OGE Energy Corp

Good day and thank you for standing by. Welcome to the Q1 2022 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 JAR 1 on your telephone. Please be advised that today's conference is being recorded. If you require assistance during the conference, please press JAR 0. I would now like to hand the conference over to Jason Bailey, Director of Investor Relations. Please go ahead.

Thank you, Abigail, and good morning, everyone, and welcome to OGE Energy Corp's first quarter 2022 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 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.

Good morning, everyone, and thank you for joining us on the call today. Before we begin, last night a number of our communities in our service territory were impacted by severe storms and multiple tornadoes. This was the second round of storms this week, And our thoughts and prayers are with the families and businesses impacted by these severe storms. Many of our own OG&E family live in these very same communities. So we're working very safely to support our communities. So moving on to the quarter, earlier this morning we reported first quarter consolidated earnings of $1.39 per share, which includes utility earnings of 19 cents per share, earnings at the holding company of 5 cents per share, and natural gas midstream operations of $1.15 per share. The first quarter was stable from a weather perspective, and the team executed very well, setting our course for the year. Less than 10% of our annual income is derived from the first quarter, and we are confident in our guidance for this year. I'm proud of what we've accomplished for our investors, our customers, and communities, and I want you to know that we're not done. For 2022, Critical operations, investments, and our continued grid enhancement work will benefit 16% of our customer base through 27 new or upgraded substations and transmission lines. This quarter, we completed 40 distribution line circuit improvements, including automation and resiliency projects. We also improved 10 distribution substations and five communication technology projects. These projects will deliver improved reliability and resiliency for our growing customer base. Combined with last year's grid enhancements, now 36% of our customers will experience improvements from these investments to the grid. Turning to regulatory, last week we received responsive testimony in the Oklahoma Rate Review. As you know, this is one part of the overall rate review, and we appreciate the transparent and public process the Oklahoma Commission provides. You may have read the responsive testimony, which is consistent with prior reviews with regard to this point in the process. The testimony does not reflect the positions of the commission, the individual commissioners, or Oklahoma regulation, and we will file rebuttal testimony later this month. On Tuesday, the Supreme Court of Oklahoma approved the issuance of bonds associated with the securitization of fuel and purchase power costs from winter storm Yuri. In Arkansas, the settlement and our fourth formula rate filing was approved, and we also received an order approving the extension of our formula rate plan. We expect an order from the Commission by May 18th on terms of the extension. Oklahoma and Arkansas continue to expand with load growth continuing at the expected pace of 3.5% to 5% in 2022. Customer growth continues to be on track as well, coming in at 1.3% for the first quarter of the year. Brian will have more details when he discusses the first quarter results. The business and economic development remains very active in our service territory. Our affordable low rates are a significant driver of companies coming to or expanding their operations in our service territory. Three hospital systems in the Oklahoma City metro are growing. And between them, we anticipate an additional 15 megawatts over the next couple of years. Additionally, Georgia Pacific recently announced plans to stand up new production lines at their 640-acre manufacturing operation in Muskogee, Oklahoma. These efforts, while incremental at 20 to 50 basis points of our overall load, build on one another, demonstrating how consistent and predictable growth makes us a stronger company as we support stronger communities. In Q1 alone, we've connected 14 megawatts of new load from new large projects, and we're excited about the year ahead. We will continue to work on the many opportunities that will bring more load, more jobs, and more investment to our communities. Our economies in Oklahoma and Arkansas remain strong, with unemployment rates well below the national average. And 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 in maintaining some of the lowest rates in the nation, which in turn attracts more customers. We've accomplished a lot in the first quarter, setting us up for a strong year. Now, as we've all read, supply chain issues and are reviewed by the U.S. Department of Commerce has impacted solar panel availability across the industry. We are evaluating responses we have to the active solar RFP with the understanding that solar likely will be unavailable before 2025. Last week, we released our Flexible Resources RFP, which seeks a quick start or quick responding resource like a hydrogen-capable combustion turbine, batteries, or other technologies. As a reminder, our current investment plan does not include any potential investments associated with our 2021 IRP. We will be nimble as we address our future capacity needs, and we will update you as we move through the process. Inflationary pressures are also impacting certain materials and supplies, as other industries are also experiencing. We will remain flexible and agile with our investment opportunities to minimize that impact on customers. In April, we began exiting out of our energy transfer units, which Brian will update you on shortly. Our plan remains to exit a majority of this position by the year end, and we will continue to update you each quarter on our progress. Now, I was doing some research for a talk I gave a couple weeks ago. about the future of the energy sector and wanted to talk about how technology has changed at OG&E. Right now, there are nearly 1 million communication points or devices on our system. About a decade ago, that number topped out at around 500. Our industry is undergoing a digital transformation the likes of which we have not seen. I am biased, but I would argue that the electric grid is among the most complex machines in and must be flexible to deliver affordable, reliable, and resilient service to our customers. As we add increasing amounts of renewables and see additional technology in homes and businesses, the energy grid must be smarter, must be stronger, more dynamic, and maintain security and affordability. Achieving this bright future means we will deploy new and different technology like AI and automation to improve both grid functions and customer interactions. We are bullish on technology, and while economies of scale will prevail, we're not making singular big bets, rather making technology investments continually along the curve. This technology curve is not just in our business, but also in our customers' homes and businesses. This technology requires greater precision and more functionality compared to the past, and we rely on it for a multitude of uses. Our team has been on a path to transform OG&E into a customer-centric company. We're in the process of centering decisions on customer impact as we balance the needs of all stakeholders. This work is already paying off in improved customer satisfaction measures, increased internal collaboration across teams, and identifying new customer programs and communication tools that we can deploy in the future. We believe this shift will help us continue to grow communities, serve customers better, and improve employee experience. and deliver strong shareholder returns. So with that, I'll thank you and turn the call over to Brian. Brian?