OGE Energy (OGE) - 2025 Q4 - Earnings Call Transcript

Financial Data and Key Metrics Changes - Consolidated earnings for 2025 were reported at $2.32 per share, an increase from $2.19 per share in 2024, reflecting a solid year of performance [10][11] - Net income at the electric company rose to approximately $500 million, or $2.47 per share, up from $470 million, or $2.33 per share in the previous year [11] - The holding company reported a loss of $29 million, or $0.15 per share, slightly higher year-over-year due to increased interest expenses [11] Business Line Data and Key Metrics Changes - The electric company experienced strong load growth, with weather-normalized load increasing approximately 7% [11] - Customer growth was just under 1%, indicating a stable service area performance [11] Market Data and Key Metrics Changes - The service area continues to attract investment, supported by low rates and reliable service, contributing to the overall growth in customer base and load [11] - The company expects customer count to increase about 1% and weather-normalized load to grow 4%-6% in 2026 [12] Company Strategy and Development Direction - The company is focused on long-term growth through generation and transmission opportunities, with plans to advance its transmission strategy and secure approvals for new projects [4][5] - A significant portion of the capital plan is allocated to new generation capacity, with a target of adding 1.3 gigawatts of generation by the end of the decade [6][10] - The company aims to maintain affordability while investing in reliability and growth, with a commitment to keeping rates among the lowest in the nation [7][10] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the financial plan, projecting earnings per share growth of 5%-7% through 2028, with a solid foundation for future growth [16] - The company highlighted the importance of balancing affordability and execution in its investment strategy, ensuring that customer needs are met while pursuing growth opportunities [16] Other Important Information - The company plans to file a rate review in Oklahoma mid-year and evaluate a potential filing in Arkansas later in the year [12] - A draft Integrated Resource Plan (IRP) was issued, outlining long-term resource strategies and identifying approximately 1.9 gigawatts of capacity needs by 2031 [15][54] Q&A Session Summary Question: How to think about rate base growth versus the investment plan? - Management indicated that the current plan equates to a rate-based growth of about 9%, with opportunities for incremental growth [20][21] Question: What has changed within the large load panel since the last update? - Management confirmed active negotiations with 6-7 large load customers, with progress on agreements for Customer X [21][22] Question: Insights on moderating weather-normalized load growth in 2026? - Management noted that load growth can fluctuate, but overall trends remain positive, with a strong average since 2021 [28][30] Question: Clarification on the Black Kettle Energy Storage capacity purchase agreement? - Management affirmed their commitment to owning and operating generation assets, validating their strategy for future projects [32] Question: Details on the $7.3 billion base capital plan and potential capital prioritization? - Management emphasized flexibility in capital allocation, focusing on affordability while planning for additional generation capacity [34][35] Question: Update on the 765 kV transmission line and OGE's portion of the project? - Management indicated that OGE's portion of the project is estimated to be around 20% of the current capital plan, with further details to be refined [39][40] Question: Timeline for updating on potential other customers beyond Customer X? - Management stated that they are actively engaging with various potential customers and will announce developments as they materialize [72][75]