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DATE
Oct. 29, 2025, at 9 a.m. ET
CALL PARTICIPANTS
- Chairman, President, and Chief Executive Officer — Sean Trauschke
- Executive Vice President, Chief Operating Officer — Chuck Walworth
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TAKEAWAYS
- Consolidated EPS -- $1.14 per diluted share in Q3 2025, up from $1.09 per share in the third quarter of the prior year.
- Electric Company EPS -- $1.20 per diluted share in Q3 2025, consistent with $1.20 per share in the prior year, with net income of $243 million in Q3 2025 compared to $225 million in the prior year.
- Holding Company Loss -- $0.06 per diluted share in Q3 2025, increasing from a $0.03 per share loss in Q3 2024, attributed to higher income interest expense, partially offset by an income tax benefit.
- Consolidated Net Income -- consolidated net income of $231 million in Q3 2025, compared to $219 million in the third quarter of the prior year.
- Year-to-Date Weather-Normalized Load Growth -- 6.5%, with expecting approximately 7.5% total retail normalized load growth in 2025.
- Customer Growth -- Customer growth was just under 1% in the third quarter, maintaining a multiyear pace.
- EPS CAGR (10 Years) -- 6%.
- Capital Plan Update -- Addition of the Fort Smith to Muskogee transmission line, a $250 million project scheduled to go into service in phases in 2027, 2028, and 2029, with cost recovery primarily through FERC formula rate and use of CWIP recovery approved during construction.
- Generation Expansion -- Pre-approval requested for 450 megawatts of new natural gas generation targeted to be operational by 2029, with 550 megawatts of combustion turbines under construction as of Q3 2025 and projected to go live next year, all on time and on budget.
- Customer Monthly Bill Impact -- Oklahoma customers were notified of a monthly average bill decrease of approximately $6.75 beginning November 1, due to a reduction in the fuel cost adjustment beginning November 1.
- Top Half Guidance -- Management reiterated confidence in delivering results at the top half of the 2025 earnings guidance range.
- Planned Rate Reviews -- Oklahoma rate review will move to the second half of next year if pre-approval is granted; Arkansas rate review timing remains under assessment.
- Dividend Policy -- Targeting a 65%-70% payout ratio, with dividend growth rate intentionally set below EPS growth until the target 65% to 70% payout ratio is achieved.
- Data Center Growth -- Management described ongoing “very serious negotiations” with data center customers and anticipates updates in coming quarters; new filings with the commission would follow contract announcements.
- Economic Development -- A recent plastics manufacturer expansion in Shawnee, Oklahoma, contributed 4.5 megawatts of load and created hundreds of jobs.
- Major Load Drivers -- Davis Center load highlighted as incremental to existing strong load growth.
- Long-Term Earnings Growth Target -- Company affirmed 5%-7% consolidated earnings growth rate based on 2025 guidance midpoint.
SUMMARY
OGE Energy (OGE +0.30%) reported a year-over-year increase in consolidated earnings per share and net income in Q3 2025, with management maintaining guidance for full-year results in the top half of the specified range. Executives announced a $250 million addition for a major transmission project included in the updated capital plan and highlighted continued robust load and customer growth. A fuel cost adjustment will lower Oklahoma customers’ average monthly bills, supporting OGE’s competitive rate advantage. The company is in advanced discussions with data center clients, with potential for new special contract filings. Management signaled an ongoing cycle of regular capital plan and load expectation updates tied to regulatory approvals and customer demand evolution.
- Chuck Walworth said, "We have requested CWIP recovery on Horseshoe Lake units thirteen and fourteen," citing anticipated dual customer and balance sheet benefits.
- Management committed to continued periodic capital plan updates beyond customary fourth-quarter revisions, reflecting ongoing regulatory and demand-driven changes.
- Oklahoma City’s unemployment rate has remained below 4% for 48 consecutive months, as stated on the company's Q3 2025 earnings call, with regional job growth attributed to education, health care, and construction.
- The company’s dividend growth will remain below the EPS growth rate until it reaches a 65% to 70% payout ratio, after which further capital allocation decisions will be reassessed.
- The Fort Smith to Muskogee transmission line will be deployed in three phases -- 2027, 2028, and 2029 -- to address reliability and capacity needs in the Arkansas service territory.
- Management attributed the slight downward adjustment in 2025 load growth outlook to timing, with “chunky” large load additions, according to Chuck Walworth, moving into later periods.
- Customer affordability remains central to strategy.
INDUSTRY GLOSSARY
- FERC formula rate: Mechanism prescribed by the Federal Energy Regulatory Commission for regulated transmission cost recovery and return, allowing rate adjustments as actual costs change.
- CWIP recovery: Inclusion of Construction Work In Progress in rate base for cost recovery during project construction, improving utility cash flows and reducing customer cost impact over time.
- IRP (Integrated Resource Plan): A long-term electricity supply and demand planning tool utilities use to optimize generation and procurement mix and meeting projected load.
- RFP (Request for Proposal): Formal process issued to solicit competitive offers from third parties for energy assets or capacity additions.
- SPP (Southwest Power Pool): Regional transmission organization coordinating wholesale electric power in the central United States, including Oklahoma and Arkansas.
Full Conference Call Transcript
Sean Trauschke: Thank you, Jason. Good morning, everyone, and thank you for joining us today. It's certainly great to be with you. We again delivered strong results in the third quarter, and we remain on track to deliver on our commitments. This morning, we reported consolidated earnings of $1.14 per share, including electric company earnings of $1.20 per share and a loss of the holding company of $0.06. Our solid performance is driven by continued operational excellence, laser-like focus on the customer, and constructive regulatory outcomes. As we head into the remaining two months of 2025, we remain confident in our plans to deliver in the top half of our earnings guidance range.
As you know, on the regulatory front, we have a pre-approval request in Oklahoma and expect an order in a few weeks. This will allow us to move forward with building 450 megawatts of natural gas generation, which should be operational by 2029. As a reminder, we have approximately 550 megawatts of combustion turbines under construction now, which will be operational next year on time and on budget. When Horseshoe Lake units thirteen and fourteen come into service in 2029, we will have added approximately 2,000 megawatts over an eleven-year period, and we anticipate more to come. When filing the preapproval case, we indicated that this was the first step of many.
In the filing, we updated our integrated resource plan, which showed we are still solving for our customers' future generation needs. We are now negotiating with existing bidders remaining from the last RFP, and we anticipate issuing more in future filings to address our customers' needs. We notified Oklahoma customers this week that they will see a decrease in their monthly bill with a reduction in the fuel cost adjustment beginning November 1. The average residential customer bill will be approximately $6.75 lower per month. Our customers benefit from OG&E having some of the lowest rates in the nation. We understand the competitive advantage our low rates offer; it's one reason our demand has grown so consistently year over year.
We do everything we can to ensure our rates remain low in the future so that we can sustain the growth of the company and the communities we serve. While the electric power industry is entering an exciting new era, OG&E is uniquely positioned at the forefront. We've been experiencing load growth that far surpasses national trends, and Davis Center load will certainly be incremental to our already strong load growth. At the heart of that growth for OG&E is affordability. It's not a new concept to us; it's key to our community's success and central to our planning as we move ahead. Over the past decade, we've delivered a 6% EPS CAGR, which is great news for our investors.
Equally important for our customers, it's worth highlighting that our nonfuel rates have increased at less than half the rate of inflation during this time. In a period when the cost of living continues to rise, we focused on what we can control, helping our customers and communities manage costs while supporting growth and reliability. As we build on our strong growth and performance, we experienced growing interest in our service area from data centers. Negotiations and conversations are progressing, and we hope to have something to share in the near future. Turning to economic development, we continue to see diversified business growth, including commercial and industrial.
Just a couple of weeks ago, we celebrated the grand opening of a major expansion project for a plastics manufacturer, which added 4.5 megawatts of load and created hundreds of jobs in Shawnee, Oklahoma. Our economies remain strong, with unemployment in Oklahoma and Arkansas continuing to outpace the national average. For the forty-eighth straight month, Oklahoma City's unemployment rate is below 4%. And Oklahoma's overall job growth is driven by gains in education, health care, and construction. The Council for Community and Economic Research ranked Oklahoma City as the most affordable among large cities in the US, a competitive advantage for continued growth. And our rates are a factor in keeping Oklahoma and Arkansas consistently ranked high for affordability.
As I close, I want to emphasize that the business is doing very well. We've just completed another strong quarter, and I'm excited about the future. We remain confident in our ability to deliver on our commitments while continuing to grow the business. And as I mentioned, we have many positive updates to share in the quarters ahead. Thank you. And I'll now turn the call over to Chuck. Chuck?
Chuck Walworth: Thank you, Sean, and thank you, Jason, and good morning, everyone. We're three quarters through the year, and our steady execution positions us to deliver results in the top half of our 2025 earnings guidance range. It's our execution that will lead us to continued long-term success. I'm excited to review our financial performance with you today. Starting on Slide five, for the third quarter, consolidated net income was $231 million or $1.14 per diluted share compared to $219 million or $1.09 per share last year. In our core business, the electric company achieved net income of $243 million or $1.20 per diluted share compared to $225 million or $1.20 per share last year.
The main driver of the year-over-year increase in net income was increased recovery of capital investments. Milder weather this summer compared to last year and higher O&M and income taxes partially offset the increase. The holding company reported a loss of $12 million or $0.06 per diluted share compared to a loss of $6 million or $0.03 per share last year. The change was primarily attributed to higher income interest expense, partially offset by an income tax benefit. Turning our attention to our 2025 financial plan update on slide six. Year-over-year customer growth continued its healthy multiyear pace and was just under 1% in the third quarter.
Our weather-normalized load growth was historically strong once again at 6.5% through the third quarter compared to the same period last year. We expect total retail normalized load growth of approximately 7.5% in 2025. Our execution keeps us firmly on plan to deliver on our consolidated earnings commitment. We continue to expect to be in the top half of 2025's earnings guidance range. Sean discussed how our local economies and communities are strong, and our intentional efforts around economic and business development provide important support for growth.
In each quarterly update, we highlight how our sustainable business model works by attracting new customers to our service area with low rates and reliable electric service, helping our communities to grow and prosper. We've updated our capital plans to include the Fort Smith to Muskogee transmission line, which will address reliability and capacity issues in the Fort Smith, Arkansas area. This $250 million project is planned to go into service in three phases in 2027, 2028, and 2029. This higher voltage line will be primarily recovered through our FERC formula rate, and we have received approval to utilize CWIP recovery during construction of the project. The updated capital plan is included in the appendix. Our financial position remains strong.
Our balance sheet is one of the strongest in the industry and is an important competitive advantage, one we are committed to maintaining. We have requested CWIP recovery on Horseshoe Lake units thirteen and fourteen. The use of CWIP has important dual customer benefits. First, by reducing the long-term cost to customers, and second, by supporting the balance sheet during the construction phase of projects. As I close, let's review our guiding financial objective. As we grow the company, we will: maintain our competitive low rate advantage by focusing on our cost structure, minimize the time between investments and the return and recovery, and grow the company by maintaining a highly credible total return proposition for our shareholders.
We've made great progress so far this year. Our steady execution keeps us on track to deliver in the top half of this year's guidance range. Our load growth remains historically strong. We've reached the settlement with a number of parties in the Oklahoma Pre Approval request. If approved, we will move our planned Oklahoma rate review from the end of this year to the second half of next year. And we will continue to assess the timing of the next rate review in Arkansas. We've updated our capital plan for the Fort Smith to Muskogee transmission line. Additional updates to our capital and financing plans will follow a determination in the pre-approval case.
And finally, our results keep us as confident as ever in our ability to achieve a 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 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, the foundation of our success is grounded on the dedication of our employees and their ability to get the job done. That concludes our prepared remarks, and we'll now open the line for your questions.
Operator: Thank you. If your question has been answered, you will still move yourself from the queue, please press 11 again. We will pause for a moment while we compile our Q&A roster. Our first question comes from Sean Pourreza with Wells Fargo. Your line is open.
Constantine Lednev: Good morning, Chuck, Sean. Great to hear from you. It's actually Constantine here.
Sean Trauschke: For sure. Good morning.
Constantine Lednev: Good morning. It's great to be back. Maybe starting off on the CapEx needs, we have the $250 million update today. But as we're building to the fourth quarter update, with the preapproval settlement out there and another 800 megawatts in the IRP, how quickly do you think those elements start rolling into plan? And is there kind of any acceleration in the RFP process that you're seeing going to address some of those needs?
Sean Trauschke: Yes. Thanks, Constantine. This is Sean. I like that characterization there rolling. I think that's how we're thinking about it. We're anticipating this approval for under the preapproval in a couple of weeks here, and then we're going to layer that in there. And then we're probably going to make some additional filings, as I mentioned in my remarks, with coming out of the last RFP. We'll make that filing. We get approved for that, we'll layer that in there. We'll probably commence a new RFP to kind of continue down that road. And I think your characterization of rolling, I think you should just consider it a continuous flow of updates.
Constantine Lednev: Okay. So versus kind of the fourth quarter that we've typically seen, we should expect more periodic updates, right?
Sean Trauschke: Yeah. You'll see the normal update in the fourth quarter that should improve the approval of the last filing. And include the customary updates we always do. And then in addition to that, these generation adds, we'll add those as we receive approval.
Constantine Lednev: Okay, perfect. And in terms of the new regulatory constructs kind of that are in place now, how significant is the impact on that ROE lag, if you can quantify it at all? And do you anticipate in some of these benefits in 26 planning assumptions?
Chuck Walworth: Yes. Constantine, I think we've always had a really good track record on minimizing lag on earned ROEs. So this is obviously just accretive to that. You can see some of those impacts as disclosed in our 10-Q today in terms of some of those benefits. And we'll definitely lay that out whenever we come up with guidance for next year.
Constantine Lednev: And just the last one related to kind of that '26 update. Given the ramp schedules for that C and I load, do you see the '26 load growth kind of being higher than your planning assumptions as you roll into that year?
Chuck Walworth: We'll bring you a full update in February, but clearly, we don't see any changes in the fundamentals that are driving the results that we see in our service area. But we'll address that fully in our February call.
Constantine Lednev: Right. Okay. And year to date, it's been healthy. So thanks for that. Yep. Appreciate it.
Sean Trauschke: One costing.
Operator: One moment for our next question. Next question comes from Julien Dumoulin-Smith with Jefferies. Your line is open.
Brian Russo: Hi, good morning. It's Brian Russo on for Julien. Good morning, Brian.
Sean Trauschke: Hey. Just it's nice to see you add the SPP project to the CapEx. You maybe talk about the upcoming 2025 SPP ITP plan? I think there are expectations that it could be nearly double the 2024 plan. And I was just curious. It seems as if Oklahoma is one of the faster-growing states in SPP. So I'm just wondering, you know, what your competitive position is there, you know, pursue more projects like the one you just added to CapEx?
Chuck Walworth: Yes. Hey, Brian. Good morning. This is Chuck. Hey, it's obviously something that we're very closely involved with our team at the SPP. In that process. Yes, you're right. I think that they're looking at a pretty robust plan, but there's still a couple of milestones, a couple of SPP board meetings that's got to go through. Before we really have something that we can give you a firm idea as to what the opportunity set really looks like. So it's an exciting area, I think, but more to come.
Brian Russo: Okay, great. And then I think as part of the preapproval settlement filing, you plan to file a large load tariff with your next rate case. I was just curious, I assume that the contract negotiations are still going on with the Google Stillwater project.
Sean Trauschke: Yeah. I think that was the requirement in the settlement to file that large load tariff. But to the extent that we finalized an agreement before then, we'll file it then.
Brian Russo: Okay. Great. And then lastly, is the new load growth outlook of 7.5% for 2025, is that now at the low end of your prior range? Just wondering what's driving that.
Chuck Walworth: Yes. So you're right. But as we've said kind of all along, some of these loads that we have are a little chunky and the timing can kind of it's really hard to nail it down whether it's the start of this quarter, the beginning of next quarter. And so we've got a little bit of timing going on there. We have one in particular that's coming in about a quarter later than anticipated. So just really mainly a timing issue.
Brian Russo: Alright. Great. Thank you very much.
Sean Trauschke: Thanks, Brian.
Operator: One moment for our next question. Our next question comes from Stephanie D'Ambrosi with Capital Markets.
Stephanie D'Ambrosi: My apologies. I all good. It's all good. I had a we're gonna we're gonna enjoy that one for a while.
Sean Trauschke: I know you will, Sean. I know I it couldn't happen to on a better call. I'm not gonna lie. Couldn't happen on a better call. So welcome back. Good to hear from you.
Stephanie D'Ambrosi: Thank you very much. Good to hear from you too. Appreciate you guys letting me on. Yeah. So just quickly, a follow-up on, you know, how you guys are gonna meet the 850 megawatt shortfall or capacity need that you have by 2030. Just, when I'm thinking about where you I know think you have some of the results still outstanding, but they feel like they might be a little stale now at this point. And I know you're you're ongoing you have discussions ongoing. But do you think it's likely that you can get material capacity out of the prior RFPs? Or do we have to run new RFPs to really make up most of that capacity deficit?
And then just, like, how long does that take to run a new RFP? Like, what's the timing around you know, announcements there?
Sean Trauschke: Yes. So a great question. So answer to your first question, yes, we do believe we have some capacity opportunities in the current RP. And yes, we will file a new RFP to kind of meet this need. And this that 800 megawatts you referenced there, that largely depends on the ramp rate of this customer X that we disclosed in the IRP. And so that's kind of a give or take number two in terms of how quickly or how you know, slowly you get to that number in 2030. But nevertheless, I think it's an answer of yes to both those Yes, we're going to get some out of that last RFP.
And yes, we're going to file a new RFP. And I would expect that the second RFP to move along at a quicker pace. We've kinda got it nailed down now, and I think everybody understands the rules.
Stephanie D'Ambrosi: Okay. That makes that makes a lot of sense to me. And then just on the I it covered the sales growth well. I kinda figured that it was timing. But just you know, like, just looking at where you're at, your data think sales growth is six and a half percent year to date, and you're still guiding to seven and a half. So I mean, that implies a significant acceleration right into the fourth quarter. And then just guess, how does that set us up for sales growth into 2026? Right? Because effectively, you're delaying customers. So all things equal, it should drive higher sales growth? Year over year into the back into next year?
Chuck Walworth: Yeah. Steve, I your points are right. I mean, we've seen this chunky growth before. And how that can impact any particular quarter on an outsized manner and obviously, you can kind of do your own math as to how that plays in the future years. But, you know, again, we'll we'll be prepared to thoroughly discuss that with you at the next call.
Stephanie D'Ambrosi: Okay. Alright. That's all I had. I hope you guys get a kick out of that. And I'm glad that it's gonna be, you know, kept forever on the Internet. So love that. Thanks, Dave. Yep. I was doing it now. See you.
Operator: One moment for our next question. Our next question comes from Chris Hark with Mizuho. Your line is open.
Chris Hark: Hi, team. Thanks for the time today.
Sean Trauschke: Good morning. Good morning. I just had a question regarding the dividend growth rate. Should we be expecting that to be in line with the EPS CAGR?
Chuck Walworth: Yeah, Chris. So we've been very intentional about the dividend growth rate really in relation to the opportunity set that we've had for investments. So the past several years, we have kind of bifurcated the rates of those two with the dividend growing a little lower. And we're basically targeting growing into a 65% to 70% payout ratio. And so we're well on our way to getting to that target. And once we get to that target, we'll kind of reassess where we are. Versus, again, the opportunities that we have out there. And make that capital allocation decision at that time.
Chris Hark: Okay. Awesome. Thank you for the color there. And then next question I had was really just around the cadence of rate filings. So if you push that back to '26, should we be expecting that kind of similar time of year for next two years during the four two year period off the forecast period. Yeah. I guess I would I would say that really nothing has changed. Our philosophy maintains to be the same as it was But clearly this was part of the give and take of the negotiations for settlement agreement. So yes, we if approved, we would shift that forward per the terms of the settlement agreement.
But I think going forward from that, we would still be operating under the same philosophy that we have been.
Chris Hark: Okay. Perfect. That's all I have. Thank you, guys.
Chuck Walworth: Thank you.
Operator: Our next question comes from Aditya Grandal with Wolfe Research. Your line is open.
Aditya Gandhi: Hi. Good morning, Sean, Chuck, and Jason. Can you hear me? Yeah. We can. Good morning,
Sean Trauschke: Hey. Good morning, Sean. Thank you for taking my questions. Just maybe starting with the CapEx increase to your plan, the $250 million Chuck, you've been clear that any capital increases will have an equity component to it. And recognize that you'll you'll sort of communicate your financing plans with the Q4 update. But are you willing to share sort of a rough rule of thumb for this 250 million? It should we assume it's $50.50, lesser than that? Just any color there.
Chuck Walworth: Yeah. Aditya, I think the plan remains same. We thought it was only right to go ahead and roll this project in now since signed up. But with really the biggest of the increase still pending out there, We're going to hold and get approval on that. And then we'll give you that clarity that we've been describing all along.
Aditya Gandhi: Got it. Thank you. And then maybe just one on the data center front. Sean, you mentioned in your prepared remarks that you sort of hope to share updates soon or sort of in the coming quarters. Can you maybe give us more color on sort of what stage of discussions you're in. Is it reasonable to say that the discussions are at advanced stages now? And then can you just remind us how any potential announcement you make on the data center front would interplay with a special contract or a data center tariff filing at the commission and then how do you sort of serve the capacity needs associated with any potential data center customer? Thanks.
Sean Trauschke: Yeah. There's a lot in there. I think it's fair to characterize that we were in very serious negotiations. And I think my prepared remarks were optimistic that we would be in a position to announce something soon. In terms of the filing, yes, there would be some sort of announcement and we would certainly follow that up with some sort of filing with the commission for approval of all that. So I think that's that's normal and customary. In terms of your question about the capacity, how we'll fill that need, in our last IRP, did provision for that. And been thinking about that.
Again, a lot of that goes back kind of how the counterparty contemplates a rent rate. And what they're thinking in terms of that, in terms of meeting that capacity obligation, but I feel confident we're gonna be able to meet that.
Aditya Gandhi: Great. Thank you.
Sean Trauschke: Okay. Thank you. Have a great day.
Operator: Next question comes from Nicholas Campagnolo with Barclays. Your line is open.
Nicholas Campanella: How are you? I just have one question. If you roll in the preapproval generation and data center and the possible data center deal, How would that and how would that really increase your long-term EPS CAGR? Or are you just more confident in the five to seven range?
Chuck Walworth: Yeah. My yeah. I think, you know, all along, we've been looking at our 5% to 7% is in solid shape. Regardless of, you know, this deal or any other deal. And our philosophy really is that we take a good look at where we are every year before we put guidance out. And, you know, kinda like this year, we might we might choose to alter the trend line from the previous year, so to speak. And address it in that manner. So I think that's that's really more indicative of the philosophy that we have. And the way that we've treated it in the past.
So hopefully that gives you a little a little color as to how we're about it.
Nicholas Campanella: Thank you.
Operator: And I'm not showing any further questions at this time. I'd like to turn the call back over to Sean for any further remarks.
Sean Trauschke: Okay. Thank you, Kevin. Well, thank you all for joining us today. I hope everyone has a great day and look forward to seeing everyone soon.
Operator: Thank you, ladies and gentlemen. This does conclude today's presentation. You may now disconnect, and have a wonderful day.