OGE Energy Corp

Good morning, ladies and gentlemen, and welcome to the Quarter 3 2020 OGE Energy Earnings Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session, and instructions will follow at that time. If anyone should require assistance during the conference, please press star, then zero on your touchtone telephone. As a reminder, this conference is being recorded. I would now like to turn the conference over to your host today, Mr. Jason Bailey. Sir, please go ahead.

Thank you, Mel, and good morning, everyone, and welcome to OGE Energy Corp's third quarter's 2020 earnings call. I'm Jason Bailey, Director of Investor Relations, and with me today, I have Sean Trauschke, Chairman, President, and CEO of OGE Energy Corp, and Steve Merrill, CFO of OGE Energy Corp. In terms of the call today, we will first hear from Sean, Followed by an explanation from Steve of third quarter results. And finally, as always, we will answer your questions. I'd like to remind you that this conference is being webcast and you may follow along on our website at ogeenergy.com. In addition, the conference call and accompanying slides will be archived following the call on that same website. Before we begin the presentation, I'd like to direct your attention to the safe harbor statement regarding for looking statements. This is an SEC requirement for financial statements and simply states that we cannot guarantee forward-looking financial results, but this is our best estimate to date. I'd also like to remind you that there's a Reg G reconciliation for gross margin and a reconciliation of ongoing earnings to gap earnings in the appendix. I will now turn the call over to Sean for his opening comments. Sean? Thank you, Jason. Hey, good morning, everyone.

Thank you for joining us on today's call. It's great to be with you. As some of you may be aware, we are finishing up a very large restoration effort in our service territory. I think we're going to talk a lot about weather today. On Monday, October 26th, we experienced three separate waves of sleet, freezing rain, and even for us, uncharacteristically high winds. This early season storm brought about a significant accumulation of ice on leaves and trees and weighed down Lines and infrastructure causing an extraordinary number of outages and damage to the system. When it was all said and done, we found ourselves facing the worst storm in the company's history, causing over 400,000 outages at its peak. This extraordinary situation required our best and most extensive restoration efforts. We've mobilized contractors and mutual assistance personnel from 18 different states. We've put more than 4,000 restoration personnel in this field. Before I go any further, though, I would like to offer our thoughts and prayers to a mutual assistance lineman and his family who was injured while helping us restore power to our system. Certainly our thoughts and prayers remain with them. At this point, power has been restored to 372,000 customers. Included in this effort was an extraordinary effort to ensure all 800 polling locations within our service territory were operational for the election on Tuesday. I want to thank our customers who have been so supportive of our workers during this time, and I want to thank the women and men who have spent their days and nights working long hours in difficult conditions to restore service to our customers. Your support is truly appreciated. The other thing I wanted to point out was to help our customers in need, we donated $500,000 to the United Way to assist with shelter, food and water, and other support for those in need by this storm. Turning to the quarter. Earlier this morning, we reported third quarter ongoing consolidated earnings of $1.04 per share compared to $1.25 per share in the third quarter of 2019. At utility, we reported $1 per share compared to $1.13 in the third quarter of 2019. But just to set this up, to summarize the year-to-date results against our original guidance, we've been impacted by about nine cents of weather, seven of which occurred this quarter, three cents from COVID, two cents from a debt issuance we made as a conservative measure at the onset of the pandemic, and two cents from an additional ad valorem tax the state of Oklahoma assessed us this year. But as you'd expect, we've adapted and continued to drive savings out of the business, equal to about 10 cents. So basically, we've covered all the COVID impacts, the incremental interest, and all these other items, and a third of the weather with these savings. To turn that around and say it differently, but for the big weather impact, we would have been at the upper end of our original guidance. The adjustments we've made to our business will offset the COVID-related load impacts that we expect to carry over into next year as we continue down the path of economic recovery. A core focus of ours is maintaining a strong balance sheet, and we continually view our balance sheet as key to handling situations like this that arise. Steve will discuss the detailed financial results and guidance in a moment. But before he does, I'd like to spend a few minutes to update you on the economic recovery in our service territory and our third quarter operational accomplishments before offering some closing remarks. You know, last quarter I described our performance this year as excelling through challenging times. And that continues as we operate at a high level while dealing with the impacts of COVID. Interestingly enough, we've continued to add customers at a 1% annualized rate, and the Oklahoma and Arkansas economic recoveries are moving forward. In September, the U.S. Bureau of Labor Statistics reported that Oklahoma City was tied for first with the lowest unemployment rate for large metropolitan areas at 4.9%. The state of Oklahoma had the ninth lowest unemployment rate in the nation at 5.3%, which is down from a high in April of 14.8. and Ford Smith, the unemployment rate was 6.3 in September, showing the strength of these economies across our service territories. While COVID has impacted our business, our service territory is building momentum. Improvement in weather normalized load continues month over month across all of our customer classes. During the second quarter call, we reported that our weather normalized load was down 3.2% through the first half compared to the same period in 2019. In the third quarter, We've seen continued improvement. Year-to-date, we are now down 2.5% on a weather-normalized basis compared to 2019. And based on our analysis and based on our discussions with various customers, we expect continued improvement and forecast the year-end load to be down about 1.6% on a weather-normalized basis. So let me describe the load impact to our customer classes in the order of their contribution margin. Looking at residential. On a weather normalized basis, load remains above 2019, with each month since April being above the same periods in 2019. Year-to-date, residential load is up 3.3% compared to 2019. We are seeing the same trend with commercial customers, with month-over-month improvements. After a rough start early on in the pandemic, our commercial classes' steady improvement had weather normalized load in September 2.4%, above 2019 levels. Year-to-date, weather normalized commercial load is down 3.7%, which is an improvement from being down 5.6% back in June. Industrial load continues to show month-over-month improvements. Year-to-date, industrial load is down 6.6% compared to 2019, where it was 7.6% below 2019 back in June. And finally, our oil field load remains down, but each month of the third quarter was an improvement to the second quarter. And year-to-date, it is down 5.3% compared to 2019. We believe the economy is coming back, load is returning, and weather will find its way back to normal. We are strong and poised to come out of the pandemic even stronger. Operationally, our teams are delivering exceptional results across the board. I couldn't be proud of the work they're doing under very difficult circumstances, all while observing enhanced safety and health protocols. You know, our crews spend a number of weeks during the quarter in Louisiana and in the Northeast. And one of the great aspects about our industry is when help is needed, we all come together with mutual assistance. Since we reside in Oklahoma and Arkansas, we receive more than our fair share of severe weather throughout the year. Our philosophy is to help whenever we can because we know we will need the support in the future. Hence, the gratitude we have for the support we have with us today. Our grid enhancement projects continue in Arkansas with our upgraded circuits continuing to impress. We are on our way with the grid enhancement projects in Oklahoma, and we're expecting to provide customers the same positive results that we've seen in Arkansas on the regulatory front. We're pleased to have reached a unanimous settlement agreement on our Oklahoma grid enhancement plan. As a matter of fact, a final vote on the proposed order in that case is on the agenda today at the Commission. Our goal from the very beginning was to secure a mechanism for recovery of our grid enhancement investments in order to provide better value to our customers. This is an important step in de-risking the regulatory environment in Oklahoma and bring value to our customers. The grid enhancement plan will benefit our customers today and in the future with fewer outages, faster restoration, and rates that will remain among the lowest in the country. I realize some of you may be cautious about Oklahoma regulation. Our goal is for Oklahoma to be viewed as a constructive regulatory jurisdiction. Through a positive working relationship with the commissioners and staff, our practice of smaller, more straightforward filings on a more frequent cadence We also filed our third formula rate plan update in Arkansas on October 1st, and the FRP has been a successful regulatory mechanism that has facilitated investment in Arkansas, most notably the highly effective grid modernization projects that have delivered significant reliability improvements in a very short period of time. On the environmental front, we recently announced our plans for the conversion of 50% of our light-duty vehicles to electric by 2025 and 100% by 2030. We'll also make some additional modifications to our medium and heavy-duty fleet, All of which supports our goal to decrease emissions from the company's fleet vehicles by 60% by 2030. We're proud of our ESG efforts, especially around the environment. We have industry-leading emission reductions and will continue to improve on those reductions. We're not waiting for 2050, but acting now and are already ahead of the curve. We've met our 2019 goal of having our CO2 emissions 40% below 2005 levels, We are well on our way of meeting our goal of being 50% by 2030, which is consistent with the Paris Agreement. In addition to those reductions, we've avoided another 3% of CO2 emissions with our very successful domain response and energy efficiency programs. We continue to look for more opportunities to reduce or offset our CO2 footprint and advance technology. OG&E was the first to bring renewables, both wind and solar, to Oklahoma. We've built four solar farms already. We're adding our fifth next year. And we've done all of this and still have, lowest rates in the nation. As we continue the recovery, let me point out how I believe our sustainable business model has the company and our service territories poised to grow. So when looking at rates across all classes, S&P Global has reported that OG&E had the lowest rates in the nation in 2018 and 2019. We believe those low rates are the key to economic development in both Oklahoma and Arkansas. In just the third quarter, we've seen nine new economic development announcements, seven in Oklahoma, two in Fort Smith. That economic development will bring 24 megawatts of new load and more than 2,700 new jobs to our service territory just in one quarter. Between 2011 and 2019, we've invested $6.2 billion into our businesses. and our rates are 7% lower now than they were in 2011. By the time we finish 2020, our O&M per customer expense once again will be lower than it was in 2011. So our sustainable business model of growing revenues by attracting new customers and managing expenses by utilizing technology, becoming more efficient has produced the lowest rates in the country. This in turn attracts more customers and allows for more investment and the cycle continues. You know, I'd like to talk about the three R's when it comes to how we operate. The first two are reliability and resiliency, and they're understood. We'll invest in projects like grid enhancement to improve the reliability and resiliency of our system for our customers, but we'll also manage the business in a way that our shareholders can reliably count on us to deliver the results we say we will. And being resilient enough to come through even in difficult times. The third R is responsiveness, and that really is just our efforts to respond to the ever-increasing wants and needs of our customers in providing innovative solutions for the benefit of their homes and businesses. You know, before I go any further, I would like to remind everybody that this will be Steve and Todd's last call with us. I do want to extend my sincere gratitude to both Steve and Todd for their many, many contributions to the company. As for Steve's replacement, I will make an announcement on Steve's replacement before year-end. Quickly turning to Enable, I'm very aware of the market sentiment around the midstream sector, the market sentiment with a bias towards pure play utilities. We're not going to comment or participate in the speculation that is out there. As I've continually said, speculation does not help Enable, and we are focused on maximizing the value of Enable for the OGE shareholders. and that has been consistent and will continue to think that way. We all anxiously await the results of the election on Tuesday. Let me just say this. This is OGE's 30th presidential election since we were incorporated in 1902. I'm confident whomever the winner is will work effectively with the administration to advance our industry and our business and our company just like we've done in the 29 elections before this one. So as we look to next year, we have several key items to execute on. In addition to grid enhancement, we'll complete the new Arkansas solar farm and continue to look for additional opportunities. New rates will go into effect in April for the formula rate plan in Arkansas. We'll file our fourth FRP update in October, where we will likely request an extension for an additional five years in that program. The FRP has been a productive mechanism that strikes the right balance between enabling investment, improving customer experiences. In closing, I'd just like to be clear that from the initial shockwave of the COVID pandemic earlier this year to what has now essentially become a new normal, employees at OG&E continue to perform at a high level, safely energizing life for customers in our communities. You know, I am encouraged by the ongoing recovery in our economy. We're watching this very closely. and as this develops, we will have plans to update our CapEx and our integrated resource plan outlook on our February call. Our customers will benefit from us having the lowest rates in the nation and both Oklahoma and Arkansas benefit from the economic development that is facilitated by these rates. As our local economies continue to gain strength, we will focus on executing on our business strategy and building value for our shareholders as we excel and grow with our communities through this. Thank you, and now I'll turn the call over to Steve.

Thank you, Sean, and good morning, everyone. For the third quarter, we reported ongoing net income of $207 million, or $1.04 per share, as compared to net income of $251 million, or $1.25 per share in 2019. On a GAAP basis, OGE Energy Corp reported net income of $177 million, or 89 cents per share. The contribution by business unit on a comparative basis is listed on the slide. I will note here that absent a non-cash write-down of $11.5 million it enabled, the earnings contribution would have been 9 cents for the quarter, which would have made consolidated earnings $1.08 per share. At OG&E, net income for the quarter was $199 million, or $1 per share. Third quarter gross margin is lower at the utility by $28 million, which I will discuss on the next slide. Looking at the other key factors, depreciation increased $6 million as additional assets were placed into service. Interest expense increased $2 million, primarily due to additional long-term debt outstanding. Income tax expense increased $10 million, primarily due to reduced tax credit generation and amortization of net unfunded deferred taxes, all included in our original plan for the year. Our O&M expense was down $20 million compared to last year. As we've mentioned before, O&M reductions have covered the COVID impacts, incremental interest and ad valorem expense, and part of the impact of our mild summer weather. Turning to third quarter gross margin, utility margins decreased approximately $28 million in the third quarter of 2020 compared to 2019. Year to date, mild weather has reduced margin by $25 million or 9 cents per share. Compared to the third quarter of 2019, weather reduced margin $34 million or 13 cents per share as cooling degree days for the quarter were 21% below last year. Compared to normal, weather reduced margin by $21 million or 7 cents per share. Industrial and oilfield sales along with non-residential demand revenues combined to reduce margin nearly $8 million. Partially offsetting these reductions, price variance increased margin by $10 million. This was primarily riders with direct expense offsets driven by storm recovery, the home of production tax credits. And finally, new customer growth contributed $4 million in margin for the quarter. Turning to our investment enable, natural gas midstream operations contributed earnings to OGE Energy Corp of $10 million for the third quarter of 2020, compared to $29 million in the same period of 2019. The decrease in earnings was primarily due to an $11.5 million non-cash write-down related to an impairment Enable took on their investment in the SESH pipeline, adjusted for basis differences. In addition, Enable Midstream issued cash distributions to OGE of approximately $18 million in the third quarter of 2020. Enable is on track to achieve the capital and cost reductions announced earlier this year and have fully funded their CapEx plan with cash flow. They ended the quarter with a distribution coverage ratio of just over two times, which provides increased liquidity and further flexibility to execute their plans. Turning to 2020 guidance, OG&E earnings guidance is now projected to be between $1.68 and $1.70 per average diluted share, narrowed and adjusted for mild summer weather from the previously issued guidance of $1.72 to $1.78 per average diluted share. This assumes normal weather for the remainder of the year. As Sean mentioned earlier, below normal weather has reduced earnings by $0.09 this year. As a result of the equity method investment impairment recorded by Enable, OGE Energy projects ongoing earnings for the natural gas midstream operations to be between $0.32 and $0.36 per average diluted share. Additionally, OGE Energy's consolidated ongoing guidance is projected to be between $2 and $2.06 per average diluted share. At the holding company, guidance remains flat for the year. plus as we have seen our turnaround of the interim tax adjustments. This concludes our prepared remarks and we'll now answer your questions.

Thank you. Ladies and gentlemen, as a reminder, if you have a question at this time, please press the star and then the number one key on your touchstone telephone. If your question has been answered or you wish to remove yourself from the queue, please press the hash key. First question comes from the line of Julian Smith from Bank of America. Your line is now open. You may ask your question.

Hey, good morning. This is actually Richie here for Julian. Hey, good morning, Richie. How are you? I'm doing well. Thanks for taking my question here. Just, I guess, setting Enable aside for a moment, how do you think about your business mix going forward? Is there any interest in staying in the gas business through, say, gas OECs? I know there's some adjacent assets in Oklahoma and Arkansas. And just given where some of those multiples are for that subsector, could that be a way to unlock additional growth here?

Yeah, I mean, we're, you know, I think I'd answer this two ways. We're focused on kind of our utility business. We have a bias towards electric. You know, that being said, you know, our focus is continuing to try to grow our company, but Electric is where we're at.

Okay, got it. That's helpful. And then separately, can you just remind us of the tax basis on Enable?

Yeah, Richie, I think at the end of 2019, it was about $850 million, negative $850 million, about that.

All right, perfect. That is very helpful. That's all I have.

All right, thanks. Have a great day, Richie.

All right, you too.

Thank you. Next question comes from the line of Shar Pariza from Godinham. Your line is now open. You may ask a question.

Hi, good morning, guys. It's actually Constantine here for Shar. Thanks for the opportunity here.

Yeah, good morning, Constantine. Give our regards to Shar as well.

Absolutely will do. Just kind of a couple of questions to round out some of the stuff that you covered. Just thinking about the low dynamics and kind of recovery going into 21, how are some of your assumptions starting to build up? What are you kind of seeing as we kind of get past the crisis phase and Maybe in terms of kind of load mix going forward, do you anticipate that some of the increase in the residential load could be kind of sustained? We've kind of been hearing about employers kind of looking to reduce real estate footprints in one way or another.

Yeah, I think, you know, I would characterize it. I agree with that thesis. I think you're going to see some of that residential load be sustained. Just from more and more people working from home. We have more people working from home, and we figured out opportunities to do more of that for the benefit of our business. So I think you're going to see more of that. As we survey our segments and talk to various people, it does look like to us that a lot of the industrial and commercial businesses are, I mentioned that, we provided some detail there, they're improving. There is momentum there. You know, the area that we've just, while we've seen improvement, haven't seen as much improvement has really been around our public authority area, which is really schools. A lot of schools have not been in operation and things like that. You know, I think we all would agree we need to educate our children, and so those schools will come back, so I think that's positive momentum there. And then on the oil field, that is That's a relatively smaller and smaller piece of our overall margin contribution. And believe it or not, that seems to be improving. So we're watching this very, very closely. We look at this monthly. Well, actually more than that. But, you know, we forecasted out that we think the total would be only down 1.6% by year end, and we would expect continued improvement in 2021. And we'll update all that in February. What those growth projections are for us. I will point out, you know, this is really something that I think is going to be unique for us because we do see the momentum building in our service territories. Remember, pre-pandemic, we were actually talking about load growth greater than 1%. And so we're excited to get back there and So we're watching it very closely. We'll update all this in February, but I think that is a good catalyst for us for next year.

And then that's great color. And one kind of follow-up to that in a similar kind of line, you talked about kind of the offsets to O&M that you had this year around kind of 10 cents, and just curious to kind of How are you thinking about the kind of recurrence and kind of sustainable kind of cost levers coming out of 2020 into 21? Kind of how should we think about that?

Yeah, great question. I appreciate you asking that question. So, you know, Steve talked about $20 million of reductions, and that's going to flow through. That's going to carry through through to 21. You know, obviously, in addition to that, as we went through the year, recognizing the pandemic – We deferred some things. It didn't make a lot of sense from a health standpoint to have a lot of people in working on a plant outage or things like that, so we've deferred that. As we've gone through the year, we've actually brought some of that back into 2020. Two points I'd make to you is, yes, we have some deferrals that we'll pick up into 2021 that we didn't do in 2020, but the $20 million that we have Thank you. We have the next question comes from the line of Andrew Levy from Hype Hedge. Your line is now open.

You may ask your question.

Gentlemen, how are you? Hey, Andrew, how are you doing today? Andy, you, how's your family?

Good? Everybody's good, Sean. Everyone's good, Sean. Very good. Good, very good. First, Todd, it's been a good run, man. You've been a good friend, so I really appreciate that, number one. And Steve, you've been a great CFO. We don't know each other as long, but, and I'm sorry to interrupt you there, Todd, but you guys both have done a great job, and I'm really sorry to see you both go. Especially you, Todd. So anyway, so now down to the questions. So just, I know you're not answering anything on Enable, but just, can you just talk about, because this, you know, you have kind of made public, is just the alignment with CenterPoint and, you know, in your words, what does that really mean?

Yeah, I... I think what I'm going to just say is I really don't want to comment about that. My focus is because that gets taken out of context and creates more speculation and rumors. So, Andy, I would just defer that to say no comment and just reiterate my focus and our focus has consistently, we've been, you know, Resolute about the idea that we look at Enable in terms of how do we maximize value for the OG shareholder. I'm not focused on anybody else but the OG shareholder. But I'm not going to comment on anybody else. Okay.

And then kind of maybe on the shareholder part, you know, I guess, you know, we've had discussions in the past how, you know, in the past you created shareholder value. when you did the initial ENABLE deal. Can you maybe just talk about that as a shareholder or potential shareholder? How should we think about that in the context of ENABLE?

Can you help me out a little bit here? I'm not sure I'm following.

Well, basically, you know, I think you've talked about in the past how you've always been very focused on the shareholder and that how, you know, when you did the initial enabled transaction, it created a lot of shareholder value. And, you know, I think in the past, you know, put dollar amounts on that and how much value it created. So as you kind of contemplate this, You know, possible change in whether it's ownership or strategy or whatever it may be. As a shareholder, how should we think about how you will think or the board will think when it comes to doing something? What are kind of the pluses, minuses, things that you're thinking about as you contemplate what you may or may not do? Okay, that's fine. Okay, that's fine. I'm trying to get some information out of you, but that's fine. And then we'll just leave it at that. And then the last question is just more on the industry. So getting off of Enable and, you know, looking at like a negative carbon type environment going forward, whether it's on the oil side and maybe to a lesser degree on the nat gas side. And then, you know, The country, whether it's a Biden administration or a Trump administration, is clearly going to move towards electricity. There's going to be a big transformation within the sector over the next decade. Can you maybe just talk about that and how OGE management and the board is kind of looking at what the opportunities are over the next decade as the country becomes more electrified and a better way to put it?

Andy, we've had this discussion. I think your thesis and your thinking about this is really quite insightful. The way we think about it is it goes back to that fundamental point about economic development because I think if we can continue to operate our business as a With affordability and reliability in mind, we can attract more people to our service territory. We're able to compound that idea that you have because I agree with you. I think there's going to be much more electrification, whether in the home and the vehicles and processes, things like that, and manufacturing. And then you compound that with a growing service territory. You get that multiplier effect. So we think this idea of actual load growth today that is separate and aside from electrification is huge. And so we believe we are very, very well positioned. Now, as you think about, you know, any kind of CO2 tax or things like that, we're not waiting, as I mentioned, to 2050. We're plowing through that, and we've made huge inroads. And we've been able to do that without affecting the economic vitality of our communities. And so you should expect us to continue to march down that path as well. And those are investment opportunities. Everything you're talking about are investment opportunities, whether it's decarbonization, whether it's because of economic development, or as you profess, just more electricity sales. Got it.

I think it's bright.

Okay, thank you. Hey, Andy, great. Tell me the name of your firm again.

It's H-I-T-E Edge. You can look it up.

We'll talk about it. All right. All the best, Andy. Take care. Thank you. Good talk to you.

Thank you. Next question comes from the line of Charles Fishman from Morningstar. Your line is now open. You may ask a question.

Good morning. I sort of lost... I've lost track of your settlement agreement at my end.

And I just want to make sure that what is on the agenda today at the Oklahoma Commission is the full five-year $800, $900 million grid enhancement plan.

Am I correct? Yeah. Steve, you want to kind of put the details on that?

Yeah. So what we got through on the settlement was not the full CapEx plan. were kind of capped at a revenue requirement around seven, $8 million for the first couple of years. And then we've got to file a rate case by the end of 2022. And then we can take the mechanism back up in a general rate case. I think that was really what was preferred is to try to deal with this in an overall review of costs. So we felt like we made great inroads in getting this mechanism in place and we can build from there.

Okay. So do you think that does that give you any room or upward trajectory on your most recent rate based guides for OG&E?

Yeah, we'll address any change to our CapEx plans in February. So at this point, our plan is just to continue to execute the plan as laid out that we've already laid out before you.

Okay, good. Look forward to that. Thank you.

That's all I have. Thank you, Charles.

Thank you. The next question comes from the line of David Peters from Wolf Research. Your line is now open. You may ask a question.

Hey, good morning, guys. Hey, good morning. Just in a scenario where you, you know, say you have a 100% regulated earnings profile, when thinking about the balance sheet, what would be the appropriate credit metrics to target for you guys to kind of maintain the ratings you currently have today?

Yeah, probably, you know, if you're talking about FFO to debt, probably mid-teens. Mid-teens. Okay. That's all I have. Thank you. Okay. All right. Thanks. Have a good day.

Thank you. Next question comes to the line up randomly from . Your line is now open. You may ask your question.

Hey, good morning, Sean. Good morning. Congrats, Steve and Todd, on your retirement and the next phase of your life. First question is of the decrease in outlook, how much of that is attributed to weather and how much are other factors?

Yeah, good question. And so it's almost all weather, right? I mean, Steve remarked that we've had nine cents of weather impact for the year. You add that to our revised outlook, we'd be at the top end of our guidance. You know, we operated very, very well, and I'm not making excuses for the weather. It happened, and it's our job as management to address as much of that as we could. We took a lot of that. Unfortunately, you know, late August, early September is where this hit, and you're just not really able to kind of do enough things to overcome that. And this was a big one, right? I mean, nine cents for the year, seven cents for the quarter. That's a lot to overcome. And so it's all weather. Again, not You know, it's our job to kind of address this and not making any excuses or anything like that. But we covered about a third of that weather impact with what we've got. Hopefully, you know, just one other point. You know, July was so-so. August was worse. And then September was really bad. But in Oklahoma, October is actually a summer rate month because it usually gets hot here in October, too. Thank you for joining us today. I think that bodes well for the future because I do believe all things are leaving out. We'll get there. We'll get there. So thanks, Brandon, for the question. Do you have another one?

Yeah, just on rate-based growth. Is there an ability to get to maybe a higher rate-based growth more in line with the average of like 7%? Or do you think the states that you operate in will not permit like a more aggressive CapEx plan?

Yeah, good question. You know, I think what we're focused on is the earnings growth. We're making sure that we earn our allowed returns and we grow earnings. And we don't necessarily focus on the rate-based growth. That being said, you know, we've got a very solid plan. And as you've seen over the years, we usually or we will layer in additional opportunities as we go forward. I would view our plan as kind of the base case with going through the execution phase with UpSight.

Great. And then I guess just one last one. Should you decide to exit Enable, what do you see as the possible alternatives?

Alternative? For the proceeds. Okay. I think I'm going to no comment on that and just say that, you know, whatever we would do would be focused on the OGE shareholder.

Okay, great. Thanks a lot. That's all I had. All right. Thank you.

Thank you. Again, if anyone would like to ask a question, you may press star then the number one on your telephone keypad. We don't have any questions from the queue. As of the moment, please continue, presenters.

Okay. Thank you, Mel. Thank you all for your interest in OGE Energy Corp and for being with us on the call today. Everyone stay safe, and I look forward to seeing many of you very soon. All the best. Take care. Bye-bye.

Thank you, ladies and gentlemen. This concludes today's conference call. Thank you all for participating. You may now disconnect.