Q3 2026 OGE Energy Corp. Earnings Conference Call - OGE ENERGY CORP

Explicit Guidance:

• Raised 2026 consolidated earnings guidance range to $2.62–$2.68 per share (previously lower), assuming normal weather for the remainder of the year.
• Anticipates providing an update on EPS CAGR next year, specifically after the full impact of current generation filings (Horseshoe Lake 15) and SPP NTCs is assessed; reaffirms the strategic target of 5–7% long-term EPS CAGR but notes the next formal update will occur holistically in the coming year.
• Expects revenue and load growth to reflect ~1% annual normalized growth driven by customer additions and weather-normalized load increases.

Business-Segment Outlook:

• Generation Capacity: Aiming to own and operate the majority of the remaining 1.1 GW capacity need through utility ownership rather than third-party PPAs; primary mix expected to be natural gas with potential solar/storage combinations.
• Horseshoe Lake Expansion:
  • Units 13 and 14 under construction, adding 440 MW (part of 544 MW total additions this year).
  • Unit 15 (755 MW) filed for pre-approval in Oklahoma and pending in Arkansas; expected in-service date 2031; represents $1.75 billion investment.
• Energy Storage: $395 million investment in the Frontier Energy Storage Project approved and included in the capital plan.
• Transmission: Added $160 million in transmission investments to the 2027–2030 capital plan, distinct from the Seminole-to-Shreveport (Longwood) line.
• Customer Assistance: Expanding Senior Discount and Low Income Assistance Programs; launching a pilot for past-due balance management and "Choose My Due Date" prepayment options.

Market and Competitive Outlook:

• Demand Drivers: Service area demand remains healthy with "customer ramps" and maintenance outages causing short-term load variance; long-term growth supported by customer commitments.
• Pricing/Regulation: Residential electricity prices were 7% lower in August/September YoY; regulatory review in Oklahoma includes investments to strengthen the grid while balancing affordability.
• Technology Shifts: Monitoring migration of cryptocurrency load to AI workloads; potential impact on capacity needs (current 1.1 GW remaining need could increase if load nature shifts to require more capacity).
• Regional Interconnection: Monitoring SPP 2026 Integrated Transmission Plan (ITP) with expected NTC closure later this year; SPP board meetings in November (review) and February (direct assignment decisions).

Macro / Industry Outlook:

• Capital Access: Established an inaugural $750 million At-The-Market (ATM) equity program to fund growing capital needs; expects to raise approximately $200 million in incremental equity over the planning horizon to support new investments.
• Regulatory Environment: Oklahoma legislation enables CWIP (Construction Work in Progress) recovery, estimated to save customers >$900 million over asset life and establishing an 180-day pre-approval review timeline for generation filings.
• Cost Management: Projected to maintain competitive low-rate advantage; managing inflation and interest rate impacts through disciplined capital allocation and cost control.

Strategic Initiatives:

• New Generation Filings: Filing for pre-approval of 755 MW combined cycle plant at Horseshoe Lake; anticipating additional pre-approval filings before year-end.
• Project Execution: Completed Horseshoe Lake Units 11–12 ahead of schedule and $12M under budget; early commissioning avoided up to $16M in capacity purchase costs this winter.
• Community Investment: Refreshed "Lend-to-Hand" bill assistance program with increased nonprofit partnerships and matching funds from the OGE Energy Corporation Foundation.
• Timeline Milestones:
  • Q4 Call: Update on accepted SPP notices to construct.
  • Q1 Call: Update on Oklahoma Rate Review and Horseshoe Lake 15 pre-approval case.
  • Q2 Call: Update on regulatory approval for remaining 2026 generation filings.

Risks and Headwinds to Outlook:

• Weather Variance: Outlook assumes "normal weather" for the remainder of 2026; deviations from normal temperatures could impact earnings vs. guidance.
• Regulatory Execution: Success depends on successful passage of the 180-day pre-approval process in Oklahoma and Arkansas; potential scrutiny on cost, need, and economic viability remains a standard risk factor.
• Load Uncertainty: The 1.1 GW remaining capacity need is dynamic; changes in load nature (e.g., higher AI/crypto conversion rates) could increase required capacity beyond current projections.
• Financing Mix: Equity financing (ATM) levels are dynamic and depend on individual project attributes and credit metric maintenance; no fixed ratio is guaranteed for all future projects.

Management Tone on the Future:

• Confidence: High confidence in project execution, citing a "demonstrated excellence" record of on-time, on-budget delivery and a strong regulatory track record.
• Strategic Focus: Repeated emphasis on "disciplined approach," "long-term value," and maintaining "reliable, low-cost service."
• Growth Posture: Expresses clear intent to scale infrastructure to meet demand, viewing the current 9.6% rate base CAGR as sustainable against the 5–7% EPS growth target through future regulatory adjustments.

Miscellaneous:

• SPP ITP: Expectation that the 2026 ITP will follow a similar cadence to the 2025 process, with potential "step-function" changes to earnings managed via regulatory timing rather than immediate adjustments.
• Equity Usage: ATM program not tied to specific future opportunities but established as a flexible tool; specific project financing will be solved for on a project-by-project basis to maintain credit metrics.