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What changed in OGE ENERGY CORP.'s 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of OGE ENERGY CORP.'s 2023 and 2024 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 2024 report.

+201 added−205 removedSource: 10-K (2025-02-19) vs 10-K (2024-02-21)

Top changes in OGE ENERGY CORP.'s 2024 10-K

201 paragraphs added · 205 removed · 147 edited across 6 sections

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

48 edited+9 added−6 removed103 unchanged
Biggest changeFor these reasons, a significant cyber incident could reduce future net income and cash flows and impact financial condition. The failure of our technology infrastructure, or the failure to enhance existing technology infrastructure and implement new technology, could adversely affect our business.
Biggest changeHowever, damage and claims arising from such incidents may exceed the amount of any insurance available, certain insurance may be unavailable to us, and other damage and claims arising from such incidents may not be covered at all. For these reasons, a significant cyber incident could reduce future net income and cash flows and impact financial condition.
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.
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 control equipment and otherwise increase costs.
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.
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 21 lead to increased bad debt. If such circumstances occur, we expect that commercial and industrial customers would be impacted first, with residential customers following.
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.
A significant 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.
Properties," it could potentially result in stranded assets. In addition, we may be required to make significant expenditures in connection with the investigation and remediation of alleged or actual spills, personal injury or property damage claims, and the repair, upgrade or expansion of our facilities to meet future requirements and obligations under environmental laws.
Properties," it could potentially result in stranded assets. 16 In addition, we may be required to make significant expenditures in connection with the investigation and remediation of alleged or actual spills, personal injury or property damage claims, and the repair, upgrade or expansion of our facilities to meet future requirements and obligations under environmental laws.
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.
State regulatory commissions generally possess broad powers to ensure that the needs of the utility customers 15 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.
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.
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. 22 Our technology infrastructure is critical to cost-effective, reliable daily operations and our ability to effectively serve our customers.
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.
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. 20 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 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.
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 18 or service under certain circumstances, such as in the event of a natural disaster.
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.
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.
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.
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. Recent 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.
The occurrence of any of these events, if not fully covered by insurance or if insurance is not available, could have a material effect on our financial position and results of operations.
The occurrence of any of these events, if not fully covered by insurance or if insurance is not available to us, could have a material effect on our financial position and results of operations.
The change to SOFR or transition to other alternative rates, whether in connection with borrowings under the current credit facilities, or borrowings under replacement facilities or lines of credit, could expose the Registrants' future borrowings to less favorable rates.
The use of SOFR or transition to other alternative rates, whether in connection with borrowings under the current credit facilities, or borrowings under replacement facilities or lines of credit, could expose the Registrants' future borrowings to less favorable rates.
As discussed above, the Infrastructure Investment and Jobs Act and Inflation Reduction Act present opportunities for federal grants and tax incentives intended to hasten the future economy-wide deployment of various greenhouse gas emission reducing technologies and approaches.
The Infrastructure Investment and Jobs Act and Inflation Reduction Act present opportunities for federal grants and tax incentives intended to hasten the future economy-wide deployment of various greenhouse gas emission reducing technologies and approaches.
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.
Over the next three years, 26.2 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.
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.
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.
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.
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.
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.
At December 31, 2024, OGE Energy and OG&E had outstanding indebtedness and other liabilities of $9.1 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.
Our operations have been and are affected by local, national and worldwide economic conditions. National and global events could adversely affect and/or exacerbate macroeconomic conditions, including inflationary pressures, rising interest rates, supply chain disruptions and economic recessions, which in turn affect our operations and our customers.
Our operations have been and are affected by local, national and worldwide economic conditions. National and global events could adversely affect and/or exacerbate macroeconomic conditions, including inflationary pressures, interest rate fluctuations, supply chain disruptions, potential tariffs and economic recessions, which in turn affect our operations and our customers.
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.
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.
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.
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. 17 This could adversely affect the Registrants' financial position and results of 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.
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.
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.
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.
In OG&E's service area, demand for power peaks during the hot summer months, with market prices also typically peaking at that time. As a result, overall operating results may fluctuate on a seasonal and quarterly basis. In addition, we have historically sold less power, and consequently received less revenue, when weather conditions are milder.
Weather conditions directly influence the demand for electric power. In OG&E's service area, demand for power peaks during the hot summer months, with market prices also typically peaking at that time. As a result, overall operating results may fluctuate on a seasonal and quarterly basis.
In the ordinary course of business, we rely on technology infrastructure, including the internet and third-party hosted services, to support a variety of business processes and activities and to store sensitive data.
Any significant failure or malfunction of such technology infrastructure may result in disruptions of our operations. In the ordinary course of business, we rely on technology infrastructure, including the internet and third-party hosted services, to support a variety of business processes and activities and to store sensitive data.
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.
These measures aim to ensure reliable service and rapid recovery during severe weather events. 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, either due to increased investments or restoration costs, it could have a material adverse effect on our financial performance.
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.
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.
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.
If the use of SOFR, or other alternative rates, results in increased alternative interest rates or if the Registrants' lenders have increased costs due to such 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.
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.
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.
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.
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 U.S. is a party to the United Nations' "Paris Agreement" on climate change, and the Agreement, along with other potential legislation and regulation discussed above, could result in enforceable greenhouse gas emission reduction requirements that could lead to increased compliance costs for OGE Energy and its affiliates.
Potential legislation and regulation as discussed above, could result in enforceable greenhouse gas emission reduction requirements that could lead to increased compliance costs for OGE Energy and its affiliates.
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.
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. 19 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.
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.
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.
The effect of the failure of our facilities to operate as planned, as described above, would be particularly burdensome during a peak demand period.
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.
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.
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.
We maintain property, casualty and cybersecurity insurance that may cover certain resultant cyber and physical damage or third-party injuries caused by potential cyber events. However, damage and claims arising from such incidents may exceed the amount of any insurance available and other damage and claims arising from such incidents may not be covered at all.
We maintain property, casualty and cybersecurity insurance that may cover certain resultant cyber and physical damage or third-party injuries caused by potential cyber events.
The impact of any future downgrade could include an increase in the costs of our short-term borrowings, but a reduction in our credit ratings would not result in any defaults or accelerations. Any future downgrade could also lead to higher long-term borrowing costs and, if below investment grade, would require us to post collateral or letters of credit.
Pricing grids associated with our credit facilities could cause annual fees and borrowing rates to increase if an adverse rating impact occurs. 23 The impact of any future downgrade could include an increase in the costs of our short-term borrowings, but a reduction in our credit ratings would not result in any defaults or accelerations.
Unusually mild weather in the future could reduce our revenues, net income, available cash and borrowing ability.
In addition, we have historically sold less power, and consequently received less revenue, when weather conditions are milder. Unusually mild weather in the future could reduce our revenues, net income, available cash and borrowing ability.
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.
Physical risks from climate change 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.
OG&E may be unable to recover these costs from insurance or other regulatory mechanisms. The Biden Administration has suggested that it will enact stricter laws, regulations and enforcement policies that could significantly increase compliance costs and the cost of any remediation that may become necessary. If regulations are enacted regarding any of our generating units, as listed in "Item 2.
OG&E may be unable to recover these costs from insurance or other regulatory mechanisms, or certain insurance may be unavailable to us. If regulations are enacted regarding any of our generating units, as listed in "Item 2.
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.
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.
Our operations are dependent upon the proper functioning of our internal systems, including the technology and network infrastructure that support our underlying business processes. Any significant failure or malfunction of such technology infrastructure may result in disruptions of our operations.
The failure of our technology infrastructure, or the failure to enhance existing technology infrastructure and implement new technology, including potential generative artificial intelligence, could adversely affect our business. Our operations are dependent upon the proper functioning of our internal systems, including the technology and network infrastructure that support our underlying business processes.
Our ability to access the commercial paper market could be adversely impacted by a credit ratings downgrade or major market disruptions. Pricing grids associated with our credit facilities could cause annual fees and borrowing rates to increase if an adverse rating impact occurs.
Our ability to access the commercial paper market could be adversely impacted by a credit ratings downgrade or major market disruptions.
Management'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.
For further discussion, see "Environmental Laws and Regulations" within "Item 7. Management'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 litigation or any final action by the EPA.
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.
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, however, under the Trump Administration, the status of additional funding under these Acts is unclear at this time.
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.
For example, in May 2024, the EPA finalized rules to reduce emissions of greenhouse gases from fossil fuel-fired electric generating units under Clean Air Act Section 111 for both new units and existing units. However, as detailed further below, these power plant-specific rules are currently under judicial review and could ultimately be upheld, modified, or overturned.
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.
Rules from the EPA to reduce emissions of greenhouse gases from fossil fuel-fired electric generating units under the Clean Air Act Section 111 were finalized in 2024, but the rules still might change before implementation. For example, as detailed further below, power plant-specific rules are currently under judicial review and could ultimately be upheld, modified, or overturned.
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, legislation reflecting a focus on reducing greenhouse gas emissions may potentially be introduced in Congress.
Removed
No rules are currently in effect that require us to reduce our greenhouse gas emissions, but laws and regulations to which we must adhere change, and the Biden Administration's agenda includes a significant shift in environmental and energy policy, focusing on reducing greenhouse gas emissions and addressing climate change issues.
Added
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. The intermittency of renewables remains a critical challenge particularly as cost-efficient energy storage is still in development.
Removed
These laws present opportunities for federal grants and tax incentives intended to hasten the future economy-wide deployment of various greenhouse gas emission reducing technologies and approaches. These initiatives could lead to new and revised energy and environmental laws and regulations, including tax reforms relating to energy and environmental issues.
Added
We expect to typically be responsible for any project costs not covered by grants on further investments related to this Act. OG&E currently provides service at rates approved by one or more regulatory commissions.
Removed
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.
Added
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.
Removed
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.
Added
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.
Removed
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.
Added
We have observed some of these events in recent years, and the trend could continue. OG&E is committed to strengthening and securing our energy grid and infrastructure against extreme weather by upgrading physical infrastructure, deploying advanced monitoring technologies and devices, and enhancing emergency preparedness and response plans.
Removed
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.
Added
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
Any future downgrade could also lead to higher long-term borrowing costs and, if below investment grade, would require us to post collateral or letters of credit. Beginning December 2022, the Registrants began utilizing SOFR for their credit facility reference rate.
Added
SOFR is a relatively new reference rate and we have been using it for only a relatively short period of time and, accordingly, we do not have much historical rate information.
Added
Our debt levels may limit our flexibility in obtaining additional financing and in pursuing other business opportunities. We have revolving credit agreements for working capital, capital expenditures, acquisitions and other corporate purposes.

Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeThe Registrants have third-party vendor risk management processes to oversee and identify risks from cybersecurity threats associated with their use of third-party service providers. Enterprise Security works cross-functionally across the companies to review new vendors and their proposed solutions as they are engaged by the Registrants.
Biggest changeEnterprise Security works cross-functionally across the companies to review new vendors and their proposed solutions as they are engaged by the Registrants. The Enterprise Security team’s monitoring and assessment of third-party cybersecurity practices is continuous and ongoing throughout the Registrants’ relationship with the third party.
Although prior incidents have not materially affected the Registrants, any future incidents related to the Registrants' 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 materially adverse impact on the Registrants, and affect their business strategy, results of operations or its financial condition.
Although prior incidents have not materially affected the Registrants , any future incidents related to the Registrants' 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, 25 could have a materially adverse impact on the Registrants, and affect their business strategy, results of operations or its financial condition.
As part of these plans, incidents are evaluated, classified and elevated, as necessary, to an executive team which includes the Vice President of Technology, Data and Security and other executives on the Registrants’ Corporate Risk Oversight Committee. Once elevated, these executives are ultimately responsible for the management, mitigation and remediation of incidents. 26
As part of these plans, incidents are evaluated, classified and elevated, as necessary, to an executive team which includes the Vice President of Technology, Data and Security and other executives on the Registrants’ Corporate Risk Oversight Committee. Once elevated, these executives are ultimately responsible for the management, mitigation and remediation of incidents.
The Registrants utilize a risk-based, comprehensive, systematic and layered approach to cybersecurity risk, which helps them to continually assess, identify and manage enterprise-wide material cybersecurity risks. The Registrants have a comprehensive cybersecurity threat detection and monitoring program for their technology and network infrastructure, which leverages various systems, processes and operational measures to monitor, detect and respond to cyber incidents.
The Registrants have a comprehensive cybersecurity threat detection and monitoring program for their technology and network infrastructure, which leverages various systems, processes and operational measures to monitor, detect and respond to cyber incidents.
The Enterprise Security team also utilizes multiple sources of threat intelligence 25 information from real time feeds that come from government, industry and private sources to help stay abreast of emerging threats that could impact the Registrants.
The Enterprise Security team also utilizes multiple sources of threat intelligence information from real time feeds that come from government, industry and private sources to help stay abreast of emerging threats that could impact the Registrants. The Registrants have third-party vendor risk management processes to oversee and identify risks from cybersecurity threats associated with their use of third-party service providers.
None of these attempts has individually or in aggregate resulted in a security incident with a material impact on the Registrants financial condition or results of operations.
The Registrants and their 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 the Registrants financial condition or results of operations.
The Enterprise Security team’s monitoring and assessment of third-party cybersecurity practices is continuous and ongoing throughout the Registrants’ relationship with the third party. Based on this process, the Enterprise Security team may require specific security controls on the third-party application, system, hardware or software being deployed.
Based on this process, the Enterprise Security team may require specific security controls on the third-party application, system, hardware or software being deployed. Enterprise Security monitors vendors for disclosed vulnerabilities and change in scores from external risk scoring agencies.
Removed
Enterprise Security monitors vendors for disclosed vulnerabilities and change in scores from external risk scoring agencies. The Registrants and their 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.
Added
The Registrants utilize a risk-based, comprehensive, systematic and layered approach to cybersecurity risk, which helps them to continually assess, identify and manage enterprise-wide material cybersecurity risks. This comprehensive approach to protecting the Registrants’ assets, employees, and data - including customer information - utilizes a defense-in-depth approach, which enables the Registrants to continually evaluate enterprise-wide cyber and physical security risks.
Added
The Registrants’ defense-in-depth methodology is based on leading cybersecurity frameworks, including: • U.S. Department of Energy’s Cybersecurity Capability Maturity Model standard, • National Institute of Standards and Technology Cybersecurity Framework, and, particularly for the bulk electric system, • North American Electric Reliability Corporation’s Critical Infrastructure Protection Standards.
Added
In addition, the Registrants’ cybersecurity team regularly coordinates with industry peers, the Edison Electric Institute, and state and federal agencies to improve threat intelligence, situational awareness, and security practices.

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeStation & 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)).
Biggest changeUnless otherwise indicated, these electric generating facilities are located in Oklahoma. 26 Station & Unit Year Installed Unit Design Type Fuel Capability 2024 Capacity Factor (A) Unit Capability (MW) Station Capability (MW) Seminole 1 1971 Steam-Turbine Gas 9.0 % 500 2 1973 Steam-Turbine Gas 15.8 % 513 3 1975 Steam-Turbine Gas 28.8 % 508 1,521 Muskogee 4 1977 Steam-Turbine Gas 23.0 % 498 5 1978 Steam-Turbine Gas 37.7 % 491 6 1984 Steam-Turbine Coal 11.2 % 521 1,510 Sooner 1 1979 Steam-Turbine Coal 18.8 % 519 2 1980 Steam-Turbine Coal 20.0 % 519 1,038 Horseshoe Lake 5A (B) 1971 Combustion-Turbine Gas/Jet Fuel 6.0 % 33 5B (B) 1971 Combustion-Turbine Gas/Jet Fuel 3.9 % 31 8 1969 Steam-Turbine Gas 14.3 % 377 9 2000 Combustion-Turbine Gas 26.8 % 45 10 2000 Combustion-Turbine Gas 9.2 % 46 532 Redbud (C) 1 2003 Combined Cycle Gas 45.2 % 156 2 2003 Combined Cycle Gas 41.2 % 154 3 2003 Combined Cycle Gas 40.6 % 154 4 2003 Combined Cycle Gas 48.5 % 155 619 Mustang 6 2018 Combustion-Turbine Gas — 57 7 2018 Combustion-Turbine Gas 0.2 % 56 8 2017 Combustion-Turbine Gas 17.3 % 58 9 2018 Combustion-Turbine Gas 21.6 % 57 10 2018 Combustion-Turbine Gas 30.6 % 55 11 2018 Combustion-Turbine Gas 30.7 % 58 12 2018 Combustion-Turbine Gas — 57 398 McClain (D) 1 2001 Combined Cycle Gas 42.9 % 375 375 Frontier 1 1989 Combined Cycle Gas 66.4 % 126 126 River Valley 1 1991 Steam-Turbine Coal/Gas 22.1 % 161 2 1991 Steam-Turbine Coal/Gas 22.6 % 160 321 Total Generating Capability (all stations, excluding renewable) 6,440 (A) 2024 Capacity Factor = 2024 Net Actual Generation / (2024 Net Maximum Capacity (Nameplate Rating in MWs) x Period Hours (8,784 Hours)).
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.
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, 2024.
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.
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 17.6 percent of gross property, plant and equipment (excluding construction work in progress) for both Registrants at December 31, 2024.
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)).
Renewable 2024 Station Year Installed Location Number of Units Fuel Capability Capacity Factor (A) Unit Capability (MW) Station Capability (MW) Crossroads 2011 Canton, OK 98 Wind 15.9 % 2.30 228 Centennial 2007 Laverne, OK 80 Wind 16.1 % 1.50 120 OU Spirit 2009 Woodward, OK 44 Wind 15.3 % 2.30 101 Mustang 2015 Oklahoma City, OK 90 Solar 21.0 % 2 Covington 2018 Covington, OK 4 Solar 20.2 % 2.5 10 Choctaw Nation 2020 Durant, OK 2 Solar 21.2 % 2.5 5 Chickasaw Nation 2020 Davis, OK 2 Solar 23.9 % 2.5 5 Branch 2021 Branch, AR 2 Solar 22.6 % 2.5 5 Durant 2 2022 Durant, OK 2 Solar 24.0 % 2.5 5 Total Generating Capability (renewable) 481 (A) 2024 Capacity Factor = 2024 Net Actual Generation / (2024 Net Maximum Capacity (Nameplate Rating in MWs) x Period Hours (8,784 Hours)).
(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.
(D) Represents OG&E's 77 percent ownership interest in the McClain Plant. 27 In 2024, OG&E retired Unit 7 located at the Horseshoe Lake station.
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.
Item 2. Properties. OG&E owns and operates an interconnected electric generation, transmission and distribution system, located in Oklahoma and western Arkansas, which included 18 generating stations with an aggregate capability of 6,921 MWs at December 31, 2024. The following table presents information with respect to OG&E's electric generating facilities.
Oklahoma 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.
Oklahoma Arkansas Transmission system: Substations 55 7 Total capacity (million kV-amps) 15.3 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 29,727 2,810 Miles of underground conduit 3,391 290 Miles of underground conductors 11,863 761 During the three years ended December 31, 2024, both Registrants' gross property, plant and equipment (excluding construction work in progress) additions were $2.9 billion, and gross retirements were $521.6 million.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeThe 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
Biggest changeThe 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.
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.
The graph assumes that the value of the investment in OGE Energy's common stock and each index was $100 as of December 31, 2019, and that all dividends were reinvested.
Item 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.
Item 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, 2024, there were 11,091 holders of record of OGE Energy's common stock.

Item 7. Management's Discussion & Analysis

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

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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.
Biggest changeOGE Energy is projected to earn approximately $447 million to $471 million, or $2.21 to $2.33 per average diluted share, with a midpoint of $459 million, or $2.27 per average diluted share in 2025 and is based off the following assumptions: • OGE Energy forecasts earnings for OG&E of $491 million, or $2.43 per average diluted share; • OGE Energy forecasts a loss of $32 million for other operations (primarily the holding company), or a loss of $0.16 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; • total retail load growth of approximately 7.5 percent to 9.5 percent; • operating expenses of approximately $1.205 billion to $1.217 billion, with operation and maintenance expenses comprising approximately 44 percent of the total; • net interest expense of approximately $281 million to $284 million which assumes a $15 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; • other income of approximately $16 million including $18 million of allowance for equity funds used during construction; • an effective consolidated tax rate of approximately 16.5 percent; and • approximately 202.1 million average diluted shares outstanding.
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.
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.
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.
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 39 and disclosure of the following critical accounting estimates have been discussed with the Audit Committee of OGE Energy's Board of Directors.
Likewise, certain actual or anticipated credits that would otherwise reduce expense can be deferred as regulatory liabilities, based on the expected flowback to customers in future rates. Management's expected recovery of deferred costs and flowback of deferred credits generally results from specific decisions by regulators granting such ratemaking treatment.
Likewise, certain actual or anticipated credits that would otherwise reduce expense 40 can be deferred as regulatory liabilities, based on the expected flowback to customers in future rates. Management's expected recovery of deferred costs and flowback of deferred credits generally results from specific decisions by regulators granting such ratemaking treatment.
Management continues to evaluate its compliance with existing and proposed environmental legislation and regulations and implement appropriate environmental programs in a competitive market. Air OG&E's operations are subject to the Federal Clean Air Act of 1970, as amended, and comparable state laws and regulations.
Management continues to evaluate its compliance with existing and proposed environmental legislation and regulations and implement appropriate environmental programs in a competitive market. 41 Air OG&E's operations are subject to the Federal Clean Air Act of 1970, as amended, and comparable state laws and regulations.
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.
Change Impact on Funded Status Actual plan asset returns +/- 1 percent +/- $2.5 million Discount rate +/- 0.25 percent +/- $5.2 million Contributions +/- $10 million +/- $10.0 million Income Taxes The Registrants use the asset and liability method of accounting for income taxes.
OG&E is also planning to deploy more renewable energy sources that do not emit greenhouse gases. OG&E has leveraged its geographic position to develop renewable energy resources and completed transmission investments to deliver the renewable energy.
OG&E is also planning to deploy more renewable energy sources that do not emit greenhouse gases. OG&E has leveraged its geographic position to develop and access renewable energy resources and completed transmission investments to deliver the renewable energy.
Due to the uncertainty relating to the disapproval of the SIP and implementation of the FIP, OG&E cannot determine 43 the cost to comply with certainty, as such costs are dependent upon the timing and outcome of the litigation discussed above, the particular control strategies ultimately selected for each unit, the terms and timing of regulatory approvals required from the OCC and the time period necessary to complete the projects.
Due to the uncertainty relating to the disapproval of the SIP and implementation of the FIP, OG&E cannot determine the cost to comply with certainty, as such costs are dependent upon the timing and outcome of the litigation discussed above, the particular control strategies ultimately selected for each unit, the terms and timing of regulatory approvals required from the OCC and APSC and the time period necessary to complete the projects.
OG&E expects that it would seek recovery of any necessary environmental expenditures to handle state and federally mandated environmental upgrades, but there is no guarantee that all of such expenditures will be approved for recovery or will be approved for recovery on a timely basis.
OG&E expects that it would seek recovery of any necessary environmental expenditures to address state and federally mandated environmental upgrades, but there is no guarantee that all of such expenditures will be approved for recovery or will be approved for recovery on a timely basis.
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.
A more detailed discussion regarding the financial performance for the year ended December 31, 2024 as compared to December 31, 2023 can be found under "Results of Operations" below. A discussion of the financial performance for the year ended December 31, 2023 compared to December 31, 2022 for OGE Energy and OG&E can be found within "Item 7.
On January 31, 2023, the EPA disapproved the SIPs of 21 states, including Oklahoma. On March 2, 2023, the Oklahoma Attorney General and the ODEQ jointly filed a Petition for Review of the SIP disapproval in the Tenth Circuit. On March 16, 2023, OG&E filed a Petition for Review of the SIP disapproval in the Tenth Circuit.
On January 31, 2023, the EPA disapproved the SIPs of 19 states, including Oklahoma. On March 2, 2023, the Oklahoma Attorney General and the ODEQ jointly filed a Petition for Review of the SIP disapproval in the Tenth Circuit. On March 16, 2023, OG&E filed a Petition for Review of the SIP disapproval in the Tenth Circuit.
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.
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 33 one heating degree day. The daily calculations are then totaled for the particular reporting period.
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.
In 2024, OG&E obtained refunds of $2.5 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.
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.
Based on estimates from the American Coal Ash Association, OG&E fly ash reuse helped avoid over approximately 4 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 the status of OGE Energy's Pension Plan, the Restoration of Retirement Income Plan and the postretirement benefit plans at December 31, 2023 and 2022.
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, 2024 and 2023.
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.
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 $120.0 million floating rate unsecured three-year credit agreement, of which $60.0 million is considered a revolving loan.
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.
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, 2024, 22.6 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.
However, OG&E preliminarily estimates that the cost of compliance with the FIP as issued could be approximately $2.7 billion in total, including $100 million to $300 million over the 12- to 18-month period following effectiveness of the FIP.
However, OG&E preliminarily estimates that the cost of compliance with the FIP as issued could be approximately $2.4 billion to $2.8 billion in total, including $100 million to $300 million over the 12- to 18-month 42 period following effectiveness of the FIP.
We believe our cash flows from operations, existing borrowing capacity, and access to debt and equity capital markets as needed, should be sufficient to satisfy our material cash requirements over the short-term and long-term. 37 Capital Expenditures The following table presents OGE Energy's estimates of capital expenditures for the years 2024 through 2028.
We believe our cash flows from operations, existing borrowing capacity, and access to debt and equity capital markets as needed, should be sufficient to satisfy our material cash requirements over the short-term and long-term. Capital Expenditures The following table presents OGE Energy's estimates of capital expenditures for the years 2025 through 2029.
The following table presents information about OGE Energy's revolving credit agreements as of December 31, 2023.
The following table presents information about OGE Energy's revolving credit agreements as of December 31, 2024.
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.
During 2024, approximately 95 percent of the ash from OG&E's River Valley, Muskogee and Sooner facilities was recovered and reused off-site 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.
(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.
(Dollars in millions) December 31, 2024 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 $ 690.3 Balance of cash and cash equivalents $ 0.6 The following table presents information about OGE Energy's total short-term debt activity for the year ended December 31, 2024.
Working Capital Working capital is defined as the difference in current assets and current liabilities. OGE Energy's working capital requirements are driven generally by changes in accounts receivable, accounts payable, commodity prices, credit extended to and the timing of collections from OG&E's customers, the level and timing of spending for maintenance and expansion activity, inventory levels and fuel recoveries.
OGE Energy's working capital requirements are driven generally by changes in accounts receivable, accounts payable, commodity prices, credit extended to and the timing of collections from OG&E's customers, the level and timing of spending for maintenance and expansion activity, inventory levels and fuel recoveries.
(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.
(In millions) $ Change Fuel, purchased power and direct transmission expense (A) $ 164.7 Price variance (B) 104.3 Non-residential demand and related revenues (C) 28.1 New customer growth 22.0 Wholesale transmission revenue 8.5 Other (0.1 ) Quantity impacts (includes weather) (1.6 ) Industrial and oilfield sales (3.2 ) Guaranteed Flat Bill program (D) (11.7 ) Change in operating revenues $ 311.0 (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.
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.
Treasury notes and bonds and mutual funds, as presented in Note 11 within "Item 8. Financial Statements and Supplementary Data." During 2024, the actual return on the Pension Plan was $11.8 million, compared to an expected return on plan assets of $16.5 million.
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.
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.
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.
In 2024, the Board of Directors reviewed a recommendation from management of an increase in the quarterly dividend to $0.42125 per share from $0.41820 per share and subsequently approved the recommendation to become effective with the dividend payment in October 2024.
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.
With respect to its calendar year 2024 direct emissions, compared to 2005 levels, OG&E has reduced CO 2 emissions by approximately 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.
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.
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 increased $164.7 million, or 18.1 percent, primarily driven by the below factors.
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.
The final rule establishes technology- and performance-based standards that may apply to discharges of six waste streams including bottom ash transport water. In April 2017, the EPA granted a Petition for Reconsideration of the 2015 Rule. On April 25, 2024, the EPA released the final supplemental effluent limitations guidelines rule.
(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.
(Dollars in millions) Year Ended December 31, 2024 Average balance of short-term debt $ 444.8 Weighted-average interest rate of average balance of short-term debt 5.52 % Maximum month-end balance of short-term debt $ 755.7 OG&E must obtain regulatory approval from the FERC in order to borrow on a short-term basis.
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.
Management's Discussion and Analysis of Financial Condition and Results of Operations" of the Registrants' 2023 Form 10-K . 31 202 5 Outlook Key assumptions for the 2025 outlook are discussed below.
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 expects to contribute $10.0 million to the Pension Plan in 2025, of which $5.0 million was contributed in January 2025. 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.
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.
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.
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.
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 increased $43.5 million, or 10.2 percent, in 2024 as compared to 2023. The following section discusses the primary drivers for the increase in net income in 2024 as compared to 2023.
(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.
(In millions) $ Change Fuel expense (A) $ (1.6 ) Purchased power costs: Purchases from SPP (B) 119.1 Capacity (C) 29.2 Wind 5.4 Other 9.6 Transmission expense 3.0 Change in fuel, purchased power and direct transmission expense $ 164.7 (A) Decreased primarily due to lower fuel costs related to the generating assets utilized during 2024.
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.
OG&E (Electric Company) Year Ended December 31 (Dollars in millions) 2024 2023 Operating revenues $ 2,985.3 $ 2,674.3 Fuel, purchased power and direct transmission expense 1,076.4 911.7 Other operation and maintenance 514.1 505.0 Depreciation and amortization 539.5 506.6 Taxes other than income 109.7 99.4 Operating income 745.6 651.6 Allowance for equity funds used during construction 25.5 19.4 Other net periodic benefit income (expense) (1.6 ) 6.5 Other income 12.5 23.9 Other expense 4.5 6.3 Interest expense 214.4 199.9 Income tax expense 93.2 68.8 Net income $ 469.9 $ 426.4 Operating revenues by classification: Residential $ 1,148.5 $ 1,040.4 Commercial 839.1 688.4 Industrial 254.1 240.5 Oilfield 227.7 211.9 Public authorities and street light 262.0 234.9 System sales revenues 2,731.4 2,416.1 Provision for rate refund and tax refund (3.0 ) 2.0 Integrated market 74.5 71.6 Transmission 152.9 143.0 Other 29.5 41.6 Total operating revenues $ 2,985.3 $ 2,674.3 MWh sales by classification (In millions) Residential 9.8 9.6 Commercial 10.5 8.5 Industrial 4.2 4.2 Oilfield 4.4 4.4 Public authorities and street light 3.1 3.0 System sales 32.0 29.7 Integrated market 0.8 0.8 Total sales 32.8 30.5 Number of customers 906,952 896,102 Weighted-average cost of energy per kilowatt-hour (In cents) Natural gas 2.640 2.976 Coal 3.083 3.385 Total fuel 2.637 2.926 Total fuel and purchased power 3.139 2.837 Degree days (A) Heating - Actual 2,791 3,092 Heating - Normal 3,568 3,568 Cooling - Actual 2,313 2,215 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 solar projects, could be restricted or delayed, or OG&E could be required to implement expensive mitigation measures.
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. 44 In September 2022, the USFWS published a proposal to list the Tricolored Bat as endangered under the Endangered Species Act.
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.
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 2025. See Note 8 within "Item 8. Financial Statements and Supplementary Data" for a discussion of OGE Energy's common stock activity.
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.
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. Short-Term Debt and Credit Facilities OGE Energy borrows on a short-term basis, as necessary, by issuance of commercial paper and borrowings under its revolving credit agreements.
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.
Liquidity and Capital Resources Cash Flows OGE Energy Year Ended December 31 (In millions) 2024 2023 $ Change % Change Net cash provided from operating activities (A) $ 812.8 $ 1,232.3 $ (419.5 ) (34.0) Net cash used in investing activities (B) $ (1,161.2 ) $ (1,272.1 ) $ 110.9 (8.7) Net cash provided from (used in) financing activities (C) $ 348.8 $ (48.1 ) $ 396.9 * * Change is greater than 100 percent.
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.
The amounts in Accumulated Other Comprehensive Loss and those recorded as a regulatory asset represent a net periodic benefit cost to be recognized in the statements of income in future periods. 37 Pension Plan Restoration of Retirement Income Plan Postretirement Benefit Plans December 31 (In millions) 2024 2023 2024 2023 2024 2023 Benefit obligations $ 303.1 $ 303.7 $ 7.0 $ 5.5 $ 98.1 $ 103.3 Fair value of plan assets 246.9 243.7 — — 30.0 32.7 Funded status at end of year $ (56.2 ) $ (60.0 ) $ (7.0 ) $ (5.5 ) $ (68.1 ) $ (70.6 ) 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.
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.
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. OGE Energy made a contribution to its Pension Plan of $10.0 million in 2024 and did not make a contribution to its Pension Plan in 2023.
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.
Critical Accounting Policies and Estimates The financial statements and notes thereto contain information that is pertinent to management's discussion and analysis.
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.
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, 2025 and ending December 31, 2026. Long-Term Debt On May 9, 2024, OGE Energy issued $350.0 million of 5.45 percent senior notes due May 15, 2029.
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.
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.
OG&E expects to submit its final 2024 IRP to the OCC and APSC in the first quarter of 2024, which will evaluate various potential compliance options related to the EPA's Good Neighbor FIP.
OG&E submitted its final 2024 IRP to the OCC and APSC on March 29, 2024. The IRP evaluates various potential compliance options related to the EPA's Good Neighbor FIP.
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.
A coalition of 22 state governors separately requested the EPA to pause implementation of the final rule. 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.
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.
Financial Statements and Supplementary Data." (In millions) 2025 2026 2027 2028 2029 Total Total contractual obligations $ 443.2 $ 261.6 $ 436.9 $ 629.4 $ 478.7 $ 2,249.8 Amounts recoverable through fuel adjustment clause and other regulatory mechanisms (A) (230.4 ) (181.0 ) (175.2 ) (123.3 ) (122.5 ) (832.4 ) Total contractual obligations, net $ 212.8 $ 80.6 $ 261.7 $ 506.1 $ 356.2 $ 1,417.4 (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.
On June 6, 2023, OG&E, together with the Oklahoma Attorney General, the ODEQ, Tulsa Cement LLC and Western Farmers Electric Cooperative, jointly filed a motion with the Tenth Circuit requesting a stay of the EPA’s disapproval of the Oklahoma SIP. On July 27, 2023, the Tenth Circuit granted a stay of the EPA's disapproval of the Oklahoma SIP.
On June 6, 2023, OG&E, together with the Oklahoma Attorney General and other parties, jointly filed a motion with the Tenth Circuit requesting a stay of the EPA’s disapproval of the Oklahoma SIP; the stay was granted on July 27, 2023. On February 27, 2024, the Tenth Circuit issued a decision to transfer venue to the U.S.
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.
OGE Energy Year Ended December 31, (In millions except per share data) 2024 2023 Net income $ 441.5 $ 416.8 Basic average common shares outstanding 200.8 200.3 Diluted average common shares outstanding 201.3 200.9 Basic earnings per average common share $ 2.20 $ 2.08 Diluted earnings per average common share $ 2.19 $ 2.07 Dividends declared per common share $ 1.6789 $ 1.6646 Results by Business Segment Year Ended December 31, (In millions) 2024 2023 Net income: OG&E (Electric Company) $ 469.9 $ 426.4 Other operations (28.4 ) (9.6 ) OGE Energy net income $ 441.5 $ 416.8 32 The following discussion of results of operations for OG&E includes intercompany transactions that are eliminated in OGE Energy's consolidated financial statements.
The ODEQ submitted a revised SIP to the EPA on August 12, 2022. It is unknown at this time what the outcome, or any potential material impacts, if any, will be from the evaluations by OG&E, the ODEQ and the EPA.
It is unknown at this time what the outcome, or any potential material impacts, if any, will be from the evaluations by OG&E, the ODEQ and the EPA. Mercury and Air Toxics Standards On April 25, 2024, the EPA released the final revised Mercury and Air Toxics Standards regulation with a compliance date in May 2027.
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.
According to the proposal, the current known range of the Tricolored Bat extends to 36 states, including Oklahoma and Arkansas. A listing decision was expected by September 2024, however, to date no listing decision has been issued.
The following information should be read in conjunction with the financial statements and notes thereto. Known trends and contingencies of a material nature are discussed to the extent considered relevant.
Known trends and contingencies of a material nature are discussed to the extent considered relevant.
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.
The primary drivers of the changes in fuel, purchased power and direct transmission expense during the period are further detailed in the table below.
Long-Term Debt Due Within One Year decreased $999.9 million, due to the repayment of the $1.0 billion in senior notes that matured in May 2023. 2023 Capital Requirements, Sources of Financing and Financing Activities In 2023, OGE Energy's primary sources of capital were cash generated from operations and the proceeds from the issuance of long- and short-term debt.
Long-Term Debt Due Within One Year increased $32.4 million, due to the reclassification of the Muskogee industrial authority bonds which matured in January 2025. 2024 Capital Requirements, Sources of Financing and Financing Activities In 2024, OGE Energy's primary sources of capital were cash generated from operations and the proceeds from the issuance of long- and short-term debt.
(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.
(B) Increased primarily due to new rates effective July 1, 2024 resulting from the Oklahoma general rate review interim order received in November 2024 and increased recovery through rider mechanisms, such as the Storm Cost Recovery Rider. (C) Increased primarily due to initiating new customer service that includes a demand component.
OG&E’s preliminary analysis indicates that Oklahoma’s state budget for 2026 will be reduced by 34.5 percent from 2023 levels and that for 2027 it will be reduced by 50 percent from 2021 levels.
OG&E’s analysis indicates that Oklahoma’s state budget for 2026 will be reduced by 34.5 percent from 2023 levels and that for 2027 it will be reduced by 50 percent from 2021 levels. In October 2023, several state and industry petitioners filed emergency applications for a stay of the EPA’s Good Neighbor FIP in the U.S. Supreme Court.
(In millions) 2024 2025 (A) 2026 (A) 2027 (A) 2028 (A) Total Transmission economic expansion & reliability $ 145 $ 180 $ 195 $ 225 $ 240 $ 985 Oklahoma distribution economic expansion & reliability 400 520 665 705 725 3,015 Arkansas distribution economic expansion & reliability 20 25 25 25 25 120 Generation reliability 140 150 155 160 165 770 Generation capacity projects 165 160 35 — — 360 Technology, fleet & facilities 230 115 125 135 145 750 Total $ 1,100 $ 1,150 $ 1,200 $ 1,250 $ 1,300 $ 6,000 (A) OG&E expects to continually evaluate the capital prioritization for transmission, distribution, technology, and generation investments based on the evolving capacity, reliability, and economic growth needs of the electrical power system.
(In millions) 2025 2026 (A) 2027 (A) 2028 (A) 2029 (A) Total Transmission $ 110 $ 195 $ 225 $ 240 $ 240 $ 1,010 Oklahoma distribution 495 665 705 725 775 3,365 Arkansas distribution 25 25 25 25 25 125 Generation reliability 175 155 160 165 165 820 Generation capacity projects 210 35 — — — 245 Technology, fleet & facilities 135 125 135 145 145 685 Total $ 1,150 $ 1,200 $ 1,250 $ 1,300 $ 1,350 $ 6,250 (A) OG&E expects to continually evaluate the capital prioritization for transmission, distribution, technology, and generation investments based on the evolving capacity, reliability, and economic growth needs of the electrical power system. 36 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.
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.
The increase in net income of $24.7 million, or $0.12 per diluted share, in 2024 as compared to 2023 is further discussed below. • An increase in net income at OG&E of $43.5 million, or $0.21 per diluted share of OGE Energy's common stock, was primarily due to higher operating revenues (excluding the impact of recoverable fuel, purchased power and direct transmission expense not impacting earnings) driven primarily by load growth and recovery of capital investments, partially offset by higher depreciation and amortization expense driven by additional assets being placed into service, higher income tax expense, higher interest expense driven by borrowings under OG&E's revolving credit agreement and senior notes issuances in August 2024 and April 2023, and lower other income. • An increase in net loss of other operations (holding company) of $18.8 million, or $0.09 per diluted share of OGE Energy's common stock, was primarily due to higher interest expense driven by borrowings under OGE Energy's revolving credit agreement and OGE Energy's senior notes issuance in May 2024, as well as lower net other income.
Under the terms of the FIP, the emissions budget will decline over time based on the level of reductions that the EPA has determined is achievable through particular emissions controls.
Among other changes, the EPA finalized a revision of the current Oklahoma NO X emissions budget for electric generating units, including OG&E's units, which began in 2023. Under the terms of the FIP, the emissions budget will decline over time based on the level of reductions that the EPA has determined is achievable through particular emissions controls.
Operating revenues decreased $701.4 million, or 20.8 percent, primarily driven by the below factors.
Operating revenues increased $311.0 million, or 11.6 percent, primarily driven by the below factors.
If legislation or regulations are passed at the federal or state levels in the future requiring mandatory reductions of CO 2 and other greenhouse gases at OG&E's facilities, this could result in significant additional compliance costs that would affect OG&E's future financial position, results of operations and cash flows if such costs are not recovered through regulated rates.
If these recently promulgated rules are implemented and enforced as currently written or if legislation or regulations are passed at the federal or state levels in the future requiring mandatory reductions of CO 2 and other greenhouse gases at OG&E's facilities, this could result in significant additional compliance costs that would affect OG&E's future financial position, results of operations and cash flows if such costs are not recovered through regulated rates. 43 On May 9, 2024, the EPA published its final rule addressing emission guidelines under Section 111(d) for existing fossil fuel fired steam units, including both coal-fired and oil/gas-fired steam units, and revising performance standards under Section 111(b) for new gas turbines.
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.
Supreme Court is set to be scheduled for March 2025. The timing of a U.S. Supreme Court decision or further action at the D.C. Circuit is unknown. 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 also intends to file for approval of generation capacity investments and would expect to update its capital plan based on final orders received by state regulators. The annual level of investments in the transmission and distribution system could vary depending on the amount and timing of incremental generation capacity investments.
In May 2024, OG&E issued requests for proposals for resources to meet the capacity needs identified in its 2024 IRP and is currently reviewing the proposals submitted in the process. OG&E intends to file for approval of additional generation capacity investments and would expect to update its capital plan based on final orders received by state regulators.
The final rule lowers the primary annual PM 2.5 NAAQS from 12.0 µg/m3 to 9.0 µg/m3 and retains the other PM standards at their current levels, including the 24-hour PM 2.5 NAAQS. The EPA will determine which areas of the country meet the standards, such as making initial attainment/nonattainment designations, no later than two years after new standards are issued.
The final rule lowers the primary annual PM 2.5 NAAQS from 12.0 µg/m 3 to 9.0 µg/m 3 and retains the other PM standards at their current levels, including the 24-hour PM 2.5 NAAQS.
It is unknown what potential material impacts, if any, will be from the final action by the EPA. The EPA has indicated they anticipate finalizing the rule in April 2024.
The deadline to submit comments on the Proposed Rule is March 13, 2025. It is unknown what potential material impacts, if any, there will be from any final action by the EPA.
On June 5, 2023, the EPA published a final FIP for 23 states, including Oklahoma. The issuance of the FIP resulted from the EPA's aforementioned SIP disapprovals. Among other changes, the EPA finalized a revision of the current Oklahoma NO X emissions budget for electric generating units, including OG&E's units, which began in 2023.
OG&E filed comments to the proposed FIP with the EPA on June 21, 2022. On June 5, 2023, the EPA published a final FIP for 23 states, including Oklahoma. The issuance of the FIP resulted from the EPA's aforementioned SIP disapprovals.
At this point in time, the impacts of these actions on the Registrants' results of operations, if any, cannot be determined with any certainty. Environmental regulation can increase the cost of planning, design, initial installation and operation of OG&E's facilities.
Environmental regulation can increase the cost of planning, design, initial installation and operation of OG&E's facilities.
The proposed rule would prohibit any discharge from bottom ash transport water systems and has a compliance date of December 31, 2029. OG&E has begun installation of dry bottom ash handling technology that will comply with the rule. The final rule is expected in April 2024.
OG&E has completed installation of dry bottom ash handling technology at an affected facility and is evaluating options at another affected facility to comply with the final rule by the December 31, 2029 compliance date.
The grant funds will be used to reduce the total cost for investments in this adaptable grid project. 31 Summary of OGE Energy 2023 Operating Results Compared to 2022 OGE Energy's net income was $416.8 million, or $2.07 per diluted share, in 2023 as compared to $665.7 million, or $3.32 per diluted share, in 2022.
Financial Statements and Supplementary Data." Summary of OGE Energy 2024 Operating Results Compared to 2023 OGE Energy's net income was $441.5 million, or $2.19 per diluted share, in 2024 as compared to $416.8 million, or $2.07 per diluted share, in 2023.
Net other income increased $32.3 million, primarily due to the carrying charge for the increased fuel under recovery balance during 2023, higher allowance for equity funds used during construction and lower pension cost.
Other income decreased $11.4 million, or 47.7 percent, primarily due to the carrying charge for the higher fuel under recovery balance in 2023.
In 2024, OGE Energy expects to issue $300.0 million of long-term debt and OG&E expects to issue $300 million to $350 million in long-term debt to help fund general operating needs.
The proceeds from this issuance were added to OG&E's general funds to be used for repayment of short-term debt and borrowings under OG&E's revolving credit agreement, and to fund OG&E's capital investment program and working capital needs. In 2025, OG&E expects to issue $300 million to $350 million in long-term debt to help fund general operating needs.
(In millions) $ Change Corporate overheads and allocations $ 11.5 Payroll and benefits, net of capitalized labor 10.4 Materials and supplies (2.3 ) Other (3.1 ) Contract technical and construction services (3.4 ) Change in other operation and maintenance expense $ 13.1 35 Depreciation and amortization expense increased $45.7 million, or 9.9 percent, primarily due to an increase in depreciation rates effective as of July 1, 2022 resulting from the most recent Oklahoma general rate review order and additional assets being placed into service.
Other operation and maintenance expense increased $9.1 million, or 1.8 percent, primarily due to an increase in various costs such as software expense, contract technical and construction services, and payroll and benefits, net of capitalized labor.
Long-Term Debt In January 2023, OG&E issued $450.0 million of 5.40 percent Senior Notes due January 15, 2033, and in April 2023, OG&E issued $350.0 million of 5.60 percent Senior Notes due April 1, 2053.
The proceeds from this issuance were added to OGE Energy's general funds to be used for general corporate purposes and to repay short-term debt. 38 On August 15, 2024, OG&E issued $350.0 million of 5.60 percent senior notes due April 1, 2053, bringing the aggregate total principal amount of this series of senior notes to $700.0 million.
(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.
(A) Changed primarily due to decreased cash received from customers, including cash related to fuel recoveries, and increased interest payments from recent debt issuances, partially offset by decreased vendor payments, including payments for fuel. (B) Changed primarily due to timing of power supply and power delivery projects.
Removed
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.
Added
Recent Developments OG&E's Regulatory Matters On November 26, 2024, the OCC issued an interim order approving the settlement agreement in OG&E's most recent rate review. The settlement included a base rate revenue increase of $126.7 million, effective July 1, 2024.
Removed
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.
Added
OG&E also submitted its final 2024 IRP for Oklahoma and Arkansas in March 2024 and is currently reviewing proposals submitted in this process. These matters, as well as other regulatory matters, are discussed in Note 14 within "Item 8.

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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) 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.
Biggest changeYear Ended December 31 (Dollars in millions) 2025 2026 2027 2028 2029 Thereafter Total 12/31/24 Fair Value OGE Energy (holding company) fixed-rate debt (A): Principal amount $ — $ — $ — $ — $ 350.0 $ — $ 350.0 $ 355.7 Weighted-average interest rate — % — % — % — % 5.45 % — % 5.45 % OGE Energy (holding company) variable-rate debt (A): Principal amount $ — $ — $ 60.0 $ — $ — $ — $ 60.0 $ 60.0 Weighted-average interest rate — % — % 5.53 % — % — % — % 5.53 % OG&E fixed-rate debt (A): Principal amount $ — $ — $ 125.0 $ 500.0 $ — $ 3,921.7 $ 4,546.7 $ 4,183.9 Weighted-average interest rate — % — % 6.65 % 4.34 % — % 4.74 % 4.75 % OG&E variable-rate debt (B): Principal amount $ 32.4 $ — $ 56.0 $ — $ — $ 47.0 $ 135.4 $ 135.4 Weighted-average interest rate 3.75 % — % 3.65 % — % — % 3.65 % 3.67 % (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.
The Registrants' exposure to changes in interest rates relates primarily to variable-rate debt, commercial paper and future long-term debt issuances. The Registrants are exposed to commodity prices in their operations to the extent any fuel price changes are not recovered in customer rates. Risk Oversight Committee The Registrants manage market risks using a risk committee structure.
The Registrants' exposure to changes in interest rates relates primarily to variable-rate debt, commercial paper and future long-term debt issuances. The 45 Registrants are exposed to commodity prices in their operations to the extent any fuel price changes are not recovered in customer rates. Risk Oversight Committee The Registrants manage market risks using a risk committee structure.
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.
In 2024, 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. 46 Interest Rate Risk The Registrants' exposure to changes in interest rates primarily relates to variable-rate debt and commercial paper.
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.
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 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 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.
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. 46 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.
Removed
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.

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