OGE Energy Corp

Good day, and thank you for standing by. Welcome to the OGE Energy Corp 2023 Fourth Quarter Earnings and Business Update Call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 11 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 1-1 again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Jason Bailey, Director of Investor Relations. Please go ahead.

Thank you, DeeDee, and good morning, everyone, and welcome to OGE Energy Corp's fourth quarter 2023 earning and business call update. With me today, I have Shawn Trotsky, our Chairman, President, and CEO, and Brian Buckler, our CFO. In terms of the call today, we will first hear from Shawn, 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. It simply states that we cannot guarantee forward-looking financial results, but this is our best estimate today. I will now turn the call over to Shawn for his opening remarks. Shawn? Thank you, Jason.

Good morning, everyone. Thank you for joining us today. It's certainly great to be with you. I'm excited about our message to you this morning as our results for 2023 were top of guidance and we are updating our five-year plan, including a consolidated earnings growth rate based on the strong fundamentals of our business. It's truly a great time to be here at the company. Before we get into the plan, I do want to take a moment to talk about our people here at Big Orange. In 2023, the team delivered results for our customers, for our communities, and shareholders by providing reliable energy at some of the lowest rates in the nation every day. Once again, our safety results were very strong, with the last eight years being the safest in our 121-year history, even as we continue to face some of the most extreme weather in the country, like winter storms Jerry and Heather in January, where our plants ran, generating electricity to the grid to ensure our customers could continue to live their lives and run their businesses. Our team achieved recognition for our culture in 2023. I mentioned last quarter that we'd been named the number one state employer in Oklahoma by Forbes magazine. And later in the year, we were also named a top workplace in Oklahoma, following the feedback our employees gave in our annual workplace survey. And just last week, Forbes named OGE Energy the 16th best mid-sized employer in the country, achieving the highest rank in our sector and the highest ranking of any company in Oklahoma. These results are not happenstance. They come from a dedicated commitment to fostering a culture grounded in our values and our beliefs and operationalized with a focus to deliver safe, reliable, and resilient electricity combined with outstanding customer experiences every single day. I'm so proud of everyone here at the company, and it's because of them that we're discussing great financial results. This morning, we reported consolidated earnings at the top end of our guidance of $2.07 per share for the year, including $2.12 per share for OG&E and a holding company loss of 5 cents per share. Our sustainable business model provides opportunities to drive low growth while simultaneously investing in the grid and generation for many years to come in a way that is mindful of ensuring a smooth customer impact and delivering consistent financial returns. Last year, my message to you was, we've got this. The plan we introduced to you this morning is an extension of that message and is consistent with the growth we've delivered in the past. Over the next five years, we expect to grow consolidated earnings per share at 5% to 7%. Looking back at the 10-year period before we exited our midstream natural gas segment, we delivered over 6% of consolidated earnings per share growth. The difference now is that we've simplified our business mix and remove the volatility that was associated with that business segment. Our plan going forward, which Brian will detail, is based on a pure play electric model with premium fundamentals, including a strong financial base and credit metrics, excellent load and customer growth, and a lower risk investment plan focused on delivering the safe, reliable, resilient electric service that our customers expect. Today, I want to talk to you a bit more about three key aspects of our work that drive our results. reliability, growth, and affordability. Our grid and weather hardening investments continue to deliver great results for our customers. Our grid reliability investments benefited customers in 2023, saving over 320 minutes of interruption for the average impacted customer. And from a SADIE perspective, automated restorations saved our customers more than seven and a half minutes of SADIE, or 6.2 million customer minutes of interruptions. We also built or upgraded 21 substations to serve our growing service area, and we will continue making these types of investments in the grid that directly benefit our customers. This foundation powers our growing communities and economic development engine that has delivered 11 new projects in our service area that are projected to create thousands of jobs and garner billions of dollars in additional investment. This type of growth is not by accident. We set the stage for these results more than five years ago when we began investment and growing the local economy in cities and towns all across our service area. Our communities maintain strong unemployment rates and continue to attract expanding and new businesses that our low rates help secure. For example, just last month, Stardust Power announced its plans to build a new battery-grade lithium refinery in Oklahoma, bringing hundreds of jobs to the community as well as community infrastructure development. Oklahoma's central location, access to multiple transportation routes, highly skilled workforce, and low-cost energy were all reasons noted for the site selection, and we look forward to serving Stardust as they get up and running. Our load forecast for 2024 continues to keep pace with the outstanding growth we've experienced over the last three years, and our long-term load forecast remains as strong as our service area continues to grow. Turning to the regulatory front, constructive regulatory outcomes enable us to support growth, serve customers, and achieve results for our shareholders. We've released the draft IRP that will lead to RFPs later in the year for additional generation to meet the needs of our growing service area. We'll be disciplined with regard to customer impact and expect a combination of gas, solar, along with energy efficiency and DSM programs to meet the identified needs. In Oklahoma, we have filed a rate review and expect new rates to be in place by July 1st. In Arkansas, we've achieved a settlement under the formula rate plan for a 1.4% increase in rates effective April 1st. Today's macroeconomic environment continues to create pressure on our customers, and we remain committed to affordability and keeping bills low. As I mentioned in our last call, we reduced the average fuel charge by $21 per month in November, which had an immediate impact on customer bills. We've doubled down on connecting customers to programs and services to help them manage their energy use and monthly bill. Enrolling nearly 20% of our customers in new to them programs in 2023, including energy efficiency and home weatherization, as well as connecting our customers to billing assistance when they need it. Additionally, our team continues to innovate energy efficiency programs that will help customers reduce their bill and increase reliability, including making low-cost repairs to qualified customer homes for weatherizations, piloting solar and battery storage technology at schools, and piloting managed flexible load technology. As we celebrate the impact of those programs, I want to close with a few important thoughts. We are committed to growth for our communities, for our customers, and to financial growth for our shareholders and our employees. The case for Ogenie is strong, and I'm bullish on our future. We're leveraging the economic development engine we built that drives load growth. Our excellent execution is driven by fully engaged employees who are determined to reach our North Star of delivering safe, reliable, and affordable electricity to our customers. We operate in constructive regulatory jurisdictions, and we've created a competitive, credible, lower risk financial plan backed by a strong balance sheet, all of which leads to a long-term plan where we address system growth and customer needs, which are at the center of our decisions. Next week, OG&E turns 122 years old. And as we celebrate that milestone, we look ahead to the future where our deep Diverse set of investment opportunities allows us to meet customer expectations and achieve investor commitments. Keeping the customer bill impact in mind, we will invest alongside growth in our communities to keep the momentum going for many, many years to come. Thank you.