Q is separately filed by OGE Energy and OG&E, with each registrant responsible only for its own information[9] - Neither OGE Energy nor its other subsidiaries have obligations for OG&E's debt securities, and OG&E has no obligation for OGE Energy's debt securities[9] Forward-Looking Statements This section outlines that the report contains forward-looking statements, identifiable by specific terms, and warns that actual results may differ materially due to various risks. Key risk factors include general economic conditions, capital market access, regulatory rate relief, commodity prices, competition, technological advancements, weather, environmental laws, and the impact of generative AI technologies - Forward-looking statements are identified by words like 'anticipate,' 'believe,' 'estimate,' 'expect,' and 'forecast,' and actual results may vary materially due to risks[11] - Key risk factors include general economic conditions, access to capital markets, ability to obtain timely rate relief, prices and availability of electricity/fuel, competitive factors, technological advancements, unusual weather, environmental laws, and changes in accounting standards[11] - New risks include the impact of generative artificial intelligence technologies on utilization, regulatory scrutiny, intellectual property, and potential damage to business or financial results[11][12] Part I - FINANCIAL INFORMATION Item 1. Financial Statements (Unaudited) This section presents the unaudited condensed consolidated financial statements for OGE Energy Corp. and separate condensed financial statements for its subsidiary, Oklahoma Gas and Electric Company (OG&E), for the periods ended June 30, 2025 and 2024. It includes statements of income, comprehensive income, cash flows, balance sheets, and changes in stockholders' equity, along with combined notes detailing significant accounting policies, regulatory matters, and other financial disclosures OGE Energy Corp. Condensed Consolidated Financial Statements Condensed Consolidated Statements of Income OGE Energy Corp. Condensed Consolidated Statements of Income (Unaudited) | Metric | Three Months Ended June 30, 2025 (Millions) | Three Months Ended June 30, 2024 (Millions) | Six Months Ended June 30, 2025 (Millions) | Six Months Ended June 30, 2024 (Millions) | | :----------------------------------- | :------------------------------------------ | :------------------------------------------ | :----------------------------------------- | :----------------------------------------- | | Operating Revenues | $741.6 | $662.6 | $1,489.3 | $1,259.4 | | Fuel, Purchased Power and Direct Transmission Expense | $261.1 | $193.9 | $585.1 | $426.1 | | Operating Income | $186.6 | $175.9 | $319.9 | $249.9 | | Interest Expense | $72.2 | $64.9 | $139.5 | $125.1 | | Income Before Taxes | $129.5 | $121.5 | $202.4 | $141.7 | | Net Income | $107.5 | $102.3 | $170.2 | $120.9 | | Basic Earnings Per Average Common Share | $0.53 | $0.51 | $0.85 | $0.60 | | Diluted Earnings Per Average Common Share | $0.53 | $0.51 | $0.84 | $0.60 | - OGE Energy Corp. reported a 5.1% increase in net income for the three months ended June 30, 2025, reaching $107.5 million, and a 40.8% increase for the six months ended June 30, 2025, reaching $170.2 million, compared to the same periods in 2024[16] - Diluted EPS increased from $0.51 to $0.53 for the three-month period and from $0.60 to $0.84 for the six-month period year-over-year[16] Condensed Consolidated Statements of Comprehensive Income OGE Energy Corp. Condensed Consolidated Statements of Comprehensive Income (Unaudited) | Metric | Three Months Ended June 30, 2025 (Millions) | Three Months Ended June 30, 2024 (Millions) | Six Months Ended June 30, 2025 (Millions) | Six Months Ended June 30, 2024 (Millions) | | :-------------------------------- | :------------------------------------------ | :------------------------------------------ | :----------------------------------------- | :----------------------------------------- | | Net income | $107.5 | $102.3 | $170.2 | $120.9 | | Other comprehensive income, net of tax | $0.1 | $0.1 | $0.2 | $4.0 | | Comprehensive income | $107.6 | $102.4 | $170.4 | $124.9 | - Other comprehensive income, net of tax, remained stable at $0.1 million for the three months ended June 30, 2025 and 2024, but significantly decreased from $4.0 million to $0.2 million for the six-month period, primarily due to regulatory classification of certain pension costs in the prior year[18] Condensed Consolidated Statements of Cash Flows OGE Energy Corp. Condensed Consolidated Statements of Cash Flows (Unaudited) | Metric | Six Months Ended June 30, 2025 (Millions) | Six Months Ended June 30, 2024 (Millions) | | :----------------------------------- | :----------------------------------------- | :----------------------------------------- | | Net cash provided from operating activities | $354.5 | $336.1 | | Net cash used in investing activities | $(559.0) | $(589.6) | | Net cash provided from financing activities | $204.4 | $253.4 | | Net change in cash and cash equivalents | $(0.1) | $(0.1) | - Net cash provided from operating activities increased by $18.4 million (5.5%) to $354.5 million for the six months ended June 30, 2025, primarily due to cash received from customers, partially offset by payments for fuel and purchased power[21][164] - Net cash used in investing activities decreased by $30.6 million (5.2%) to $(559.0) million, mainly due to the timing of power delivery and power generation projects[21][165] - Net cash provided from financing activities decreased by $49.0 million (19.3%) to $204.4 million, primarily due to the payment of long-term revolver borrowings in 2024 and the repayment of Muskogee industrial authority bonds in January 2025, partially offset by increased commercial paper borrowings[21][165] Condensed Consolidated Balance Sheets OGE Energy Corp. Condensed Consolidated Balance Sheets (Unaudited) | Metric | June 30, 2025 (Millions) | December 31, 2024 (Millions) | | :----------------------------------- | :------------------------- | :--------------------------- | | Total Current Assets | $969.3 | $895.1 | | Total Assets | $14,089.1 | $13,716.0 | | Total Current Liabilities | $1,250.7 | $1,229.8 | | Total Liabilities | $9,444.2 | $9,075.1 | | Total Stockholders' Equity | $4,644.9 | $4,640.9 | - Total assets increased by $373.1 million (2.7%) from December 31, 2024, to June 30, 2025, driven by increases in property, plant and equipment (net) and current assets[23] - Total liabilities increased by $369.1 million (4.1%), primarily due to an increase in long-term debt and short-term debt[26] - Total stockholders' equity saw a slight increase of $4.0 million (0.1%) to $4,644.9 million[26] Condensed Consolidated Statements of Changes in Stockholders' Equity OGE Energy Corp. Condensed Consolidated Statements of Changes in Stockholders' Equity (Unaudited) | Metric | Balance at Dec 31, 2024 (Millions) | Balance at June 30, 2025 (Millions) | | :----------------------------------- | :--------------------------------- | :-------------------------------- | | Common Stock Value | $2.0 | $2.0 | | Premium on Common Stock | $1,165.9 | $1,171.2 | | Retained Earnings | $3,475.7 | $3,474.2 | | Accumulated Other Comprehensive (Loss) Income | $(2.7) | $(2.5) | | Total Stockholders' Equity | $4,640.9 | $4,644.9 | - Total stockholders' equity increased by $4.0 million from December 31, 2024, to June 30, 2025, primarily driven by net income and issuance of common stock, partially offset by dividends declared[28] - Net income for the six months ended June 30, 2025, was $170.2 million, contributing to the equity increase[16][28] - Dividends declared on common stock totaled $171.7 million ($0.84250 per share) for the six months ended June 30, 2025[28][146] Oklahoma Gas and Electric Company Condensed Financial Statements Condensed Statements of Income and Comprehensive Income OG&E Condensed Statements of Income and Comprehensive Income (Unaudited) | Metric | Three Months Ended June 30, 2025 (Millions) | Three Months Ended June 30, 2024 (Millions) | Six Months Ended June 30, 2025 (Millions) | Six Months Ended June 30, 2024 (Millions) | | :----------------------------------- | :------------------------------------------ | :------------------------------------------ | :----------------------------------------- | :----------------------------------------- | | Operating Revenues | $741.6 | $662.6 | $1,489.3 | $1,259.4 | | Fuel, Purchased Power and Direct Transmission Expense | $261.1 | $193.9 | $585.1 | $426.1 | | Operating Income | $187.4 | $176.1 | $320.7 | $250.1 | | Interest Expense | $63.4 | $54.9 | $120.2 | $106.3 | | Income Before Taxes | $131.0 | $131.4 | $216.4 | $160.6 | | Net Income | $107.7 | $109.3 | $178.7 | $134.5 | | Comprehensive Income | $107.7 | $109.3 | $178.7 | $134.5 | - OG&E's net income decreased by $1.6 million (1.5%) to $107.7 million for the three months ended June 30, 2025, but increased by $44.2 million (32.9%) to $178.7 million for the six months ended June 30, 2025, compared to the same periods in 2024[30][151] - Operating revenues increased by $79.0 million (11.9%) and $229.9 million (18.3%) for the three and six months ended June 30, 2025, respectively, primarily due to new rates and recovery of capital investments, offsetting milder weather impacts[30][152][144] Condensed Statements of Cash Flows OG&E Condensed Statements of Cash Flows (Unaudited) | Metric | Six Months Ended June 30, 2025 (Millions) | Six Months Ended June 30, 2024 (Millions) | | :----------------------------------- | :----------------------------------------- | :----------------------------------------- | | Net cash provided from operating activities | $395.8 | $386.9 | | Net cash used in investing activities | $(558.1) | $(587.6) | | Net cash provided from financing activities | $162.3 | $200.6 | | Net change in cash and cash equivalents | $0.0 | $(0.1) | - Net cash provided from operating activities increased by $8.9 million (2.3%) to $395.8 million for the six months ended June 30, 2025[33] - Net cash used in investing activities decreased by $29.5 million (5.0%) to $(558.1) million[33] - Net cash provided from financing activities decreased by $38.3 million (19.1%) to $162.3 million, primarily due to changes in advances with parent and dividends paid on common stock, partially offset by proceeds from long-term debt and capital contribution from OGE Energy[33] Condensed Balance Sheets OG&E Condensed Balance Sheets (Unaudited) | Metric | June 30, 2025 (Millions) | December 31, 2024 (Millions) | | :----------------------------------- | :------------------------- | :--------------------------- | | Total Current Assets | $1,009.1 | $888.5 | | Total Assets | $13,990.8 | $13,581.3 | | Total Current Liabilities | $605.0 | $880.2 | | Total Liabilities | $8,329.1 | $8,254.9 | | Total Stockholder's Equity | $5,661.7 | $5,326.4 | - Total assets increased by $409.5 million (3.0%) from December 31, 2024, to June 30, 2025, primarily due to increases in current assets and net property, plant and equipment[36] - Total current liabilities decreased by $275.2 million (31.3%), mainly due to a decrease in advances from parent[39] - Total stockholder's equity increased by $335.3 million (6.3%) to $5,661.7 million[39] Condensed Statements of Changes in Stockholder's Equity OG&E Condensed Statements of Changes in Stockholder's Equity (Unaudited) | Metric | Balance at Dec 31, 2024 (Millions) | Balance at June 30, 2025 (Millions) | | :----------------------------------- | :--------------------------------- | :-------------------------------- | | Common Stock Value | $100.9 | $100.9 | | Premium on Common Stock | $1,488.6 | $1,645.2 | | Retained Earnings | $3,736.9 | $3,915.6 | | Total Stockholder's Equity | $5,326.4 | $5,661.7 | - Total stockholder's equity increased by $335.3 million from December 31, 2024, to June 30, 2025, primarily driven by net income and a capital contribution from OGE Energy[41] - Net income for the six months ended June 30, 2025, was $178.7 million[30][41] - OGE Energy made a capital contribution of $150.0 million to OG&E during the six months ended June 30, 2025[33][41] Combined Notes to Condensed Financial Statements Note 1. Summary of Significant Accounting Policies This note outlines OGE Energy's primary investment in OG&E, an electric company regulated by OCC, APSC, and FERC, detailing OG&E's adherence to FERC's Uniform System of Accounts and rate-regulated accounting principles, including the deferral of certain costs as regulatory assets or liabilities. It also highlights recent legislative changes in Oklahoma (SB 998) and Arkansas (Act 373) impacting construction work in progress (CWIP) recovery and depreciation expense deferral - OGE Energy is a holding company whose primary investment is OG&E, an electric company operating in Oklahoma and western Arkansas, regulated by OCC, APSC, and FERC[46] - OG&E maintains accounting records in accordance with FERC's Uniform System of Accounts and is subject to rate-regulated accounting principles, allowing deferral of certain costs as regulatory assets or liabilities based on expected recovery or flowback in future rates[51][52] Summary of OG&E's Regulatory Assets and Liabilities (Millions) | Category | June 30, 2025 | December 31, 2024 | | :-------------------------- | :-------------- | :---------------- | | Total Current Regulatory Assets | $109.3 | $123.5 | | Total Non-current Regulatory Assets | $561.8 | $568.1 | | Total Current Regulatory Liabilities | $13.4 | $20.3 | | Total Non-current Regulatory Liabilities | $985.2 | $1,016.4 | - Oklahoma's SB 998 (effective August 29, 2025) allows CWIP recovery for new natural gas generation and deferral of 90% of depreciation expense and return on qualified plant investments (not transmission or new generation) for 20-year recovery[63] - Arkansas' Act 373 (signed March 2025) enables CWIP recovery for 'strategic investments' including new/upgraded electric generating and transmission facilities, with cost recovery through a rider upon APSC approval[64] Note 2. Accounting Pronouncements This note discusses the Registrants' adoption of ASU 2023-09, 'Improvements to Income Tax Disclosures,' effective January 1, 2025, and their evaluation of ASU 2024-03, 'Expense Disaggregation Disclosures,' effective for fiscal years beginning after December 15, 2026, with no material impact expected from either pronouncement - The Registrants adopted ASU 2023-09, 'Improvements to Income Tax Disclosures,' effective January 1, 2025, with no material impact expected on annual financial statement disclosures[65][66] - The Registrants are evaluating ASU 2024-03, 'Expense Disaggregation Disclosures,' effective for fiscal years beginning after December 15, 2026, and do not believe it will have a material impact[67] Note 3. Revenue Recognition This note details OG&E's revenues from contracts with customers by classification for the three and six months ended June 30, 2025 and 2024, highlighting significant growth in Commercial and Residential segments OG&E Revenues from Contracts with Customers by Classification (Unaudited) | Customer Classification | Three Months Ended June 30, 2025 (Millions) | Three Months Ended June 30, 2024 (Millions) | Six Months Ended June 30, 2025 (Millions) | Six Months Ended June 30, 2024 (Millions) | | :-------------------------------- | :------------------------------------------ | :------------------------------------------ | :----------------------------------------- | :----------------------------------------- | | Residential | $251.3 | $239.0 | $534.9 | $460.4 | | Commercial | $218.5 | $177.6 | $425.1 | $326.4 | | Industrial | $58.4 | $55.2 | $120.0 | $108.2 | | Oilfield | $52.5 | $47.6 | $111.9 | $97.3 | | Public authorities and street light | $62.2 | $57.7 | $122.7 | $108.7 | | System sales revenues | $642.9 | $577.1 | $1,314.6 | $1,101.0 | | Integrated market | $26.3 | $17.1 | $47.6 | $32.1 | | Transmission | $42.1 | $42.5 | $81.9 | $78.1 | | Total Revenues from contracts with customers | $719.7 | $644.1 | $1,460.8 | $1,226.7 | - Total revenues from contracts with customers increased by $75.6 million (11.7%) for the three months and $234.1 million (19.1%) for the six months ended June 30, 2025, compared to the prior year, with significant growth in Commercial and Residential segments[69] Note 4. Fair Value Measurements This note confirms that the Registrants had no financial instruments measured at fair value on a recurring basis at June 30, 2025, and December 31, 2024, and provides a table detailing the carrying amount and fair value of financial instruments, primarily long-term debt, classified by fair value hierarchy levels - The Registrants had no financial instruments measured at fair value on a recurring basis at June 30, 2025, and December 31, 2024[73] Carrying Amount and Fair Value of Financial Instruments (Unaudited) | Instrument | June 30, 2025 Carrying Amount (Millions) | June 30, 2025 Fair Value (Millions) | December 31, 2024 Carrying Amount (Millions) | December 31, 2024 Fair Value (Millions) | Classification | | :----------------------------------- | :--------------------------------------- | :------------------------------------ | :------------------------------------------- | :------------------------------------------- | :------------- | | OGE Energy Senior Notes | $347.2 | $362.3 | $346.9 | $355.7 | Level 2 | | OGE Energy Term Loan | $59.8 | $60.0 | $59.7 | $60.0 | Level 2 | | OG&E Senior Notes | $4,845.5 | $4,596.9 | $4,499.6 | $4,174.9 | Level 2 | | OG&E Industrial Authority Bonds | $103.0 | $103.0 | $135.4 | $135.4 | Level 2 | | OG&E Tinker Debt | $11.7 | $9.0 | $11.7 | $9.0 | Level 3 | - Most long-term debt is classified as Level 2, indicating fair value is determined using observable inputs other than quoted prices in active markets. OG&E Tinker Debt is classified as Level 3, using unobservable inputs[71][72][74] Note 5. Stock-Based Compensation This note provides a table detailing stock-based compensation expense and income tax benefit for OGE Energy and OG&E, and highlights the issuance of new common stock and granting of performance and restricted stock units during the six months ended June 30, 2025 Stock-Based Compensation Expense and Income Tax Benefit (Unaudited) | Metric | Three Months Ended June 30, 2025 (Millions) | Three Months Ended June 30, 2024 (Millions) | Six Months Ended June 30, 2025 (Millions) | Six Months Ended June 30, 2024 (Millions) | | :-------------------------- | :------------------------------------------ | :------------------------------------------ | :----------------------------------------- | :----------------------------------------- | | Total compensation expense (OGE Energy) | $3.6 | $3.3 | $6.6 | $6.5 | | Income tax benefit (OGE Energy) | $0.9 | $0.8 | $1.6 | $1.6 | | Total compensation expense (OG&E) | $3.6 | $3.3 | $6.6 | $6.5 | | Income tax benefit (OG&E) | $0.9 | $0.8 | $1.6 | $1.6 | - OGE Energy issued 234,476 shares of new common stock during the six months ended June 30, 2025, to satisfy payouts of earned performance units and restricted stock units[76] - During the same period, OGE Energy granted 216,426 performance units and 116,532 restricted stock units to employees[77] Note 6. Income Taxes This note explains that OGE Energy files consolidated income tax returns, including OG&E, with income taxes generally allocated based on stand-alone taxable income or loss, and details the deferral and amortization of federal investment tax credits and the impact of Oklahoma investment tax credits on OG&E's effective tax rate - OGE Energy files consolidated income tax returns federally and in various states, with OG&E included in the consolidated return. Income taxes are generally allocated based on stand-alone taxable income or loss[78] - Federal investment tax credits are deferred and amortized, while Oklahoma investment tax credits on electric generating facilities further reduce OG&E's effective tax rate[78] Note 7. Common Equity This note details OGE Energy's issuance of new common shares under its Automatic Dividend Reinvestment and Stock Purchase Plan, the proceeds generated, and the number of shares reserved for issuance. It also provides a table summarizing basic and diluted earnings per share for OGE Energy - OGE Energy issued 138,254 new common shares under its Automatic Dividend Reinvestment and Stock Purchase Plan during the six months ended June 30, 2025, generating $6.0 million in proceeds[79] - As of June 30, 2025, 4,184,299 shares of unissued common stock were reserved for issuance under the plan[79] OGE Energy Basic and Diluted Earnings Per Share (Unaudited) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :----------------------------------- | :------------------------------- | :------------------------------- | :------------------------------ | :------------------------------ | | Basic average common shares outstanding (Millions) | 201.3 | 200.8 | 201.3 | 200.6 | | Diluted average common shares outstanding (Millions) | 202.1 | 201.4 | 202.0 | 201.0 | | Basic earnings per average common share | $0.53 | $0.51 | $0.85 | $0.60 | | Diluted earnings per average common share | $0.53 | $0.51 | $0.84 | $0.60 | Note 8. Long-Term Debt This note confirms the Registrants' compliance with debt agreements, details OG&E's industrial authority bonds, including a recent repayment, and describes the issuance of new senior notes to fund operations and capital investments - The Registrants were in compliance with all debt agreements at June 30, 2025[82] OG&E Industrial Authority Bonds Redeemable in Next 12 Months (Unaudited) | Series | Date Due | Amount (Millions) | | :----------------------------------- | :--------- | :---------------- | | Muskogee Industrial Authority, 1.65%-4.60% | June 1, 2027 | $56.0 | | Garfield Industrial Authority, 1.85%-4.60% | October 1, 2039 | $47.0 | | Total | | $103.0 | - OG&E repaid $32.4 million of Muskogee Industrial Authority bonds that matured on January 1, 2025[84] - On April 1, 2025, OG&E issued $350.0 million of 5.80% senior notes due April 1, 2055, using proceeds for short-term debt repayment, revolving credit facility borrowings, and capital investment[87] Note 9. Credit Facilities and Short-Term Debt This note provides a table summarizing the Registrants' revolving credit agreements, detailing aggregate commitments, outstanding amounts, weighted average interest rates, and expiration dates. It also outlines OG&E's regulatory approvals for short-term borrowings and its intercompany borrowing agreement with OGE Energy Registrants' Revolving Credit Agreements at June 30, 2025 (Unaudited) | Entity | Aggregate Commitment (Millions) | Amount Outstanding (Millions) | Weighted Average Interest Rate | Expiration | | :-------------------------- | :------------------------------ | :---------------------------- | :----------------------------- | :----------------- | | OGE Energy | $550.0 | $534.5 | 4.71% | December 18, 2029 | | OGE Energy (revolving loan portion) | $60.0 | — | —% | May 24, 2027 | | OG&E | $550.0 | $0.4 | 1.20% | December 18, 2029 | | Total | $1,160.0 | $534.9 | 4.70% | | - OG&E has regulatory approvals to incur up to $1.0 billion in short-term borrowings at any one time for a two-year period ending December 31, 2026[91] - OG&E has an intercompany borrowing agreement with OGE Energy, providing access to up to $450.0 million of OGE Energy's revolving credit amount, with no borrowings outstanding at June 30, 2025, but $42.3 million in advances to parent[93] Note 10. Retirement Plans and Postretirement Benefit Plans This note presents a table detailing OGE Energy's net periodic benefit cost for its Pension Plan, Restoration of Retirement Income Plan, and Postretirement Benefit Plans. It also explains OG&E's recovery of pension and postretirement medical costs in rates and OGE Energy's contributions to its Pension Plan OGE Energy Net Periodic Benefit Cost (Unaudited) | Plan | Three Months Ended June 30, 2025 (Millions) | Three Months Ended June 30, 2024 (Millions) | Six Months Ended June 30, 2025 (Millions) | Six Months Ended June 30, 2024 (Millions) | | :----------------------------------- | :------------------------------------------ | :------------------------------------------ | :----------------------------------------- | :----------------------------------------- | | Pension Plan | $2.8 | $2.3 | $5.6 | $5.5 | | Restoration of Retirement Income Plan | $0.4 | $0.5 | $0.9 | $0.8 | | Postretirement Benefit Plans | $1.2 | $0.9 | $2.1 | $1.7 | - OG&E recovers specific pension and postretirement medical costs in rates, deferring differences between actual and approved expenses as regulatory assets or liabilities[94] - OGE Energy made a $5.0 million contribution to its Pension Plan in January 2025 related to OG&E employees and an additional $5.0 million in July 2025[100] Note 11. Report of Business Segments This note clarifies that OGE Energy primarily reports operations through a single 'electric company' segment, encompassing OG&E's electric energy activities, with 'Other operations' including the holding company and energy-related investments. It also provides a table detailing net income (loss) by business segment - OGE Energy reports operations primarily through a single 'electric company' segment, which includes OG&E's generation, transmission, distribution, and sale of electric energy. 'Other operations' primarily includes the holding company and energy-related investments[101] OGE Energy Business Segment Net Income (Loss) (Unaudited) | Segment | Three Months Ended June 30, 2025 (Millions) | Three Months Ended June 30, 2024 (Millions) | Six Months Ended June 30, 2025 (Millions) | Six Months Ended June 30, 2024 (Millions) | | :-------------------------- | :------------------------------------------ | :------------------------------------------ | :----------------------------------------- | :----------------------------------------- | | Electric Company | $107.7 | $109.3 | $178.7 | $134.5 | | Other Operations | $(0.2) | $(7.0) | $(8.5) | $(13.6) | | Total Net Income (Loss) | $107.5 | $102.3 | $170.2 | $120.9 | - The Electric Company segment's net income decreased slightly for the three-month period but increased significantly for the six-month period, while Other Operations' net loss decreased for both periods[102][103] Note 12. Commitments and Contingencies This note addresses OG&E's compliance with environmental laws, a lawsuit seeking over $60.0 million in damages related to an apartment fire, and management's approach to assessing and disclosing contingent liabilities - OG&E's operations are subject to numerous stringent federal, state, and local environmental laws and regulations, with management believing current operations are in substantial compliance[105] - In July 2023, OG&E was named as a defendant in a lawsuit seeking over $60.0 million in damages related to an apartment fire. OG&E disputes the claims and believes existing insurance policies will cover costs exceeding a non-material retention[108] - Management assesses contingent liabilities and accrues losses when probable and estimable; otherwise, disclosures are made if reasonably possible and material[107] Note 13. Rate Matters and Regulation This note details OG&E's 2025 Integrated Resource Plan (IRP) identifying capacity needs, FERC approval for CWIP and abandoned plant incentives for a transmission project, the OCC's final order on the 2023 Oklahoma General Rate Review, and OG&E's applications for preapproval of capacity projects. It also addresses the U.S. Supreme Court's denial of a stay for the EPA's greenhouse gas emissions rule and potential compliance costs - OG&E issued its 2025 Integrated Resource Plan (IRP) to the OCC and APSC, identifying capacity needs ranging from 221 MWs in 2026 to 1,647 MWs in 2030 for the summer season, and 280 MWs in 2026 to 1,017 MWs in 2030 for the winter season[110] - The FERC approved OG&E's request for CWIP and abandoned plant incentives for the $242 million Muskogee to Fort Smith Transmission Project on July 15, 2025[111] - The OCC issued a final order on March 27, 2025, affirming the 2023 Oklahoma General Rate Review settlement, which resulted in an annual revenue requirement increase of $126.7 million and maintained a 9.5% return on equity[113][117] - OG&E filed applications with the APSC and OCC in May/July 2025 for preapproval of three capacity projects (Black Kettle Battery Storage, Kiamichi natural gas, and Horseshoe Lake combustion turbines), seeking CWIP recovery and cost recovery through a rider under Act 373 in Arkansas[119][131] - The U.S. Supreme Court denied a stay request on October 16, 2024, for the EPA's final rule addressing greenhouse gas emissions, and the D.C. Circuit Court granted EPA's request to hold the case in abeyance while EPA reconsiders the rule. Compliance costs could be material if implemented as adopted[205] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations This section provides a detailed analysis of OGE Energy Corp.'s and OG&E's financial condition and results of operations for the three and six months ended June 30, 2025, compared to 2024. It covers recent regulatory and legislative developments, a summary of operating results, detailed segment performance, liquidity, capital resources, critical accounting policies, and environmental regulations, offering management's perspective on financial performance and future outlook Introduction and Overview This section introduces OGE Energy as a holding company primarily invested in OG&E, an electric utility serving Oklahoma and western Arkansas, regulated by the OCC, APSC, and FERC. It outlines OGE Energy's goal for 5-7% consistent EPS growth, supported by load growth, low customer rates, and infrastructure investments, emphasizing long-term sustainability through customer experience, grid strengthening, proven generation technologies, environmental stewardship, governance, and community support - OGE Energy is a holding company primarily invested in OG&E, an electric utility serving Oklahoma and western Arkansas, regulated by the OCC, APSC, and FERC[134] - OGE Energy aims for 5-7% consistent growth in consolidated EPS, supported by strong load growth, low customer rates, and investments in lower-risk infrastructure projects[136] - Long-term sustainability is based on exceptional customer experiences, grid strengthening, investment in proven generation technologies, environmental stewardship, strong governance, and community support[136] Recent Developments This section highlights recent regulatory and legislative developments, including the OCC's final order on the 2023 general rate review, OG&E's 2025 Integrated Resource Plan (IRP), Oklahoma's SB 998 allowing CWIP recovery for new natural gas generation, and Arkansas' Act 373 enabling CWIP recovery for 'strategic investments' - The OCC issued a final order on March 27, 2025, for the 2023 general rate review, approving the settlement agreement and addressing the one MW issue[137] - OG&E recently issued its 2025 Integrated Resource Plan (IRP) to the OCC and APSC[137] - Oklahoma's SB 998 (effective August 29, 2025) allows CWIP recovery for new natural gas generation and deferral of 90% of depreciation expense and return on qualified plant investments[139] - Arkansas' Act 373 (signed March 2025) enables CWIP recovery for 'strategic investments' in electric generating and transmission facilities, with cost recovery through a rider[140] Summary of OGE Energy Operating Results Three Months Ended June 30, 2025 as compared to the Three Months Ended June 30, 2024 This section summarizes OGE Energy's operating results for the three months ended June 30, 2025, compared to the same period in 2024, highlighting an increase in net income driven by a decrease in net loss from other operations, partially offset by a decrease in net income at OG&E - OGE Energy's net income increased by $5.2 million to $107.5 million, or $0.02 per diluted share, for the three months ended June 30, 2025[141] - The increase was driven by a decrease in net loss from other operations ($6.8 million, or $0.03 per diluted share), partially offset by a decrease in net income at OG&E ($1.6 million, or $0.01 per diluted share)[144] Six Months Ended June 30, 2025 as compared to the Six Months Ended June 30, 2024 This section summarizes OGE Energy's operating results for the six months ended June 30, 2025, compared to the same period in 2024, highlighting an increase in net income primarily due to an increase in net income at OG&E and a decrease in net loss from other operations - OGE Energy's net income increased by $49.3 million to $170.2 million, or $0.24 per diluted share, for the six months ended June 30, 2025[142] - The increase was primarily due to an increase in net income at OG&E ($44.2 million, or $0.21 per diluted share) and a decrease in net loss from other operations ($5.1 million, or $0.03 per diluted share)[144] 2025 Outlook This section provides OGE Energy's 2025 consolidated earnings guidance, which remains at $2.21 to $2.33 per average diluted share, with expectations to be in the top half of this range due to year-to-date performance, strong economic growth, and new legislation benefits, assuming approximately 202.1 million average diluted shares outstanding and normal weather - OGE Energy's 2025 consolidated earnings guidance remains $2.21 to $2.33 per average diluted share, with expectations to be in the top half of this range due to year-to-date performance, strong economic growth, and new legislation benefits[143] - This guidance assumes approximately 202.1 million average diluted shares outstanding and normal weather for the remainder of the year[143] Results of Operations Results by Business Segment (OG&E Electric Company) This section presents OG&E's net income and MWh sales by classification for the three and six months ended June 30, 2025 and 2024, highlighting a decrease in net income for the three-month period but a significant increase for the six-month period, driven by commercial sales growth despite declines in other segments OG&E (Electric Company) Net Income (Unaudited) | Metric | Three Months Ended June 30, 2025 (Millions) | Three Months Ended June 30, 2024 (Millions) | Six Months Ended June 30, 2025 (Millions) | Six Months Ended June 30, 2024 (Millions) | | :-------------------------- | :------------------------------------------ | :------------------------------------------ | :----------------------------------------- | :----------------------------------------- | | Net income | $107.7 | $109.3 | $178.7 | $134.5 | - OG&E's net income decreased by $1.6 million (1.5%) for the three months ended June 30, 2025, but increased by $44.2 million (32.9%) for the six months ended June 30, 2025, compared to the same periods in 2024[151] OG&E MWh Sales by Classification (Unaudited) | Classification | Three Months Ended June 30, 2025 (Millions MWh) | Three Months Ended June 30, 2024 (Millions MWh) | Six Months Ended June 30, 2025 (Millions MWh) | Six Months Ended June 30, 2024 (Millions MWh) | | :-------------------------- | :---------------------------------------------- | :---------------------------------------------- | :--------------------------------------------- | :--------------------------------------------- | | Residential | 2.1 | 2.3 | 4.6 | 4.6 | | Commercial | 3.1 | 2.5 | 5.8 | 4.6 | | Industrial | 1.0 | 1.1 | 2.0 | 2.1 | | Oilfield | 1.0 | 1.1 | 2.1 | 2.2 | | Public authorities and street light | 0.7 | 0.8 | 1.4 | 1.5 | | System sales | 7.9 | 7.8 | 15.9 | 15.0 | | Integrated market | 0.2 | 0.2 | 0.4 | 0.4 | | Total sales | 8.1 | 8.0 | 16.3 | 15.4 | - Total MWh sales increased by 0.1 million (1.3%) for the three months and 0.9 million (5.8%) for the six months ended June 30, 2025, driven by commercial sales growth, despite decreases in residential, industrial, oilfield, and public authority sales for the three-month period[149] Operating Revenues This section details the increase in operating revenues for the three and six months ended June 30, 2025, primarily due to higher fuel, purchased power, and direct transmission expense recovery, and new rates, partially offset by decreased quantity impacts from milder weather - Operating revenues increased by $79.0 million (11.9%) and $229.9 million (18.3%) for the three and six months ended June 30, 2025, respectively, primarily due to higher fuel, purchased power, and direct transmission expense recovery, and new rates[152][153] - The increase was partially offset by a decrease in quantity impacts (including weather), with a 22% and 21% decrease in cooling degree days for the three and six months, respectively[153][155] Fuel, Purchased Power and Direct Transmission Expense This section explains the increase in fuel, purchased power, and direct transmission expense for the three and six months ended June 30, 2025, primarily driven by higher market prices, increased MWhs purchased from SPP, and higher fuel costs related to generating assets - Fuel, purchased power, and direct transmission expense increased by $67.2 million (34.7%) and $159.0 million (37.3%) for the three and six months ended June 30, 2025, respectively[156] - The increase was primarily driven by higher market prices and increased MWhs purchased from SPP, and higher fuel costs related to generating assets[157][158] Other Operation and Maintenance Expense This section details the decrease in other operation and maintenance expense for the three and six months ended June 30, 2025, primarily due to reductions in contract technical and construction services, lower payroll and benefits, and timing of energy efficiency programs, partially offset by increased vegetation management activities - Other operation and maintenance expense decreased by $3.9 million (3.0%) and $14.5 million (5.5%) for the three and six months ended June 30, 2025, respectively[159] - The decrease was primarily due to a reduction in contract technical and construction services, lower payroll and benefits (for the six-month period), and timing of energy efficiency program activities, partially offset by increased vegetation management activities[159][160] Depreciation and Amortization Expense This section explains the increase in depreciation and amortization expense for the three and six months ended June 30, 2025, primarily due to additional assets being placed into service and increased amortization of certain regulatory assets - Depreciation and amortization expense increased by $5.1 million (3.8%) and $13.3 million (5.0%) for the three and six months ended June 30, 2025, respectively[160] - This increase was primarily due to additional assets being placed into service and increased amortization of certain regulatory assets[160] Net Other Income This section details the decrease in net other income for the three and six months ended June 30, 2025, primarily due to higher other net periodic benefit expense resulting from changes in pension expense levels in base rates from the recent Oklahoma rate review - Net other income decreased by $3.2 million (31.4%) and $0.9 million (5.4%) for the three and six months ended June 30, 2025, respectively[161] - The decrease was primarily due to higher other net periodic benefit expense resulting from changes in pension expense levels in base rates from the recent Oklahoma rate review[161] Interest Expense This section explains the increase in interest expense for the three and six months ended June 30, 2025, primarily due to the issuance of $350.0 million senior notes in August 2024 and another $350.0 million senior notes in April 2025 - Interest expense increased by $8.5 million (15.5%) and $13.9 million (13.1%) for the three and six months ended June 30, 2025, respectively[162] - This increase was primarily due to the issuance of $350.0 million senior notes in August 2024 and another $350.0 million senior notes in April 2025[162] Income Tax Expense This section details the increase in income tax expense for the three and six months ended June 30, 2025, due to decreased recognition of unfunded deferred taxes and higher pretax income, partially offset by increased recognition of unfunded deferred taxes for the six-month period - Income tax expense increased by $1.2 million (5.4%) for the three months ended June 30, 2025, due to decreased recognition of unfunded deferred taxes[163] - For the six months ended June 30, 2025, income tax expense increased by $11.6 million (44.4%), primarily due to higher pretax income, partially offset by increased recognition of unfunded deferred taxes[163] Liquidity and Capital Resources Cash Flows This section summarizes OGE Energy's cash flow activities for the six months ended June 30, 2025, compared to 2024, highlighting increases in operating cash flows, improvements in investing cash flows, and decreases in financing cash flows due to debt repayments and increased commercial paper borrowings OGE Energy Cash Flow Summary (Unaudited) | Metric | Six Months Ended June 30, 2025 (Millions) | Six Months Ended June 30, 2024 (Millions) | $ Change | % Change | | :----------------------------------- | :----------------------------------------- | :----------------------------------------- | :------- | :------- | | Net cash provided from operating activities | $354.5 | $336.1 | $18.4 | 5.5% | | Net cash used in investing activities | $(559.0) | $(589.6) | $30.6 | (5.2)% | | Net cash provided from financing activities | $204.4 | $253.4 | $(49.0) | (19.3)% | - Operating cash flows increased due to higher cash receipts from customers, partially offset by increased payments for fuel and purchased power[164] - Investing cash flows improved due to timing of power delivery and generation projects[165] - Financing cash flows decreased due to repayment of long-term revolver borrowings and Muskogee industrial authority bonds, partially offset by increased commercial paper borrowings[165] Working Capital This section details changes in working capital components, including an increase in Accounts Receivable and Accrued Unbilled Revenues due to higher seasonal usage, a decrease in Fuel Clause Under Recoveries from higher retail customer recoveries, and an increase in Short-Term Debt due to operating needs, partially offset by a senior notes issuance - Accounts Receivable and Accrued Unbilled Revenues increased by $116.9 million (37.1%) due to higher seasonal usage in mid-2025[167] - Fuel Clause Under Recoveries decreased by $14.8 million (13.1%) due to higher recoveries from OG&E retail customers[167] - Short-Term Debt increased by $65.2 million (13.9%) due to increased borrowings for general operating needs, partially offset by a $350.0 million senior notes issuance used to pay down short-term debt[169] Future Material Cash Requirements This section outlines the primary cash requirements related to acquiring, constructing, replacing, and expanding OG&E's facilities, along with maturing debt, operating lease obligations, and fuel clause under recoveries. It also states that OGE Energy expects to meet these needs through cash from operations, existing borrowing capacity, and access to capital markets - Primary cash requirements relate to acquiring/constructing new facilities and replacing/expanding existing facilities at OG&E, along with maturing debt, operating lease obligations, and fuel clause under recoveries[171] - OGE Energy expects to meet cash needs through cash from operations, existing borrowing capacity, and access to debt and equity capital markets[171] Capital Expenditures This section states that capital expenditure estimates for 2025-2029 remain largely unchanged from the 2024 Form 10-K, focusing on maintaining and improving the safety, resiliency, and reliability of OG&E's grid and generation fleet. It also notes that OG&E has selected projects to meet capacity needs identified in its 2024 IRP and filed for regulatory approvals - Capital expenditure estimates for 2025-2029 remain largely unchanged from the 2024 Form 10-K, focused on maintaining and improving safety, resiliency, and reliability of OG&E's grid and generation fleet[172] - OG&E has selected projects to meet capacity needs identified in its 2024 IRP and filed for regulatory approvals with the OCC and APSC[172] Financing Activities and Future Sources of Financing This section states that management anticipates cash from operations, long- and short-term debt issuance, and common stock sales will be sufficient for anticipated cash needs and future growth, with short-term borrowings used for temporary working capital and interim financing of capital expenditures - Management anticipates cash from operations, long- and short-term debt issuance, and common stock sales will be sufficient for anticipated cash needs and future growth[173] - Short-term borrowings (commercial paper and bank borrowings) are used for temporary working capital and interim financing of capital expenditures[173] Short-Term Debt and Credit Facilities This section details OGE Energy's unsecured revolving credit facilities totaling $1.1 billion, plus a $120.0 million floating rate unsecured three-year credit agreement, and provides a table summarizing short-term debt activity. It also states that net available liquidity under these agreements was $625.1 million at June 30, 2025 - OGE Energy has unsecured five-year revolving credit facilities totaling $1.1 billion ($550.0 million for OGE Energy and $550.0 million for OG&E), plus a $120.0 million floating rate unsecured three-year credit agreement (of which $60.0 million is revolving)[174][175] OGE Energy Short-Term Debt Activity (Unaudited) | Metric | Three Months Ended June 30, 2025 (Millions) | Six Months Ended June 30, 2025 (Millions) | | :----------------------------------- | :------------------------------------------ | :----------------------------------------- | | Average balance of short-term debt | $554.4 | $601.2 | | Weighted-average interest rate of average balance | 4.76% | 4.73% | | Maximum month-end balance of short-term debt | $573.3 | $766.7 | - Net available liquidity under revolving credit agreements, commercial paper borrowings, and letters of credit was $625.1 million at June 30, 2025[176] Issuance of Long-Term Debt This section reports that on April 1, 2025, OG&E issued $350.0 million of 5.80% senior notes due April 1, 2055, to repay short-term debt, revolving credit facility borrowings, and fund capital investments - On April 1, 2025, OG&E issued $350.0 million of 5.80% senior notes due April 1, 2055, to repay short-term debt, revolving credit facility borrowings, and fund capital investments[178] Security Ratings This section explains that access to reasonably priced capital is partly dependent on credit and security ratings, with lower ratings increasing financing costs. It also notes that Moody's Investors Service revised its ratings outlook on both OGE Energy and OG&E from stable to negative on April 14, 2025, citing pressure from OG&E's capital expenditure plan and higher holding company debt levels - Access to reasonably priced capital is partly dependent on credit and security ratings; lower ratings can increase financing costs[179] - On April 14, 2025, Moody's Investors Service revised its ratings outlook on both OGE Energy and OG&E from stable to negative, citing pressure from OG&E's capital expenditure plan and higher holding company debt levels[181] Critical Accounting Policies and Estimates This section states that management's financial statements involve estimates and assumptions, with significant judgment exercised in determining pension and postretirement plan assumptions, income taxes, contingency reserves, and regulatory assets and liabilities. It also notes that these critical accounting estimates have been discussed with OGE Energy's Audit Committee and are detailed in the Registrants' 2024 Form 10-K - Management's financial statements involve estimates and assumptions, with significant judgment exercised in determining pension and postretirement plan assumptions, income taxes, contingency reserves, and regulatory assets and liabilities[182][183] - These critical accounting estimates have been discussed with OGE Energy's Audit Committee and are detailed in the Registrants' 2024 Form 10-K[183] Commitments and Contingencies This section states that the Registrants face contingent liabilities from lawsuits or third-party claims, assessing probable losses for accounting entries and disclosing reasonably possible material losses. It also notes that currently, reasonably possible losses exceeding accrued amounts from pending or threatened lawsuits are not expected to be quantitatively material to financial statements - The Registrants face contingent liabilities from lawsuits or third-party claims, assessing probable losses for accounting entries and disclosing reasonably possible material losses[184] - Currently, reasonably possible losses exceeding accrued amounts from pending or threatened lawsuits are not expected to be quantitatively material to financial statements[184] Environmental Laws and Regulations Air This section discusses OG&E's compliance with federal and state clean air laws, the U.S. Supreme Court's stay on the EPA's Good Neighbor FIP, estimated compliance costs for the FIP, the EPA's final rule lowering PM2.5 NAAQS, and the extended compliance deadline for Mercury and Air Toxics Standards - OG&E's operations are subject to federal and state clean air laws, requiring permits, emission controls, and potentially significant capital expenditures for compliance[188] - The U.S. Supreme Court granted a stay on June 27, 2024, for the EPA's Good Neighbor FIP, pending review in the D.C. Circuit Court, which had previously denied a stay request[191] - OG&E preliminarily estimated compliance costs for the FIP could be $2.4 billion to $2.8 billion, with $100 million to $300 million in the first 12-18 months, but costs are uncertain due to ongoing litigation and regulatory approvals[192] - The EPA finalized a rule on February 7, 2024, lowering the primary annual PM2.5 NAAQS from 12.0 µg/m3 to 9.0 µg/m3, with litigation ongoing and potential impacts on OG&E's operating permit emission limits unknown[194][196] - The EPA extended the compliance deadline for the revised Mercury and Air Toxics Standards to July 8, 2029, and proposed to repeal the 2024 revised regulation, with the outcome of litigation and further EPA action unknown[198] Greenhouse Gas This section discusses federal rules under the Biden Administration that may impose requirements on fossil fuel assets, potentially leading to significant compliance costs. It details the EPA's final rule requiring carbon capture or co-firing for existing coal units and efficiency standards for new natural gas-fired turbines, and highlights OG&E's significant reductions in CO2, NOx, and SO2 emissions since 2005 - Federal rules promulgated in 2024 under the Biden Administration may impose requirements on fossil fuel assets, potentially leading to significant compliance costs if not recovered through regulated rates[199] - The EPA's final rule (May 9, 2024) requires existing coal units to use carbon capture (90% by 2032) if operating beyond 2039, or co-fire with natural gas (40% by 2030) if operating until 2039; units retiring by 2032 are exempt[201] - New natural gas-fired turbines commencing construction after May 23, 2023, are subject to efficiency standards, with baseload units also requiring 90% CO2 capture by January 1, 2032[203] - OG&E has reduced CO2 emissions by approximately 60% since 2005, NOx by 80%, and SO2 by 95%, through coal-to-gas conversions, SPP market participation, and energy efficiency programs[206] Endangered Species This section discusses federal laws protecting designated species, such as the Bald and Golden Eagle Protection Act and Endangered Species Act, which carry potential for significant penalties for unpermitted activities. It also notes that if protected species are in OG&E's operational areas or become protected, operations and development projects could be restricted, delayed, or require expensive mitigation - Federal laws like the Bald and Golden Eagle Protection Act and Endangered Species Act protect designated species, with potential for significant penalties for unpermitted activities[207] - If protected species are in OG&E's operational areas, or if new species become protected, operations and development projects (especially transmission, wind, or solar) could be restricted, delayed, or require expensive mitigation[207] Waste This section discusses OG&E's operations ge