Good day, and thank you for standing by. Welcome to the Q4 2022 OGE Energy Corp. Earnings Conference Call. [Operator Instructions]. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Jason Bailey, Director of Investor Relations. Please go ahead.

Thank you, Rizko, and good morning, everyone, and welcome to OGE Energy Corp.'s Fourth Quarter 2022 Earnings Call. With me today, I have Sean Trauschke, our Chairman, President and CEO; and Bryan Buckler, our CFO. In terms of the call today, we will first hear from Sean, followed by an explanation from Bryan of financial results. And finally, as always, we will answer your questions. I'd like to remind you that this conference is being webcast and you may follow along at oge.com. In addition, the conference call and accompanying slides will be archived following the call on that same website. Before we begin the presentation, I'd like to direct your attention to the safe harbor statement regarding forward-looking statements. This is an SEC requirement for financial statements and simply states that we cannot guarantee forward-looking financial results, but this is our best estimate to date. I will now turn the call over to Sean for his opening remarks. Sean?

Thank you, Jason. Good morning, everyone. Thank you for being with us this morning. Before we get started on our financial results, I want to take some time to highlight our team who safely delivers reliable, resilient, secure energy at low rates to our customers every day. Once again, in 2022, our team delivered results for our customers, our communities and our shareholders, even as continued economic and inflationary pressure impacted all of us. I have confidence in our team and the company to deliver a great future for all of our stakeholders. We are pleased with the financial plan that we are presenting to you this morning and proud to extend our long-term earnings guidance another year into 2027, without the need for any additional equity. Let me be clear, the plan we've put together for 2023 is exactly in line with the commitment we made to you to consistently deliver 5% to 7% earnings per share growth at the electric company based off 2021's original midpoint. Bryan will discuss more in a moment, but my message to you is this. We've certainly got this, and our sustainable business model provides numerous opportunities from driving load growth to grid investments in generation for many years to come. We are mindful of ensuring a smooth customer impact and delivering consistent growth. Turning to 2022's financial results. This morning, we reported consolidated earnings of $3.32 per share for the year, including $2.19 per share for OG&E, a holding company loss of $0.03 per share and earnings from natural gas midstream operations of $1.16. Now this will be the last time we report results from natural gas midstream operations as we have fully exited that business. We are pleased with how that investment has helped transform our company. Over the years, we've…

Thank you, Sean. Thank you, Jason, and good morning, everyone. Let's start on Slide 7 and discuss full year 2022 results. On a consolidated basis, net income was $666 million or $3.32 per diluted share compared to $737 million or $3.68 per share in 2021. The electric company achieved net income of $440 million or $2.19 per diluted share compared to $360 million or $1.80 per share in 2021. The increase in electric company net income in 2022 was primarily due to increased recoveries of capital investments as well as higher sales volumes, primarily driven by strong economic growth and a 26% increase in cooling degree days. These favorable drivers were partially offset by expected higher O&M and increased depreciation on a growing asset base. With respect to our natural gas midstream operations segment, we reported net income of $231 million or $1.16 per diluted share compared to net income of $385 million or $1.92 per share in 2021. The decrease in net income was primarily due to the prior year's gain on the Enable merger transaction in 2021 and the subsequent elimination of equity and earnings of Enable, partially offset by gains on the sale of energy transfer equity securities in 2022. As we discussed during the third quarter earnings call, we have completed the exit of the natural gas midstream segment, simplifying our story and enabling our investors to have a more clear line of sight into our core business, the regulated electric company. Other operations, including our holding company, reported a loss of $5 million or $0.03 per diluted share compared to a loss of $8 million or $0.04 per share in 2021. The decrease in net loss was primarily due to higher other income, partially offset by an increase in interest expense. Please see the appendix…

[Operator Instructions]. Our first question comes from the line of Paul Zimbardo of Bank of America.

Nice to see the update. First question was, could you please walk through some of the changes in the CapEx plan just within the categories? I noticed other moved up in the near term, transmission moderated a little bit in the later period of the plan. If you could just walk through some of those changes. That would be helpful.

Yes. Bryan, you want to tackle that one?

Sure. Paul, we do have a ERP system we're implementing in '23 and '24. That was part of our regulatory filing in the last rate case where were granted deferral treatment on O&M rated to that project. So that's what you see in the other categories, so a lot of our IT projects falling there. As those investments are completed at the end of 2024, you can see that we then turned back to the transmission and distribution investment plan for some of those critical projects. So we're looking at that kind of steady $950 million investment plan per year over the 5-year period. And then Sean mentioned some of the other investment opportunities that we have coming as well.

Okay. No, that's helpful. Then another -- I know you talked a lot about the data mining load and conservative keeping it basically flat from December 2022. I know that the margin profile there can be a little dynamic. So could you help unpack like what a sensitivity is on that or even just what the contribution was in 2022 in terms of earnings?

Yes. Sure, Paul. I'll take that 1 as well. And in 2022, just to give you a feel for the total impact of the data mining load, it's a little under 0.5% of our margins in 2022. And you're right, it's a customer class that has a much lower margin profile. They do have load reduction requirements where we're able to take the load down on peak days of load. And so they have a discount in their bill for that. And some of the newer projects also receive some economic incentives. So that is lower margin. We try to give you a feel for the potential impact of the crypto load on our 2023 load forecast. You can see, even without that load, we're still expecting overall growth to be at least 2.5% to 3.5%. So really strong load and that incremental to take you to 4.5 -- sorry, 4% to 5%, rather, has a very minor impact to our EPS in 2023.

Okay. Great. That's helpful. And then last quick if I can. Just I know very strong weather in 2022. And you talked about expected O&M increase is just the normal factors for 2022. Did you use any of that favorability to pull forward some spending into 2022, perhaps out of 2023?

Yes, sure. I mean, just in normal course of managing the business, we pulled some stuff in early and took care of that late in the year.

[Operator Instructions]. Our next question comes from the line of Aditya Gandhi of Wolfe Research.

Sean, Bryan and Jason. Can you hear me?

Yes, we can.

So you reaffirmed your 5% to 7% utility EPS growth target through 2027. With midstream now gone, how should we think about consolidated earnings over the forecast period? And I guess more specifically, what I'm asking is how should we think about the parent drag beyond 2023. Could you give any color on how much parent debt needs to be raised in the outer years?

Yes. So -- we'll take this maybe in 2 parts. I'll address the consolidated and then maybe, Bryan, you can tackle the holding company. So we want to be very clear. One of the messages we heard a lot, it wasn't about our company, but we heard a lot when we're out on the road about a lot of discussion around rebasing and changing growth rates and changing start points and all that. We want to be very clear that we're maintaining the same starting point, and we actually rolled forward the growth rate an additional year. And on top of that, we said we do not require any equity. And so I just -- I wanted to make sure that there was absolutely no confusion around that. And I hope it's coming through that we are very bullish on the growth prospects that we have here and absolutely confident in our ability to execute on those. So that was going on there. My belief or my expectation is, I do believe we will consolidate all of this and provide a consolidated growth rate at some point. But I want to be very clear with regards to the utility business and the growth prospects we have there. So with that, Bryan, do you want to -- maybe talk what's going on at the holding company?

Yes, absolutely. And so maybe just to help you model, Aditya. So we've given you the utility guidance this year and 4 to 5-year plan. Our holding company numbers in the area of $0.04 of expected drag here in 2023. As Sean mentioned, we really are bullish on the utility going forward. You've seen us deliver a little bit above the 6% growth rate midpoint for the last couple of years and have great optimism going forward. For a holding company, you should expect the debt levels to grow in 2024, 2025 as the utility reinvests in its business. So think of the $0.04 this year, maybe that goes up roughly in the neighborhood of $0.05 next year, so in that kind of $0.09 area in 2024. We'll firm all this up over time. And as Sean mentioned, give you consolidated CAGR at a future date. But hopefully, that's enough for you to model for now. And again, really strong optimism at the utility level with some of this level of holding company drag.

Got it. That's helpful. I just wanted to confirm one, Bryan, did you say it goes up another $0.05 in '24, so sort of like a $0.09 drag in 2024. Is that what you said?

Yes, that's a really rough early estimate, but that's something to get you going for your modeling.

Okay. Got it. And just 1 last question on the -- I have 1 more question, but just before that, 1 last question on the parent drag in '23. Is that because of higher interest rates? Or I don't believe you have much parent debt really except the Uri debt. Where exactly is that coming from?

Yes. So you should think of our holding company debt being in the neighborhood of $300 million as the dust settles here at the end of 2023 and kind of growing roughly in that area each year thereafter. And you're right, interest rates are a lot higher than what we were thinking they would be a year ago. But I think you know how the holding company would price on the interest rate front. But if you need some additional help modeling that, Jason can help you after the call.

Okay. Got it. Super helpful. And just last question. Could you maybe give us a quick update on the kind of the bids that have come into your RFPs? And maybe just some color on the approval filing that you will make. When exactly will we get a sense of the investment opportunity? And when will that be baked into your CapEx plan?

I'm smiling here because I think we're all interested in closing the book on this one for sure. So just remember, we have 3 different RFPs. And each one of them, we are following to the tee all of the commission rules and procedures and time lines and notifications and all that. We've completed all that. We are negotiating the agreements right now. And so once we conclude the negotiations of the agreement, we will file with the commission for approval. I expect that to be very shortly, but we're negotiating those. When we file that, we'll submit that in both states. Once we get the approval, we will layer that into our plans going forward. And we'll see how all that plays out. But we are in the middle of negotiating those agreements and the amount and the timing are negotiable items. And so we're working through that right now. Does that help?

Super helpful.

[Operator Instructions]. Our next question comes from the line of Brandon Lee of Mizuho.

Just a quick question for me. So in your 5% to 7% targeted utility EPS growth rate, I guess, is there a bias towards the midpoint, the upper end to the lower end? And I guess, what gets you to the high end and the low end as you go -- move on through the years.

Yes. Brandon, this is Sean. I don't think we have a particular bias. We're just going to -- we have a commitment to hit it. And I think, obviously, from year-to-year, if we see some surprises there in terms of load growth, a little higher, it could be higher. Weather certainly plays a role in that. But I kind of envision this that we're committed to hitting the number and probably the variable you should be thinking about is more around weather.

Okay. Great. All my other questions have been answered.

At this time, I would like to turn the call back over to Sean Trauschke for closing remarks.

Thank you, Rizko. Well, thank you all for your interest in OGE Energy Corp. I appreciate your engagement. And please have a great day, and we are adjourned.

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