Q2 2025 OGE Energy Corp Earnings Call

Good day, and thank you for standing by. Welcome to the OGE Energy Corp 2025 second quarter earnings and business update call.

At this time, all participants are listening only mode after the speaker's presentation, there will be a question and answer session to ask a question during the session. You'll need to press star 1. 1 on your telephone, you will then hear automated message advising, your hand is raised to draw your question. Please, press star 1 again.

Jason Bailey: Thank you, Marvin, and good morning, everyone, and welcome to our call. With me today is Sean Trauschke, our Chairman, President, and CEO, and Chuck Walworth, our CFO and Treasurer. In terms of the call today, we will first hear from Sean, followed by an explanation from Chuck of financial results. Finally, as always, we will answer your questions. I would 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 would 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.

Please be advised that today's conference is being recorded, I would like to hand the conference over to your first Speaker Today. Jason Bailey, director of investor relations. Please go ahead.

Thank You, Marvin. And good morning, everyone. And Welcome to our call. With me today is santosi our chairman president and CEO and Chuck Walworth our CFO and treasurer

In terms of the call today we will first hear from Sean followed by an explanation for of Chuck from Chuck a 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 a company's 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 board, looking statements,

Jason Bailey: I will now turn the call over to Sean for his opening remarks. Sean.

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 today.

Sean Trauschke: Thank you, Jason, and good morning, everyone. Thank you for joining us today. It is certainly great to be with you. Our service area is continuing to grow, and I couldn't be more excited about this growth we are experiencing. Here in Oklahoma City, we have truly entered the global stage. Our Thunder secured their first NBA championship, and more than half a million people descended downtown to help celebrate during the championship parade. That is not all. In 2028, we will host the softball and Kudus-Salalom events as part of the Los Angeles Olympics. As we celebrate these milestones, it is important to stay focused on our goals for the year and the years ahead. Here we are, halfway through the year, and we have achieved a lot.

I will now turn the call over to Sean for his opening remarks.

Sean. Thank you Jason and good morning everyone. Thank you for joining us today. It's certainly great to be with you. Our service area is continuing to grow and I couldn't be more excited about this growth. We're experiencing

Here in Oklahoma City, we've truly entered the global stage, our Thunder secured their first NBA championship and more than a half a million people. Descended on downtown to help celebrate during the championship parade.

But that's not all.

In 2028, we will host the softball and canoe Salam events as part of the Los Angeles Olympics.

Sean Trauschke: We are confident in our plans for the year and expect to deliver in the top half of our earnings guidance range. This morning, we reported consolidated earnings of $0.53 per diluted share, with the holding company flat for the quarter. We built a strong foundation for future growth and remain committed to providing safe, reliable, and affordable service to our customers. The second quarter usually includes severe weather in our service area, and I am happy to report the system performed well and impacts on our customers were minimal as a result of our investment and outstanding team. I am very proud of our people and the work they do every day. This month, the weather is heating up, and as always, our system will be prepared. Moving on to customer growth and demand, our service area is poised for continued growth across all customer segments.

And as we celebrate these Milestones, it's important to stay focused on our goals for the year and the years ahead. So here we are halfway through the year and we've achieved a lot and we're confident in our plans for the year and expect to deliver in the top half of our earnings guidance range.

This morning, we reported Consolidated earnings of 53 cents per diluted, share with the holding company flat for the quarter.

We built a strong foundation for future growth and remain committed to providing safe reliable and affordable service to our customers.

The second quarter usually includes severe weather in our service area and I'm happy to report the system performed. Well, and impacts on our customers were minimal as a result of our investments and outstanding team.

I'm very proud of our people and the work they do every day.

This month, the weather is he heating up and there's always our system will be prepared.

Sean Trauschke: Additional generation projects under construction are all on time and all on budget. Our growth and performance continues to excel, providing three future opportunities: new generation capacity, transmission, and large loads that I am happy to update you on. To address the growing customer demand, we are adding approximately 550 megawatts of capacity today. This includes the new natural gas combustion turbines at Tanker, as well as construction of new natural gas combustion turbines at Horseshoe Lake, units 11 and 12.

Moving on to customer growth and demand. Our service areas poised for continued growth across all customer segments, additional generation projects, under construction are all on time and all on budget.

Our growth and performance continues to excel, providing 3 future opportunities, new generation capacity, transmission and large loads. That I'm happy to update you on.

Sean Trauschke: We expect these units all to be operational within the next year. We have also filed for approval of two more natural gas combustion turbines, again at Horseshoe Lake, units 13 and 14, which would add approximately 450 megawatts to our generation capacity in 2029. We are not finished. We will continue to explore options to meet our growing generation needs, and I expect we will continue to add generation at the same pace for the next few years. On the transmission side, next month, we will accept an NTC for a line from Fort Smith, Arkansas, to Muskogee, which will help address reliability in the Fort Smith area. Charles Walworth will tell you more about that in just a moment. Data centers continue to have an interest in our service area. Negotiations and conversations continue to progress, and our load projections are solid even without the data centers.

To address the growing customer, customer demand. We're adding approximately 550 megawatts of capacity today. This includes the new natural gas combustion. Turbines at Tinker, as well as construction of new natural, gas combustion. Turbines at Horseshoe Lake units. 11 and 12.

And we expect these units all to be operational within the next year.

Meet our growing generation needs and I expect we will continue to add generation at the same pace for the next few years.

On the transmission side. Next month, we will accept an NTC for a line from Fort Smith Arkansas to Muscogee which will address.

Which will help address reliability in the Fort Smith area.

And Chuck will tell you more about that in just a moment.

Sean Trauschke: Any data centers that we are adding, we add to our service area, will certainly be accretive to our business. In preparation for these opportunities, we supported the passage of legislation that would help minimize customer impacts, specifically CWIP for generation. We filed for and received CWIP for this future transmission project as well. Turning to economic development, the Oklahoma Department of Commerce announced the 2025 Oklahoma Innovation Expansion Program, which includes 83 companies in our service area. This program supports high-impact, new capital investment across a broad range of industries to help diversify the state's economy, lead to new product development, or increase capacity at Oklahoma's existing companies. In addition to encouraging new capital investment, these awards support existing jobs and the creation of new jobs. This is just another example of the growth opportunities in our service area.

And data centers continue to have an interest in our service area, negotiation and conversations, continue to progress, and our low projections are solid even without the data centers. So any data centers that we're adding we add to our service area, will certainly be a creative to our business.

In preparation for these opportunities. We supported the passage of legislation that would help minimize customer impacts specifically, seaweed for generation, and we filed for and received seaweed for this future transmission project as well.

Turning the economic development, the Oklahoma Department of Commerce, announced the 2025 Oklahoma Innovation expansion program which includes 83 companies in our service area.

This program supports high impact, new capital investment across a broad range of Industries to help diversify the state's economy. Lead to new product development or increase capacity at Oklahoma's existing companies.

Sean Trauschke: We continue to see diversified growth, including tribal and defense sectors. In late February, Ocana, a $400 million resort and water park, opened along the still-developing Oklahoma River in Oklahoma City, and their traffic this summer has really taken off. Tinker Air Force Base announced the purchase of 131 acres of land adjacent to the base, allowing for future expansion, including more than 1,000 new jobs. Additionally, we see retail and restaurant chains expand in our service area, including Bass Pro Shops in Fort Smith, which is set to open early next year. Just last month, conceptual designs for the new $900 million Thunder Arena were shared, with the arena set to open in the summer of 2028. Our economies remain strong, with unemployment in Oklahoma and Arkansas continuing to outpace the national average. For the 46th straight month, Oklahoma City's unemployment rate is below 4%.

In addition to encouraging new capital investment, these Awards, support existing jobs and the creation of new jobs. And this is just another example of the growth opportunities and our service area.

We continue to see Diversified growth, including tribal and defense sectors in late. February, Okana a 400 million resort. Waterpark opened along the still developing Oklahoma River in Oklahoma City and their traffic. This summer is really taken off.

Tinker Air Force Base announced the purchase of 131 acres of land adjacent to the base, allowing for future expansion, including more than 1,000 new jobs.

Additionally we see retail and restaurant chains expanding our service area, including Bass Pro Shops and Fort Smith, which is set to set to open early next year.

And then just last month, conceptual designs for the new 900 million Thunder arena were shared with the arena set to open in the summer of 28th.

Sean Trauschke: The city also had the lowest unemployment rate in the nation for April and May. U.S. News and World Report just named Oklahoma City the number one best big city to live in in the U.S., underscoring the Metro's national rise as a destination for both opportunity and quality of life. As I close my remarks and prepare to hand it over to Chuck, I hope you hear how excited we are about the future and our confidence in delivering on our commitments. We are on track to deliver in the top half of our guidance range. As we close the books on another successful quarter, our strategic initiatives, our sustainable business model position us well to achieve our goals and to continue to grow the company and provide excellent service to our customers. Thank you. I will turn it over to Chuck. Chuck.

Our economies remain strong with unemployment and Oklahoma and Arkansas continuing to outpace the national average for the 46th straight month. Oklahoma City unemployment rate is below 4%.

the city also had the lowest unemployment rate in the nation for April and May,

And US News and World Report just named Oklahoma City. The number 1, best big city to live in in the US.

Underscoring the Metro's National rise as a destination for both opportunity and quality of life.

As I close my remarks and prepare to hand, it over to Chuck, I hope you hear how excited we are about the future, and our confidence in delivering on our commitments. And we are on track to deliver in the top half of our guidance range.

Charles Walworth: Thank you, Sean, and thank you, Jason. Good morning, everyone. I am pleased to review Q2 and year-to-date results with you and provide an update on our 2025 financial plan. Halfway through the year, we are confident in achieving results in the top half of our earnings guidance range. More importantly, we execute today with an eye on our long-term success. I am excited to discuss some of those benefits with you today, but first, let us review our recent performance. Starting on slide five, for the second quarter, consolidated net income was $108 million, or $0.53 per diluted share, compared to $102 million, or $0.51 per share in the same period of 2024. In our core business, the electric company achieved net income of $108 million, or $0.53 per diluted share, compared to $109 million, or $0.54 per share in the same period of 2024.

So as we close the books on another successful quarter our strategic initiatives, our sustainable business model position us. Well to achieve our goals and to continue to grow the company and provide excellent, excellent service to our customers. So thank you, I'll turn it over to chuck chuck.

Thank you, Sean. And thank you. Jason. Good morning, everyone.

I'm pleased to review 2025 second quarter in year-to-date results with you and provide an update on our 2025 financial plan.

Halfway through the year, we are confident in achieving results in the top half of our earnings guidance range. More importantly, we we execute today with an eye on our long-term success. I'm excited to discuss some of those benefits with you today. But first, let's review our recent performance.

Starting on slide 5 for the second quarter Consolidated. Net income was 108 million or 53 cents per dude, share compared to 102 million, or 51 cents per share in the same period of 24.

Charles Walworth: The main drivers of the year-over-year net income decrease were milder weather and higher interest and depreciation expense on a growing asset base, partially offset by increased recovery of capital investments, higher weather normalized load, and lower operation and maintenance expense. The holding company reported a small loss of less than $1 million, or flat on a per diluted share basis, compared to a loss of $7 million, or $0.03 per share in the same period of 2024. The change was primarily attributed to a one-time pre-tax benefit of $8.7 million related to our legacy midstream operations. Let us review our load results by turning to slide six. Year-over-year, customer growth continued at its healthy multi-year pace, near 1% in the second quarter. Our weather normalized load continues to be historically strong and has grown 6.5% year to date compared to the same period in 2024.

In our Core Business, the electric company achieved net income of 108 million or 53 cents per diluted share compared to 109 million or 54 cents per share in the same period of 24.

The main drivers of the year-over-year net income decrease were milder weather and higher interest and depreciation expenses on a growing asset base, partially offset by increased recovery of capital investments, higher weather-normalized load, and lower operation and maintenance expenses.

Or 3 cents per share in the same period of 2024.

The change was primarily attributed to a 1-time pre-tax benefit of 8.7 million related to our Legacy Midstream operations.

Let's review our load results by turning the slide 6 year-over-year. Customer growth continued at its healthy multi-year, Pace near 1% in the second quarter.

Charles Walworth: Year-to-date growth of our two largest customer classes, residential and commercial, was 1% and 25% respectively, putting them on pace to meet or exceed our full-year guidance. Industrial and oil field load continued to show some softness this year. As I mentioned last quarter, some of that performance can be explained by unplanned customer outages. We are excited about the future growth of these sectors. For example, one update is One Oak's plan to have their natural gas liquids fractionator in Medford online in 2027. Sean discussed the strength of the local economy and communities, which are buoyed by our intentional efforts to drive economic and business development. The additional industrial and oil field opportunities expected to result from our efforts should spur increased residential and commercial growth.

Our weather normalized load continues to be historically, strong and has grown 6.5% year to date compared to the same period in 24.

Year-to-date growth of our two largest customer classes, residential and commercial, was 1% and 25%, respectively, putting them on pace to meet or exceed our full-year guidance.

Industrial and oil field load continue to show some softness this year. As I mentioned last quarter, some of that performance can be explained by unplanned customer outages.

We are excited about the future growth of these sectors. For example,

1 update is 1. Oak's plan to have their Natural Gas, Liquids fractionator, and Medford online in 2027,

Sean discussed the strength of the local economy and communities which are viewed by our intentional efforts to drive Economic and Business Development.

Charles Walworth: This is our sustainable business model at work, attracting new customers to our service area with low rates, excellent service, helping communities grow and prosper. Let's turn our attention to our 2025 financial plan on slide seven. As we pass the mid-year mark, we anticipate consolidated earnings in the top half of our guidance range. We've completed our planned financing activities for the year. As a reminder, our refinancing risk is low. Our next refi isn't until 2027, and it's a modest $125 million. It's also our highest coupon debt. Our balance sheet remains one of the strongest in the industry and is an important competitive advantage, one that we're committed to maintaining. Sean mentioned our successful legislative session that resulted in several new customer benefiting and credit accretive provisions. In Oklahoma and Arkansas, new legislation allows for CWIP recovery during the construction phase of certain generation capacity projects.

The additional industrial and oil field opportunities expected to result from our efforts should spur an increased residential and commercial growth.

This is our sustainable business model at work, attracting new customers to our service area with low rates, excellent service, helping communities, grow and prosper.

Let's turn our attention to our 2025 financial plan on slide 7.

As we pass the mid-year, Mark, we anticipate Consolidated earnings in the top half of our guidance range.

We've completed our plan financing activities for the year. As a reminder, our refinancing risk is low. Our next refi isn't until 2027 and it's a modest 125 million. It's also our highest coupon debt.

Our balance sheet remains 1 of the strongest in the industry and is an important competitive advantage.

1 that we're committed to maintaining.

Sean mentioned our successful legislative session that resulted in several new customer benefits and credit-accretive provisions.

Charles Walworth: We are now going through the regulatory steps of putting relevant CWIP recovery mechanisms in place in both states. The CWIP benefits of the legislation will save customers $190 million on our proposed Horseshoe Lake units 13 and 14 over the life of the units. In Oklahoma, the new legislation also allows for plant and service or PISA accounting. The combined benefits to all our stakeholders of this legislation should reduce customer costs, facilitate new investment, which strengthens the grid with new dispatchable generation, and provide additional strength to an already strong balance sheet. There's one other credit accretive development I can update you on. We received a notice to construct from the SPP to build a transmission line from Fort Smith, Arkansas, to Muskogee, Oklahoma, and we are near the final acceptance of this project. This important line will address reliability and capacity issues in the Fort Smith area.

In Oklahoma and Arkansas. New legislation allows for sea whip recovery during the construction phase of certain generation capacity projects,

We are now going through the regulatory steps of putting relevant, sea whip recovery mechanisms in place in both States.

The sea whip benefits of the legislation will save customers. 190 million on our proposed Horseshoe Lake units. 13 and 14 over the life of the units.

In Oklahoma. The new legislation also allows for plant and service or pizza accounting.

The combined benefits to all our stakeholders of this legislation should reduce customer costs, facilitate new investment, strengthen the grid with new dispatchable generation, and provide additional strength to an already strong balance sheet.

There's 1 other credit, accretive development. I can update you on. We received a notice to construct from the spp to build a transmission, line from Fort Smith Arkansas to Muscogee Oklahoma. And we are near the final acceptance of this project.

Charles Walworth: We have received approval from the FERC to utilize CWIP recovery during the construction phase of this project. We estimate this line to cost approximately $240 million and to be constructed in multiple phases coming online in 2027, 2028, and 2029, with recovery primarily through our FERC formula. Together, these regulatory and legislative changes give us greater flexibility to minimize customer impacts and to finance the construction of projects. Once we receive the appropriate approvals, we will share our plans for the proposed natural gas combustion turbines and the SPP transmission project, including prospective financing with you.

This important line will address reliability and capacity issues in the Fort Smith area.

We have received approval from the ferc to utilize seaweed recovery during the construction phase of this project.

We estimate this line's cost to be approximately $240 million.

And to be constructed in multiple phases, coming online in 2027, 2028, and 2029, with recovery primarily through our FK formula.

Together these Regulatory, and legislative changes, give us greater flexibility to minimize customer impacts in the finance, the construction of projects.

Charles Walworth: As we continue to grow the company, we will keep our financial plan objectives at the forefront, which include maintaining our competitive low-rate advantage by focusing on our cost structure, minimizing the time between investments and their return and recovery, and growing OGE Energy by maintaining a highly credible total return proposition for our shareholders. I will close by summarizing our progress this quarter. With the first half historically representing only 30% or so of the electric company earnings for a year, our financial plan is on track, and we expect results in the top half of our guidance range. Our legislative successes provide additional flexibility that will benefit our customers, and we plan to file an Oklahoma rate review by the end of the year, with Arkansas to follow thereafter.

Once we receive the appropriate approvals, we will share our plans for the proposed natural gas, uh, combustion turbines in the spp transmission project including prospective financing with you.

as we continue to grow the company will keep our financial plan objectives at the Forefront, which includes

Maintaining our competitive low-rated advantage by focusing on our cost structure.

Minimizing the time between investments in their return and Recovery.

I'll close by summarizing our progress as quarter.

With the first half historically representing only 30% or so of the electric company's earnings for a year, our financial plan is on track, and we expect results in the top half of our guidance range.

Our legislative successes provide additional flexibility, that will benefit our customers.

Charles Walworth: We are confident in our ability to achieve our consolidated earnings growth rate of 5% to 7% based on the midpoint of our 2025 guidance. The strength of the current year's plan allows us to continue to focus on the future, address our customers' expectations of a safe and reliable system, and to deliver power at some of the lowest rates in the nation. As always, our confidence remains based on the dedication of our employees and their ability to get the job done. That concludes our prepared remarks, and we will now open the line for your questions.

And we plan to file an Oklahoma rate review by the end of the year with Arkansas to follow their after.

We are confident in our ability to achieve our Consolidated earnings growth rate of 5 to 7% based on the midpoint of our 2025 guidance.

The strength of the current year's plan allows us to continue to focus on the future address, our customers, expectations of a safe and reliable system.

And to deliver power at some of the lowest rates in the nation.

As always, our confidence remains based on the dedication of our employees and their ability to get the job done.

Marvin: Thank you. At this time, we will conduct the question and answer session. As a reminder, to ask a question, you will need to press star one-one on your telephone and wait for your name to be announced. To withdraw your question, please press star one-one again. Please stand by while we compile the Q&A roster. Our first question comes from the line of Nicholas Campanella of Barclays. Your line is now open.

That concludes our prepared, remarks and will now open the line for your questions.

Thank you at this time. We'll conduct the question and answer session. As a reminder, to ask a question, you'll need to press star 1 on your telephone and wait for your name. To be announced to withdraw your question. Please press star 1 on again, please. Stand by while we compare the Q&A roster.

Nathan Richardson: Hey, everybody. It's actually Nathan Richardson on for Nicholas Campanella.

In our first question comes from the line of Nicholas Campanella. Barclays, your line is now open.

Charles Walworth: Good morning, Nicholas Campanella.

Hey everybody. It's actually Nathan Richardson on for Nick.

Nathan Richardson: Morning. Just a few questions here. Can you please provide a little bit of color on what is driving the weaker industrial sales?

Hey, good morning. Nathan

Morning. Uh, just a few questions here. Um, can you please provide a little bit of color on what is driving the weaker Industrial Sales?

Charles Walworth: Yeah, Nathan. We have talked about this, addressed this in the comments a little bit. These types of customers, first of all, they are a little more chunky, if you will. They are a little more power-intensive customers, and they are going to have cycles for maintenance. So it is going to be a little noticeable when they go down for areas like that. As I said earlier, we have got line of sight to many of those coming back online, as well as incremental load coming in the foreseeable future. I think again, that is just one section. Take a step back and you look at the overall growth, we are at 6.5%. So really seeing strong performance across the portfolio as a whole.

Yeah, Nathan. So, you know, we we've talked about this address this in the comments, you know, a little bit. I mean, you know, these types of customers. First of all, you know, they're a little more, a little more chunky if you will, right? I mean, it's, it's they're, they're a little more in power intensive customers. And, you know, they're they're going to have cycles for maintenance and, you know, so it's going to be a little noticeable when they go down for areas like that. And like I said, um earlier, you know, we've got line of sight, so many of those coming back online as well as, you know, incremental load, uh, coming in the uh, in in the uh, foreseeable future.

Nathan Richardson: Got it. Okay, that makes sense. Thank you. Excluding the midstream operations one-time legacy benefit, how can we think about parent drag for 2025, and how could that grow for the remainder of the forecast period as you finance your growth plan?

So, um, you know, I think, you know, again that's just 1 Section, take a step back, and you look at the overall growth. You know, we're at 6 and a half percent, uh, and so, you know, really seeing strong performance, uh, across the portfolio as a whole

Charles Walworth: So, I think the one-time benefit that we mentioned is just that. It is a one-time benefit. I think you should largely ignore that from that perspective. We are really squarely on our guidance for this year, excluding that item.

Got it. Okay, that makes sense. Thank you. And then, um, including the Midstream operations 1 time Legacy benefit. How can we think about parent drag, uh, for 2025? And how could that grow for the remainder of the forecast period as you finance your growth plan?

So, I think the, um,

Nathan Richardson: Okay, got it. Just one more. You are still exploring options for generation capacity additions into 2029. You mentioned a few things, but I was wondering how it could end up shaping out for ownership versus PPA, and could there be an update on year-ends?

the 1-time benefit that we mentioned is just that it's a 1-time benefit. So, I think, you know, you, you should largely, you know, ignore that from that perspective. And so we're, you know, really squarely on, on a, on our guidance for this year, excluding that item.

Sean Trauschke: Yeah, this is Sean Trauschke. Absolutely. I think we have expressed our strong preference to own these assets. While we are building them, we do secure short-term bridge capacity as we are building those out. I would expect, I mean, we are going through all those right now. What we filed for earlier this summer was what we concluded in terms of negotiations, but we are still negotiating other agreements. When we get those finalized, we will file for those.

Okay, got it and then just 1 more. Um, so you're still exploring options for generation capacity additions and into 29 mentioned, a few things, but I was wondering how could it end up shaping out for ownership versus PPA and could there be an update on your ends?

Yeah. Yeah, this is Sean. Um, absolutely. I, I think, um, we've, um, expressed our strong preference to own these assets. Uh, you know, while we're building them, uh, we do secure kind of short-term Bridge capacity, to kind of, um, as we're building those out. Um, um, I would expect, um, we're we're going through all those right now. What we filed for, um, earlier this summer was what we'd concluded in terms of negotiations, but we're still negotiating other agreements. And when we get those final,

Nathan Richardson: Got it. That's all I had. Thank you so much.

Will file for those.

Sean Trauschke: Thanks. Have a great day.

Got it. That's all I had. Thank you so much.

Marvin: Thank you. We'll move to our next question. As a reminder, to ask a question, you'll need to press star one-one on your telephone. Our next question comes from the line of Julien Dumoulin-Smith of Wolfe Research. Your line is now open.

Thanks. Have a great day.

Thank you, 1 moment for our next question. Again, as a reminder to ask a question you'll need to press star 1 1 on your telephone.

Brian Russill: Yeah, hi, good morning. It's Brian Russill on for Julien Dumoulin-Smith.

And our next question, comes online of Julian deman Smith of Jeffrey your line is now open.

Charles Walworth: Good morning, Brian.

Yeah. Hi. Good morning. It's Brian Russell on for Julian.

Brian Russill: Hey, good morning. Hey, just maybe to follow up on the upcoming additional capacity procurements, can you kind of tie that into what has been outlined in the 2025 draft IRP? I think it is at least 800 megawatts, maybe by 2030. What is kind of the update there with, like you mentioned, ongoing negotiations with bidders and own versus, you know, PPAs or bridge PPAs?

Hey, good morning, Brian.

Outlined in the 2025 uh draft IRP. Uh in terms. I think it's at least 800 megabytes Maybe by 20.

Sean Trauschke: Yeah. I'm sorry, Brian. A couple of things are going on at the same time with the updated IRP, right? We have made some assumptions in there for some potential large loads that we are negotiating on. As I said before, those do not all occur at once. There is a ramp schedule, so there is a little bit of movement there. The second piece is, we are still in negotiations from the last RFP we did. To the extent we fill some of that, you are looking for what the gap looks like. I think what we are trying to convey is we are probably going to continue to add generation capacity over the next few years. The absolute amount and timing is going to be somewhat dependent upon some of these loads coming in.

Uh, 30. Um, and, and what is kind of the the update there with, uh, like you mentioned ongoing negotiations with bidders and and, and own versus, uh, you know, ppas or or Bridge ppas?

Yeah. Um,

what, um,

I'm I'm sorry, Brian. Um,

Sean Trauschke: Instead of giving, I am not really in a position to give you a definitive number, but I think what I am doing is giving you a directional number that you should expect us to continue to add capacity.

Couple things are are going on at the same time with the updated IRP, right? I mean, so we've made some assumptions in there for some potential large loads that were negotiating on. As I said before, those don't all occur at once they there's a ramp schedule. So there's a little bit of movement there. And then the second piece is is, you know, we're still in negotiations from the last RFP we did. So to the extent we fill some of that you're you're looking for what the Gap looks like and and I think what what we're trying to convey is we're probably going to continue to add generation capacity, um, over the next few years but the actual the absolute amount and timing is going to be somewhat dependent upon, you know, some of these loads coming in and so um and instead of give, I'm not really in a position to give you a definitive number, but I think what I'm doing is giving you a directional number that uh, you should expect us to continue.

Continue to add capacity.

Brian Russill: Okay, great. Also, the mention of OGE Energy Corp. and then Google in the 2025 draft IRP. Just curious, are there any updates in the development of the Google Stillwater data center site?

Okay, great. And and then also, um, you know, the mention of company X. And then company y in the 2025 draft IRP

Um, just curious. Um, you know, are there any updates in the development of, uh, the Google, uh, Stillwater?

Sean Trauschke: Yeah, I think those negotiations are progressing. I think we are getting closer and closer to achieving our objectives in terms of protecting our existing customers and making sure it is value accretive to us. So those negotiations are getting closer and closer.

Data center site.

yeah, I I think um um,

Brian Russill: Okay, great. Just lastly, to clarify, now that you are at the top end of your guidance, does that include the one-time midstream tax gain? Otherwise, you would probably still be in the middle, or is July weather a factor as well?

Those negotiations are progressing. And, um, you know, I think we're getting closer and closer to achieving our objectives in terms of, you know, protecting our existing customers, and make sure it's, um, the value of creative dust. And so, uh, those negotiations are are getting closer and closer.

Charles Walworth: So, just to clarify, we are pointing towards the top half of the range. Yes, that does include the impact. That is on the earnings we will report at the end of the year. So, that would include this benefit that was mentioned.

Okay, great. And then just lastly, just just to clarify, um, does the now that you're at the, the high, the top end of your guidance, because that include the the 1 time, uh, Midstream tax gain. Otherwise, you'd probably still be in in the middle or is July weather a factor as well.

Brian Russill: Okay, great. Thank you very much.

So, so just to clarify we're we're we're pointing towards the top half of the range and yes that does include the impact. You know, that that's, you know, it's on the earnings we will report at the end of the year. So that would include uh, this this benefit that was mentioned.

Charles Walworth: Thanks, Brian.

Marvin: Thank you. We will move to our next question. Our next question comes from the line of Dylan Litner of Ladenburg Thalmann. Your line is now open.

Okay, great. Thank you very much.

Thanks Brian.

Thank you. 1 moment for our next question.

Dylan Litner: Hey, guys. Congrats on a good quarter.

Our next question, comes to the line of Dylan, litner of landmark Tomlin. Your Line is now open.

Charles Walworth: Hey, good morning.

Dylan Litner: Morning. Just real quick, kind of piggybacking with the 450 megawatts from Horseshoe Lake coming on in 2029, is the company expected to be in a long generation capacity at the end of the decade? If so, how do you see that need being filled?

Hey guys, congrats on good quarter.

Good morning.

Sean Trauschke: I do not anticipate us being long. I think we have been very consistent in saying that we are going to be in a continuous adding capacity mode, and we are doing that into the load growth. So you should expect us to, if there is any surplus, it is de minimis, and we will quickly be filled by future growth.

Good morning. Um, just quote real quick, how to piggybacking with the 450 megawatts. Um, of course you like coming on in 2029, as a company expected to be, you know, long capacity at the end of the decade. And if so, you know, how do you see that, um, need being filled.

Yeah, we're not.

Dylan Litner: Great. That's all I got for you guys. Thank you very much.

Yeah, I I don't anticipate us being um um long. I think we've been very consistent in saying that. Um we're going to be in a continuous uh adding capacity mode and uh, we're doing that into the load growth. So you should expect us to, uh, um. If there is any surplus, it's the Minimus and, um, we'll quickly be filled by, uh, future growth.

Charles Walworth: Thanks. Have a great day.

Marvin: Thank you. I'm showing no further questions at this time. I'll now turn it back to Sean Trauschke for closing remarks.

Great. Uh, that's all I got for you guys. Thank you very much. Thanks, and have a great day.

Sean Trauschke: Thank you, Marvin. Thank you all for joining us today. Thank you for your interest, and I look forward to seeing everyone very soon. Have a great day.

Thank you. I'm showing all further questions at this time. I would now like to turn it back to Sean troski for closing remarks.

Marvin: Thank you for your participation in today's conference. This does conclude the program. You may now disconnect.

Uh thank you Marvin. Well thank you all for joining us today. Thank you for your interest and uh I look forward to seeing everyone very soon. Have a great day.

Thank you for your participation. In today's conference, this concludes the program. You may now disconnect.