OGE Energy Corp

Good day and thank you for standing by. Welcome to the first quarter 2021 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, Mr. Jason Bailey.

Thank you, Mae, and good morning, everyone, and welcome to OGE Energy Corp's first quarter 2021 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 Brian Buckler, CFO of OGE Energy Corp. In terms of the call today, we will first hear from Sean, followed by an explanation from Brian of first 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 forward-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 will now turn the call over to Sean for his opening comments. Sean?

Thank you, Jason. Good morning, everyone. It's great to be with you this morning. Earlier, we reported first quarter consolidated earnings of 26 cents per share, which includes utility earnings of 6 cents per share, earnings associated with our investment in Enable of 19 cents per share, and earnings at the holding company of a penny per share. We've accomplished a lot. and I'm pleased to report that we've made great progress in mitigating the impacts of winter storm URI. We are back within the guidance range we reported last quarter and we're not done. We are one quarter into the year and we're focused on a great year. Our efforts to mitigate the impacts of URI are ongoing as we work consistently to deliver shareholder value. Brian will provide additional details when he discusses our financial results. We've had a productive and busy first quarter, starting the year off by announcing our support of the merger between Enable and Energy Transfer, and as we worked to finalize that merger agreement in February, our service territory experienced winter storm Yuri, and I'm pleased to say that our operational performance during the storm was strong. Our employees and our generation fleet performed admirably, and our customers experienced minimal disruptions. Importantly, we performed our work safely. improving our year-over-year first quarter safety results by 60%, which is a great accomplishment when you consider that 2020 was our second safest year on record, and particularly when you consider that our members worked in some of the most difficult winter conditions imaginable during the storm. Then we quickly got to work on legislative and regulatory solutions to address the financial impacts of URI. We now have a regulatory asset for the recovery of the winter storm costs in Oklahoma and in Arkansas. We now have securitization legislation in Oklahoma and in Arkansas, and we have filed for securitization in Oklahoma and in Arkansas. Turning to other positive regulatory outcomes in the first quarter, in March the Arkansas Public Service Commission approved the settlement in our third formula rate, and new rates were implemented April 1st. In Oklahoma, under our grid enhancement mechanism, the work is going well. We file regulatory reports each quarter as projects are placed in service and I'm pleased to say that the entire program is going smoothly. On the last call, I mentioned that we have a lot of really exciting projects in and around our communities in various stages of development. The two projects I'm sharing today are only the first and there are more to come. We announced an innovative deal with Dobson Fiber to upgrade the resiliency and capacity of our utility communications network to accommodate new grid automation and mitigate the risk of wireless interference. This is part of our continued grid enhancement efforts to deploy increased automation, monitoring, and operational technologies. This initiative enables us to essentially future-proof our communications network while saving more than 60% over standard capital deployment and O&M costs. Those are just real savings for our customers. We also announced an expansion of the Choctaw Nation OG&E Solar Energy Center. We're proud to continue our work with the Choctaw Nation and expand our commitment to renewable energy. This commitment is based off customer-driven demand for our renewable energy offerings. We now have included $25 million to our 2021 capital investment forecast to reflect the inclusion of these two projects in the first quarter. These are just two examples of the kinds of innovative projects you can expect from us in the future. Turning to load, we are seeing the recovery we anticipated at the beginning of the year. Last quarter, we stated our expectations for 2021 weather normalized load being 2.4% above 2020 levels. After the first quarter, we still expect full year 2021 weather normalized load to be at that level. Adding to our confidence around the return of load is the fact that even during the pandemic, we've continued our trend of strong customer growth, which is up 1.4% over the same period in 2020, driven primarily in our residential and commercial classes. Add to this the fact that in Oklahoma, gross receipts are up 38% for the month of April, adding to the confidence we have in our business. Today, as I've said before, Our electric rates are lower than they were in 2011. And let me share an interesting data point. When adjusted for inflation, our rates are actually 14% below what they were in 2011. Business and economic development is active in our service territory. These low rates are a significant driver of companies coming to or expanding their operations, including electrification in our service territory. So far, This year, those efforts expect to bring an additional 50 megawatts of load by the end of 2021. This combination of strong customer growth and outstanding business and economic development activity puts us on track for sustained load growth of at least 1%. We will continue to work on the many opportunities that will bring more load, more jobs, and more investment to our communities in Oklahoma and Arkansas. So let me put all of this into perspective. We've continued to achieve positive regulatory outcomes. We've added new innovative projects. We see strong customer growth. We have some of, if not the lowest rates in the nation, combined with annual low growth and better unemployment rates than most of the nation. This is all part of our great story that further supports our sustainable business model of growing revenues by attracting new customers, managing expenses by utilizing technology, and becoming more efficient This helps us maintain the low rates, which in turn attracts more customers. This virtuous cycle continues. Our results this year will rest on our operational execution, and I'm very confident in our ability to achieve that. For the remainder of the year, we will achieve final regulatory approval of cost recovery plans for Winter Storm Uri, submit integrated resource plans in Oklahoma and Arkansas, file our fourth formula rate in Arkansas, including a request for an extension of its term, finish construction of the two solar farms, continue our grid enhancement investments in Oklahoma, which are on track to deliver results to our customers, and finally, we continue to prepare for our next Oklahoma rate case, which we plan to file later this year. So we've accomplished a lot already in the first quarter, but we're still going, and this all sets us up for a great year and years to come. Turning to Enable, We expect the transaction to close in 2021, subject to the satisfaction of customary closing conditions, including the HSR clearance. Our intention to prudently exit our midstream investment remains the same, and we will provide information upon closing of the transaction. On our last call, we talked about our solid, compelling investment thesis, supported by a track record of performance. We put in motion our vision to become a pure play utility, targeting 5% earnings growth, based off lower risk investments that will enhance our customers' experience. We have some of the most affordable rates in the nation helping to drive economic growth in our communities. We've made great progress towards getting back to our 2021 guidance. Our ability to meet guidance rests on our operational execution, and I'm confident in our ability to do so. Our company is strong, and while COVID and extreme weather have presented challenges, it's important to understand that we have always been determined more than simply manage the downturn. Instead, set our sights on excelling through the recovery. So with that, thank you very much, and I'll now turn the call over to Brian. Brian?