OGE Energy Corp

Good day and thank you for standing by. Welcome to the Q4 2021 OGE Energy Corp earnings conference call. At this time, all participants are in a listen-only mode. After the speaker presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 1 on your telephone. Please be advised that today's conference is being recorded. If you require assistance during the conference, please press star 0. I would now like to hand the conference over to your speaker today, Jason Bailey, Director of Investor Relations.

Please go ahead. Thank you, Dennis, and good morning, everyone, and welcome to OGE Energy Corp's fourth quarter 2021 earnings call. With me today, I have Sean Trosky, our Chairman, President, and CEO, and Brian Buckler, our CFO. In terms of the call today, we will first hear from Sean, followed by an explanation from Brian of financial 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 OGE.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'll now turn the call over to Sean for his opening remarks. Sean?

Thank you, Jason. You know, before we begin, I do want to acknowledge the sad and disturbing news out of Ukraine this morning and share our thoughts for a peaceful resolution. With that in mind, thank you for joining us today. It's certainly great to be with you. Before I get into the specifics of 2021, I do want to mention a few items at the outset. Some of you may recall that over the last five years, I've shared with you how we were changing our operational paradigm with an intentional focus on reliability, resiliency, and affordability to really drive load in customer growth. And we pushed to change how we engage our customers, concentrate economic development efforts to grow our communities, operate the business with excellence, and creating the sustainable business model we have today. This effort was very intentional. And this focus led to the tremendous load growth we are experiencing today. And we're not done. I'm incredibly proud of every single employee for their exceptional performance and how they've adapted to create a brighter future for OGE Energy. We are well positioned for future growth. And I have confidence in our team, and I have confidence in our business, and I have confidence in our company. With that, let's take a look at 2021 results. This morning, we reported earnings of $1.80 per share for the utility and a holding company loss of $0.04 per share, and also included is $1.92 per share from natural gas midstream, including a gain associated with the enable merger transaction. In total, consolidated earnings total $3.68 for the year, and Brian will provide more details shortly. Turning to operations. Every employee in this company took the opportunities in front of them to deliver outstanding results, and they did so across all metrics. We are celebrating two key operational performance indicators this year. 2021 was our second-best safety year on record, making each of the last six years the safest in company history. And for the second time in four years, we delivered a number one ranking in the Southeast Electric Exchange, or SCE, for safety. Additionally, Escalant recognized OG&E as a business customer champion for 2022, and thanks for all of our efforts on delivering a great customer experience. Again, as I mentioned at the outset, this is confirmation of our intentional focus. We continue to make investments in the grid to benefit our customers and communities in both Arkansas and Oklahoma. The impact of our grid investments is real. Last May, a windstorm swept through Fort Smith, and our data shows that 20,000 fewer customers experienced a sustained outage, and the power restoration process was reduced by 50%, thanks to those grid modernization efforts in that state. The Oklahoma grid enhancement program kicked off in 2020, and we expect to see similar results in the future. In 2021, we invested approximately $232 million in the grid, including work on 104 distribution circuits, 64 distribution substations, four technology platforms, three communication systems, and these investments improve service to more than 175,000 customers, or nearly 20% of our customer base. For 2022, we plan to continue these investments, improving reliability and resiliency for an additional 145,000 customers. Combined, the two program investments ensure a better customer experience by reducing and eliminating outages. We continue to expand our solar offerings, Underway, we have another 5 megawatt solar farm supporting our customer subscription programs. And we will provide you an update on our utility scale solar RFP that we have underway later this year. Our regulatory calendar continues to be steady. In December, we obtained the securitization order in Oklahoma to cover nearly all the fuel and purchase power costs associated with winter storm Yuri. We are awaiting the Oklahoma Supreme Court to certify those bonds. In Arkansas, We reached a settlement in our fourth formula rate evaluation report, which we filed in October. We expect an order soon, with rates going into effect in April. At the same time, we also filed for a five-year extension of the formula rate plan. We filed a rate review in Oklahoma at the end of the year. First and foremost, this rate review is about recovering the capital investment we've made for our customers in 2019, 2020, and 2021. Additional elements of the review include the continuation of the Oklahoma Grid Enhancement Program and the established recovery mechanism. Also in the review is an option for the Oklahoma Corporation Commission to consider a performance-based rate plan like those used by the natural gas utilities in Oklahoma. The review also includes updating the depreciation schedule to reflect the useful life of assets in service, and these new rates would likely become effective in July. The customer impact of the review is an increase of approximately 9% to the current rates of residential customer. We are sensitive to the financial impact on our customers and are committed to continue our long track record of affordable rates and program offerings to help customers manage both their monthly bill and energy usage. Turning to economic development activities, we ended 2021 on target with 2.4% load growth and customer growth of 1.4% outpaced our customer growth projection. Strong growth like this means the combination of our highly affordable rates and ability to serve as commercial expansion in our markets drives results for OG&E and the communities we serve. We expect continued low growth in the 3.5% to 5% range for 2022. This tremendous growth reflects our economic and business development efforts designed to support existing business expansion with new growth in health care, defense contracting, and other industries in our service area. We ended 2021 with 201 megawatts of new connections, landing right on target with the estimate I shared with you last quarter. Oklahoma and Arkansas' key economic indicators are strong, with unemployment rates lower than the national average, reflecting a competitive business environment. Additionally, Oklahoma City was recently listed as the 12th best place for startups in the U.S., thanks to an affordable cost of living and business-friendly environment. So as we look to the future, we intend to grow our utility OG&E earnings by 5% to 7% over our forecast period, underpinned by the reliability and resiliency investments as a result of our growing service area. Additionally, we expect to grow the dividends. targeting a dividend payout ratio of 65% to 70% based on utility earnings. Over the next several years, we expect our earnings per share growth to exceed the dividend growth rates to help achieve this target. Regarding our energy transfer units, our plans are consistent to exit a majority of the position by the end of the calendar year, and we will update you quarterly on the progress we've made. Before I hand the call over to Brian, I want to recap a few Important points. First, the economies in our service area are strong, driving economic development that leads to growth and capital investment that fuels our business. Second is our regulatory agenda. We're delivering on our customer commitments and look forward to constructive regulatory outcomes and rate reviews and finalizing securitization in both jurisdictions. Third, our balance sheet is among the strongest in the industry, and we're on a path to becoming a pure play utility, plans include grid and generation infrastructure that add value for customers and support our growing service area. And finally, at the end of the day, it's about our people. Our employees told us through a survey last fall that they feel a higher sense of purpose in working for OG&E, and our customer experience is the result of our employees' dedication to what we believe is our noble purpose to energize life. So with that, thank you, and I'll now turn the call over to Brian. Brian?

All right, thank you, Sean, and good morning, everyone. Let's start on slide eight and discuss 2021. Fourth quarter results were as expected, and the details can be found in the appendix of the slides. For the full year 2021, the utility achieved net income of $360 million, or $1.80 per share, compared to $339 million, or $1.70 per share, in 2020. The $1.80 of earnings per share at OG&E is right at our original guidance midpoint of $1.81. representing an increase of 5.8% in earnings per share at the utility. After winter storm URI, we committed to get back within our original guidance range, and we met that commitment with strong execution across our operations, including cost mitigation efforts. As Sean mentioned, we could not be more proud of the employees of OG&E and their dedication to excellent customer service in 2021 while meeting our financial objectives for our shareholders. On a year-over-year basis, the increase in net income was primarily driven by strong weather normal load growth of 2.4 percent, increased revenues from the recovery of our capital investments and customer programs, as well as strong cost mitigation efforts. These favorable results were partially offset by the impacts of winter storm Uri, including the fourth quarter regulatory settlement we reached in Oklahoma, and higher depreciation on a growing asset base. With respect to our natural gas midstream operations, we reported net income of $385 million or $1.92 per share compared to a net loss of $515 million or $258 per share in 2020. The impact of the closing of the Enable merger with energy transfer in December 2021 was a net gain to the company of $265 million after tax. As a reminder, 2020's results were impacted by a loss due to an Enable investment impairment charge of $590 million after tax. Holding Company and other operations resulted in a loss of $8 million or $0.04 per share in 2021 compared to a gain of $2 million or $0.01 per share in 2020, primarily due to higher short-term debt levels and lower income tax benefit. We expect Holding Company and other operations to have a minor impact to consolidated results in 2022 of a $0.01 to $0.02 loss. Putting it all together, on a consolidated basis, we had an excellent 2021. with net income of $737 million, or $3.68 per share. Turning to our 2021 load results on slide nine, fourth quarter load came in as expected, and for the full year, load was 2.4% above 2020 levels. The residential class maintained its 2020 weather normal volumes of approximately 4% above 2019 levels, sustained by outstanding customer growth. We also began to see real strength in the commercial and industrial classes. Overall, our 2021 load surpassed the pre-pandemic levels of 2019 by one-half a percent, and we are bullish on the future of our local economies. As we look to 2022, as shown on slide 10, we expect total load growth between 3.5% to 5% above our 2021 levels. Our commercial segment is forecasted to experience double-digit increases. A large portion of that growth will come from data mining companies attracted to our service territory by our low customer rates. We also expect to see strength in several other commercial segments. Further, we expect volumes in our residential class to be supported by customer migration into Oklahoma and Arkansas. Lastly, we are also forecasting solid growth in the public authority and oil field sectors as volumes return to pre-pandemic levels. Turning to slide 11, you can see how these low trends play into a strong EPS growth equation for 2022. We expect utility earnings per share in the range of $1.87 to $1.97 per share. The midpoint of $1.92 represents 6% growth from the midpoint of our 2021 guidance of $1.81 and nearly 7% growth off of actuals. In addition to outstanding load projections, we expect new customer rates to come into effect in Arkansas and Oklahoma during the year. Other drivers in our 2022 financial plan include an expectation of normal weather and higher depreciation in line with our capital investment plan. With respect to O&M, our non-rider O&M in 2022 is forecasted to be approximately $25 million below 2019 levels. Our company's cost discipline has been an important factor in maintaining some of the lowest customer rates in the nation. Let's turn to slide 12, where we are introducing our five-year capital plan through 2026. This targeted capital investment plan will address the robust investment needs in Oklahoma and Arkansas to maintain and improve reliability and resiliency while adding capacity for the load and customer growth expected in the coming years. Over 75% of our plan is customer-focused distribution and transmission investments. This new five-year capital plan of $4.75 billion excludes potential additional investments associated with our 2021 IRP. We will update you on investment needs related to our integrated resource plan as we receive the results of our RFPs. From an earnings perspective, as Sean and I have looked at the five-year financial forecast, we see a business with strong fundamentals, a compelling customer-focused capital investment plan, and a service territory with outstanding load growth prospects. These factors give us confidence that OG&E can annually grow earnings per share in the 5% to 7% range over our forecast period based off the midpoint of our 2021 guidance of $1.81. Turning to our financing plan on slide 13, our balance sheet strength remains a key advantage and supports our long-term growth plan and dividend without the need to issue equity in our five-year planning horizon. Our cash flows will benefit from the sale of the energy transfer units as we exit a majority of our ownership interest by the end of 2022. With respect to the fuel costs we incurred during winter storm URI, In December, we received a financing order from the Oklahoma Corporation Commission, and the 30-day appeal period ended in January. We await certification from the Oklahoma Supreme Court and anticipate a securitization transaction closing in the second or third quarter of 2022, which will solidify our credit metrics to more normal levels. We project FFO to debt of 18% to 20% for 2022 through 2024. Earlier this month, Moody's revised their ratings outlook on both the holding company and the utility to stable from negative, reflecting their expectation that OG&E will recover the cost incurred during winter storm URI in Oklahoma through the issuance of securitization bonds. Separately, we expect to issue long-term debt at OG&E of approximately $300 million in the second half of 2022 to support our capital investment plan. Before I turn the call back over to Sean, let me summarize where we stand. Our employees have built a strong foundation for this company, and they delivered outstanding results in 2021. Looking forward, we have put together an operational and financial plan for 2022 through 2026 that will continue to deliver great value to our customers and drive economic development in our communities. We expect to deliver strong earnings per share growth of 6% in 2022. And lastly, our 5% to 7% long-term earnings per share growth rate, coupled with a stable and growing dividend, offers our investors an attractive total return proposition. That concludes our prepared remarks, and we will now open the line for your questions.

As a reminder, to ask a question, you will need to press star 1 on your telephone. To withdraw your question, press the pound key. Please stand by while we compile the Q&A roster. And your first question is from the line of Char Perreza with Guggenheim Partners. Please go ahead.

Hi, good morning, Sean and team. It's actually Constantine here for Char. Congrats on a great quarter.

Hey, good morning, Constantine. Good morning, Constantine.

It looks like a healthy CapEx roll forward, and you're now hitting that 950 million run rate of CapEx per year. Can you talk a little bit about the drivers for the step-up? There seems to be more generation, more transmission spending, and you're not including upsides from the IRP at this juncture. So just any color that you can provide on the step-up and maybe the regulatory mechanisms for recovery there.

Yeah, well, I think in two parts there. The driver there is really around the growth we're seeing in our service territory. And, you know, As I mentioned in my comments, we've been intentional. We built this the right way, trying to attract businesses and customers to our service territory, and we're seeing the results of that. So those investments are really targeted to that growing service territory. You're exactly right. There's nothing in there for the results coming out of our integrated resource planning process. As we get feedback from those, we'll certainly layer those in. As far as the recovery of that, we have a case underway right now, and we've proposed two alternatives, one with this grid enhancement mechanism in Oklahoma to recover that. Alternatively, we've also proposed a performance rate-making program. Both of those would serve as the recovery mechanism for a lot of these investments. And then, as you know, in Arkansas, we have a formula rate, and we're in the process of seeking a five-year extension for Arkansas. Does that help?

Yes, that's very helpful. And the second question is on just longer-term assumptions for growth, as you were presenting today. what level of load growth and bill inflation do you embed over the five years? And maybe a little bit more broadly, kind of what takes you to the top of the 5% to 7% growth that you're projecting today? Any assumptions on rate case outcome or the performance-based rates, as you mentioned?

Yeah. Well, I think I'll turn this over to Brian here to get into the details, but I think very succinctly, you know, what's going to drive this is load growth. And, you know, That's what's going to be the driver of this. And so the more load we have, you should expect higher earnings coming out of our company. But, Brian, do you want to fill in the details?

Sure, absolutely. And I think incremental load growth is the factor that could take you to the top end of that 5% to 7% load growth, earnings per share growth expectation. Constantine, just so you know, As we modeled out our five-year plan, we've modeled out different scenarios of how low growth could play out, capital investment plans, various outcomes on a regulatory front, and we have great confidence in being able to deliver that 5% to 7% over the five-year period under various scenarios. For low growth, we're obviously showing some very strong low growth in 2022, but as we built our core financial plan in 2023 and beyond, We've assumed that we revert back to a more historical 1% low growth level in 2023 and beyond. So certainly there's some upside there. But we're really proud of the capital investment plan that we've targeted for our customers over the next five years. It's a great balance of doing the infrastructure investments the community needs while also always keeping in mind affordability. So we believe over the five-year period this this capital investment plan with the low growth we're seeing will allow us to stay at the top tier of affordability in the nation and keep rate increases very modest.

I think that's a great message. And maybe just one part that you didn't touch on is the performance-based rates. Is there any timing embedded in plan for an outcome there, or is it too soon?

Yeah, our financial plan does not assume the PBR in Oklahoma occurs. We obviously believe the grid recovery mechanism is working very well in Oklahoma, so we filed for an extension of that. But the PBR is really another option for the commission to consider.

Excellent. Thank you, and congrats on closing out a good year.

All right. Thanks, Constantine. Take care.

Your next question is from the line of Julian DeNewland Smith with Bank of America. Please go ahead.

Hey, this is actually Cody Clark on for Julian. Thanks for taking my questions.

Good morning, Cody. Hey, good morning.

So just piggybacking off of Constantine's question, I'm wondering how you're thinking about investments driven specifically from the 2021 RRP and how that plays with the 5% to 7% growth rate, if we can kind of hone in on the solar investments there. I mean, depending on the ownership percentage, the 150 megawatts of solar annually that you previously outlined could be fairly significant. So wondering, you know, you talked a lot about low growth, but how does investments there kind of drive the range?

Yes, certainly that's not included in the investment forecast over the five years that Brian laid out there. We're going to go through this RFP process, recognizing that there are inflationary pressures out there. We do have some flexibility about the timing of when we do some of this. But we'll layer those investment dollars in when we come to a conclusion that and evaluate all those bids that we receive back. And one point there, Cody, it is my expectation that we're going to own all of these assets. These would not be contractual arrangements. So I think that's an important distinction there.

Okay, understood. That's very helpful. And then, you know, curious if it's a significant ownership difference you know, if it were to come to fruition, you know, you just stated your expectation to own all of the assets. I'm just wondering, you know, it's not embedded in plan now, would you need to issue equity as you layer these investments in, or are you thinking about using incremental leverage to kind of satisfy the funding needs?

Yeah, I think, yeah, I think, um, We'll cross that bridge when we get there, and we'll certainly lay all that out for you. I don't think it's good to speculate right now about what that would look like, but again, we've got a lot of flexibility around our plan, and I'm really proud of what we've done here because we've built it the right way over the years, focused on affordability to drive this load growth. This wasn't by chance. This This was intentional. And so, you know, we're going to be cognizant of continuing to do everything we can to have low growth, too.

Okay. And just the follow-up to that leverage question, just wondering if you could share any updated thoughts on how the rating agencies are thinking about the downgrade threshold as you're exiting energy transfer.

Okay. Yeah, Brian, you want to take that one?

Yeah, absolutely. Hey, Cody, it's Brian. With respect to Moody, you know, they recently issued their report on the company, the holding company and the utility. And as I mentioned in my remarks, they have put us back on stable outlook. In that report, they've taken our downgrade threshold from 20% down to 18%. And, you know, many of our peers are more at that 17% or 16% downgrade threshold. You know, one thing I will say is that Part of the reason they lowered the downgrade threshold is because we're exiting the midstream business, so we're lowering the risk profile of the company. And as we exit and fully exit the midstream business, and as we continue to execute well on our operational plans, I think you'll see Moody's revisit that downgrade threshold. But all in all, we feel like we're in great shape with all the agencies over the next several years. And as you know, an 18% FFO to debt is one of the strongest in the industry and gives us a lot of flexibility on deploying our investment plan as needed for our customers.

Okay, got it. I'll pass it off there. Thanks again for the time.

Thanks, Cody. Have a good day.

Your next question is from the lines of Insu Kim with Goldman Sachs. Please go ahead.

Hey, guys. Thank you for taking my question. My first one is maybe piggybacking off of the balance sheet question and, you know, as you get rid of the midstream. When you just look across your peer set, a regulated utility, I guess, with your type of balance sheet, what is that threshold by Moody's typically? And, you know, if that were to be the case, in a good case scenario where you have the threshold even you know, lower to where your peers are, what type of additional leverage capacity do you think that creates for you guys?

Brian? Sure. Hey, Andrew. You know, again, when we've looked at our peers, peer sets with the BAA rating at Moody's and BBB Plus at S&P, S&P's downgrade threshold is actually a good bit lower than Moody's. So that, for one, gives you a lot more flexibility. As I mentioned before, We've looked at many of our peers in our sector, and they appear to have more of a 16% or 17% downgrade threshold at Moody's. So that certainly, as you described, would indicate you're able to deploy more capital with leverage without impacting your credit rating. So does that answer your question as to what you're looking for?

Yeah, no, it does. And I guess the other question, I think, you know, currently you guys are currently at the BBB plus VAA1. Is that something you want to maintain or, you know, I think a stable utility, some of the other peers out there are, you know, okay to be in the mid BBB range. Is that something that you're okay with holding as well or do you want to maintain your current ratings?

Yeah, we intend to maintain our current ratings.

Okay. that makes a lot of sense. On the low-growth side, I mean, obviously, I think the, especially the commercial load that you're putting out there for 2022, we've talked about, you know, the low-growth trends over the past couple, a few quarters from you guys, and, you know, this number is definitely very impressive. You know, I know the forecast beyond 2022 is relatively conservative, so it would seem to indicate that there could be, you know, definitely upside from there if that holds. Any Carla, on what you're seeing on 2022 expectations and which industries or what momentum do you think exists to at least beyond 2022, this level, maybe not the same level, but being above your conservative assumptions?

Yeah. I'm going to let Brian get into the detail. But, Insu, I tell you, this is a great conversation. We're talking about momentum. We're talking about growth. It's really exciting. So, Brian, you want to kind of get into the details there?

Yeah, absolutely. And, you know, I'm in my, I guess, fifth quarter here at the company, and a lot of discussions Sean and Jason and I have had have talked about the real strong momentum the company had developed right before the pandemic hit. So we were starting to see load growth exceed 1% before the pandemic hit and had great momentum. And then, of course, speed bump in 2020 with COVID hit. in the pandemic and now we're turning a corner here and you're in Oklahoma and Arkansas that are very business friendly states. And then you have us as a utility that has some of the most affordable rates in the country. So you're seeing great interest in existing and new companies coming in and expanding operations. In 2022, I would describe, you know, that bigger, one of the bigger drivers, there's a lot of different industries that are helping to grow. I did mention data mining companies in my opening remarks, and I tell you, we've taken a pretty conservative approach with that expected load as to what we expected to come in at. They've indicated certain start dates for their operations, and we have taken a conservative approach by assuming a six-month ramp-up period for those operations, so a slower ramp-up than what those customers are actually expecting. And that should start in earnest in the second quarter. And I think your question, too, was could you also see some of that upside play into 2023? And I think that's absolutely a possibility.

Got it. And then just to follow up to that, the capital, the $950 per year over the next few years, you know, starting the 2023 period, that capital is assuming your relatively conservative low-growth assumptions? Yes.

Yeah, and, you know, I wouldn't point to this specific load I've been speaking to as driving our capital investment needs. It's the overall ocean rising in Oklahoma of great customer demand, residential, industrial, oil field, public authority. It's the entire economy here that we've been planning for for years. And so you're seeing not only new – capital projects around capacity upgrades in our transmission system, 69KV lines, and our substations on the distribution side. You're seeing us make investments needed to make the entire grid more resilient, to protect it against extreme weather events and things of that nature. So these investments are needed. They're critical for the safe and reliable operation of our grid over the next five years, irrespective of what you might see in 2023 load.

Okay, that's definitely a good color. And just one more, if I could. The 22 guidance and also just that annual 5 to 7 growth rate, as we think about the utility, I assume that's utility as, you know, net of, you know, Holco and others as well. And if that is the case, any, from a modeling perspective, any expectations on the range of either drag or benefit on the Holco side that we should be thinking about?

Yeah, so our 5% to 7%, we mentioned that as our utility expectation of earnings per share growth. On the holdco, we had a $0.04 drag here in 2022. In my comments, I mentioned we expect that to go down to about a penny or two here in 2022. And really what's driving that into is that our holding company debt levels should go back close, should really shrink here in 2022 and 2023 as we sell our energy transfer units. get the proceeds from those sales, as well as to harvest the distributions, if you will, from that investment. So we expect Holdco to have a minimal impact on the company from an earnings perspective the next couple of years. And then over time, as you deploy your annual $950 million of capital, you're going to see Holdco debt levels start to move up, and you will have a bit of an interest expense drag in the out years. But, you know, we've modeled utility by itself and then, of course, utility plus the holdco and believe we can deliver in that 5% to 7% range on a consolidated basis once you exit the midstream business.

Okay, so that's all embedded. Okay, thank you so much.

Great, thank you. Your next question is from the line of Travis Miller with Morningstar. Please go ahead.

Good morning, everyone. Thank you.

Good morning, Travis. Good morning.

You answered all of my questions around the CapEx, but just to follow up on what you were talking about just then, that 1% number that you're planning for going to be on 2023 or so, if that were to go to a 2% or 3%, what areas of CapEx would you expect most affected? Distribution, generation, transmission. Where do you think we would see the most pieces moving around, so to speak, in that plan?

Yeah, you'll continue to see investments in the transmission and distribution side of the business. I mean, that, you know, we've said for many, many years, you know, really the wires is where we're focused. As Brian remarked, it's really that customer focus where there is benefit, and those will be the investment dollars we make to connect those new customers.

Okay, understood. Good. And then a couple of your peers around the Southeast and Midwest have talked about industrial demand driving a lot of renewable growth, ESG and greening of their energy use. Are you seeing that? And if so, what are the dynamics of trying to get users essentially to pay for that upgrade versus socializing across the system?

Yeah, we're certainly having that conversation with some of our customers. You know, I think the bar there is a little higher in our service territory because our rates are so attractive. And so, you know, those industrial customers are looking for the economics there too. And so they've got a really good thing where they are now. And so we're working with them. Our solar subscription program, where customers are able to subscribe to some of that, has been very successful. We've got another one underway this year. But those discussions are ongoing. But just like we're focused on the economics and the affordabilities, we call it, for our customers, those industrial customers are looking at the same thing there, too.

Travis, the only thing I might add is that being an SPP, we have access to a tremendous amount of wind generation. And when you look at RTOs in a country, SPP has probably done a better job than any as far as bringing renewable resources in. So they're getting a pretty green electron flow as it is today. Sure.

Okay. Great. I appreciate the thoughts.

Thank you.

Once again, ladies and gentlemen, if you would like to ask a question, simply press star, then the number one on your telephone keypad. Our next question is from the line of Brandon Lee with Mizuho. Please go ahead.

Good morning, Sean and Brian. Congrats on the quarter. Most of my questions have been asked, but just a quick question. If you... Do you guys have good weather and, you know, you guys perform well during the year? Are you guys looking to toggle O&M to stay within your 5% to 7% range? Maybe pull forward, tap back?

Yeah, you're forecasting 10 months ahead here, Brandon. But, you know, I think that's something that – Our planning and operations are dynamic. Brian talked about the efforts we undertook in 2021 to get in the guidance range, and I think that's the expectation that you're adaptable and adjust things based on how the year progresses. I mean, things will surface, and we'll adjust and adapt, and we have every expectation to meet our numbers. And again, I want to be really clear. We've built this company and built this plan the right way, and we're focused on the long-term too. I mean, we're not narrowly focused just on the current year either. We're making sure that we're going to deliver this for many, many years.

Great. And then just on your energy transfer sell-down, I think – You guys mentioned that the majority of the energy transfer shares will be exited by the end of the year. Is that a change in strategy? Are you expecting to hold a small minority piece into 23?

No, there's no change in our strategy. We were just trying to communicate we are going to exit this position. Okay, great.

That's all I had. Thanks.

All right. Thanks, Brandon. Thank you, Brandon.

And I am showing no further questions at this time. I would like to turn the conference back to Sean Troschke for closing remarks.

Thank you, Dennis. You know, as we close today's call, I do want to leave you with a final thought. We will continue our sustainable business model of growing revenues by attracting new customers and managing expenses by utilizing technology and becoming more efficient as we focus on reliability and resiliency. You know, and this virtuous cycle helps us maintain some of the most affordable rates in the nation, which in turn attracts more customers as we're seeing. I'm grateful for our team, for every employee who has brought us to this point, realizing the growth projections we set out five years ago. And as we celebrate OG&E's 120th birthday this week, we aren't letting up, and I look forward to sharing continued results with you in the future. So I'm excited about where we are headed and what the future has in store for the company. Thank you for your interest in OG Energy Corp and for being on the call today. Take care of yourselves.

This concludes today's conference call. Thank you for joining. You may now disconnect.