OGE

OGE Energy Corp. 2026 Q1 Filing Summary

Business Context and Reporting Period

This Form 10-Q covers the quarterly period ended March 31, 2026, for OGE Energy Corp. (OGE Energy) and its wholly-owned subsidiary, Oklahoma Gas and Electric Company (OG&E). OGE Energy is a holding company primarily engaged in the generation, transmission, distribution, and sale of electric energy in Oklahoma and western Arkansas. The company operates as a large accelerated filer and is regulated by the Oklahoma Corporation Commission (OCC), Arkansas Public Service Commission (APSC), and Federal Energy Regulatory Commission (FERC).

Key Financial Metrics

Material Changes vs. Prior Period

• Net Income Decline: Net income decreased by $12.5 million (20.0%) to $50.2 million. This was primarily driven by a $13.1 million decrease in OG&E net income due to milder weather reducing heating demand (27% decrease in heating degree days) and higher operation and maintenance expenses.
• Revenue Growth: Operating revenues increased slightly by $4.9 million (0.7%) despite lower volume, driven by higher fuel costs passed through to customers ($12.7 million increase in fuel expense) and price variances.
• Operating Expenses: Other operation and maintenance expenses rose $15.0 million (12.3%) due to increased energy efficiency program activities and uncollectible accounts, partially offset by lower contract technical services.
• Interest Expense: Interest expense decreased $7.4 million (11.0%) to $59.9 million, largely due to the deferral of interest to a regulatory asset under Oklahoma PISA (Plant-in-Service Accounting).
• Cash Flow: Net cash provided by operating activities surged to $175.5 million from $15.9 million, primarily due to timing differences in fuel recoveries and customer collections.

Guidance, Outlook, and Risks

• 2026 Guidance: OGE Energy maintains its full-year 2026 consolidated earnings guidance of $494 million to $514 million ($2.38 to $2.48 per diluted share). OG&E is projected to earn approximately $533 million.
• Regulatory Matters:
  • Arkansas Act 373: The APSC approved OG&E's tariff to recover return on construction work in progress (CWIP) for Horseshoe Lake and Tinker facilities.
  • Horseshoe Lake Units 13 & 14: The APSC denied preapproval for prudence but authorized construction. The OCC dismissed a CWIP filing, which OG&E has appealed to the Oklahoma Supreme Court.
  • FERC/SPP: OG&E has reserved $14 million plus interest for potential refunds related to SPP transmission upgrade credits (Attachment Z2).
• Environmental Risks: Significant uncertainty remains regarding EPA regulations, including the "Good Neighbor" FIP (NOx emissions), GHG rules for existing and new units, and the repeal of the Endangerment Finding. Compliance costs for the Good Neighbor FIP were previously estimated between $2.4 billion and $2.8 billion, though litigation and reconsideration are ongoing.
• Capital Markets: On April 1, 2026, OG&E issued $350.0 million of 5.90% senior notes due 2056. Moody's revised the outlook for both OGE Energy and OG&E to "stable" from "negative" in April 2026.

Investor Verification Checklist

• Verify the status of the Oklahoma Supreme Court appeal regarding the CWIP treatment for Horseshoe Lake Units 13 and 14, as this impacts rate recovery and earnings.
• Monitor the EPA's reconsideration process for the "Good Neighbor" FIP and GHG rules, as final outcomes could trigger billions in compliance costs.
• Review the FERC refund process regarding SPP Attachment Z2 credits to confirm the final liability amount beyond the $14 million reserve.
• Assess the impact of weather normalization on Q2 and Q3 earnings, given the significant variance in heating degree days in Q1.
• Track the settlement of the Forward Equity Sale Agreements (FSAs) entered in November 2025, which could result in share issuance or cash settlement by May 2027.