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What changed in OGE ENERGY CORP.'s 10-K — 2022 vs 2023

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Paragraph-level year-over-year comparison of OGE ENERGY CORP.'s 2022 and 2023 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2023 report.

+235 added−244 removedSource: 10-K (2024-02-21) vs 10-K (2023-02-23)

Top changes in OGE ENERGY CORP.'s 2023 10-K

235 paragraphs added · 244 removed · 171 edited across 6 sections

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

64 edited+8 added−9 removed85 unchanged
Biggest changeAs we expand our cleaner energy generation asset mix, the ability to integrate renewable technologies into our operations and maintain reliability and affordability is key. The intermittency of renewables remains a critical challenge particularly as cost-efficient energy storage is still in development.
Biggest changeManagement's Discussion and Analysis of Financial Condition and Results of Operations." It is unknown what the outcome, or any potential material impacts, if any, will be from the final action by the EPA. As we expand our cleaner energy generation asset mix, the ability to integrate renewable technologies into our operations and maintain reliability and affordability is key.
In addition, as discussed above, OG&E is regulated by state utility commissions in Oklahoma and Arkansas as well as a federal regulatory agency which generally possess broad powers to ensure that the needs of the utility customers are being met.
In addition, as discussed above, OG&E is regulated by state utility commissions in Oklahoma and Arkansas as well as a federal regulatory agency which generally possess broad powers to ensure that the needs of customers are being met.
We and our third-party vendors have been subject to, and will likely continue to be subject to, attempts to gain unauthorized access to systems, or confidential data, or to disrupt operations. None of these attempts has individually or in aggregate resulted in a security incident with a material impact on our financial condition or results of operations.
We and our third-party vendors have been subject to, and will likely continue to be subject to, attempts to gain unauthorized access to systems and/or confidential data, or to disrupt operations. None of these attempts has individually or in aggregate resulted in a security incident with a material impact on our financial condition or results of operations.
Included among these risks are: • increased prices for fuel, fuel transportation, purchased power and purchased capacity as existing contracts expire; • facility shutdowns due to a breakdown or failure of equipment or processes or interruptions in fuel supply; • operator error or safety related stoppages; • disruptions in the delivery of electricity; • intentional destruction of electric grid equipment; and • catastrophic events such as fires, explosions, tornadoes, floods, earthquakes or other similar occurrences.
Included among these risks are: • increased prices for fuel, fuel transportation, purchased power and purchased capacity as existing contracts expire; • facility shutdowns due to a breakdown or failure of equipment or processes or interruptions in fuel supply; • operator or contractor error or safety related stoppages; • disruptions in the delivery of electricity; • intentional destruction of electric grid equipment; and • catastrophic events such as fires, explosions, tornadoes, floods, earthquakes or other similar occurrences.
Reductions in customer electricity consumption, thereby reducing utility electric sales, could result from increased deployment of renewable energy technologies as well as increased efficiency of household appliances, among other general efficiency gains in technology. However, this potential reduction in load would not reduce our need for ongoing investments in our infrastructure to reliably serve our customers.
Reductions in customer electricity consumption, thereby reducing electric sales, could result from increased deployment of renewable energy technologies as well as increased efficiency of household appliances, among other general efficiency gains in technology. However, this potential reduction in load would not reduce our need for ongoing investments in our infrastructure to reliably serve our customers.
State utility commissions generally possess broad powers to ensure that the needs of the utility customers are being met. OG&E cannot assure that the OCC, APSC and the FERC will grant rate increases in the future or in the amounts requested, and they could instead lower OG&E's rates.
State regulatory commissions generally possess broad powers to ensure that the needs of the utility customers are being met. OG&E cannot assure that the OCC, APSC and the FERC will grant rate increases in the future or in the amounts requested, and they could instead lower OG&E's rates.
The increasing costs and funding requirements with our Pension Plan, health care plans and other employee benefits may adversely affect our financial position, results of operations or liquidity. 17 OGE Energy is a holding company with its primary asset being its subsidiary, OG&E. OGE Energy is a holding company and thus its primary asset is its subsidiary, OG&E.
The increasing costs and funding requirements with our Pension Plan, health care plans and other employee benefits may adversely affect our financial position, results of operations or liquidity. OGE Energy is a holding company with its primary asset being its subsidiary, OG&E. OGE Energy is a holding company and thus its primary asset is its subsidiary, OG&E.
If we fail to successfully implement critical technology infrastructure, or if it does not provide the anticipated benefits or meet customer demands, 19 such failure could materially adversely affect our business strategy as well as impact our results of operations, financial position and cash flows.
If we fail to successfully implement critical technology infrastructure, or if it does not provide the anticipated benefits or meet customer demands, such failure could materially adversely affect our business strategy as well as impact our results of operations, financial position and cash flows.
Uncertainty surrounding continued hostilities or sustained military campaigns may affect our operations in unpredictable ways, including disruptions of supplies and markets for our products, and the possibility that our infrastructure facilities could be direct targets of, or indirect casualties of, an act of terror.
Uncertainty surrounding continued hostilities or sustained military campaigns may affect our operations in unpredictable ways, including disruptions of supplies and markets for our products, and the possibility that our infrastructure facilities could be direct targets of, or 23 indirect casualties of, an act of terror.
OG&E's widespread use 16 of Smart Grid technology allowing for two-way communications between the electric company and its customers could enable the entry of technology companies into the interface between OG&E and its customers, resulting in unpredictable effects on our current business.
OG&E's widespread use of Smart Grid technology allowing for two-way communications between the electric company and its customers could enable the entry of technology companies into the interface between OG&E and its customers, resulting in unpredictable effects on our current business.
We cannot predict when we will be subject to changes in legislation or regulation, nor can we predict the impact of these changes on our financial position, results of operations or cash flows. We are subject to substantial utility regulation by governmental agencies.
We cannot predict when we will be subject to changes in legislation or regulation, nor can we predict the impact of these changes on our financial position, results of operations or cash flows. We are subject to substantial regulation by governmental agencies.
Compliance with current and future utility regulatory requirements and procurement of necessary approvals, permits and certifications may result in significant costs to us. We are subject to substantial regulation from federal, state and local regulatory agencies.
Compliance with current and future regulatory requirements and procurement of necessary approvals, permits and certifications may result in significant costs to us. We are subject to substantial regulation from federal, state and local regulatory agencies.
Any failure to obtain utility commission approval to increase rates to fully recover costs, or a delay in the receipt of such approval, could have an adverse impact on OG&E's results of operations.
Any failure to obtain commission approval to increase rates to fully recover costs, or a delay in the receipt of such approval, could have an adverse impact on OG&E's results of operations.
Institutional investors and lenders who provide financing to fossil-fuel energy companies also have become more attentive to sustainable investing and lending practices 14 and some of them may elect not to provide funding for fossil fuel energy companies.
Institutional investors and lenders who provide financing to fossil-fuel energy companies also have become more attentive to sustainable investing and lending practices and some of them may elect not to provide funding for fossil fuel energy companies.
We are subject to extensive federal, state and local environmental statutes, rules and regulations relating to air quality, water quality, waste management, wildlife conservation, natural resources and health and safety that could, among other things, restrict or limit the output of certain facilities or the use of certain fuels required for the production of electricity and/or require additional pollution 13 control equipment and otherwise increase costs.
We are subject to extensive federal, state and local environmental statutes, rules and regulations relating to air quality, water quality, waste management, wildlife conservation, natural resources and health and safety that could, among other things, restrict or limit the output of certain facilities or the use of certain fuels required for the production of electricity and/or require additional 16 pollution control equipment and otherwise increase costs.
Costs of compliance with environmental laws and regulations are significant, and the cost of compliance with future environmental laws and regulations may adversely affect our results of operations, financial position or liquidity.
Costs of compliance with environmental and other laws and regulations are significant, and the cost of compliance with future environmental and other laws and regulations may adversely affect our results of operations, financial position or liquidity.
Most of its revenue results from the sale of electricity to retail customers subject to bundled rates that are approved by the applicable state utility commission. OG&E operates in Oklahoma and western Arkansas and is subject to rate regulation by the OCC and the APSC, in addition to FERC regulation of its transmission activities and any wholesale sales.
Most of its revenue results from the sale of electricity to retail customers subject to bundled rates that are approved by the applicable state regulatory commission. OG&E operates in Oklahoma and western Arkansas and is subject to rate regulation by the OCC and the APSC, in addition to FERC regulation of its transmission activities and any wholesale sales.
Weather conditions such as tornadoes, thunderstorms, ice storms, wind storms, flooding, earthquakes, prolonged droughts and the occurrence of wildfires, as well as seasonal temperature variations may adversely affect our financial position, results of operations and cash flows. Weather conditions directly influence the demand for electric power.
Weather conditions such as tornadoes, thunderstorms, ice storms, windstorms, flooding, earthquakes, prolonged droughts and the occurrence of wildfires, as well as seasonal temperature variations may adversely affect our financial position, results of operations and cash flows. Weather conditions directly influence the demand for electric power.
In addition, OG&E's ability to pay dividends or distributions to OGE Energy depends on any statutory and contractual restrictions that may be applicable to the entity, which may include requirements to maintain minimum levels of working capital and other assets.
In addition, OG&E's ability to pay dividends to OGE Energy depends on any statutory and contractual restrictions that may be applicable to the entity, which may include requirements to maintain minimum levels of working capital and other assets.
Substantially all of OGE Energy's operations are conducted by its subsidiary. Consequently, OGE Energy's operating cash flow and its ability to pay dividends and service its indebtedness are dependent upon the operating cash flow of OG&E and the payment of funds by OG&E to OGE Energy in the form of dividends or distributions.
Substantially all of OGE Energy's operations are conducted by this subsidiary. Consequently, OGE Energy's operating cash flow and its ability to pay dividends and service its indebtedness are dependent upon the operating cash flow of OG&E and the payment of funds by OG&E to OGE Energy in the form of dividends.
The regional power market in which OG&E operates has changing transmission regulatory structures, which may affect the transmission assets and related revenues and expenses. OG&E currently owns and operates transmission and generation facilities as part of a vertically integrated utility.
The regional power market in which OG&E operates has changing transmission regulatory structures, which may affect the transmission assets and related revenues and expenses. OG&E currently owns and operates transmission and generation facilities as part of a vertically integrated electric company.
Continued utility infrastructure investment without increased electricity sales could cause increased rates for customers, potentially resulting in further reductions in electricity sales and reduced profitability.
Continued electric infrastructure investment without increased electricity sales could cause increased rates for customers, potentially resulting in further reductions in electricity sales and reduced profitability.
Financial Statements and Footnotes." The utility commissions in the states where OG&E operates regulate many aspects of its electric operations including siting and construction of facilities, customer service and the rates that OG&E can charge customers.
The utility commissions in the states where OG&E operates regulate many aspects of its electric operations including siting and construction of facilities, customer service and the rates that OG&E can charge customers.
Over the next three years, 23.4 percent of our current employees will meet the eligibility requirements to retire. Failure to hire and adequately train replacement employees, including the transfer of significant internal historical knowledge and expertise to the new employees, may adversely affect our ability to manage and operate our business.
Over the next three years, 24.6 percent of our current employees will meet the eligibility requirements to retire. Failure to hire and adequately train replacement employees, including the transfer of significant internal historical knowledge and expertise to the new employees, may adversely affect our ability to manage and operate our business.
In late 2022, physical attacks on electric equipment owned by other electric utility companies in the U.S. resulted in the loss of power for a period of time. Authorities have indicated they believe these attacks may have been carried out by domestic extremists, as the U.S. electric grid is noted as being highly vulnerable to domestic terrorism.
In recent years, physical attacks on electric equipment owned by other electric companies in the U.S. resulted in the loss of power for a period of time. Authorities have indicated they believe these attacks may have been carried out by domestic extremists, as the U.S. electric grid is noted as being highly vulnerable to domestic terrorism.
A security breach of our information systems due to theft, ransomware, viruses, denial of service, hacking, acts of war or terrorism or inappropriate release of certain types of information, including confidential customer information or system operating information, could have a material adverse impact on our financial position, results of operations and cash flows.
A security breach of our information systems due to theft, ransomware, viruses, increased use of artificial intelligence technologies, denial of service, hacking, acts of war or terrorism, or inappropriate release of certain types of information, including confidential customer information or system operating information, could have a material adverse impact on our financial position, results of operations and cash flows.
Also, because our generation and transmission systems are part of an interconnected regional grid, we face the risk of possible loss of business due to a disruption or black-out caused by an event such as a severe storm, generator or transmission facility outage on a neighboring system or the actions of a neighboring utility.
Additionally, due to our generation and transmission systems being part of an interconnected regional grid, we face the risk of possible loss of business due to a disruption or black-out caused by an event such as a severe storm, generator or transmission facility outage on a neighboring system or the actions of a neighboring utility.
Severe weather, such as tornadoes, thunderstorms, ice storms, wind storms, flooding, earthquakes, prolonged droughts and the occurrence of wildfires, may cause outages and property damage which may require us to incur additional costs that are generally not insured and that may not be recoverable from customers.
Severe weather, such as tornadoes, thunderstorms, ice storms, windstorms, flooding, earthquakes, prolonged droughts and the occurrence of wildfires, may cause outages and property damage which may require us to incur additional costs that may not be adequately insured and that may not be recoverable from customers.
In addition to maintaining our current technology infrastructure, we believe the digital transformation of our business is key to driving internal efficiencies as well as providing additional capabilities to customers. Our technology infrastructure is critical to cost-effective, reliable daily operations and our ability to effectively serve our customers.
In addition to maintaining our current technology infrastructure, we believe the digital transformation of our business, including potential generative artificial intelligence, is key to driving internal efficiencies as well as providing additional capabilities to customers. Our technology infrastructure is critical to cost-effective, reliable daily operations and our ability to effectively serve our customers.
We are subject to cybersecurity risks and increased reliance on processes dependent on technology. In the regular course of our business, we handle a range of sensitive security and customer information. We are subject to laws and rules issued by different agencies concerning safeguarding and maintaining the confidentiality of this information.
We are subject to cybersecurity risks and increased reliance on processes dependent on technology. In the regular course of our business, we handle a range of sensitive security and customer information. We are subject to numerous laws and rules concerning safeguarding and maintaining the confidentiality of this information.
Such failures or breaches of the systems could impact the reliability of OG&E's generation, transmission and distribution systems which may result in a loss of service to customers and also subject OG&E to financial harm due to the significant expense to respond to security breaches or repair system damage. Our generation and transmission systems are part of an interconnected system.
Such failures or breaches of the systems could impact the reliability of OG&E's generation, 22 transmission and distribution systems which may result in a loss of service to customers and also subject OG&E to financial harm due to the significant expense to respond to security breaches or repair system damage.
The Registrants have experienced rising costs to produce electricity through increased fuel prices, raw material inflation, logistical challenges and certain component shortages. We are dependent upon others, such as fuel suppliers and transporters and suppliers for our capital projects, to help execute our operations.
OG&E has experienced rising costs to produce electricity through increased fuel prices, raw material inflation, logistical challenges and certain component shortages. We are dependent upon others, such as fuel suppliers and transporters and suppliers for our capital projects, to help execute our operations.
Health epidemics and other outbreaks, such as the COVID-19 pandemic, could adversely impact economic activity and conditions worldwide, by, among other things, leading to shutdowns, disrupting supply chains, increasing unemployment, resulting in customer slow payment or non-payment and decreasing commercial and industrial load.
Health epidemics and other outbreaks could adversely impact economic activity and conditions worldwide, by, among other things, leading to shutdowns, disrupting supply chains, increasing unemployment, resulting in customer slow payment or non-payment and decreasing commercial and industrial load.
While the Registrants have experienced physical attacks on their electric equipment, these incidents have not been material to their operations. The long-term impact of terrorist attacks and the magnitude of the threat of future terrorist attacks on the electric utility in general, and on us in particular, cannot be known.
While OG&E has experienced physical attacks on its electric equipment, these incidents have not been material to its operations. The long-term impact of terrorist attacks and the magnitude of the threat of future terrorist attacks on the electric utility in general, and on us in particular, cannot be known.
At December 31, 2022, OGE Energy and OG&E had outstanding indebtedness and other liabilities of $8.1 billion. OG&E is a separate legal entity that has no obligation to pay any amounts due on OGE Energy's indebtedness or to make any funds available for that purpose, whether by dividends or distributions.
At December 31, 2023, OGE Energy and OG&E had outstanding indebtedness and other liabilities of $8.3 billion. OG&E is a separate legal entity that has no obligation to pay any amounts due on OGE Energy's indebtedness or to make any funds available for that purpose.
We have seen increased interest for electric service from emerging industries such as crypto mining and hydrogen production, which are both large consumers of electricity. If this continues, these types of customers could represent a significant portion of our revenues.
We have seen increased interest for electric service from emerging industries such as data mining and hydrogen production, which are both large consumers of electricity. If this continues, these types of customers could represent a significant portion of our revenues. Item 1B. Unresolved Staff Comments. None.
If these regulatory commissions do not approve adjustments to the rates OG&E charges, it would not be able to recover the costs associated with its planned extensive investment. This could adversely affect the Registrants' financial position and results of operations.
OG&E currently provides service at rates approved by one or more regulatory commissions. If these regulatory commissions do not approve adjustments to the rates OG&E charges, it would not be able to recover the costs associated with its planned extensive investment. This could adversely affect the Registrants' financial position and results of operations.
Therefore, a disruption caused by the impact of a cybersecurity incident of the regional electric transmission grid, natural gas pipeline infrastructure or other fuel sources of our third-party service providers' operations could also negatively impact our business.
Our generation and transmission systems are part of an interconnected system. Therefore, a disruption caused by the impact of a cybersecurity incident of the regional electric transmission grid, natural gas pipeline infrastructure or other fuel sources of our third-party service providers' operations could also negatively impact our business.
We have observed some of these events in recent years, and the trend could continue. OG&E can incur significant restoration costs as a result of these weather events. If OG&E is unable to recover any of these increased costs in rates, it could have a material adverse effect on our financial performance.
OG&E can incur significant restoration costs as a result of these weather events. If OG&E is unable to recover any of these increased costs in rates, it could have a material adverse effect on our financial performance.
Operation of electric generation, transmission and distribution assets involves risks that can adversely affect energy output and efficiency levels or that could result in loss of human life, significant damage to property, environmental pollution and impairment of OG&E's operations.
OG&E owns and operates coal-fired, natural gas-fired, wind-powered and solar-powered generating assets. Operation of electric generation, transmission and distribution assets involves risks that can adversely affect energy output and efficiency levels or that could result in loss of human life, significant damage to property, environmental pollution and impairment of OG&E's operations.
If the change to SOFR, or other alternative rates, results in increased alternative interest rates or if the Registrants' lenders have increased costs due to such phase out or changes, then the Registrants' debt that uses benchmark rates could be affected and, in turn, the Registrants' cash flows and interest expense could be adversely impacted.
If the change to SOFR, or other alternative rates, results in increased alternative interest rates or if the Registrants' lenders have increased costs due to such phase out or changes, then the Registrants' debt that uses benchmark rates could be affected and, in turn, the Registrants' cash flows and interest expense could be adversely impacted. 24 Our debt levels may limit our flexibility in obtaining additional financing and in pursuing other business opportunities.
We believe the necessary permits, approvals and certificates have been obtained for our existing operations and that our business is conducted in accordance with applicable laws; however, we are unable to predict the impact on our operating results from future regulatory activities of these agencies. 15 The NERC is responsible for the development and enforcement of mandatory reliability and cyber security standards for the wholesale electric power system.
We believe the necessary permits, approvals and certificates have been obtained for our existing operations and that our business is conducted in accordance with applicable laws; however, we are unable to predict the impact on our operating results from future regulatory activities of these agencies.
If such circumstances occur, we expect that commercial and industrial customers would be impacted first, with residential customers following. 18 In addition, economic conditions, particularly budget shortfalls, could increase the pressure on federal, state and local governments to raise additional funds by increasing corporate tax rates and/or delaying, reducing or eliminating tax credits, grants or other incentives that could have a material adverse impact on our results of operations and cash flows.
In addition, economic conditions, particularly budget shortfalls, could increase the pressure on federal, state and local governments to raise additional funds by increasing corporate tax rates and/or delaying, reducing or eliminating tax credits, grants or other incentives that could have a material adverse impact on our results of operations and cash flows.
Further, we regularly engage in negotiations on renewals of franchise agreements with municipal governments within our service territories. Any such restructuring could have a significant impact on our financial position, results of operations and cash flows. Further, our load growth could be impacted, which could result in an impact on the affordability of our services.
Any such restructuring could have a significant impact on our financial position, results of operations and cash flows. Further, our load growth could be impacted, which could result in an impact on the affordability of our services.
OG&E is subject to comprehensive regulation by several federal and state utility regulatory agencies, which significantly influences its operating environment and its ability to fully recover its costs, including its cost of capital, from utility customers.
OG&E is subject to comprehensive regulation by several federal and state regulatory agencies, which significantly influences its operating environment and its ability to fully recover its costs, including its cost of capital, from customers. Recoverability of any under recovered amounts from OG&E's customers due to a rise in fuel costs is a significant risk.
Economic conditions may be impacted by insufficient financial sector liquidity leading to potential increased unemployment, which could impact the ability of our customers to pay timely, increase customer bankruptcies, and could lead to increased bad debt.
Economic conditions may be impacted by insufficient financial sector liquidity or inflationary pressures, leading to potential increased unemployment, which could impact the ability of our customers to pay timely, increase customer bankruptcies, and could lead to increased bad debt. If such circumstances occur, we expect that commercial and industrial customers would be impacted first, with residential customers following.
We have certain supply and transportation contracts in place; however, there can be no assurance that the counterparties to these agreements will fulfill their obligations to supply and transport coal and natural gas to us. The suppliers and transporters under these agreements may experience financial or technical problems that inhibit their ability to fulfill their obligations to us.
We rely on suppliers to deliver coal and natural gas in accordance with short- and long-term contracts. We have certain supply and transportation contracts in place; however, there can be no assurance that the counterparties to these agreements will fulfill their obligations to supply and transport coal and natural gas to us.
There are significant capital, operating and other costs associated with compliance with these environmental statutes, rules and regulations and those costs may be even more significant in the future.
We are also subject to SPP-related capacity methodologies which are expected to continue to impact our future capacity needs. There are significant capital, operating and other costs associated with compliance with these environmental and other statutes, rules and regulations and those costs may be even more significant in the future.
Together, these actions reflect climate change issues and greenhouse gas emission reductions as central areas of focus for domestic and international regulations, orders and policies. In addition, a parallel focus on reducing greenhouse gas emissions is reflected in legislation introduced in Congress. For example, the Infrastructure Investment and Jobs Act and Inflation Reduction Act were passed into law in 2022.
In addition, a parallel focus on reducing greenhouse gas emissions is reflected in legislation introduced in Congress. For example, the Infrastructure Investment and Jobs Act and Inflation Reduction Act were passed into law in 2022.
Increased competition resulting from efforts to restructure utility and energy markets or deregulation could have a significant financial and load growth impact on us and consequently impact our revenue and affordability of services. We have been and will continue to be affected by competitive changes to the utility and energy industries.
Our revenues, expenses, assets and liabilities may be adversely affected by changes in the organization, operation and regulation of the SPP Integrated Marketplace by the FERC or the SPP. 18 Increased competition resulting from efforts to restructure utility and energy markets or deregulation could have a significant financial and load growth impact on us and consequently impact our revenue and affordability of services.
Other technology risks include the need for significant upfront financial investments, lengthy development timelines, and the uncertainty of integration and scalability across our entire service territory.
The intermittency of renewables remains a critical challenge particularly as cost-efficient energy storage is still in development. Other technology risks include the need for significant upfront financial investments, lengthy development timelines, and the uncertainty of integration and scalability across our entire service territory.
The increasing development of NERC rules and standards will increase compliance costs and our exposure for potential violations of these standards. OPERATIONAL RISKS Our results of operations may be impacted by disruptions to fuel supply or the electric grid that are beyond our control. We are exposed to risks related to performance of contractual obligations by our suppliers and transporters.
OPERATIONAL RISKS Our results of operations may be impacted by disruptions to fuel supply or the electric grid that are beyond our control. We are exposed to risks related to performance of contractual obligations by our suppliers and transporters. We are dependent on coal and natural gas for much of our electric generating capacity.
GENERAL RISKS Governmental and market reactions to events involving other public companies or other energy companies that are beyond our control may have negative impacts on our business, financial position, results of operations, cash flows and access to capital.
To the extent that the state commissions or federal regulatory agency attempt to impose restrictions on the ability of OG&E to pay dividends to OGE Energy, it could adversely affect its ability to continue to pay dividends. 21 GENERAL RISKS Governmental and market reactions to events involving other public companies or other energy companies that are beyond our control may have negative impacts on our business, financial position, results of operations, cash flows and access to capital.
Failure or delay by our suppliers and transporters of coal and natural gas could disrupt our ability to deliver electricity and require us to incur additional expenses to meet the needs of our customers.
Deliveries may be subject to short-term interruptions or reductions due to various factors, including transportation problems, weather, availability of equipment and labor shortages. Failure or delay by our suppliers and transporters of coal and natural gas could disrupt our ability to deliver electricity and require us to incur additional expenses to meet the needs of our customers.
The effect of the failure of our facilities to operate as planned, as described above, would be particularly burdensome during a peak demand period. In addition, prolonged droughts could cause a lack of sufficient water for use in cooling during the electricity generating process.
The effect of the failure of our facilities to operate as planned, as described above, would be particularly burdensome during a peak demand period.
Significant changes have occurred and additional changes have been proposed to the wholesale electric market. Retail competition and the unbundling of regulated energy service could have a significant financial impact on us due to possible impairments of assets, a loss of retail customers, impact profit margins and/or increased costs of capital.
Retail competition and the unbundling of regulated energy service could have a significant financial impact on us due to possible impairments of assets, a loss of retail customers, impact profit margins and/or increased costs of capital. Further, we regularly engage in negotiations on renewals of franchise agreements with municipal governments within our service territories.
Physical risks from climate can be considered in both acute (event-driven) and chronic (longer-term shifts in climate patterns) terms. The effects of climate change could exacerbate physical changes in weather and the extreme weather events discussed above, including prolonged droughts, rise in temperatures and more extreme weather events like wildfires and ice storms, among other weather impacts.
The effects of climate change could exacerbate physical changes in weather and the extreme weather events discussed above, including prolonged droughts, rise in temperatures and more extreme weather events like wildfires and ice storms, among other weather impacts. We have observed some of these events in recent years, and the trend could continue.
OG&E's plan is to comply with all applicable standards and to expediently correct a violation should it occur. As one of OG&E's regulators, the NERC has comprehensive regulations and standards related to the reliability and security of our operating systems and is continuously developing additional mandatory compliance requirements for the utility industry.
As one of OG&E's regulators, the NERC has comprehensive regulations and standards related to the reliability and security of our operating systems and is continuously developing additional mandatory compliance requirements for the electric power industry. The increasing development of NERC rules and standards will increase compliance costs and our exposure for potential violations of these standards.
Any such disruption could result in a significant decrease in revenues and significant additional costs to repair assets, which could have a material adverse impact on our financial position, results of operations and cash flows.
Any such disruption could result in a significant decrease in revenues and significant additional costs to repair assets, which could have a material adverse impact on our financial position, results of operations and cash flows. 19 OG&E's electric generation, transmission and distribution assets are subject to operational risks that could result in unscheduled plant outages, unanticipated operation and maintenance expenses, increased purchased power costs, accidents and third-party liability.
In addition, the suppliers and transporters under these agreements may not be required to provide the commodity or service under certain circumstances, such as in the event of a natural disaster. Deliveries may be subject to short-term interruptions or reductions due to various factors, including transportation problems, weather, availability of equipment and labor shortages.
The suppliers and transporters under these agreements may experience financial or technical problems that inhibit their ability to fulfill their obligations to us. In addition, the suppliers and transporters under these agreements may not be required to provide the commodity or service under certain circumstances, such as in the event of a natural disaster.
For example, in September 2022, the EPA created a non-rulemaking docket for public input related to the EPA's efforts to reduce emissions of greenhouse gases from new and existing fossil fuel-fired electric generating units under the Clean Air Act Section 111.
For example, in May 2023, the EPA proposed rules to reduce emissions of 17 greenhouse gases from fossil fuel-fired electric generating units under Clean Air Act Section 111. The proposal encompasses rulemakings for both new units and existing units. For further discussion, see "Environmental Laws and Regulations" within "Item 7.
Such changes also could affect the manner in which we conduct our business and could require us to make substantial additional capital expenditures or abandon certain projects. There is inherent risk of the incurrence of environmental costs and liabilities in our operations and historical industry practices.
Such changes also could affect the manner in which we conduct our business and could require us to make substantial additional capital expenditures or abandon certain projects. Recently proposed environmental regulations may also impact our plan to comply with potential additional changes to the SPP’s planning reserve margin and, as further discussed in Note 14 within "Item 8.
In December 2022, OGE Energy entered into an amendment to its revolving credit facility that increased the permitted maximum debt to capitalization ratio from 65 percent to 70 percent. OG&E’s credit facility has a financial covenant requiring it to maintain a maximum debt to capitalization ratio of 65 percent.
We have revolving credit agreements for working capital, capital expenditures, acquisitions and other corporate purposes. The credit facilities for OGE Energy and OG&E have a financial covenant requiring them to maintain a maximum debt to capitalization ratio of 70 percent and 65 percent, respectively.
While we plan to pursue opportunities through the Infrastructure Investment and Jobs Act, we expect to typically be responsible for 50 percent of the dollars spent on investments related to this Act. OG&E currently provides service at rates approved by one or more regulatory commissions.
We have been awarded grant funds for specific projects through the Infrastructure Investment and Jobs Act, and we plan to pursue additional opportunities available to us under this Act. We expect to typically be responsible for any project costs not covered by grants on further investments related to this Act.
Removed
Recoverability of any under recovered amounts from OG&E's customers due to a rise in fuel costs is a significant risk, such as the Oklahoma and Arkansas fuel clause under recovery amounts as disclosed in Note 1 within "Item 8.
Added
Together, these actions reflect climate change issues and greenhouse gas emission reductions as central areas of focus for domestic and international regulations, orders and policies, such as proposed rules from the EPA in 2023 to reduce emissions of greenhouse gases from fossil fuel-fired electric generating units under Clean Air Act Section 111.
Removed
Our revenues, expenses, assets and liabilities may be adversely affected by changes in the organization, operation and regulation of the SPP Integrated Marketplace by the FERC or the SPP.
Added
Financial Statements and Supplementary Data," recent changes to the resource capacity accreditation methodologies for both thermal and renewable resources. Both changes may increase OG&E's generation capacity needs.
Removed
We are dependent on coal and natural gas for much of our electric generating capacity. We rely on suppliers to deliver coal and natural gas in accordance with short- and long-term contracts.
Added
We may be constrained by the ability to procure resources or labor that is needed to construct projects on time and at a reasonable price, which could significantly impact the extent to which we can successfully comply with these proposed environmental regulations and SPP requirements.
Removed
OG&E's electric generation, transmission and distribution assets are subject to operational risks that could result in unscheduled plant outages, unanticipated operation and maintenance expenses, increased purchased power costs, accidents and third-party liability. OG&E owns and operates coal-fired, natural gas-fired, wind-powered and solar-powered generating assets.
Added
There is inherent risk of the incurrence of environmental costs and liabilities in our operations and historical industry practices.
Removed
To the extent that the state commissions or federal regulatory agency attempt to impose restrictions on the ability of OG&E to pay dividends to OGE Energy, it could adversely affect its ability to continue to pay dividends.
Added
We have been and will continue to be affected by competitive changes to the utility and energy industries. Significant changes have occurred and additional changes have been proposed to the wholesale electric market.
Removed
The Registrants recently amended their credit facilities to switch from eurodollar loans based on LIBOR to term SOFR loans. SOFR is a relatively new reference rate, and its composition and characteristics are not the same as LIBOR.
Added
The NERC is responsible for the development and enforcement of mandatory reliability and cyber security standards for the wholesale electric power system. OG&E's plan is to comply with all applicable standards and to expediently correct a violation should it occur.
Removed
It is not possible to predict what effect the change to SOFR may have on our interest rates. 20 As indicated above, SOFR is a relatively new reference rate. Any failure of SOFR to gain market acceptance could cause the SOFR to be modified or discontinued.
Added
In addition, prolonged droughts could cause a lack of sufficient water for use in cooling during the electricity generating process. 20 Physical risks from climate can be considered in both acute (event-driven) and chronic (longer-term shifts in climate patterns) terms.
Removed
The Registrants' current credit facilities provide a mechanism for determining an alternative rate of interest upon the occurrence of certain events related to the discontinuance of SOFR.
Added
Beginning December 2022, the Registrants utilize SOFR for their credit facility reference rate. SOFR is a relatively new reference rate without much historical rate information.

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Item 2. Properties

Properties — owned and leased real estate

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Biggest changeAt December 31, 2022, OG&E's distribution system included: (i) 350 substations with a total capacity of 10.8 million kV-amps, 29,544 structure miles of overhead lines, 3,544 miles of underground conduit and 11,183 miles of underground conductors in Oklahoma and (ii) 30 substations with a total capacity of 1.0 million kV-amps, 2,801 structure miles of overhead lines, 360 miles of underground conduit and 660 miles of underground conductors in Arkansas.
Biggest changeOklahoma Arkansas Transmission system: Substations 54 7 Total capacity (million kV-amps) 14.1 2.9 Structure miles - lines 5,208 347 Distribution system: Substations 351 30 Total capacity (million kV-amps) 11.0 1.0 Structure miles - overhead 29,690 2,811 Miles of underground conduit 3,150 273 Miles of underground conductors 11,801 761 During the three years ended December 31, 2023, both Registrants' gross property, plant and equipment (excluding construction work in progress) additions were $2.7 billion, and gross retirements were $372.8 million.
Item 2. Properties. OG&E owns and operates an interconnected electric generation, transmission and distribution system, located in Oklahoma and western Arkansas, which included 17 generating stations with an aggregate capability of 7,240 MWs at December 31, 2022. The following table presents information with respect to OG&E's electric generating facilities. Unless otherwise indicated, these electric generating facilities are located in Oklahoma.
Item 2. Properties. OG&E owns and operates an interconnected electric generation, transmission and distribution system, located in Oklahoma and western Arkansas, which included 17 generating stations with an aggregate capability of 7,116 MWs at December 31, 2023. The following table presents information with respect to OG&E's electric generating facilities. Unless otherwise indicated, these electric generating facilities are located in Oklahoma.
(D) Represents OG&E's 77 percent ownership interest in the McClain Plant. 22 Renewable 2022 Station Year Installed Location Number of Units Fuel Capability Capacity Factor (A) Unit Capability (MW) Station Capability (MW) Crossroads 2011 Canton, OK 98 Wind 18.6 % 2.3 228 Centennial 2007 Laverne, OK 80 Wind 16.5 % 1.5 120 OU Spirit 2009 Woodward, OK 44 Wind 15.5 % 2.3 101 Mustang 2015 Oklahoma City, OK 90 Solar 26.4 % 2 Covington 2018 Covington, OK 4 Solar 18.1 % 2.5 10 Choctaw Nation 2020 Durant, OK 2 Solar 23.6 % 2.5 5 Chickasaw Nation 2020 Davis, OK 2 Solar 25.4 % 2.5 5 Branch 2021 Branch, AR 2 Solar 22.6 % 2.5 5 Durant 2 2022 Durant, OK 2 Solar 10.4 % 2.5 5 Total Generating Capability (renewable) 481 (A) 2022 Capacity Factor = 2022 Net Actual Generation / (2022 Net Maximum Capacity (Nameplate Rating in MWs) x Period Hours (8,760 Hours)).
Renewable 2023 Station Year Installed Location Number of Units Fuel Capability Capacity Factor (A) Unit Capability (MW) Station Capability (MW) Crossroads 2011 Canton, OK 98 Wind 17.8 % 2.30 228 Centennial 2007 Laverne, OK 80 Wind 15.6 % 1.50 120 OU Spirit 2009 Woodward, OK 44 Wind 16.0 % 2.30 101 Mustang 2015 Oklahoma City, OK 90 Solar 20.8 % 3 Covington 2018 Covington, OK 4 Solar 21.6 % 2.5 10 Choctaw Nation 2020 Durant, OK 2 Solar 22.2 % 2.5 5 Chickasaw Nation 2020 Davis, OK 2 Solar 24.4 % 2.5 5 Branch 2021 Branch, AR 2 Solar 22.6 % 2.5 5 Durant 2 2022 Durant, OK 2 Solar 19.7 % 2.5 5 Total Generating Capability (renewable) 482 (A) 2023 Capacity Factor = 2023 Net Actual Generation / (2023 Net Maximum Capacity (Nameplate Rating in MWs) x Period Hours (8,760 Hours)).
Station & Unit Year Installed Unit Design Type Fuel Capability 2022 Capacity Factor (A) Unit Capability (MW) Station Capability (MW) Seminole 1 1971 Steam-Turbine Gas 10.5 % 500 2 1973 Steam-Turbine Gas 13.2 % 510 3 1975 Steam-Turbine Gas 10.9 % 498 1,508 Muskogee 4 1977 Steam-Turbine Gas 17.2 % 487 5 1978 Steam-Turbine Gas 11.7 % 488 6 1984 Steam-Turbine Coal 22.6 % 503 1,478 Sooner 1 1979 Steam-Turbine Coal 29.4 % 516 2 1980 Steam-Turbine Coal 30.2 % 515 1,031 Horseshoe Lake 5A (B) 1971 Combustion-Turbine Gas/Jet Fuel 4.0 % 33 5B (B) 1971 Combustion-Turbine Gas/Jet Fuel 3.9 % 31 6 1958 Steam-Turbine Gas 16.5 % 170 7 1963 Steam-Turbine Gas 1.4 % 211 8 1969 Steam-Turbine Gas 3.0 % 377 9 2000 Combustion-Turbine Gas 28.6 % 45 10 2000 Combustion-Turbine Gas 27.1 % 43 910 Redbud (C) 1 2003 Combined Cycle Gas 37.1 % 154 2 2003 Combined Cycle Gas 35.6 % 154 3 2003 Combined Cycle Gas 32.5 % 152 4 2003 Combined Cycle Gas 35.9 % 153 613 Mustang 6 2018 Combustion-Turbine Gas 19.4 % 57 7 2018 Combustion-Turbine Gas 34.8 % 56 8 2017 Combustion-Turbine Gas 1.5 % 58 9 2018 Combustion-Turbine Gas 14.4 % 57 10 2018 Combustion-Turbine Gas 19.2 % 57 11 2018 Combustion-Turbine Gas 38.0 % 57 12 2018 Combustion-Turbine Gas 37.0 % 57 399 McClain (D) 1 2001 Combined Cycle Gas 50.1 % 378 378 Frontier 1 1989 Combined Cycle Gas 40.4 % 121 121 River Valley 1 1991 Steam-Turbine Coal/Gas 35.0 % 161 2 1991 Steam-Turbine Coal/Gas 16.2 % 160 321 Total Generating Capability (all stations, excluding renewable) 6,759 (A) 2022 Capacity Factor = 2022 Net Actual Generation / (2022 Net Maximum Capacity (Nameplate Rating in MWs) x Period Hours (8,760 Hours)).
Station & Unit Year Installed Unit Design Type Fuel Capability 2023 Capacity Factor (A) Unit Capability (MW) Station Capability (MW) Seminole 1 1971 Steam-Turbine Gas 19.9 % 500 2 1973 Steam-Turbine Gas 24.1 % 513 3 1975 Steam-Turbine Gas 20.5 % 509 1,522 Muskogee 4 1977 Steam-Turbine Gas 14.8 % 489 5 1978 Steam-Turbine Gas 10.9 % 488 6 1984 Steam-Turbine Coal 18.0 % 521 1,498 Sooner 1 1979 Steam-Turbine Coal 12.1 % 519 2 1980 Steam-Turbine Coal 11.8 % 519 1,038 Horseshoe Lake 5A (B) 1971 Combustion-Turbine Gas/Jet Fuel 2.6 % 33 5B (B) 1971 Combustion-Turbine Gas/Jet Fuel 4.8 % 31 7 1963 Steam-Turbine Gas — 211 8 1969 Steam-Turbine Gas 11.7 % 375 9 2000 Combustion-Turbine Gas 20.4 % 45 10 2000 Combustion-Turbine Gas 6.0 % 43 738 Redbud (C) 1 2003 Combined Cycle Gas 37.2 % 157 2 2003 Combined Cycle Gas 43.6 % 154 3 2003 Combined Cycle Gas 41.3 % 154 4 2003 Combined Cycle Gas 45.3 % 153 618 Mustang 6 2018 Combustion-Turbine Gas 12.0 % 57 7 2018 Combustion-Turbine Gas 14.5 % 56 8 2017 Combustion-Turbine Gas 18.6 % 58 9 2018 Combustion-Turbine Gas 21.9 % 57 10 2018 Combustion-Turbine Gas 13.0 % 57 11 2018 Combustion-Turbine Gas 21.6 % 58 12 2018 Combustion-Turbine Gas 2.0 % 57 400 McClain (D) 1 2001 Combined Cycle Gas 52.2 % 373 373 Frontier 1 1989 Combined Cycle Gas 57.0 % 126 126 River Valley 1 1991 Steam-Turbine Coal/Gas 19.3 % 161 2 1991 Steam-Turbine Coal/Gas 23.9 % 160 321 Total Generating Capability (all stations, excluding renewable) 6,634 (A) 2023 Capacity Factor = 2023 Net Actual Generation / (2023 Net Maximum Capacity (Nameplate Rating in MWs) x Period Hours (8,760 Hours)).
During the three years ended December 31, 2022, both Registrants' gross property, plant and equipment (excluding construction work in progress) additions were $2.2 billion, and gross retirements were $299.4 million. These additions were provided by cash generated from operations, short-term borrowings (through a combination of bank borrowings and commercial paper), long-term borrowings and permanent financings.
These additions were provided by cash generated from operations, short-term borrowings (through a combination of bank borrowings and commercial paper), long-term borrowings and permanent financings. The additions during this three-year period amounted to 17.0 percent of gross property, plant and equipment (excluding construction work in progress) for both Registrants at December 31, 2023.
Capacity Factors are impacted by events that reduce Net Actual Generation such as outages.
Capacity Factors are impacted by events that reduce Net Actual Generation such as outages. The following table presents certain operating data relating to the OG&E's electricity transmission and distribution assets at December 31, 2023.
Removed
At December 31, 2022, OG&E's transmission system included: (i) 54 substations with a total capacity of 14.1 million kV-amps and 5,190 structure miles of lines in Oklahoma and (ii) seven substations with a total capacity of 2.9 million kV-amps and 347 structure miles of lines in Arkansas.
Added
(D) Represents OG&E's 77 percent ownership interest in the McClain Plant. 27 In 2023, OG&E retired unit 6 located at the Horseshoe Lake station.
Removed
The additions during this three-year period amounted to 15.2 percent of gross property, plant and equipment (excluding construction work in progress) for both Registrants at December 31, 2022.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeAt the present time, based on currently available information, the Registrants believe that any reasonably possible losses in excess of accrued amounts arising out of pending or threatened lawsuits or claims would not be quantitatively material to their financial statements and would not have a material adverse effect on the Registrants' financial position, results of operations or cash flows.
Biggest changeFinancial Statements and Supplementary Data," the Registrants believe that any reasonably possible losses in excess of accrued amounts arising out of pending or threatened lawsuits or claims would not be quantitatively material to their financial statements and would not have a material adverse effect on the Registrants' financial position, results of operations or cash flows. 28 Item 4.
Item 4. Mine Safety Disclosures. Not Applicable. 23 PAR T II
Mine Safety Disclosures. Not Applicable. 29 PAR T II
Added
If the assessment indicates that a potential loss is not probable but reasonably possible, the nature of the contingent matter, together with an estimate of the range of possible loss, if determinable and material, would be disclosed. At the present time, based on currently available information, except as disclosed in Note 13 within "Item 8.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeItem 5. Mar ket for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities. OGE Energy's common stock is listed for trading on the New York Stock Exchange under the ticker symbol "OGE." At December 31, 2022, there were 12,222 holders of record of OGE Energy's common stock.
Biggest changeItem 5. Mar ket for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities. OGE Energy's common stock is listed for trading on the New York Stock Exchange under the ticker symbol "OGE." At December 31, 2023, there were 11,692 holders of record of OGE Energy's common stock.
The graph and information are included for historical comparative purposes only and should not be considered indicative of future stock performance. Issuer Purchases of Equity Securities None. Item 6. [Reserved] 24
The graph and information are included for historical comparative purposes only and should not be considered indicative of future stock performance. Issuer Purchases of Equity Securities None. Item 6. [Reserved] 30
The graph assumes that the value of the investment in OGE Energy's common stock and each index was $100 as of December 31, 2017, and that all dividends were reinvested.
The graph assumes that the value of the investment in OGE Energy's common stock and each index was $100 as of December 31, 2018, and that all dividends were reinvested.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

90 edited+53 added−62 removed46 unchanged
Biggest changeOG&E (Electric Company) OG&E is projected to earn approximately $400 million to $421 million, or $1.99 to $2.09 per average diluted share, with a midpoint of $411 million, or $2.04 per average diluted share, in 2023 and is based on the following assumptions: • normal weather patterns are experienced for the year; • operating revenues growth driven by total retail load growth (weather normalized) of approximately 4 to 5 percent, or approximately 2.5 to 3.5 percent assuming an equivalent level of datamining load in 2023 as existed at the end of 2022; • operating expenses of approximately $1.101 billion to $1.109 billion, with operation and maintenance expenses comprising approximately 45 percent of the total; • net interest expense of approximately $204 million to $210 million which assumes a $4 million allowance for borrowed funds used during construction reduction to interest expense and assumes a debt issuance at OG&E of up to $400 million in 2023 in addition to the $450 million that was issued in January 2023; • other income of approximately $32 million including $10 million of allowance for equity funds used during construction; and • an effective tax rate of approximately 15 percent.
Biggest changeOGE Energy is projected to earn approximately $415 million to $439 million, or $2.06 to $2.18 per average diluted share, with a midpoint of $427 million, or $2.12 per average diluted share in 2024 and is based off the following assumptions: • OGE Energy forecasts earnings for OG&E of $447 million, or $2.22 per average diluted share; • OGE Energy forecasts a loss of $20 million for other operations (primarily the holding company), or a loss of $0.10 per average diluted share; • OG&E experiences normal weather patterns for the year; OG&E has significant seasonality in its earnings; OG&E typically shows minimal earnings in the first and fourth quarters with a majority of its earnings in the third quarter due to the seasonal nature of air conditioning demand; • operating revenues growth driven by OG&E total approximate load growth (weather normalized) in the residential class of 1 percent, commercial class of between 8 percent and 15 percent, oilfield class of 3 percent, public authority class of 3 percent, and a slight decline in the industrial class of 1 percent; total retail load growth up to approximately 3 percent to 5 percent; • operating expenses of approximately $1.145 billion to $1.150 billion, with operation and maintenance expenses comprising approximately 44 percent of the total; • net interest expense of approximately $250 million to $252 million which assumes a $16 million allowance for borrowed funds used during construction reduction to interest expense, and assumes a debt issuance at OG&E of $300 million to $350 million and a debt issuance at other operations (primarily the holding company) of $300 million in 2024; • other income of approximately $30 million including $17 million of allowance for equity funds used during construction; • an effective consolidated tax rate of approximately 15.0 percent; and • approximately 201.5 million average diluted shares outstanding. 32 Results of Operations The following discussion and analysis presents factors that affected the Registrants' results of operations for the years ended December 31, 2023 and 2022 and the Registrants' financial positions at December 31, 2023 and 2022.
In July 2020, the ODEQ notified OG&E that the Horseshoe Lake generating units would be included in Oklahoma's second Regional Haze implementation period evaluation of visibility impairment impacts to the Wichita Mountains. OG&E submitted an analysis of all potential control measures for NO x on these units to the ODEQ.
Regional Haze In July 2020, the ODEQ notified OG&E that the Horseshoe Lake generating units would be included in Oklahoma's second Regional Haze implementation period evaluation of visibility impairment impacts to the Wichita Mountains. OG&E submitted an analysis of all potential control measures for NO X on these units to the ODEQ.
Although Oklahoma complies with the revised standard, the Federal Clean Air Act of 1970, as amended, requires states to submit to the EPA for approval a SIP to prohibit in-state sources from contributing 37 significantly to nonattainment of the NAAQS in another state. On October 28, 2018, Oklahoma submitted its SIP to the EPA related to these "Good Neighbor" requirements.
Although Oklahoma complies with the revised standard, the Federal Clean Air Act of 1970, as amended, requires states to submit to the EPA for approval a SIP to prohibit in-state sources from contributing significantly to nonattainment of the NAAQS in another state. On October 28, 2018, Oklahoma submitted its SIP to the EPA related to these "Good Neighbor" requirements.
The Guaranteed Flat Bill program allows qualifying customers the opportunity to purchase their electricity needs at a set monthly price for an entire year which can result in variances when actual fuel and purchased power prices differ from what is included in Guaranteed Flat Bill Program rates.
(D) The Guaranteed Flat Bill program allows qualifying customers the opportunity to purchase their electricity needs at a set monthly price for an entire year which can result in variances when actual fuel and purchased power prices differ from what is included in Guaranteed Flat Bill rates.
If the calculated average is below 65 degrees, then the difference between the calculated average and 65 is expressed as heating degree days, with each degree of difference equaling one heating degree day. The daily calculations are then totaled for the particular reporting period.
If the calculated average is below 65 degrees, then the difference between the calculated average and 65 is expressed as heating degree days, with each degree of difference equaling 34 one heating degree day. The daily calculations are then totaled for the particular reporting period.
Contractual Obligations The following table presents OGE Energy's total contractual obligations for the next five years at December 31, 2022. For further detail of OGE Energy's contractual obligations, which include operating leases, long-term debt and purchase obligations and commitments (including information for maturities beyond the next five years), see Notes 4, 9 and 13, respectively, within "Item 8.
Contractual Obligations The following table presents OGE Energy's total contractual obligations for the next five years at December 31, 2023. For further detail of OGE Energy's contractual obligations, which include operating leases, long-term debt and purchase obligations and commitments (including information for maturities beyond the next five years), see Notes 4, 9 and 13, respectively, within "Item 8.
Financial Statements and Supplementary Data" may increase capital requirements, such costs are generally recoverable through fuel adjustment clauses and have little, if any, impact on net capital requirements and future contractual obligations. The fuel adjustment clauses are subject to periodic review by the OCC and the APSC.
Financial Statements and Supplementary Data" may increase capital requirements, such costs are generally recoverable through fuel adjustment clauses and have little, if any, impact on net capital requirements and future contractual obligations. OG&E's fuel adjustment clauses are subject to periodic review by the OCC and the APSC.
A more detailed discussion regarding the financial performance for the year ended December 31, 2022 as compared to December 31, 2021 can be found under "Results of Operations" below. A discussion of the financial performance for the year ended December 31, 2021 compared to December 31, 2020 for OGE Energy and OG&E can be found within "Item 7.
A more detailed discussion regarding the financial performance for the year ended December 31, 2023 as compared to December 31, 2022 can be found under "Results of Operations" below. A discussion of the financial performance for the year ended December 31, 2022 compared to December 31, 2021 for OGE Energy and OG&E can be found within "Item 7.
The actual cost of fuel used in electric generation (which includes the operating lease obligations for OG&E's railcar leases shown in Note 4 within "Item 8. Financial Statements and Supplementary Data") and certain purchased power costs are passed on to OG&E's customers through fuel adjustment clauses.
The actual cost of fuel used in electric generation (which includes the operating lease obligations for OG&E's railcar leases shown in Note 4 within "Item 8. Financial Statements and Supplementary Data") and certain purchased power costs are passed on to OG&E's customers through fuel adjustment clauses and other regulatory mechanisms.
Regulatory Assets and Liabilities OG&E, as a regulated utility, is subject to accounting principles for certain types of rate-regulated activities, which provide that certain incurred costs that would otherwise be charged to expense can be deferred as regulatory assets, based on the expected recovery from customers in future rates.
Regulatory Assets and Liabilities OG&E, as a regulated electric company, is subject to accounting principles for certain types of rate-regulated activities, which provide that certain incurred costs that would otherwise be charged to expense can be deferred as regulatory assets, based on the expected recovery from customers in future rates.
On October 13, 2020, the EPA published a final rule to revise the technology-based effluent limitations for flue gas desulfurization waste water and bottom ash transport water.
On October 13, 2020, the EPA published a final rule to revise the technology-based effluent limitations for flue gas desulfurization wastewater and bottom ash transport water.
President Biden's Administration has taken a number of actions that adopt policies and affect environmental regulations, including issuance of executive orders that instruct the EPA and other executive agencies to review certain rules that affect OG&E with a view to achieving nationwide reductions in greenhouse gas emissions. OG&E is monitoring these actions which are in various stages of being implemented.
President Biden's Administration has taken a number of actions that adopt policies and affect environmental regulations, including issuance of executive orders that instruct the EPA and other executive agencies to review certain rules that affect OG&E with a view to achieving nationwide reductions in greenhouse gas emissions. OG&E is monitoring these actions which are in various stages of 42 implementation.
In 2022, OG&E obtained refunds of $2.9 million from the recycling of scrap metal, salvaged transformers and used transformer oil. This figure does not include the additional savings gained through the reduction and/or avoidance of disposal costs and the reduction in material purchases due to the reuse of existing materials. Similar savings are anticipated in future years.
In 2023, OG&E obtained refunds of $2.0 million from the recycling of scrap metal, salvaged transformers and used transformer oil. This figure does not include the additional savings gained through the reduction and/or avoidance of disposal costs and the reduction in material purchases due to the reuse of existing materials. Similar savings are anticipated in future years.
During 2022, approximately 95 percent of the ash from OG&E's River Valley, Muskogee and Sooner facilities was recovered and reused in various ways, including soil stabilization, landfill cover, road base construction and cement and concrete production. Reusing fly ash reduces the need to manufacture cement resulting in reductions in greenhouse gas emissions from cement and concrete production.
During 2023, approximately 94 percent of the ash from OG&E's River Valley, Muskogee and Sooner facilities was recovered and reused in various ways, including soil stabilization, landfill cover, road base construction and cement and concrete production. Reusing fly ash reduces the need to manufacture cement resulting in reductions in greenhouse gas emissions from cement and concrete production.
Change Impact on Funded Status Actual plan asset returns +/- 1 percent +/- $2.9 million Discount rate +/- 0.25 percent +/- $5.6 million Contributions +/- $10 million +/- $10.0 million Income Taxes The Registrants use the asset and liability method of accounting for income taxes.
Change Impact on Funded Status Actual plan asset returns +/- 1 percent +/- $2.4 million Discount rate +/- 0.25 percent +/- $5.4 million Contributions +/- $10 million +/- $10.0 million Income Taxes The Registrants use the asset and liability method of accounting for income taxes.
Since the purchase of the Redbud facility in 2008, OG&E made investments in the infrastructure that have led to OG&E's average use of approximately 2.5 billion gallons per year of treated municipal effluent for all of the needed cooling water at Redbud and McClain.
Since the purchase of the Redbud facility in 2008, OG&E made investments in the infrastructure that have led to OG&E's average use of approximately 2.4 billion gallons per year of treated municipal effluent for cooling water at Redbud and McClain.
Otherwise, as discussed above, OGE Energy expects to meet these cash requirement needs through cash generated from operations, short-term borrowings and permanent financings. Pension and Postretirement Benefit Plans At December 31, 2022, 24.5 percent of the Pension Plan investments were in listed common stocks with the balance primarily invested in corporate fixed income and other securities, U.S.
Otherwise, as discussed above, OGE Energy expects to meet these cash requirement needs through cash generated from operations, short-term borrowings and permanent financings. Pension and Postretirement Benefit Plans At December 31, 2023, 23.3 percent of the Pension Plan investments were in listed common stocks with the balance primarily invested in corporate fixed income and other securities, U.S.
Based on estimates from the American Coal Ash Association, OG&E fly ash reuse helped avoid over three million tons of CO 2 emissions in the last 15 years. OG&E has sought and will continue to seek pollution prevention opportunities and to evaluate the effectiveness of its waste reduction, reuse and recycling efforts.
Based on estimates from the American Coal Ash Association, OG&E fly ash reuse helped avoid over 3.5 million tons of CO 2 emissions in the last 16 years. OG&E has sought and will continue to seek pollution prevention opportunities and to evaluate the effectiveness of its waste reduction, reuse and recycling efforts.
The following table presents information about OGE Energy's revolving credit agreements as of December 31, 2022.
The following table presents information about OGE Energy's revolving credit agreements as of December 31, 2023.
Management's Discussion and Analysis of Financial Condition and Results of Operations" of the Registrants' 2021 Form 10-K . 2023 Outlook Key assumptions for the Registrants' 2023 outlook are discussed below.
Management's Discussion and Analysis of Financial Condition and Results of Operations" of the Registrants' 2022 Form 10-K . 2024 Outlook Key assumptions for the 2024 outlook are discussed below.
OG&E is closely monitoring each of these issues due to possible future impacts; however, it is unknown at this time what, if any, material impacts will result from the USFWS action.
OG&E is closely monitoring this issue due to possible future impacts; however, it is unknown at this time what, if any, material impacts will result from the USFWS action.
The fuel adjustment clauses are subject to periodic review by the OCC and the APSC. OG&E's fuel, purchased power and direct transmission expense decreased $465.2 million, or 21.9 percent, primarily driven by the below factors.
The fuel adjustment clauses are subject to periodic review by the OCC and the APSC. OG&E's fuel, purchased power and direct transmission expense decreased $750.7 million, or 45.2 percent, primarily driven by the below factors.
OGE Energy has unsecured five-year revolving credit facilities totaling $1.1 billion ($550.0 million for OGE Energy and $550.0 million for OG&E), which can also be used as letter of credit facilities. As further discussed below, in May 2022, OGE Energy entered into a $100.0 million floating rate unsecured three-year credit agreement, of which $50.0 million is considered a revolving loan.
OGE Energy has unsecured five-year revolving credit facilities totaling $1.1 billion ($550.0 million for OGE Energy and $550.0 million for OG&E), which can also be used as letter of credit facilities. OGE Energy also has a $100.0 million floating rate unsecured three-year credit agreement, of which $50.0 million is considered a revolving loan.
On August 3, 2021, the EPA published notice in the Federal Register that it will undertake a supplemental rulemaking to revise the effluent limitation guidelines rule after completing its review of the October 2020 rule. The existing effluent limitation guidelines will remain in effect while the EPA undertakes this new rulemaking.
On August 3, 2021, the EPA published notice in the Federal Register that it will undertake a supplemental rulemaking to revise the effluent limitation guidelines rule after completing its review of the October 2020 rule.
Pension Plan Restoration of Retirement Income Plan Postretirement Benefit Plans December 31 (In millions) 2022 2021 2022 2021 2022 2021 Benefit obligations $ 358.5 $ 502.9 $ 5.8 $ 5.9 $ 101.9 $ 137.3 Fair value of plan assets 293.0 486.0 — — 32.8 44.3 Funded status at end of year $ (65.5 ) $ (16.9 ) $ (5.8 ) $ (5.9 ) $ (69.1 ) $ (93.0 ) Common Stock Dividends OGE Energy's dividend policy is reviewed by the Board of Directors at least annually and is based on numerous factors, including management's estimation of the long-term earnings power of its businesses.
Pension Plan Restoration of Retirement Income Plan Postretirement Benefit Plans December 31 (In millions) 2023 2022 2023 2022 2023 2022 Benefit obligations $ 303.7 $ 358.5 $ 5.5 $ 5.8 $ 103.3 $ 101.9 Fair value of plan assets 243.7 293.0 — — 32.7 32.8 Funded status at end of year $ (60.0 ) $ (65.5 ) $ (5.5 ) $ (5.8 ) $ (70.6 ) $ (69.1 ) Common Stock Dividends OGE Energy's dividend policy is reviewed by the Board of Directors at least annually and is based on numerous factors, including management's estimation of the long-term earnings power of its businesses.
(Dollars in millions) December 31, 2022 Balance of outstanding supporting letters of credit $ 0.4 Weighted-average interest rate of outstanding supporting letters of credit 1.15 % Net available liquidity under revolving credit agreements, commercial paper borrowings and letters of credit $ 1,149.6 Balance of cash and cash equivalents $ 89.3 The following table presents information about OGE Energy's total short-term debt activity for the year ended December 31, 2022.
(Dollars in millions) December 31, 2023 Balance of outstanding supporting letters of credit $ 0.4 Weighted-average interest rate of outstanding supporting letters of credit 1.20 % Net available liquidity under revolving credit agreements, commercial paper borrowings and letters of credit $ 650.4 Balance of cash and cash equivalents $ 0.2 39 The following table presents information about OGE Energy's total short-term debt activity for the year ended December 31, 2023.
Prior to the approval of a change in the dividend in 2022, the Board of Directors reviewed a recommendation from management of an increase in the quarterly dividend to $0.4141 per share from $0.41 per share and subsequently approved the recommendation to become effective with the dividend payment in October 2022.
In 2023, the Board of Directors reviewed a recommendation from management of an increase in the quarterly dividend to $0.4182 per share from $0.4141 per share and subsequently approved the recommendation to become effective with the dividend payment in October 2023.
The final rule establishes technology- and performance-based standards that may apply to discharges of six waste streams including bottom ash transport water. Compliance with this rule will occur by 2023; however, on April 12, 2017, the EPA granted a Petition for Reconsideration of the 2015 Rule.
The final rule establishes technology- and performance-based standards that may apply to discharges of six waste streams 45 including bottom ash transport water. On April 12, 2017, the EPA granted a Petition for Reconsideration of the 2015 Rule.
OG&E likely will be required to incur certain capital expenditures in the future for air pollution control equipment and technology in connection with obtaining and maintaining operating permits and approvals for air emissions.
OG&E likely will be required to incur certain capital expenditures in the future for air pollution control equipment and technology in connection with obtaining and maintaining operating permits and approvals for air emissions. Cross State Air Pollution Rule The EPA revised the NAAQS for ozone in 2015.
The proceeds from the issuance were added to OG&E's general funds to be used for general corporate purposes, including to help fund the repayment of its $500.0 million 0.553% Senior Notes, Series due May 26, 2023 and the funding of its capital investment program and working capital needs.
The proceeds from these issuances were added to OG&E's general funds to be used for general corporate purposes, including to help fund the repayment of its $500.0 million of 0.553 percent Senior Notes that matured on May 26, 2023, as well as the funding of its capital investment program and working capital needs.
The final rule for the listing decision was expected to occur in November 2022. On September 14, 2022, the USFWS published a proposal to list the Tricolored Bat as endangered under the Endangered Species Act. According to the proposal, the current known range of the Tricolored Bat extends to 36 states, including Oklahoma and Arkansas.
On September 14, 2022, the USFWS published a proposal to list the Tricolored Bat as endangered under the Endangered Species Act. According to the proposal, the current known range of the Tricolored Bat extends to 36 states, including Oklahoma and Arkansas. A listing decision is expected by September 2024.
(Dollars in millions) Year Ended December 31, 2022 Average balance of short-term debt $ 337.3 Weighted-average interest rate of average balance of short-term debt 0.97 % Maximum month-end balance of short-term debt $ 731.5 OG&E must obtain regulatory approval from the FERC in order to borrow on a short-term basis.
(Dollars in millions) Year Ended December 31, 2023 Average balance of short-term debt $ 269.5 Weighted-average interest rate of average balance of short-term debt 5.63 % Maximum month-end balance of short-term debt $ 499.2 OG&E must obtain regulatory approval from the FERC in order to borrow on a short-term basis.
Treasury notes and bonds and mutual funds as presented in Note 11 within "Item 8. Financial Statements and Supplementary Data." During 2022, the actual return on the Pension Plan was a loss of $82.2 million, compared to an expected return on plan assets of $25.4 million.
Treasury notes and bonds and mutual funds, as presented in Note 11 within "Item 8. Financial Statements and Supplementary Data." During 2023, the actual return on the Pension Plan was $27.6 million, 38 compared to an expected return on plan assets of $16.2 million.
(In millions) $ Change Fuel, purchased power and direct transmission expense (A) $ (465.2 ) Wholesale transmission revenue (4.2 ) Other (2.8 ) Industrial and oilfield sales 5.0 Non-residential demand and related revenues 10.2 New customer growth 13.0 Guaranteed Flat Bill program (B) 16.3 Quantity impacts (primarily weather) (C) 68.0 Price variance (D) 81.7 Change in operating revenues $ (278.0 ) (A) These expenses are generally recoverable from customers through regulatory mechanisms and are offset in Fuel, Purchased Power and Direct Transmission Expense in the statements of income, as further described below.
(In millions) $ Change Fuel, purchased power and direct transmission expense (A) $ (750.7 ) Quantity impacts (includes weather) (B) (14.5 ) Industrial and oilfield sales (2.6 ) Other (2.0 ) Price variance (C) 10.0 Non-residential demand and related revenues 11.4 New customer growth 11.8 Wholesale transmission revenue 12.3 Guaranteed Flat Bill program (D) 22.9 Change in operating revenues $ (701.4 ) (A) These expenses are generally recoverable from customers through regulatory mechanisms and are offset in Fuel, Purchased Power and Direct Transmission Expense in the statements of income.
Tax positions taken by the Registrants on their income tax returns that are recognized in the financial statements must satisfy a more likely than not recognition threshold, assuming that the position will be examined by taxing authorities with full knowledge of all relevant information.
Tax positions taken by the Registrants on their income tax returns that are recognized in the financial statements must satisfy a more likely than not recognition threshold, assuming that the position will be examined by taxing authorities with full knowledge of all relevant information. 41 Contingency Reserves In the normal course of business, the Registrants are confronted with issues or events that may result in a contingent liability.
Prior to the Energy Transfer and Enable merger closing, OGE Energy's natural gas midstream operations segment included its equity method investment in Enable, and from December 2, 2021 to September 30, 2022, this segment included OGE Energy's investment in Energy Transfer's equity securities.
Prior to the December 2, 2021 closing of the Enable and Energy Transfer merger, OGE Energy's former natural gas midstream operations segment included its investment in Enable. Subsequent to the merger and throughout 2022, OGE Energy's natural gas midstream operations segment included OGE Energy's investment in Energy Transfer's equity securities acquired in the Enable and Energy Transfer merger.
(b) Degree days are calculated as follows: The high and low degrees of a particular day are added together and then averaged. If the calculated average is above 65 degrees, then the difference between the calculated average and 65 is expressed as cooling degree days, with each degree of difference equaling one cooling degree day.
If the calculated average is above 65 degrees, then the difference between the calculated average and 65 is expressed as cooling degree days, with each degree of difference equaling one cooling degree day.
The application of income tax law is complex. Laws and regulations in this area are voluminous and often ambiguous. Interpretations and guidance surrounding income tax laws and regulations change over time. Accordingly, it is necessary to make 35 judgments regarding income tax exposure.
The application of income tax law is complex. Laws and regulations in this area are voluminous and often ambiguous. Interpretations and guidance surrounding income tax laws and regulations change over time. Accordingly, it is necessary to make judgments regarding income tax exposure. As a result, changes in these judgments can materially affect amounts the Registrants recognized in their financial statements.
Additional capital expenditures beyond those identified in the table above, including additional incremental growth opportunities, will be evaluated based upon the requirements of OG&E's power supply, transmission and distribution operational teams and the expected resultant customer benefits.
Additional capital expenditures beyond those identified in the table above, including additional incremental growth opportunities, will be evaluated based upon the requirements of OG&E's power supply, transmission and distribution operational teams and the expected resultant customer benefits. OG&E intends to issue requests for proposals for resources to satisfy the new generation capacity needs identified in OG&E's draft 2024 IRP.
OGE Energy could be required to make additional contributions if the value of its pension trust and postretirement benefit plan trust assets are adversely impacted by a major market disruption in the future. 32 The following table presents the status of OGE Energy's Pension Plan, the Restoration of Retirement Income Plan and the postretirement benefit plans at December 31, 2022 and 2021.
OGE Energy could be required to make additional contributions if the value of its pension trust and postretirement benefit plan trust assets are adversely impacted by a major market disruption in the future.
OGE Energy also has defined benefit postretirement plans that cover certain employees, including OG&E's employees. Pension and other postretirement plan expenses and liabilities are determined on an actuarial basis and are affected by the market value of plan assets, estimates of the expected return on plan assets, assumed discount rates and the level of funding.
Pension and other postretirement plan expenses and liabilities are determined on an actuarial basis and are affected by the market value of plan assets, estimates of the expected return on plan assets, assumed discount rates, and the level of funding.
This proposed rule could impact regional air quality goals and emission limits for emission sources; however, it is unknown at this time what, if any, potential material impacts to OG&E individual operating permit emission limits will result from the EPA actions.
States must develop and submit attainment plans no later than 18 months after the EPA finalizes nonattainment designations. The revised NAAQS could impact regional air quality goals and emission limits for emission sources; however, it is unknown at this time what, if any, potential material impacts to OG&E individual operating permit emission limits will result from the EPA actions.
OG&E monitors possible changes in legal standards for emissions of greenhouse gases, including CO 2 , sulfur hexafluoride and methane, including President Biden Administration's target of a 50 to 52 percent reduction in economy-wide net greenhouse gas emissions from 2005 levels by 2030 with full decarbonization of the electric power industry by 2035 and the September 2022 EPA non-rulemaking docket for public input related to the EPA's efforts to reduce emissions of greenhouse gases from new and existing fossil fuel-fired electric generating units under Clean Air Act Section 111.
Greenhouse Gas OG&E monitors possible changes in legal standards for emissions of greenhouse gases, including CO 2, sulfur hexafluoride and methane, including President Biden Administration's target of a 50 to 52 percent reduction in economy-wide net greenhouse gas emissions from 2005 levels by 2030 with full decarbonization of the electric power industry by 2035.
(D) Increased primarily due to the Oklahoma general rate review order received in September 2022 that approved new rates effective July 1, 2022, the impact of the Arkansas Formula Rate Plan and increased recovery through rider mechanisms, such as the Storm Cost Recovery Rider and energy efficiency riders.
(C) Increased primarily due to the Oklahoma general rate review order received in September 2022 that approved new rates effective July 1, 2022 and increased recovery through rider mechanisms.
OGE Energy generally meets its cash needs through a combination of cash generated from operations, short-term borrowings (through a combination of bank borrowings and commercial paper) and permanent financings. 31 Capital Expenditures The following table presents OGE Energy's estimates of capital expenditures for the years 2023 through 2027.
OGE Energy generally meets its cash needs through a combination of cash generated from operations, short-term borrowings (through a combination of bank borrowings and commercial paper) and permanent financings.
Critical Accounting Policies and Estimates The financial statements and notes thereto contain information that is pertinent to management's discussion and analysis.
Financial Statements and Supplementary Data" for a discussion of OGE Energy's common stock activity. 40 Critical Accounting Policies and Estimates The financial statements and notes thereto contain information that is pertinent to management's discussion and analysis.
For the period of December 2, 2021 to September 30, 2022, OGE Energy's natural gas midstream operations segment included OGE Energy's investment in Energy Transfer's equity securities acquired in the Enable/Energy Transfer merger. For the year ended December 31, 2022, this segment also includes legacy Enable seconded employee pension and postretirement costs.
For the period of December 2, 2021 through September 30, 2022, OGE Energy accounted for its investment in Energy Transfer as an investment in equity securities and reported the Energy Transfer investment, along with legacy Enable seconded employee pension and postretirement costs, through OGE Energy's natural gas midstream operations segment.
Financial Statements and Supplementary Data." Pension and Postretirement Plan Assumptions OGE Energy has a Pension Plan that covers certain employees, including OG&E's employees, hired before December 1, 2009. Effective December 1, 2009, OGE Energy's Pension Plan is no longer being offered to employees hired on or after December 1, 2009.
Effective December 1, 2009, OGE Energy's Pension Plan is no longer being offered to employees hired on or after December 1, 2009. OGE Energy also has defined benefit postretirement plans that cover certain employees, including OG&E's employees hired prior to February 1, 2020.
Liquidity and Capital Resources Cash Flows OGE Energy Year Ended December 31 (In millions) 2022 2021 $ Change % Change Net cash provided from (used in) operating activities (A) $ 843.1 $ (313.3 ) $ 1,156.4 * Net cash provided from (used in) investing activities (B) $ 12.9 $ (749.1 ) $ 762.0 * Net cash (used in) provided from financing activities (C) $ (767.9 ) $ 1,061.3 $ (1,829.2 ) * * Change is greater than 100 percent.
Liquidity and Capital Resources Cash Flows OGE Energy Year Ended December 31 (In millions) 2023 2022 $ Change % Change Net cash provided from operating activities (A) $ 1,232.3 $ 952.4 $ 279.9 29.4 Net cash used in investing activities (B) $ (1,272.1 ) $ (96.4 ) $ (1,175.7 ) * Net cash used in financing activities (C) $ (48.1 ) $ (767.9 ) $ 719.8 93.7 * Change is greater than 100 percent.
OG&E has reduced carbon dioxide emissions by over 40 percent compared to 2005 levels, and during the same period, emissions of ozone-forming NO x have been reduced by approximately 80 percent and emissions of SO 2 have been reduced by approximately 90 percent. OG&E expects to further reduce carbon dioxide emissions to 50 percent of 2005 levels by 2030.
With respect to its direct emissions, compared to 2005 levels, OG&E has reduced carbon dioxide emissions by over 60 percent, emissions of ozone-forming NO X have been reduced by approximately 80 percent, and emissions of SO 2 have been reduced by approximately 95 percent.
OGE Energy reports these activities through two business segments: (i) electric company and (ii) natural gas midstream operations. The accounts of OGE Energy and its wholly-owned subsidiaries, including OG&E, are included in OGE Energy's consolidated financial statements. All intercompany transactions and balances are eliminated in such consolidation.
OG&E sold its retail natural gas business in 1928 and is no longer engaged in the natural gas distribution business. The accounts of OGE Energy and its wholly-owned subsidiaries, including OG&E, are included in OGE Energy's consolidated financial statements. All intercompany transactions and balances are eliminated in such consolidation.
OGE Energy utilizes short-term borrowings (through a combination of bank borrowings and commercial paper) to satisfy temporary working capital needs and as an interim source of financing capital expenditures until permanent financing is arranged. In January 2023, OG&E issued $450.0 million of Senior Notes due January 15, 2033, as further discussed within "Long-Term Debt" below.
OGE Energy utilizes short-term borrowings (through a combination of bank borrowings and commercial paper) to satisfy temporary working capital needs and as an interim source of financing capital expenditures until permanent financing is arranged.
Contingency Reserves In the normal course of business, the Registrants are confronted with issues or events that may result in a contingent liability. These generally relate to lawsuits or claims made by third parties, including governmental agencies. When appropriate, management consults with legal counsel and other experts to assess the claim.
These generally relate to lawsuits or claims made by third parties, including governmental agencies. When appropriate, management consults with legal counsel and other experts to assess the claim.
If, in management's opinion, the Registrants have incurred a probable loss as set forth by GAAP, an estimate is made of the loss, and the appropriate accounting entries are reflected in the financial statements. Asset Retirement Obligations OG&E has recorded asset retirement obligations that are being accreted over their respective lives ranging from five to 68 years.
If, in management's opinion, the Registrants have incurred a probable loss as set forth by GAAP, an estimate is made of the loss, and the appropriate accounting entries are reflected in the financial statements.
The calculation of heating and cooling degree normal days is based on a 30-year average and updated every ten years, which most recently occurred in mid-2021. 28 OG&E's net income increased $79.5 million, or 22.1 percent, in 2022 as compared to 2021.
The calculation of heating and cooling degree normal days is based on a 30-year average and updated every ten years. OG&E's net income decreased $13.1 million, or 3.0 percent, in 2023 as compared to 2022. The following section discusses the primary drivers for the decrease in net income in 2023 as compared to 2022.
During the same time, corporate bond yields, which are used in determining the discount rate for future pension obligations, decreased. Funding levels are dependent on returns on plan assets and future discount rates. OGE Energy did not make any contribution to its Pension Plan in 2022 and made a contribution of $40.0 million in 2021.
During the same time, corporate bond yields, which are used in determining the discount rate for future pension obligations, increased. Funding levels are dependent on returns on plan assets and future discount rates.
Materials and Supplies, at Average Cost increased $62.6 million, or 53.1 percent, primarily due to increased inventory which is partly a result of the ongoing supply chain and inflation impacts of the current economic environment.
Materials and Supplies, at Average Cost increased $73.8 million, or 40.9 percent, primarily due to increased inventory which is partly a result of the acquisition of stock to alleviate supply chain disruptions, fulfillment of near-term capital needs, and inflation impacts of the recent economic environment.
OGE Energy Year Ended December 31, (In millions except per share data) 2022 2021 Net income $ 665.7 $ 737.3 Basic average common shares outstanding 200.2 200.1 Diluted average common shares outstanding 200.8 200.3 Basic earnings per average common share $ 3.33 $ 3.68 Diluted earnings per average common share $ 3.32 $ 3.68 Dividends declared per common share $ 1.64820 $ 1.62500 Results by Business Segment Year Ended December 31, (In millions) 2022 2021 Net income (loss): OG&E (Electric Company) $ 439.5 $ 360.0 OGE Holdings (Natural Gas Midstream Operations) (A) 231.3 385.0 Other operations (B) (5.1 ) (7.7 ) OGE Energy net income $ 665.7 $ 737.3 (A) Net income for the year ended December 31, 2021 includes the $344.4 million gain ($264.8 million after tax) recognized for the Enable merger transaction, as further discussed in Note 1 within "Item 8.
OGE Energy Year Ended December 31, (In millions except per share data) 2023 2022 Net income $ 416.8 $ 665.7 Basic average common shares outstanding 200.3 200.2 Diluted average common shares outstanding 200.9 200.8 Basic earnings per average common share $ 2.08 $ 3.33 Diluted earnings per average common share $ 2.07 $ 3.32 Dividends declared per common share $ 1.6646 $ 1.6482 Results by Business Segment Year Ended December 31, (In millions) 2023 2022 Net income: OG&E (Electric Company) $ 426.4 $ 439.5 Other operations (A) (9.6 ) (5.1 ) OGE Holdings (Natural Gas Midstream Operations) (B) — 231.3 OGE Energy net income $ 416.8 $ 665.7 (A) Other operations primarily includes the operations of the holding company, other energy-related investments and consolidating eliminations.
(A) Changed primarily due to an increase in cash received from customers, the receipt of securitization funds from the ODFA and a decrease in vendor payments, including payments for fuel and purchased power costs related to Winter Storm Uri in 2021, partially offset by additional income tax payments primarily relating to the sale of Energy Transfer's limited partner units in 2022.
(A) Changed primarily due to decreased vendor payments driven by lower amounts due to vendors, including those for fuel and purchased power, increased fuel recoveries from customers and decreased income tax payments primarily relating to the sale of Energy Transfer's limited partner units in 2022, partially offset by the one-time receipt of securitization funds in 2022 from the Oklahoma Development Finance Authority.
The following discussion of results of operations by business segment includes intercompany transactions that are eliminated in OGE Energy's consolidated financial statements. 27 OG&E (Electric Company) Year Ended December 31 (Dollars in millions) 2022 2021 Operating revenues $ 3,375.7 $ 3,653.7 Fuel, purchased power and direct transmission expense 1,662.4 2,127.6 Other operation and maintenance 491.9 464.7 Depreciation and amortization 460.9 416.0 Taxes other than income 98.0 99.3 Operating income 662.5 546.1 Allowance for equity funds used during construction 6.9 6.7 Other net periodic benefit income (expense) 1.2 (4.3 ) Other income 6.5 7.1 Other expense 3.4 1.8 Interest expense 157.8 152.0 Income tax expense 76.4 41.8 Net income $ 439.5 $ 360.0 Operating revenues by classification: Residential $ 1,307.0 $ 1,342.1 Commercial 825.6 766.9 Industrial 322.4 328.2 Oilfield 306.7 316.8 Public authorities and street light 298.9 289.5 System sales revenues 3,060.6 3,043.5 Provision for rate refund (1.2 ) — Integrated market 163.8 468.9 Transmission 131.7 140.2 Other 20.8 1.1 Total operating revenues $ 3,375.7 $ 3,653.7 MWh sales by classification (In millions) Residential 10.4 9.6 Commercial 7.9 6.8 Industrial 4.2 4.2 Oilfield 4.4 4.2 Public authorities and street light 3.1 2.9 System sales 30.0 27.7 Integrated market 1.1 1.6 Total sales 31.1 29.3 Number of customers 888,759 879,447 Weighted-average cost of energy per kilowatt-hour (In cents) Natural gas (A) 7.032 11.907 Coal 3.253 1.935 Total fuel (A) 5.480 6.833 Total fuel and purchased power (A) 5.096 6.892 Degree days (B) Heating - Actual 3,652 3,281 Heating - Normal 3,568 3,452 Cooling - Actual 2,385 1,896 Cooling - Normal 1,893 1,912 (A) Decreased primarily due to both elevated pricing from Winter Storm Uri and higher market prices related to increased natural gas prices in 2021.
OG&E (Electric Company) Year Ended December 31 (Dollars in millions) 2023 2022 Operating revenues $ 2,674.3 $ 3,375.7 Fuel, purchased power and direct transmission expense 911.7 1,662.4 Other operation and maintenance 505.0 491.9 Depreciation and amortization 506.6 460.9 Taxes other than income 99.4 98.0 Operating income 651.6 662.5 Allowance for equity funds used during construction 19.4 6.9 Other net periodic benefit income 6.5 1.2 Other income 23.9 6.5 Other expense 6.3 3.4 Interest expense 199.9 157.8 Income tax expense 68.8 76.4 Net income $ 426.4 $ 439.5 Operating revenues by classification: Residential $ 1,040.4 $ 1,307.0 Commercial 688.4 818.3 Industrial 240.5 327.5 Oilfield 211.9 308.8 Public authorities and street light 234.9 299.0 System sales revenues 2,416.1 3,060.6 Provision for rate refund 2.0 (1.2 ) Integrated market 71.6 163.8 Transmission 143.0 131.7 Other 41.6 20.8 Total operating revenues $ 2,674.3 $ 3,375.7 MWh sales by classification (In millions) Residential 9.6 10.4 Commercial 8.5 7.8 Industrial 4.2 4.3 Oilfield 4.4 4.4 Public authorities and street light 3.0 3.1 System sales 29.7 30.0 Integrated market 0.8 1.1 Total sales 30.5 31.1 Number of customers 896,102 888,759 Weighted-average cost of energy per kilowatt-hour (In cents) Natural gas 2.976 7.032 Coal 3.385 3.253 Total fuel 2.926 5.480 Total fuel and purchased power 2.837 5.096 Degree days (A) Heating - Actual 3,092 3,652 Heating - Normal 3,568 3,568 Cooling - Actual 2,215 2,385 Cooling - Normal 1,893 1,893 (A) Degree days are calculated as follows: The high and low degrees of a particular day are added together and then averaged.
If such species are located in an area in which OG&E conducts operations, or if additional species in those areas become subject to protection, OG&E's operations and development projects, particularly transmission, wind or pipeline projects, could be restricted or delayed, or OG&E could be required to implement expensive mitigation measures. 38 On November 9, 2021, the USFWS published a proposed rule to list the Alligator Snapping Turtle as threatened under the Endangered Species Act, along with a 4(d) rule that would provide conservation of the species.
If such species are located in an area in which OG&E conducts operations, or if additional species in those areas become subject to protection, OG&E's operations and development projects, particularly transmission, wind or solar projects, could be restricted or delayed, or OG&E could be required to implement expensive mitigation measures.
The decrease in net income of $71.6 million, or $0.36 per diluted share, in 2022 as compared to 2021 is further discussed below. • An increase in net income at OG&E of $79.5 million, or $0.39 per diluted share of OGE Energy's common stock, was primarily due to higher operating revenues driven by more favorable weather and revenues from the recovery of capital investments (excluding impacts of recoverable fuel, purchased power and direct transmission expense not impacting earnings), partially offset by higher depreciation and amortization expense due to an increase in depreciation rates resulting from the Oklahoma general rate review order received in September 2022 and additional assets being placed into service, as well as higher income taxes and higher other operation and maintenance expense. • A decrease in net loss of other operations (holding company) of $2.6 million, or $0.01 per diluted share of OGE Energy's common stock, was primarily due to higher other income, partially offset by an increase in net interest expense due to the long-term debt issuance in May 2021. • A decrease in net income at OGE Holdings (Natural Gas Midstream Operations) of $153.7 million, or $0.76 per diluted share of OGE Energy's common stock, was primarily due to a prior year $344.4 million pre-tax gain on the Enable/Energy Transfer merger and the elimination of OGE Energy's equity in earnings of Enable in 2022, which were driven by the merger closing in December 2021, partially offset by a $282.1 million pre-tax gain on OGE Energy's investment in Energy Transfer's equity securities in 2022, distributions received from Energy Transfer of $34.0 million and lower income tax expense.
The decrease in net income of $248.9 million, or $1.25 per diluted share, in 2023 as compared to 2022 is further discussed below. • A decrease in net income at OG&E of $13.1 million, or $0.07 per diluted share of OGE Energy's common stock, was primarily due to higher depreciation and amortization expense as a result of additional assets being placed into service, higher interest expense related to two senior note issuances in January and April of 2023 and higher other operation and maintenance expense, partially offset by higher operating revenues (excluding the impact of recoverable fuel, purchased power and direct transmission expense not impacting earnings) driven by the recovery of capital investments, which offset the impact of milder weather compared to 2022, higher net other income and lower income tax expense. • An increase in net loss of other operations (holding company) of $4.5 million, or $0.02 per diluted share of OGE Energy's common stock, was primarily due to higher interest expense driven by increased short-term debt outstanding, partially offset by a higher income tax benefit. • OGE Holdings' net income of $231.3 million, or $1.16 per diluted share of OGE Energy's common stock in 2022 included a $282.1 million pre-tax gain on OGE Energy's investment in Energy Transfer limited partner units.
(B) Changed primarily due to proceeds from the sale of Energy Transfer's limited partner units, partially offset by increased investment in power delivery projects at OG&E.
(B) Changed primarily due to proceeds received in 2022 from the sale of Energy Transfer's limited partner units and increased investments in technology.
Electric Company Operations . OGE Energy's electric company operations are conducted through OG&E, which generates, transmits, distributes and sells electric energy in Oklahoma and western Arkansas. OG&E's rates are subject to regulation by the OCC, the APSC and the FERC. OG&E was incorporated in 1902 under the laws of the Oklahoma Territory and is a wholly-owned subsidiary of OGE Energy.
OG&E's rates are subject to regulation by the OCC, the APSC and the FERC. OG&E was incorporated in 1902 under the laws of the Oklahoma Territory and is the largest electric company in Oklahoma, with a franchised service territory that includes Fort Smith, Arkansas and the surrounding communities.
(B) Decreased primarily due to higher market prices in 2021 during Winter Storm Uri. Other operation and maintenance expense increased $27.2 million, or 5.9 percent, primarily driven by the below factors.
(B) Decreased primarily due to lower market prices for fuel during 2023. (C) Increased partially due to new capacity agreements during 2023. Other operation and maintenance expense increased $13.1 million, or 2.7 percent, primarily driven by the below factors.
(In millions) $ Change % Change Fuel expense (A) $ (369.6 ) (33.2 )% Purchased power costs: Purchases from SPP (B) (94.2 ) (10.8 )% Wind 2.2 3.9 % Other (0.3 ) (2.8 )% Transmission expense (3.3 ) (4.3 )% Change in fuel, purchased power and direct transmission expense $ (465.2 ) (A) Decreased primarily due to inflated fuel costs in 2021 during Winter Storm Uri.
(In millions) $ Change Fuel expense (A) $ (355.1 ) Purchased power costs: Purchases from SPP (B) (389.6 ) Wind (9.2 ) Other (C) 13.0 Transmission expense (9.8 ) Change in fuel, purchased power and direct transmission expense $ (750.7 ) (A) Decreased primarily due to lower fuel costs related to the generating assets utilized during 2023.
Common Stock OGE Energy does not expect to issue any common stock in 2023 from its Automatic Dividend Reinvestment and Stock Purchase Plan. See Note 8 within "Item 8. Financial Statements and Supplementary Data" for a discussion of OGE Energy's common stock activity.
Common Stock OGE Energy expects to issue between $15 million to $25 million of common stock from its Automatic Dividend Reinvestment and Stock Purchase Plan in 2024. See Note 8 within "Item 8.
Financial Statements and Supplementary Data." (In millions) 2023 2024 2025 2026 2027 Total Total contractual obligations $ 1,174.4 $ 167.0 $ 259.0 $ 102.0 $ 290.1 $ 1,992.5 Amounts recoverable through fuel adjustment clause (A) (168.8 ) (149.5 ) (123.8 ) (81.9 ) (82.3 ) (606.3 ) Total contractual obligations, net $ 1,005.6 $ 17.5 $ 135.2 $ 20.1 $ 207.8 $ 1,386.2 (A) Includes expected recoveries of costs incurred for OG&E's railcar operating lease obligations, OG&E's minimum fuel purchase commitments and OG&E's expected wind purchase commitments.
Financial Statements and Supplementary Data." (In millions) 2024 2025 2026 2027 2028 Total Total contractual obligations $ 352.4 $ 477.7 $ 225.1 $ 350.0 $ 611.1 $ 2,016.3 Amounts recoverable through fuel adjustment clause and other regulatory mechanisms (A) (208.1 ) (190.9 ) (167.2 ) (156.1 ) (105.0 ) (827.3 ) Total contractual obligations, net $ 144.3 $ 286.8 $ 57.9 $ 193.9 $ 506.1 $ 1,189.0 (A) Includes expected recoveries of costs incurred for OG&E's railcar operating lease obligations, OG&E's minimum fuel purchase commitments, OG&E's expected wind purchase commitments and OG&E's capacity agreements.
OG&E has the necessary regulatory approvals to incur up to $1.0 billion in short-term borrowings at any one time for a two-year period beginning January 1, 2023 and ending December 31, 2024. 33 Long-Term Debt In May 2022, OGE Energy entered into a $100.0 million floating rate unsecured three-year credit agreement, of which $50.0 million is considered a revolving loan and $50.0 million is considered a term loan, and borrowed the full $50.0 million term loan, in order to preserve general financial flexibility within the company.
OG&E has the necessary regulatory approvals to incur up to $1.0 billion in short-term borrowings at any one time for a two-year period beginning January 1, 2023 and ending December 31, 2024.
The primary drivers of the changes in fuel, purchased power and direct transmission expense during the period are further detailed in the table below. (B) Increased primarily due to the loss from the Guaranteed Flat Bill program in 2021 related to Winter Storm Uri.
The primary drivers of the changes in fuel, purchased power and direct transmission expense during the period are further detailed in the table below. (B) Decreased primarily due to a 15.3 percent decrease in heating degree days and a 7.1 percent decrease in cooling degree days.
Fuel Clause Under Recoveries increased $363.0 million, primarily due to lower recoveries from OG&E retail customers as compared to the actual cost of fuel and purchased power. OG&E has implemented updated fuel factors to address recovery of the fuel under recovery balance, as further discussed in Note 14 within "Item 8.
Fuel Clause Recoveries moved from an under recovery position of $514.9 million as of December 31, 2022 to an over recovery position of $20.5 million as of December 31, 2023, primarily due to higher recoveries from OG&E retail customers as compared to the actual cost of fuel and purchased power driven by updated fuel factors implemented in early 2023 to address the existing fuel under recovery balance.
In management's opinion, the areas where the most significant judgment is exercised include the determination of pension and postretirement plan assumptions, income taxes, contingency reserves, asset retirement obligations, regulatory assets and liabilities, unbilled revenues and the allowance for uncollectible accounts receivable.
In management's opinion, the areas where the most significant judgment is exercised include the determination of pension and postretirement plan assumptions, income taxes, contingency reserves, and regulatory assets and liabilities. The selection, application and disclosure of the following critical accounting estimates have been discussed with the Audit Committee of OGE Energy's Board of Directors.
As a result of OGE Energy's sales of all Energy Transfer limited partner units in 2022, OGE Energy will not report earnings, and therefore guidance, for a natural gas midstream operations segment beginning in 2023.
As of the end of September 2022, OGE Energy sold all of its Energy Transfer limited partner units. Therefore, beginning in 2023, OGE Energy no longer has a natural gas operations reporting segment.
At this time, it is not anticipated that any associated liability will cause a significant impact to OG&E. For further discussion regarding contingencies relating to environmental laws and regulations, see Note 13 within "Item 8. Financial Statements and Supplementary Data."
At this time, it is not anticipated that any associated liability will cause a significant impact to OG&E.
Prior to OGE Energy's sale of all Energy Transfer limited partner units, the investment in Energy Transfer's equity securities was held through wholly-owned subsidiaries and ultimately OGE Holdings. OGE Energy no longer has any ownership interest in natural gas midstream operations.
Prior to OGE Energy's sale of all Energy Transfer limited partner units, the investment in Energy Transfer's equity securities was held through wholly-owned subsidiaries and ultimately OGE Holdings. Recent Developments Global Macroeconomic Pressures Geopolitical events and related governmental and business responses continue to have an impact on the Registrants' operations, supply chains and end-user customers.
In addition to increasing overall system reliability, these new transmission resources should provide greater access to additional wind resources that are currently constrained due to existing transmission delivery limitations. Endangered Species Certain federal laws, including the Bald and Golden Eagle Protection Act, the Migratory Bird Treaty Act and the Endangered Species Act, provide special protection to certain designated species.
Endangered Species Certain federal laws, including the Bald and Golden Eagle Protection Act, the Migratory Bird Treaty Act and the Endangered Species Act, provide special protection to certain designated species.
On January 31, 2023, the EPA disapproved the SIPs of 19 states, including Oklahoma. In response to litigation, on April 6, 2022, the EPA also published a proposed FIP related to the "Good Neighbor" requirements intended to reduce interstate NO x emissions contributions.
Circuit is unknown, and OG&E is evaluating the effects of the transfer of venue. In a separate but related matter, on April 6, 2022, the EPA also published a proposed FIP related to the "Good Neighbor" requirements intended to reduce interstate NO X emissions contributions. OG&E filed comments to the proposed FIP with the EPA on June 21, 2022.
The selection, application and disclosure of the following critical accounting estimates have been discussed with the Audit Committee of OGE Energy's Board of Directors. The Registrants discuss their significant accounting policies, including those that do not require management to make difficult, subjective or complex judgments or estimates, in Note 1 within "Item 8.
The Registrants discuss their significant accounting policies, including those that do not require management to make difficult, subjective or complex judgments or estimates, in Note 1 within "Item 8. Financial Statements and Supplementary Data." Pension and Postretirement Plan Assumptions OGE Energy has a Pension Plan that covers certain employees, including OG&E's employees, hired before December 1, 2009.
The following discussion addresses changes in OGE Energy's working capital balances at December 31, 2022 compared to December 31, 2021. 30 Cash and Cash Equivalents increased $88.1 million, primarily due to proceeds received from OGE Energy's sales of Energy Transfer limited partner units and OG&E's receipt of securitization funds from the ODFA, which OGE Energy intends to utilize to help fund the repayment of the senior notes due in May 2023.
The following discussion addresses changes in OGE Energy's working capital balances at December 31, 2023 compared to December 31, 2022. 36 Cash and Cash Equivalents decreased $87.9 million, or 99.8 percent, primarily due to the use of cash that had been held at December 31, 2022 to help fund the repayment of $1.0 billion in senior notes that matured in May 2023.
Income tax expense increased $34.6 million, or 82.8 percent, reflecting additional income taxes primarily related to higher pretax income and decreased federal and state tax credit generation, partially offset by higher amortization of net unfunded deferred taxes. OGE Holdings (Natural Gas Midstream Operations) On December 2, 2021, Energy Transfer completed its previously announced acquisition of Enable.
Income tax expense decreased $7.6 million, or 9.9 percent, primarily related to lower pre-tax income and additional amortization of net unfunded deferred taxes, partially offset by decreased state tax credit generation.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeYear Ended December 31 (Dollars in millions) 2023 2024 2025 2026 2027 Thereafter Total 12/31/22 Fair Value OGE Energy (holding company) fixed-rate debt (A): Principal amount $ 500.0 $ — $ — $ — $ — $ — $ 500.0 $ 491.2 Weighted-average interest rate 0.703 % — % — % — % — % — % 0.703 % OGE Energy (holding company) variable-rate debt (A): Principal amount $ — $ — $ 50.0 $ — $ — $ — $ 50.0 $ 50.0 Weighted-average interest rate — % — % 5.375 % — % — % — % 5.375 % OG&E fixed-rate debt (A): Principal amount $ 500.0 $ — $ — $ — $ 125.0 $ 3,269.3 $ 3,894.3 $ 3,484.4 Weighted-average interest rate 0.553 % — % — % — % 6.650 % 4.400 % 3.980 % OG&E variable-rate debt (B): Principal amount $ — $ — $ 79.4 $ — $ 56.0 $ — $ 135.4 $ 135.4 Weighted-average interest rate — % — % 3.830 % — % 3.850 % — % 3.840 % (A) Prior to or when these debt obligations mature, the Registrants may refinance all or a portion of such debt at then-existing market interest rates which may be more or less than the interest rates on the maturing debt.
Biggest changeYear Ended December 31 (Dollars in millions) 2024 2025 2026 2027 2028 Thereafter Total 12/31/23 Fair Value OGE Energy (holding company) variable-rate debt (A): Principal amount $ — $ 50.0 $ — $ — $ — $ — $ 50.0 $ 50.0 Weighted-average interest rate — % 6.340 % — % — % — % — % 6.340 % OG&E fixed-rate debt (A): Principal amount $ — $ — $ — $ 125.0 $ 500.0 $ 3,569.2 $ 4,194.2 $ 3,929.4 Weighted-average interest rate — % — % — % 6.650 % 4.340 % 4.660 % 4.680 % OG&E variable-rate debt (B): Principal amount $ — $ 79.4 $ — $ 56.0 $ — $ — $ 135.4 $ 135.4 Weighted-average interest rate — % 4.030 % — % 4.050 % — % — % 4.040 % (A) Prior to or when these debt obligations mature, the Registrants may refinance all or a portion of such debt at then-existing market interest rates which may be more or less than the interest rates on the maturing debt.
(B) A hypothetical change of 100 basis points in the underlying variable interest rate incurred by OG&E would change interest expense by $1.4 million annually. 41
(B) A hypothetical change of 100 basis points in the underlying variable interest rate incurred by OG&E would change interest expense by $1.4 million annually. 47
In 2022, this committee and the Registrants' management applied a holistic perspective of risk assessment and application of its strategies and policies to manage the Registrants' overall financial performance.
In 2023, this committee and the Registrants' management applied a holistic perspective of risk assessment and application of its strategies and policies to manage the Registrants' overall financial performance.
These policies are designed to provide the Audit Committee of OGE Energy's Board of Directors and senior executives of the Registrants with confidence that the risks taken on by the Registrants' business activities are in accordance with their expectations for financial returns and that the approved policies and controls related to market risk management are being followed.
These policies are designed to provide the Audit Committee of OGE Energy's Board of Directors and senior executives of the Registrants with confidence that the risks taken on by the Registrants' business activities are in accordance with their expectations for financial returns and that the approved policies and controls related to market risk management are being followed. 46 Interest Rate Risk The Registrants' exposure to changes in interest rates primarily relates to variable-rate debt and commercial paper.
Interest Rate Risk The Registrants' exposure to changes in interest rates primarily relates to variable-rate debt and commercial paper. The Registrants manage their interest rate exposure by monitoring and limiting the effects of market changes in interest rates. The Registrants may utilize interest rate derivatives to alter interest rate exposure in an attempt to reduce the effects of these changes.
The Registrants manage their interest rate exposure by monitoring and limiting the effects of market changes in interest rates. The Registrants may utilize interest rate derivatives to alter interest rate exposure in an attempt to reduce the effects of these changes.
Interest rate derivatives would be used solely to modify interest rate exposure and not to modify the overall leverage of the debt portfolio, but the Registrants have no intent at this time to utilize interest rate derivatives. 40 The fair value of the Registrants' long-term debt is based on quoted market prices and estimates of current rates available for similar issues with similar maturities or by calculating the net present value of the monthly payments discounted by the Registrants' current borrowing rate.
The fair value of the Registrants' long-term debt is based on quoted market prices and estimates of current rates available for similar issues with similar maturities or by calculating the net present value of the monthly payments discounted by the Registrants' current borrowing rate.
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Interest rate derivatives would be used solely to modify interest rate exposure and not to modify the overall leverage of the debt portfolio, but the Registrants have no intent at this time to utilize interest rate derivatives.

Other OGE 10-K year-over-year comparisons