UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
Commission File Number
1-12579
1-1097
☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2023
OR
☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transi on period from _____to_____
Exact name of registrants as specified in their charters, address of principal execu ve offices and
registrants' telephone number
I.R.S. Employer Iden fica on No.
OGE ENERGY CORP.
OKLAHOMA GAS AND ELECTRIC COMPANY
321 North Harvey
P.O. Box 321
Oklahoma City, Oklahoma 73101-0321
405-553-3000
73-1481638
73-0382390
State or other jurisdic on of incorpora on or organiza on: Oklahoma
Securi es registered pursuant to Sec on 12(b) of the Act:
Registrant
OGE Energy Corp.
Oklahoma Gas and Electric Company
Title of each class
Common Stock
None
Trading Symbol(s)
Name of each exchange on which registered
OGE
N/A
New York Stock Exchange
N/A
Securi es registered pursuant to Sec on 12(g) of the Act: None
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securi es Act.
OGE Energy Corp. ☑ Yes ☐ No
Oklahoma Gas and Electric Company ☑ Yes ☐ No
Indicate by check mark if the registrant is not required to file reports pursuant to Sec on 13 or 15(d) of the Act.
OGE Energy Corp. ☐ Yes ☑ No
Oklahoma Gas and Electric Company ☐ Yes ☑ No
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Sec on 13 or 15(d) of the Securi es Exchange Act of 1934 during the preceding 12 months (or for such shorter
period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
OGE Energy Corp. ☑ Yes ☐ No
Oklahoma Gas and Electric Company ☑ Yes ☐ No
Indicate by check mark whether the registrant has submi ed electronically every Interac ve Data File required to be submi ed pursuant to Rule 405 of Regula on S-T (§232.405 of this chapter) during the
preceding 12 months (or for such shorter period that the registrant was required to submit such files).
OGE Energy Corp. ☑ Yes ☐ No
Oklahoma Gas and Electric Company ☑ Yes ☐ No
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller repor ng company, or an emerging growth company. See the defini ons of
"large accelerated filer," "accelerated filer," "smaller repor ng company" and "emerging growth company" in Rule 12b-2 of the Exchange Act.
OGE Energy Corp.
Large Accelerated Filer
Oklahoma Gas and
Electric Company
Large Accelerated Filer
☑
☐
Accelerated Filer
Accelerated Filer
☐
☐
Non-accelerated Filer
☐ Smaller repor ng company ☐ Emerging growth company ☐
Non-accelerated Filer
☑ Smaller repor ng company ☐ Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transi on period for complying with any new or revised financial accoun ng standards provided
pursuant to Sec on 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant has filed a report on and a esta on to its management's assessment of the effec veness of its internal control over financial repor ng under Sec on 404(b) of
the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accoun ng firm that prepared or issued its audit report.
OGE Energy Corp. ☑
Oklahoma Gas and Electric Company ☑
If securi es are registered pursuant to Sec on 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correc on of an error to previously
issued financial statements. ☐
Indicate by check mark whether any of those error correc ons are restatements that required a recovery analysis of incen ve-based compensa on received by any of the registrant's execu ve officers
during the relevant recovery period pursuant to §240.10D-1(b). ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
OGE Energy Corp. ☐ Yes ☑ No
Oklahoma Gas and Electric Company ☐ Yes ☑ No
At June 30, 2023, the last business day of OGE Energy Corp.'s most recently completed second fiscal quarter, the aggregate market value of shares of common stock held by non-affiliates was
$7,192,319,241 based on the number of shares held by non-affiliates (200,287,364) and the reported closing market price of the common stock on the New York Stock Exchange on such date of $35.91.
At June 30, 2023, there was no vo ng or non-vo ng common equity of Oklahoma Gas and Electric Company held by non-affiliates.
At January 31, 2024, there were 200,330,340 shares of OGE Energy Corp.'s common stock, par value $0.01 per share, outstanding.
At January 31, 2024, there were 40,378,745 shares of Oklahoma Gas and Electric Company's common stock, par value $2.50 per share, outstanding, all of which were held by OGE Energy Corp. There were
no other shares of capital stock of the registrant outstanding at such date.
The Proxy Statement for OGE Energy Corp.'s 2024 annual mee ng of shareowners is incorporated by reference into Part III of this Form 10-K.
This combined Form 10-K represents separate filings by OGE Energy Corp. and Oklahoma Gas and Electric Company. Informa on contained herein related to an individual registrant is filed by such registrant
on its own behalf. Oklahoma Gas and Electric Company makes no representa ons as to the informa on rela ng to OGE Energy Corp.'s other opera ons.
Oklahoma Gas and Electric Company meets the condi ons set forth in General Instruc on I(1)(a) and (b) of Form 10-K and is therefore filing this form with the reduced disclosure format permi ed by
General Instruc on I(2).
DOCUMENTS INCORPORATED BY REFERENCE
FORM 10-K
FOR THE YEAR ENDED DECEMBER 31, 2023
TABLE OF CONTENTS
GLOSSARY OF TERMS
FORWARD-LOOKING STATEMENTS
Item 1. Business
Item 1A. Risk Factors
Item 1B. Unresolved Staff Comments
Item 1C. Cybersecurity
Item 2. Proper es
Item 3. Legal Proceedings
Item 4. Mine Safety Disclosures
Part I
Part II
Item 5. Market for Registrant's Common Equity, Related Stockholder Ma ers and Issuer Purchases of Equity Securi es
Item 6. [Reserved]
Item 7. Management's Discussion and Analysis of Financial Condi on and Results of Opera ons
Item 7A. Quan ta ve and Qualita ve Disclosures About Market Risk
Item 8. Financial Statements and Supplementary Data
Item 9. Changes in and Disagreements with Accountants on Accoun ng and Financial Disclosure
Item 9A. Controls and Procedures
Item 9B. Other Informa on
Item 9C. Disclosure Regarding Foreign Jurisdic ons that Prevent Inspec ons
Item 10. Directors, Execu ve Officers and Corporate Governance
Item 11. Execu ve Compensa on
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Ma ers
Item 13. Certain Rela onships and Related Transac ons, and Director Independence
Item 14. Principal Accountant Fees and Services
Part III
Item 15. Exhibit and Financial Statement Schedules
Item 16. Form 10-K Summary
Signatures
Part IV
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Page
3
4
6
16
25
25
27
28
29
30
30
31
46
48
107
107
110
110
111
111
111
111
112
113
119
120
The following is a glossary of frequently used abbrevia ons that are found throughout this Form 10-K.
GLOSSARY OF TERMS
Abbrevia on
2022 Form 10-K
401(k) Plan
APSC
ASC
ASU
CenterPoint
CO
2
Code
COVID-19
Dry Scrubber
Enable
Energy Transfer
EPA
Federal Clean Water Act
FERC
FIP
GAAP
IRP
kV
MRG
MW
MWh
NAAQS
NERC
NO
X
OCC
ODEQ
OG&E
OGE Energy
OGE Holdings
OSHA
Pension Plan
PM
Regional Haze
Registrants
Restora on of Re rement Income
Plan
SIP
SO
2
SOFR
SPP
System sales
U.S.
USFWS
Winter Storm Uri
Defini on
Annual Report on Form 10-K for the year ended December 31, 2022
Qualified defined contribu on re rement plan
Arkansas Public Service Commission
Financial Accoun ng Standards Board Accoun ng Standards Codifica on
Financial Accoun ng Standards Board Accoun ng Standards Update
CenterPoint Energy Resources Corp., wholly-owned subsidiary of CenterPoint Energy, Inc.
Carbon dioxide
Internal Revenue Code of 1986
Novel Coronavirus disease
Dry flue gas desulfuriza on unit with spray dryer absorber
Enable Midstream Partners, LP, partnership formed to own and operate the midstream businesses of OGE Energy and
CenterPoint (prior to December 2, 2021)
Energy Transfer LP, a Delaware limited partnership, collec vely with its subsidiaries
U.S. Environmental Protec on Agency
Federal Water Pollu on Control Act of 1972, as amended
Federal Energy Regulatory Commission
Federal Implementa on Plan
Accoun ng principles generally accepted in the U.S.
Integrated Resource Plan
Kilovolt
Member Resource Group
Megawa
Megawa -hour
Na onal Ambient Air Quality Standard
North American Electric Reliability Corpora on
Nitrogen oxide
Oklahoma Corpora on Commission
Oklahoma Department of Environmental Quality
Oklahoma Gas and Electric Company, wholly-owned subsidiary of OGE Energy
OGE Energy Corp., collec vely with its subsidiaries, holding company and parent company of OG&E
OGE Enogex Holdings LLC, wholly-owned subsidiary of OGE Energy, parent company of Enogex Holdings LLC (prior to
May 1, 2013) and 25.5 percent owner of Enable (prior to December 2, 2021)
U.S. Department of Labor's Occupa onal Safety and Health Administra on
Qualified defined benefit re rement plan
Par culate ma er
The EPA's Regional Haze Rule
OGE Energy and OG&E
Supplemental re rement plan to the Pension Plan
State Implementa on Plan
Sulfur dioxide
Secured Overnight Funding Rate
Southwest Power Pool
Sales to OG&E's customers
United States of America
United States Fish and Wildlife Service
Unprecedented, prolonged extreme cold weather event in February 2021
3
FILING FORMAT
This combined Form 10-K is separately filed by OGE Energy and OG&E. Informa on in this combined Form 10-K rela ng to each individual Registrant is
filed by such Registrant on its own behalf. OG&E makes no representa on regarding informa on rela ng to any other companies affiliated with OGE Energy.
Neither OGE Energy, nor any of OGE Energy's subsidiaries, other than OG&E, has any obliga on in respect of OG&E's debt securi es, and holders of such debt
securi es should not consider the financial resources or results of opera ons of OGE Energy nor any of OGE Energy's subsidiaries, other than OG&E (in
relevant circumstances), in making a decision with respect to OG&E's debt securi es. Similarly, none of OG&E nor any other subsidiary of OGE Energy has any
obliga on with respect to debt securi es of OGE Energy. This combined Form 10-K should be read in its en rety. No one sec on of this combined Form 10-K
deals with all aspects of the subject ma er of this combined Form 10-K.
FORWARD-LOOKING STATEMENTS
Except for the historical statements contained herein, the ma ers discussed within this Form 10-K, including those ma ers discussed within "Item 7.
Management's Discussion and Analysis of Financial Condi on and Results of Opera ons," are forward-looking statements that are subject to certain risks,
uncertain es and assump ons. Such forward-looking statements are intended to be iden fied in this document by the words "an cipate," "believe,"
"es mate," "expect," "forecast," "intend," "objec ve," "plan," "possible," "poten al," "project," "target" and similar expressions. Actual results may vary
materially from those expressed in forward-looking statements. In addi on to the specific risk factors discussed within "Item 1A. Risk Factors" and "Item 7.
Management's Discussion and Analysis of Financial Condi on and Results of Opera ons" herein, factors that could cause actual results to differ materially
from the forward-looking statements include, but are not limited to:
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
general economic condi ons, including the availability of credit, access to exis ng lines of credit, access to the commercial paper markets,
ac ons of ra ng agencies and infla on rates, and their impact on capital expenditures;
the ability of the Registrants to access the capital markets and obtain financing on favorable terms, as well as infla on rates and monetary
fluctua ons;
the ability to obtain mely and sufficient rate relief to allow for recovery of items such as capital expenditures, fuel and purchased power
costs, opera ng costs, transmission costs and deferred expenditures;
prices and availability of electricity, coal and natural gas;
compe ve factors, including the extent and ming of the entry of addi onal compe on in the markets served by the Registrants,
poten ally through deregula on;
the impact on demand for services resul ng from cost-compe ve advances in technology, such as distributed electricity genera on and
customer energy efficiency programs;
technological developments, changing markets and other factors that result in compe ve disadvantages and create the poten al for
impairment of exis ng assets;
factors affec ng u lity opera ons such as unusual weather condi ons; catastrophic weather-related damage; unscheduled genera on
outages; unusual maintenance or repairs; unan cipated changes to fossil fuel, natural gas or coal supply costs or availability due to higher
demand, shortages, transporta on problems or other developments; environmental incidents; or electric transmission or gas pipeline system
constraints;
availability and prices of raw materials and equipment for current and future construc on projects;
the effect of retroac ve pricing of transac ons in the SPP markets or adjustments in market pricing mechanisms by the SPP;
federal or state legisla on and regulatory decisions and ini a ves that affect cost and investment recovery, have an impact on rate structures
or affect the speed and degree to which compe on enters the Registrants' markets;
environmental laws, safety laws or other regula ons that may impact the cost of opera ons, restrict or change the way the Registrants'
facili es are operated or result in stranded assets;
changes in accoun ng standards, rules or guidelines;
the discon nuance of accoun ng principles for certain types of rate-regulated ac vi es;
the cost of protec ng assets against, or damage due to, terrorism or cybera acks, including losing control of our assets and poten al
ransoms, and other catastrophic events;
changes in the use, percep on or regula on of genera ve ar ficial intelligence technologies, which could limit our ability to u lize such
technology, create risk of enhanced regulatory scru ny, generate uncertainty around intellectual property ownership, licensing or use, or
which could otherwise result in risk of damage to our business, reputa on or financial results;
4
•
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•
•
•
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•
creditworthiness of suppliers, customers and other contractual par es, including large, new customers from emerging industries such as
cryptocurrency;
social a tudes regarding the u lity and power industries;
iden fica on of suitable investment opportuni es to enhance shareholder returns and achieve long-term financial objec ves through
business acquisi ons and dives tures;
increased pension and healthcare costs;
na onal and global events that could adversely affect and/or exacerbate macroeconomic condi ons, including infla onary pressures, rising
interest rates, supply chain disrup ons, economic recessions, pandemic health events and uncertainty surrounding con nued hos li es or
sustained military campaigns, and their collateral consequences;
costs and other effects of legal and administra ve proceedings, se lements, inves ga ons, claims and ma ers, including, but not limited to,
those described in this Form 10-K; and
other risk factors listed in the reports filed by the Registrants with the Securi es and Exchange Commission, including those listed within
"Item 1A. Risk Factors" herein.
The Registrants undertake no obliga on to publicly update or revise any forward-looking statements, whether as a result of new informa on, future
events or otherwise.
5
Item 1. Business.
Introduc on
PART I
OGE Energy is a holding company whose primary investment provides electricity in Oklahoma and western Arkansas. OGE Energy's electric company
opera ons are conducted through its wholly-owned subsidiary, OG&E, which generates, transmits, distributes and sells electric energy in Oklahoma and
western Arkansas and are reported through OGE Energy's electric company business segment. OG&E's rates are subject to regula on by the OCC, the APSC
and the FERC. OG&E was incorporated in 1902 under the laws of the Oklahoma Territory and is the largest electric company in Oklahoma, with a franchised
service territory that includes Fort Smith, Arkansas and the surrounding communi es. OG&E sold its retail natural gas business in 1928 and is no longer
engaged in the natural gas distribu on business.
The Registrants' principal execu ve offices are located at 321 North Harvey, P.O. Box 321, Oklahoma City, Oklahoma, 73101-0321 (telephone 405-553-
3000). OGE Energy's website address is www.oge.com. Through OGE Energy's website, OGE Energy makes available, free of charge, the Registrants' annual
reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and all amendments to those reports filed or furnished pursuant to
Sec on 13(a) or 15(d) of the Securi es Exchange Act of 1934 as soon as reasonably prac cable a er such material is electronically filed with or furnished to
the Securi es and Exchange Commission. OGE Energy's website and the informa on contained therein or connected thereto are not intended to be
incorporated into this Form 10-K and should not be considered a part of this Form 10-K. Reports filed with the Securi es and Exchange Commission are also
made available on its website at www.sec.gov.
Strategy
OGE Energy's purpose is to energize life, providing life-sustaining and life-enhancing products and services that enrich its communi es, encouraging
growth and a higher quality of life. Its business model is centered around growth and sustainability for employees (internally referred to as "members"),
communi es and customers and the owners of OGE Energy, its shareholders.
OGE Energy is focused on:
•
•
•
•
•
•
•
•
•
delivering top-quar le safety results, while enabling members to deliver improved value to their communi es, customers and shareholders;
transforming the customer experience by centering decisions on customer impact, which drives customer opera ons, communica ons,
programs, product development, and the digital experience including increased personaliza on and self-service;
providing safe, reliable energy to the communi es and customers it serves, with a par cular focus on enhancing the value of the grid by
improving reliability and resiliency;
leading economic development and job growth by a rac ng new and diverse businesses to improve the infrastructure of the communi es it
serves in Oklahoma and Arkansas;
ensuring the necessary mix of genera on resources to meet the long-term capacity needs of its customers, with a progressively modernized
genera on por olio;
maintaining customer rates that are some of the lowest rates in the country by con nuing to focus on innova on, intellectual curiosity and
execu on with excellence;
delivering on earnings commitments to shareholders to enhance access to lower-cost debt and equity capital that is needed to deploy
infrastructure for the long-term economic health of its communi es;
fostering strong regulatory and legisla ve rela onships, built on integrity, for the long-term benefit of our customers, communi es,
shareholders and members; and
developing and growing our members to be able to provide a greater contribu on to the company's success, while also improving their own
lives.
OGE Energy is focused on crea ng long-term shareholder value by targe ng the consistent growth of consolidated earnings per share of five to seven
percent, supported by strong load growth enabled by low customer rates and a strategy of inves ng in lower risk infrastructure projects that improve the
economic vitality of the communi es it serves in Oklahoma and Arkansas. In the next five years, OGE Energy expects to con nue to grow the dividend,
targe ng a dividend payout ra o of 65 to 70 percent. Over the next
6
several years, OGE Energy expects earnings per share growth to exceed the dividend growth rate to help achieve this target. OGE Energy's financial objec ves
also include maintaining investment grade credit ra ngs and providing a strong and reliable dividend for shareholders.
OGE Energy's long-term sustainability is predicated on providing excep onal customer experiences, inves ng in grid improvements and investments
related to new genera on capacity needs, environmental stewardship, strong governance prac ces and caring for and suppor ng its members and
communi es.
Electric Opera ons - OG&E
General
OG&E provides retail electric service to approximately 896,000 customers in Oklahoma and western Arkansas throughout a service area that covers
30,000 square miles including Oklahoma City, the largest city in Oklahoma, Fort Smith, Arkansas, the third largest city in that state, and other large
communi es with their con guous rural and suburban areas. OG&E derived 91 percent of its total electric opera ng revenues in 2023 from sales in Oklahoma
and the remainder from sales in Arkansas. OG&E does not currently serve wholesale customers in either state.
In 2023, OG&E's system control area peak demand was 7,384 MWs on August 21, 2023, and OG&E's load responsibility peak demand was 6,573 MWs on
August 21, 2023. The following table presents system sales and varia ons in system sales for 2023, 2022 and 2021.
Year Ended December 31
System sales (Millions of MWh)
2023 vs. 2022
(1.0)%
2023
29.7
2022
30.0
2022 vs. 2021
8.3%
2021
27.7
OG&E is subject to compe on in various degrees from government-owned electric systems, municipally-owned electric systems, rural electric
coopera ves and, in certain respects, from other private u li es, power marketers and cogenerators. Oklahoma law forbids the gran ng of an exclusive
franchise to a u lity for providing electricity.
Besides compe on from other suppliers or marketers of electricity, OG&E competes with suppliers of other forms of energy. The degree of compe on
between suppliers may vary depending on rela ve costs and supplies of other forms of energy. It is possible that changes in regulatory policies or advances in
technologies such as fuel cells, microturbines, windmills and photovoltaic solar cells will reduce costs of new technology to levels that are equal to or below
that of most central sta on electricity produc on. OG&E's ability to maintain rela vely low cost, efficient and reliable opera ons is a significant determinant
of its compe veness.
7
Year Ended December 31
ELECTRIC ENERGY (Millions of MWh)
Genera on (exclusive of sta on use)
Purchased
Total generated and purchased
OG&E use, free service and losses
Electric energy sold
ELECTRIC ENERGY SOLD (Millions of MWh)
Residen al
Commercial
Industrial
Oilfield
Public authori es and street light
System sales
Integrated market
Total sales
ELECTRIC OPERATING REVENUES (In millions)
Residen al
Commercial
Industrial
Oilfield
Public authori es and street light
System sales revenues
Provision for rate refund
Integrated market
Transmission
Other
Total opera ng revenues
ACTUAL NUMBER OF ELECTRIC CUSTOMERS (At end of year)
Residen al
Commercial
Industrial
Oilfield
Public authori es and street light
Total customers
Regula on and Rates
OKLAHOMA GAS AND ELECTRIC COMPANY
CERTAIN OPERATING STATISTICS
2023
2022
2021
13.3
18.8
32.1
(1.6 )
30.5
9.6
8.5
4.2
4.4
3.0
29.7
0.8
30.5
1,040.4 $
688.4
240.5
211.9
234.9
2,416.1
2.0
71.6
143.0
41.6
2,674.3 $
762,433
106,787
2,377
6,739
17,766
896,102
13.6
19.0
32.6
(1.5 )
31.1
10.4
7.8
4.3
4.4
3.1
30.0
1.1
31.1
1,307.0 $
818.3
327.5
308.8
299.0
3,060.6
(1.2 )
163.8
131.7
20.8
3,375.7 $
756,751
105,018
2,464
6,791
17,735
888,759
16.3
14.6
30.9
(1.6 )
29.3
9.6
6.7
4.3
4.2
2.9
27.7
1.6
29.3
1,342.1
763.0
330.8
318.1
289.5
3,043.5
—
468.9
140.2
1.1
3,653.7
749,091
103,337
2,585
6,804
17,630
879,447
$
$
OG&E's retail electric tariffs are regulated by the OCC in Oklahoma and by the APSC in Arkansas. The issuance of certain securi es by OG&E is also
regulated by the OCC and the APSC. OG&E's transmission ac vi es, short-term borrowing authoriza on and accoun ng prac ces are subject to the
jurisdic on of the FERC. The Secretary of the U.S. Department of Energy has jurisdic on over some of OG&E's facili es and opera ons. In 2023, 86 percent of
OG&E's electric revenue was subject to the jurisdic on of the OCC, eight percent to the APSC and six percent to the FERC.
The OCC and the APSC require that, among other things, (i) OGE Energy permits the OCC and the APSC access to the books and records of OGE Energy
and its affiliates rela ng to transac ons with OG&E; (ii) OGE Energy employ accoun ng and other procedures and controls to protect against subsidiza on of
non-u lity ac vi es by OG&E's customers; and (iii) OGE Energy refrain from pledging OG&E assets or income for affiliate transac ons. In addi on, the FERC
has access to the books and records of OGE Energy and its affiliates as the FERC deems relevant to costs incurred by OG&E or necessary or appropriate for the
protec on of u lity customers with respect to the FERC jurisdic onal rates.
8
For informa on concerning OG&E's recently completed and currently pending regulatory proceedings, see Note 14 within "Item 8. Financial Statements
and Supplementary Data."
Regulatory Assets and Liabili es
OG&E, as a regulated electric company, is subject to accoun ng principles for certain types of rate-regulated ac vi es, which provide that certain
incurred costs that would otherwise be charged to expense can be deferred as regulatory assets, based on the expected recovery from customers in future
rates. Likewise, certain actual or an cipated credits that would otherwise reduce expense can be deferred as regulatory liabili es, 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 gran ng such ratemaking treatment.
OG&E records certain incurred costs and obliga ons as regulatory assets or liabili es if, based on regulatory orders or other available evidence, it is
probable that the costs or obliga ons will be included in amounts allowable for recovery or refund in future rates. Management con nuously monitors the
future recoverability of regulatory assets. When in management's judgment future recovery becomes impaired, the amount of the regulatory asset is
adjusted, as appropriate. If OG&E were required to discon nue the applica on of accoun ng principles for certain types of rate-regulated ac vi es for some
or all of its opera ons, it could result in wri ng off the related regulatory assets or liabili es, which could have significant financial effects. See Note 1 within
"Item 8. Financial Statements and Supplementary Data" for further discussion of OG&E's regulatory assets and liabili es.
Rate Structures
Oklahoma
OG&E's standard tariff rates include a cost of service component (including an authorized return on capital) plus a fuel adjustment clause mechanism that
allows OG&E to pass through to customers the actual cost of fuel and purchased power.
OG&E offers several alterna ve customer programs and rate op ons, as described below.
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Under OG&E's Smart Grid-enabled SmartHours programs, me-of-use and variable peak pricing rates offer customers the ability to save on
their electricity bills by shi ing some of their electricity consump on to off-peak mes when demand for electricity is lowest.
The Guaranteed Flat Bill op on for residen al and small general service accounts allows qualifying customers the opportunity to purchase
their electricity needs at a set monthly price for an en re year.
The Renewable Energy Credit purchase program, the Green Power Wind Rider and the U lity Solar Program are rate op ons that make
renewable energy resources available as a voluntary op on to all OG&E Oklahoma retail customers. OG&E's ownership and access to wind
and solar resources makes the renewable op on a possible choice in mee ng the renewable energy needs of OG&E's conserva on-minded
customers.
Load Reduc on is a voluntary load curtailment program that provides qualifying OG&E commercial and industrial customers who enroll with
the opportunity to curtail usage on a voluntary basis when OG&E's system condi ons merit curtailment ac on. Large customers greater than
50 MWs who enroll in the program are also required to par cipate in Direct Load Control, giving OG&E direct control over the curtailable
por on of the customer's load. Customers that curtail their usage will receive credit for their curtailment response.
OG&E offers certain qualifying customers day-ahead price and flex price rate op ons which allow par cipa ng customers to adjust their
electricity consump on based on price signals received from OG&E. The prices for the day-ahead price and flex price rate op ons are based
on OG&E's projected next day hourly opera ng costs.
In addi on to specific rate structures, OG&E provides customers with other programs such as Average Monthly Billing which helps to make the
customer's bill more predictable on a monthly basis. Similarly, OG&E has energy efficiency programs which provide qualified customers with programs such as
in-home weatheriza on and opportuni es to lower their monthly bill. OG&E also has a Low Income Assistance Program and a Senior Ci zen Discount, which
provide qualified customers with a monthly bill credit.
OG&E has Public Schools-Demand and Public Schools Non-Demand rate classes that provide OG&E with flexibility to provide targeted programs for load
management to public schools and their unique usage pa erns. OG&E also provides service level, seasonal
9
and me period fuel charge differen a on that allows customers to pay fuel costs that be er reflect the underlying costs of providing electric service. Lastly,
OG&E has a military base rider that demonstrates Oklahoma's con nued commitment to its military partners.
The previously discussed rate op ons, coupled with OG&E's other rate choices, provide many tariff op ons for OG&E's Oklahoma retail customers. The
revenue impacts associated with these op ons are not determinable in future years because customers may choose to remain on exis ng rate op ons
instead of volunteering for the alterna ve rate op on choices. Revenue varia ons may occur in the future based upon changes in customers' usage
characteris cs if they choose alterna ve rate op ons.
Arkansas
OG&E's standard tariff rates include a cost of service component (including an authorized return on capital) plus an energy cost recovery mechanism that
allows OG&E to pass through to customers the actual cost of fuel and purchased power. OG&E's current rate order from the APSC includes a formula rate
rider that provides for an annual adjustment to rates if the earned rate of return falls outside of a plus or minus 50 basis point dead-band around the allowed
return on equity. Adjustments are limited to plus or minus four percent of revenue for each rate class for the 12 months preceding the test period. The ini al
term for the formula rate rider has expired; however, the APSC ruled that OG&E was able to undertake two more true-up updates to its formula rate rider
with adjustments to rates occurring in April 2023 and April 2024. Subsequent to the April 2024 update, the formula rate rider will con nue un l new rates are
set in a future general rate review.
OG&E offers several alterna ve customer programs and rate op ons, as described below.
•
•
•
•
The me-of-use and variable peak pricing tariffs allow par cipa ng customers to save on their electricity bills by shi ing some of their
electricity consump on to off-peak mes when demand for electricity is lowest.
The Renewable Energy Credit purchase program and the Universal Solar Program are rate op ons that make renewable energy resources
available as a voluntary op on to all OG&E Arkansas retail customers. OG&E's ownership and access to wind and solar resources makes the
renewable op on a possible choice in mee ng the renewable energy needs of OG&E's conserva on-minded customers.
Load Reduc on is a voluntary load curtailment program that provides qualifying OG&E commercial and industrial customers with the
opportunity to curtail usage on a voluntary basis and receive a billing credit when OG&E's system condi ons merit curtailment ac on.
OG&E offers certain qualifying customers day-ahead price and flex price rate op ons which allow par cipa ng customers to adjust their
electricity consump on based on a price signal received from OG&E. The day-ahead price and flex price rate op ons are based on OG&E's
projected next day hourly opera ng costs.
In addi on to specific rate structures, OG&E provides customers with other programs such as the Levelized Billing Plan which helps to make the
customer's bill more predictable on a monthly basis. Similarly, OG&E has energy efficiency programs which provide qualified customers with programs such as
in-home weatheriza on and opportuni es to lower their monthly bill.
Fuel Supply and Genera on
The following table presents the OG&E-generated energy produced and purchased, by type, for the last three years.
Natural gas
Coal
Renewable
Total
2023
Genera on Mix (A)
2022
2021
75 %
16 %
9 %
100 %
60 %
30 %
10 %
100 %
48 %
40 %
12 %
100 %
(A) Genera on mix calculated as a percent of net MWhs generated and includes purchased power agreements.
OG&E par cipates in the SPP Integrated Marketplace. As part of the Integrated Marketplace, the SPP has balancing authority responsibili es for its
market par cipants. The SPP Integrated Marketplace func ons as a centralized dispatch, where market par cipants, including OG&E, submit offers to sell
power to the SPP from their resources and bid to purchase power from the SPP for their customers. The SPP Integrated Marketplace is intended to allow the
SPP to op mize supply offers and demand bids based upon reliability and economic considera ons and to determine which genera ng units will run at any
given me for maximum
10
cost-effec veness within the SPP area. As a result, OG&E's genera ng units produce output that is different from OG&E's customer load requirements. Net
fuel and purchased power costs are generally recoverable through fuel adjustment clauses.
The following table presents the weighted-average cost of fuel used, by type, for the last three years.
Natural gas
Coal
Renewable
Total
Fuel Cost (A)
(In cents/Kilowa -Hour)
2022
2023
2.976
3.385
—
2.926
7.032
3.253
—
5.480
2021
11.907
1.935
—
6.833
(A) Total fuel and purchased power weighted-average cost was 2.837, 5.096 and 6.892 cents per kilowa -hour in 2023, 2022 and 2021, respec vely.
The change in the weighted average cost of fuel in 2023 compared to 2022 was primarily due to lower natural gas prices, and the change in 2022
compared to 2021 was primarily due to inflated fuel costs in 2021 during Winter Storm Uri. Fuel costs are generally recoverable through OG&E's fuel
adjustment clauses that are approved by the OCC and the APSC. See Notes 1 and 14 within "Item 8. Financial Statements and Supplementary Data" for
further discussion.
Of OG&E's 7,116 total MWs of genera on capability reflected in the table within "Item 2. Proper es," 4,754 MWs, or 66.8 percent, are from natural gas
genera on, 1,559 MWs, or 21.9 percent, are from coal genera on, 321 MWs, or 4.5 percent, are from dual-fuel genera on (coal/gas), 449 MWs, or 6.3
percent, are from wind genera on and 33 MWs, or 0.5 percent, are from solar genera on.
Natural Gas
As a par cipant in the SPP Integrated Marketplace, OG&E purchases its natural gas supply through short-term agreements. OG&E relies on a diversified
por olio of natural gas supply comprised of (i) base load agreements that include first-of-month agreements with a fixed price for the month term; (ii) call
agreements, whereby OG&E has the right but not the obliga on to purchase a defined quan ty of natural gas; and (iii) day and intra-day purchases to meet
the demands of the SPP Integrated Marketplace. OG&E holds two storage service contracts which provides addi onal physical storage capacity. These two
contracts provide OG&E security in both volume and price to further help protect customers against vola le natural gas prices.
Coal
OG&E's coal-fired units are designed to burn primarily low sulfur western sub-bituminous coal. The coal purchased in 2023 had a weighted average sulfur
content of 0.22 percent. Based on the average sulfur content and EPA-cer fied data, OG&E's coal units have an approximate emission rate of 0.1 lbs. of SO2
per MMBtu.
For 2024 through 2026, OG&E has coal supply agreements for 100 percent of its expected coal requirements for both the Sooner and River Valley
facili es. For the Muskogee facility, OG&E has a majority of its expected 2024 coal requirements met through a coal supply agreement and will fill any
addi onal coal needs through term agreements, spot purchases and the use of exis ng inventory. In 2023, OG&E purchased 3.0 million tons of coal from its
sub-bituminous suppliers. See "Environmental Laws and Regula ons" within "Item 7. Management's Discussion and Analysis of Financial Condi on and
Results of Opera ons" for a discussion of environmental ma ers which may affect OG&E in the future, including its u liza on of coal.
11
Wind
OG&E owns the 120 MW Centennial, 101 MW OU Spirit and 228 MW Crossroads wind farms. OG&E's current wind power por olio also includes
purchased power contracts as presented in the following table.
Company
CPV Keenan
Edison Mission Energy
NextEra Energy
Solar
Loca on
Woodward County, OK
Dewey County, OK
Blackwell, OK
Original Term of
Contract
20 years
20 years
20 years
Expira on of
Contract
2030
2031
2032
MWs
152.0
130.0
60.0
OG&E currently owns and operates the solar sites presented in the following table.
Name
Mustang
Covington
Choctaw Na on
Chickasaw Na on
Branch
Durant 2
Loca on
Oklahoma City, OK
Covington, OK
Durant, OK
Davis, OK
Branch, AR
Durant, OK
Year Completed
2015
2018
2020
2020
2021
2022
Photovoltaic Panels
MWs
9,867
38,000
15,344
15,344
15,444
15,471
2.5
9.7
5.0
5.0
5.0
5.0
OG&E will con nue to evaluate the need to add addi onal solar sites to its genera on por olio based on customer demand, u lity-scale component
supply, cost and reliability.
Environmental Ma ers
The ac vi es of OG&E are subject to numerous stringent and complex federal, state and local laws and regula ons governing environmental protec on.
These laws and regula ons can change, restrict or otherwise impact the Registrants' business ac vi es in many ways, including the handling or disposal of
waste material, planning for future construc on ac vi es to avoid or mi gate harm to threatened or endangered species and requiring the installa on and
opera on of emissions or pollu on control equipment. Failure to comply with these laws and regula ons could result in the assessment of administra ve,
civil and criminal penal es, the imposi on of remedial requirements and the issuance of orders enjoining future opera ons. Management believes that all of
the Registrants' opera ons are in substan al compliance with current federal, state and local environmental standards.
President Biden's Administra on has taken a number of ac ons that adopt policies and affect environmental regula ons, including issuance of execu ve
orders that instruct the EPA and other execu ve agencies to review certain rules that affect OG&E with a view to achieving na onwide reduc ons in
greenhouse gas emissions. OG&E is monitoring these ac ons which are in various stages of implementa on. At this point in me, the impacts of these ac ons
on the Registrants' results of opera ons, if any, cannot be determined with any certainty. In the mean me, the Registrants con nue to have obliga ons to
take or complete ac on under current environmental rules.
Management con nues to evaluate the Registrants' compliance with exis ng and proposed environmental legisla on and regula ons and implement
appropriate environmental programs in a compe ve market but at the current me, based on exis ng rules, does not expect capital expenditures for
environmental control facili es to be material for 2024 or 2025. For further discussion of environmental ma ers and capital expenditures related to
environmental factors that may affect the Registrants, see "2023 Capital Requirements, Sources of Financing and Financing Ac vi es," "Future Capital
Requirements" and "Environmental Laws and Regula ons" within "Item 7. Management's Discussion and Analysis of Financial Condi on and Results of
Opera ons."
Human Capital Management
Our company fulfills a cri cal role in the na on's electric u lity infrastructure. In order to do so, we believe we need to a ract, retain, mo vate and
develop a high quality, diverse workforce and provide a safe, inclusive and produc ve work environment for everyone. Our company's core values are
teamwork, transparency, respect, integrity, public service, and individual safety and well-being. Our company's core beliefs are unleash poten al, live safely,
achieve together, create shared trust, value diversity and inclusion, take charge and values ma er. We believe that our company's values and beliefs serve as a
founda on for our rela onships with our
12
employees, who we refer to internally as "members" of the Registrants. These core values and beliefs are reinforced to all members at the me of hire,
annually through a review of our Code of Ethics and periodically through small and large group mee ngs. We believe the efforts described herein, among
others, contribute to our members' sense of purpose for the work we perform and result in the reten on of our members. This belief is supported by OGE
Energy being named by Forbes as the #1 Best Employer in Oklahoma for 2023 based on safety of work environment, compe veness of compensa on,
opportuni es for advancement, openness to telecommu ng and how likely members would be to recommend OGE Energy as an employer. At December 31,
2023, OGE Energy had 2,329 full- me employees, of which 1,936 are OG&E employees.
Total Rewards
To help us a ract and retain the most qualified individuals for our businesses, we provide a combina on of strong compensa on and comprehensive
benefit offerings, including healthcare, health savings and flexible spending accounts, short-term and long-term incen ve plans, re rement savings plans with
company matching contribu ons, disability coverage, paid me off, parental leave and employee assistance programs. We also have a defined benefit pension
plan that covers certain members hired on or before December 1, 2009. Our members are also offered two days of paid volunteer leave every year, which is
intended to further enrich both their lives and the lives of others in the communi es we serve.
Employee Recrui ng, Development and Engagement
We make it a priority to a ract, retain, mo vate and develop a high-quality workforce. Our recruitment efforts begin with industry and career awareness
efforts directed toward learning ins tu ons, parents and students. We have built partnerships with universi es, state career tech systems, state educa on
departments, technical learning/trade schools, military bases and local school districts to increase awareness of the employment opportuni es we provide
and the total rewards packages that are ed to those opportuni es. We build these rela onships to create talent pipelines that will funnel qualified
individuals back to our organiza on and the workforce needs we have iden fied.
We provide our members with a variety of opportuni es for career growth and development. Many of the posi ons in our company are highly
specialized, so having appropriate training and succession planning is cri cal to business con nuity and compe veness. We provide leadership, career
development and skill-building opportuni es, including internal and external training as well as tui on reimbursement, to invest in the next genera on of
leaders for our company. The number of annual hours of training per employee that we target, and historically average, aligns with the benchmark published
annually by the American Society of Training and Development.
OGE Energy, like many u li es across the country, is planning for and managing the effects of turnover of our workforce due to a significant number of
re rements occurring now and expected during the next five to ten years. This will also be a period impacted by major transforma on of our business
through technology investments, regulatory changes to our electric genera on por olio and upgrades to our distribu on infrastructure. Management
engages in ongoing succession planning discussions, which includes the annual involvement of OGE Energy's Board of Directors as it relates to officer
succession planning.
OGE Energy conducts and/or par cipates in employee engagement surveys to seek feedback from its members on a variety of topics, including
understanding of and alignment with the company's strategy, objec ves, values and beliefs, management prac ces, opera onal performance and the
employee value proposi on. OGE Energy shares the survey results with members, and senior management incorporates the results of the surveys into their
ac on plans in order to respond to the feedback and further enhance member engagement. In 2023, OG&E was named a Top Workplace in Oklahoma as a
result of an employee engagement survey conducted by a third party.
Safety
At OGE Energy, safety is more than a priority; it is a value and is paramount in the work we perform. Our safety principles are core to who we are and
what we do. These principles are communicated, demonstrated and embraced at all levels of the company and supported by our core belief to "Live Safely."
To us, "Live Safely" means we protect ourselves and others from injury by constant engagement, "always living safely." Our goal is to have zero safety
incidents every year, and we educate all members on our incident and injury-free workplace vision through extensive training on safety culture and task
specific training to perform their work safely.
13
To further our vision of safety excellence, our health and safety professionals, supervisors and Safety Task Force teams conduct rou ne work observa ons
to verify members and contractors are following safety protocols and procedures and provide coaching, if necessary. To further drive improvements in our
safety performance, we report and analyze all near misses and incidents to understand the causal factors and associated correc ve ac ons necessary to
reduce the likelihood of recurrence. We share what we have learned company-wide to provide real- me learning opportuni es for all members. We con nue
to analyze trends and engage in discussions with our members, crea ng a dialogue to enhance safety performance and work toward our incident and injury-
free workplace. Our focus on safety has contributed to the last eight years being the safest in our 121-year history.
Since the incep on of our safety principle that all incidents and injuries are preventable and embracing our incident and injury free vision, we have seen a
sustained decline in our injury rate. We have reduced our 5-year averages for OSHA recordable injuries by 67 percent and our Days Away, Restricted, Transfer
Rate by 74 percent since our 2011 baseline. The Days Away, Restricted, Transfer rate is an OSHA calcula on that determines how safe businesses have been in
a calendar year in reference to par cular types of worker compensa on injuries.
OG&E is subject to a number of federal, state and local regula ons, which are administered by a variety of agencies. These agencies cover areas such as
health and safety, transporta on and the environment. OG&E has processes and procedures for these areas, and we believe we are in material compliance
with all applicable regula ons.
Diversity and Inclusion
Within our overall recruitment efforts, we are focused on fostering a culture of inclusion with our over-arching goal for the company's workforce to look
like the communi es we serve. Several of the talent pipeline partnerships referenced above are with organiza ons and trade schools whose student
popula ons represent ethnic, racial, and socio-economic diversity or are raised in underrepresented communi es. We con nue working with others to recruit
students to their programs who represent diverse communi es, which can lead to poten al employment for our posi ons. We have also formed rela onships
with universi es to provide scholarships to students with diverse backgrounds and have focused on hiring individuals transi oning out of the military. For our
workforce as a whole, the hiring percentage of members represen ng gender, racial and ethnically diverse communi es has been trending upward, and we
expect that trend to con nue. The re rement of our more tenured employees creates opportuni es to promote, a ract, and hire addi onal individuals with
diverse backgrounds.
We strive to reinforce the belief that our members are one of our greatest assets by crea ng a culture of inclusion throughout the company. One of our
core beliefs is to "Value Diversity and Inclusion," which to us means that we embrace the uniqueness of each individual to make us a stronger and more
resourceful organiza on, which enables us to serve and support the diverse communi es where we live and work. We do this by, among other things,
encouraging members to treat others justly and considering their views in the decisions we make.
The company currently has nine employee-led MRGs suppor ng Asian American & Pacific Islander, Black, Hispanic, Indigenous People, LGBTQ+, Veteran,
and Women members along with new members and those dedicated to public service. All groups are voluntary and inclusive. Each MRG selects an officer of
the company to serve as its Execu ve Sponsor. These MRGs are intended to foster a sense of belonging for all members, inspire conversa on, introduce new
ways of thinking about issues, drive innova on among our diverse popula on of members and provide an opportunity for professional development,
community involvement and recruitment.
14
Informa on About the Registrants' Execu ve Officers
The following table presents the names, tles and business experience for the most recent five years for those persons serving as Execu ve Officers of
the Registrants as of February 20, 2024:
Age
56
51
Sean Trauschke
W. Bryan Buckler
Name
Sarah R. Stafford
Sco A. Briggs
Robert J. Burch
Andrea M. Dennis
Keith E. Erickson
Donnie O. Jones
Cris na F. McQuis on
Kenneth A. Miller
David A. Parker
Ma hew J. Schuermann
William H. Sultemeier
Charles B. Walworth
Johnny W. Whi ield, Jr.
Chris ne O. Woodworth
42
52
61
47
50
57
59
57
47
45
56
49
47
53
2019 - Present:
2021 - Present:
2019 - 2020:
2019:
2019 - Present:
2020 - Present:
2019 - 2020:
2020 - Present:
2019 - 2020:
2019 - Present:
2019:
2019:
2022 - Present:
2019 - 2022:
2019 - Present:
2019:
2020 - Present:
2019 - 2020:
2019 - Present:
2020 - Present:
2019 - 2020:
2019:
2020 - Present:
2019 - 2020:
2019:
2022 - Present:
2019 - 2022:
2019 - Present:
2022 - Present:
2019 - 2022:
2019:
2021 - Present:
2019 - 2021:
Current Title and Business Experience
Chairman of the Board, President and Chief Execu ve Officer of OGE Energy Corp.
Chief Financial Officer of OGE Energy Corp.
Vice President of Investor Rela ons - Duke Energy Corpora on
Director of Financial Planning and Analysis - Duke Energy Corpora on
Controller and Chief Accoun ng Officer of OGE Energy Corp.
Vice President - Human Resources of OG&E
Managing Director Human Resources of OG&E
Vice President - U lity Technical Services of OG&E
Managing Director U lity Technical Services of OG&E
Vice President - Transmission and Distribu on Opera ons of OG&E
Managing Director Transmission and Distribu on Opera ons of OG&E
Director System Opera ons of OG&E
Vice President - Sales and Customer Opera ons of OG&E
Director of Sales and Business Development of OG&E
Vice President - U lity Opera ons of OG&E
Vice President - Power Supply Opera ons of OG&E
Vice President - Corporate Responsibility and Stewardship of OGE Energy Corp.
Vice President - Chief Informa on Officer of OG&E
Vice President - Public and Regulatory Affairs of OG&E
Vice President - Technology, Data and Security of OG&E
Director Enterprise Security and Risk of OGE Energy Corp.
Director of Internal Audit of OGE Energy Corp.
Vice President - Power Supply Opera ons of OG&E
Managing Director Power Plant Opera ons of OG&E
Special Projects Director of OG&E
General Counsel, Corporate Secretary and Chief Compliance Officer of OGE Energy Corp.
General Counsel and Chief Compliance Officer of OGE Energy Corp.
Treasurer of OGE Energy Corp.
Vice President - Business Intelligence and Supply Chain of OG&E
Director of Business Intelligence of OG&E
Sr. Manager of Resource Coordina on of OG&E
Vice President - Marke ng and Communica ons of OG&E
Vice President of Public Rela ons - Sonic Drive-In, a fast-food restaurant chain
No family rela onship exists between any of the Execu ve Officers of the Registrants. Messrs. Trauschke, Buckler, Sultemeier, Walworth and Mses.
McQuis on and Stafford are also officers of OG&E. Each Execu ve Officer is to hold office un l the next annual elec on of officers by the Board of Directors
which is typically accomplished at the first regular board mee ng following the Annual Mee ng of Shareholders, currently scheduled for May 16, 2024.
15
Item 1A. Risk Factors.
In the discussion of risk factors set forth below, unless the context otherwise requires, the terms "we," "our" and "us" refer to the Registrants. In
addi on to the other informa on in this Form 10-K and other documents filed by us and/or our subsidiaries with the Securi es and Exchange Commission
from me to me, the following factors should be carefully considered in evalua ng OGE Energy and its subsidiaries. Such factors could affect actual results
and cause results to differ materially from those expressed in any forward-looking statements made by or on behalf of us or our subsidiaries. Addi onal risks
and uncertain es not currently known to us or that we currently view as immaterial may also impair our business opera ons.
The Registrants are subject to a variety of risks which can be classified as regulatory, opera onal, financial and general. Risk factors of OG&E are also risk
factors of OGE Energy.
REGULATORY RISKS
The Registrants' profitability depends to a large extent on the ability of OG&E to fully recover its costs, including its cost of capital, from its customers in a
mely manner, and there may be changes in the regulatory environment that impair its ability to recover costs from its customers.
OG&E is subject to comprehensive regula on by several federal and state regulatory agencies, which significantly influences its opera ng environment
and its ability to fully recover its costs, including its cost of capital, from customers. Recoverability of any under recovered amounts from OG&E's customers
due to a rise in fuel costs is a significant risk. The u lity commissions in the states where OG&E operates regulate many aspects of its electric opera ons
including si ng and construc on of facili es, customer service and the rates that OG&E can charge customers. The profitability of the electric opera ons is
dependent on OG&E's ability to fully recover costs related to providing electricity and power services to its customers in a mely manner. Any failure to obtain
commission approval to increase rates to fully recover costs, or a delay in the receipt of such approval, could have an adverse impact on OG&E's results of
opera ons. In addi on, OG&E's jurisdic ons have fuel adjustment clauses that permit OG&E to recover fuel and purchased power costs through rates without
a general rate review, subject to a later determina on that such costs were prudently incurred. If the state regulatory commissions determine that such costs
were not prudently incurred, recovery could be disallowed.
In recent years, the regulatory environments in which OG&E operates have received an increased amount of a en on. It is possible that there could be
changes in the regulatory environment that would impair OG&E's ability to fully recover costs historically paid by OG&E's customers. State regulatory
commissions generally possess broad powers to ensure that the needs of the u lity customers are being met. OG&E cannot assure that the OCC, APSC and
the FERC will grant rate increases in the future or in the amounts requested, and they could instead lower OG&E's rates.
The Registrants are unable to predict the impact on their opera ng results from future regulatory ac vi es of any of the agencies that regulate OG&E.
Changes in regula ons, legisla on or the imposi on of addi onal regula ons or legisla on could have an adverse impact on the Registrants' results of
opera ons.
OG&E's rates are subject to rate regula on by the states of Oklahoma and Arkansas, as well as by a federal agency, whose regulatory paradigms and
goals may not be consistent.
OG&E is a ver cally integrated electric company. Most of its revenue results from the sale of electricity to retail customers subject to bundled rates that
are approved by the applicable state regulatory commission.
OG&E operates in Oklahoma and western Arkansas and is subject to rate regula on by the OCC and the APSC, in addi on to FERC regula on of its
transmission ac vi es and any wholesale sales. Exposure to inconsistent state and federal regulatory standards may limit our ability to operate profitably.
Further altera on of the regulatory landscape in which we operate, including a change in our authorized return on equity, may harm our financial posi on
and results of opera ons.
Costs of compliance with environmental and other laws and regula ons are significant, and the cost of compliance with future environmental and other
laws and regula ons may adversely affect our results of opera ons, financial posi on or liquidity.
We are subject to extensive federal, state and local environmental statutes, rules and regula ons rela ng to air quality, water quality, waste
management, wildlife conserva on, natural resources and health and safety that could, among other things, restrict or limit the output of certain facili es or
the use of certain fuels required for the produc on of electricity and/or require addi onal
16
pollu on control equipment and otherwise increase costs. We are also subject to SPP-related capacity methodologies which are expected to con nue to
impact our future capacity needs. There are significant capital, opera ng and other costs associated with compliance with these environmental and other
statutes, rules and regula ons and those costs may be even more significant in the future.
In response to recent regulatory and judicial decisions and interna onal accords, emissions of greenhouse gases including, most significantly, CO2, could
be restricted in the future as a result of federal or state legal requirements or li ga on rela ng to greenhouse gas emissions. No rules are currently in effect
that require us to reduce our greenhouse gas emissions, but laws and regula ons to which we must adhere change, and the Biden Administra on's agenda
includes a significant shi in environmental and energy policy, focusing on reducing greenhouse gas emissions and addressing climate change issues.
Together, these ac ons reflect climate change issues and greenhouse gas emission reduc ons as central areas of focus for domes c and interna onal
regula ons, orders and policies, such as proposed rules from the EPA in 2023 to reduce emissions of greenhouse gases from fossil fuel-fired electric
genera ng units under Clean Air Act Sec on 111. In addi on, a parallel focus on reducing greenhouse gas emissions is reflected in legisla on introduced in
Congress. For example, the Infrastructure Investment and Jobs Act and Infla on Reduc on Act were passed into law in 2022. These laws present
opportuni es for federal grants and tax incen ves intended to hasten the future economy-wide deployment of various greenhouse gas emission reducing
technologies and approaches. These ini a ves could lead to new and revised energy and environmental laws and regula ons, including tax reforms rela ng
to energy and environmental issues. Any such changes, as well as any enforcement ac ons or judicial decisions regarding those laws and regula ons, could
result in significant addi onal compliance costs that would affect our future financial posi on, results of opera ons and cash flows if such costs are not
recovered through regulated rates. Such changes also could affect the manner in which we conduct our business and could require us to make substan al
addi onal capital expenditures or abandon certain projects.
Recently proposed environmental regula ons may also impact our plan to comply with poten al addi onal changes to the SPP’s planning reserve
margin and, as further discussed in Note 14 within "Item 8. Financial Statements and Supplementary Data," recent changes to the resource capacity
accredita on methodologies for both thermal and renewable resources. Both changes may increase OG&E's genera on capacity needs. We may be
constrained by the ability to procure resources or labor that is needed to construct projects on me and at a reasonable price, which could significantly
impact the extent to which we can successfully comply with these proposed environmental regula ons and SPP requirements.
There is inherent risk of the incurrence of environmental costs and liabili es in our opera ons and historical industry prac ces. These ac vi es are
subject to stringent and complex federal, state and local laws and regula ons that can restrict or impact OG&E's business ac vi es in many ways, such as
restric ng the way OG&E can handle or dispose of its wastes or requiring remedial ac on to mi gate pollu on condi ons that may be caused by its
opera ons or that are a ributable to former operators. OG&E may be unable to recover these costs from insurance or other regulatory mechanisms. The
Biden Administra on has suggested that it will enact stricter laws, regula ons and enforcement policies that could significantly increase compliance costs and
the cost of any remedia on that may become necessary. If regula ons are enacted regarding any of our genera ng units, as listed in "Item 2. Proper es," it
could poten ally result in stranded assets.
In addi on, we may be required to make significant expenditures in connec on with the inves ga on and remedia on of alleged or actual spills,
personal injury or property damage claims, and the repair, upgrade or expansion of our facili es to meet future requirements and obliga ons under
environmental laws.
For further discussion of environmental ma ers that may affect the Registrants, see "Environmental Laws and Regula ons" within "Item 7.
Management's Discussion and Analysis of Financial Condi on and Results of Opera ons."
We are subject to financial risks associated with climate change and the transi on to a lower carbon economy.
In addi on to the poten al for physical risk related to climate change (discussed below), climate change, and the risks related to our transi on to a lower
carbon economy, creates financial risk. Transi on risks represent those risks related to the social and economic changes needed to shi toward a lower
carbon future. These risks are o en interconnected, represen ng policy and regulatory changes, technology and market risks, and risks to our reputa on and
financial performance.
Poten al regula on associated with climate change legisla on could pose financial risks to OGE Energy and its affiliates. The U.S. is a party to the United
Na ons' "Paris Agreement" on climate change, and the Agreement, along with other poten al legisla on and regula on discussed above, could result in
enforceable greenhouse gas emission reduc on requirements that could lead to increased compliance costs for OGE Energy and its affiliates. For example, in
May 2023, the EPA proposed rules to reduce emissions of
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greenhouse gases from fossil fuel-fired electric genera ng units under Clean Air Act Sec on 111. The proposal encompasses rulemakings for both new units
and exis ng units. For further discussion, see "Environmental Laws and Regula ons" within "Item 7. Management's Discussion and Analysis of Financial
Condi on and Results of Opera ons." It is unknown what the outcome, or any poten al material impacts, if any, will be from the final ac on by the EPA.
As we expand our cleaner energy genera on asset mix, the ability to integrate renewable technologies into our opera ons and maintain reliability and
affordability is key. The intermi ency of renewables remains a cri cal challenge par cularly as cost-efficient energy storage is s ll in development. Other
technology risks include the need for significant upfront financial investments, lengthy development melines, and the uncertainty of integra on and
scalability across our en re service territory.
In addi on, to the extent that any climate change adversely affects the na onal or regional economic health through physical impacts or increased rates
caused by the inclusion of addi onal regulatory costs, CO2 taxes or imposed costs, OGE Energy and its affiliates may be adversely impacted. There are also
increasing risks for energy companies from shareholders currently invested in fossil-fuel energy companies concerned about the poten al effects of climate
change who may elect in the future to shi some or all of their investments into en es that emit lower levels of greenhouse gases or into non-energy
related sectors. Ins tu onal investors and lenders who provide financing to fossil-fuel energy companies also have become more a en ve to sustainable
inves ng and lending prac ces and some of them may elect not to provide funding for fossil fuel energy companies. To the extent financial markets view
climate change and emissions of greenhouse gases as a financial risk, this could nega vely affect our ability to access capital markets or cause us to receive
less than ideal terms and condi ons.
In addi on, we may be subject to financial risks from private party li ga on rela ng to greenhouse gas emissions. Defense costs associated with such
li ga on can be significant and an adverse outcome could require substan al capital expenditures and could possibly require payment of substan al penal es
or damages. Such payments or expenditures could affect results of opera ons, financial condi on or cash flows if such costs are not recovered through
regulated rates.
We may not be able to recover the costs of our substan al investments in capital improvements and addi ons.
Our business plan calls for extensive investments in capital improvements and addi ons in OG&E, including modernizing exis ng infrastructure as well as
other ini a ves. Significant por ons of OG&E's facili es were constructed many years ago. Older genera on equipment, even if maintained in accordance
with good engineering prac ces, may require significant capital expenditures to maintain efficiency, to comply with environmental requirements or to provide
reliable opera ons. As discussed above, the Infrastructure Investment and Jobs Act and Infla on Reduc on Act present opportuni es for federal grants and
tax incen ves intended to hasten the future economy-wide deployment of various greenhouse gas emission reducing technologies and approaches. We have
been awarded grant funds for specific projects through the Infrastructure Investment and Jobs Act, and we plan to pursue addi onal opportuni es 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. 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 posi on and results of opera ons. While OG&E may seek to limit the impact of any denied recovery by a emp ng to reduce the scope of its capital
investment, there can be no assurance as to the effec veness of any such mi ga on efforts, par cularly with respect to previously incurred costs and
commitments.
The regional power market in which OG&E operates has changing transmission regulatory structures, which may affect the transmission assets and
related revenues and expenses.
OG&E currently owns and operates transmission and genera on facili es as part of a ver cally integrated electric company. OG&E is a member of the
SPP regional transmission organiza on and has transferred opera onal authority (but not ownership) of OG&E's transmission facili es to the SPP. The SPP has
implemented regional day ahead and real- me markets for energy and opera ng reserves, as well as associated transmission conges on rights. Collec vely,
the three markets operate together under the global name, SPP Integrated Marketplace. OG&E represents owned and contracted genera on assets and
customer load in the SPP Integrated Marketplace for the sole benefit of its customers. OG&E has not par cipated in the SPP Integrated Marketplace for any
specula ve trading ac vi es. Our revenues, expenses, assets and liabili es may be adversely affected by changes in the organiza on, opera on and
regula on of the SPP Integrated Marketplace by the FERC or the SPP.
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Increased compe on resul ng from efforts to restructure u lity and energy markets or deregula on 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 con nue to be affected by compe ve changes to the u lity and energy industries. Significant changes have occurred and
addi onal changes have been proposed to the wholesale electric market. Retail compe on 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 nego a ons on renewals of franchise agreements with municipal governments within our service territories. Any such
restructuring could have a significant impact on our financial posi on, results of opera ons and cash flows. Further, our load growth could be impacted,
which could result in an impact on the affordability of our services. We cannot predict when we will be subject to changes in legisla on or regula on, nor can
we predict the impact of these changes on our financial posi on, results of opera ons or cash flows.
We are subject to substan al regula on by governmental agencies. Compliance with current and future regulatory requirements and procurement of
necessary approvals, permits and cer fica ons may result in significant costs to us.
We are subject to substan al regula on from federal, state and local regulatory agencies. We are required to comply with numerous laws and
regula ons and to obtain permits, approvals and cer fica ons from the governmental agencies that regulate various aspects of our businesses, including
customer rates, service regula ons, retail service territories, sales of securi es, asset acquisi ons and sales, accoun ng policies and prac ces and the
opera on of genera ng facili es. We believe the necessary permits, approvals and cer ficates have been obtained for our exis ng opera ons and that our
business is conducted in accordance with applicable laws; however, we are unable to predict the impact on our opera ng results from future regulatory
ac vi es of these agencies.
The NERC is responsible for the development and enforcement of mandatory reliability and cyber security standards for the wholesale electric power
system. OG&E's plan is to comply with all applicable standards and to expediently correct a viola on should it occur. As one of OG&E's regulators, the NERC
has comprehensive regula ons and standards related to the reliability and security of our opera ng systems and is con nuously developing addi onal
mandatory compliance requirements for the electric power industry. The increasing development of NERC rules and standards will increase compliance costs
and our exposure for poten al viola ons of these standards.
OPERATIONAL RISKS
Our results of opera ons may be impacted by disrup ons to fuel supply or the electric grid that are beyond our control.
We are exposed to risks related to performance of contractual obliga ons by our suppliers and transporters. We are dependent on coal and natural gas
for much of our electric genera ng capacity. We rely on suppliers to deliver coal and natural gas in accordance with short- and long-term contracts. We have
certain supply and transporta on contracts in place; however, there can be no assurance that the counterpar es to these agreements will fulfill their
obliga ons to supply and transport coal and natural gas to us. The suppliers and transporters under these agreements may experience financial or technical
problems that inhibit their ability to fulfill their obliga ons to us. In addi on, the suppliers and transporters under these agreements may not be required to
provide the commodity or service under certain circumstances, such as in the event of a natural disaster. Deliveries may be subject to short-term
interrup ons or reduc ons due to various factors, including transporta on problems, weather, availability of equipment and labor shortages. Failure or delay
by our suppliers and transporters of coal and natural gas could disrupt our ability to deliver electricity and require us to incur addi onal expenses to meet the
needs of our customers.
Addi onally, due to our genera on and transmission systems being part of an interconnected regional grid, we face the risk of possible loss of business
due to a disrup on or black-out caused by an event such as a severe storm, generator or transmission facility outage on a neighboring system or the ac ons
of a neighboring u lity. Any such disrup on could result in a significant decrease in revenues and significant addi onal costs to repair assets, which could
have a material adverse impact on our financial posi on, results of opera ons and cash flows.
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OG&E's electric genera on, transmission and distribu on assets are subject to opera onal risks that could result in unscheduled plant outages,
unan cipated opera on 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 genera ng assets. Opera on of electric genera on,
transmission and distribu on 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 pollu on and impairment of OG&E's opera ons. Included among these risks are:
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increased prices for fuel, fuel transporta on, purchased power and purchased capacity as exis ng contracts expire;
facility shutdowns due to a breakdown or failure of equipment or processes or interrup ons in fuel supply;
operator or contractor error or safety related stoppages;
disrup ons in the delivery of electricity;
inten onal destruc on of electric grid equipment; and
catastrophic events such as fires, explosions, tornadoes, floods, earthquakes or other similar occurrences.
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
posi on and results of opera ons. Further, when unplanned maintenance work is required on power plants or other equipment, OG&E will not only incur
unexpected maintenance expenses, but it may also have to make spot market purchases of replacement electricity that could exceed OG&E's costs of
genera on, or be forced to re re a genera on unit if the cost or ming of the maintenance is not reasonable and prudent. 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.
Changes in technology, regulatory policies and customer electricity consump on may cause our assets to be less compe ve and impact our results of
opera ons.
OG&E is a ver cally integrated electric company and primarily generates electricity at large central facili es. We believe this method is the most efficient
and cost-effec ve method for power delivery, as it typically results in economies of scale and lower costs than newer technologies such as fuel cells,
microturbines, wind turbines and photovoltaic solar cells. It is possible that advances in technologies or changes in regulatory policies will reduce costs of new
technology to levels that are equal to or below that of most central sta on electricity produc on, which could have a material adverse effect on our results of
opera ons. OG&E's widespread use of Smart Grid technology allowing for two-way communica ons between the electric company and its customers could
enable the entry of technology companies into the interface between OG&E and its customers, resul ng in unpredictable effects on our current business.
Reduc ons in customer electricity consump on, thereby reducing electric sales, could result from increased deployment of renewable energy
technologies as well as increased efficiency of household appliances, among other general efficiency gains in technology. However, this poten al reduc on in
load would not reduce our need for ongoing investments in our infrastructure to reliably serve our customers. Con nued electric infrastructure investment
without increased electricity sales could cause increased rates for customers, poten ally resul ng in further reduc ons in electricity sales and reduced
profitability.
Weather condi ons such as tornadoes, thunderstorms, ice storms, windstorms, flooding, earthquakes, prolonged droughts and the occurrence of wildfires,
as well as seasonal temperature varia ons may adversely affect our financial posi on, results of opera ons and cash flows.
Weather condi ons 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 me. As a result, overall opera ng results may fluctuate on a seasonal and quarterly basis. In addi on, we
have historically sold less power, and consequently received less revenue, when weather condi ons are milder. Unusually mild weather in the future could
reduce our revenues, net income, available cash and borrowing ability. Severe weather, such as tornadoes, thunderstorms, ice storms, windstorms, flooding,
earthquakes, prolonged droughts and the occurrence of wildfires, may cause outages and property damage which may require us to incur addi onal costs
that may not be adequately insured and that may not be recoverable from customers. The effect of the failure of our facili es to operate as planned, as
described above, would be par cularly burdensome during a peak demand period. In addi on, prolonged droughts could cause a lack of sufficient water for
use in cooling during the electricity genera ng process.
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Physical risks from climate can be considered in both acute (event-driven) and chronic (longer-term shi s in climate pa erns) 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. We have observed some of these events in
recent years, and the trend could con nue. OG&E can incur significant restora on 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.
FINANCIAL RISKS
Market performance, increased re rements, changes in re rement plan regula ons and increasing costs associated with our Pension Plan, health care
plans and other employee-related benefits may adversely affect our financial posi on, results of opera ons or cash flows.
We have a Pension Plan that covers certain employees hired before December 1, 2009. We also have defined benefit postre rement plans that cover
certain employees hired prior to February 1, 2000. Assump ons related to future costs, returns on investments, interest rates and other actuarial
assump ons with respect to the defined benefit re rement and postre rement plans have a significant impact on our results of opera ons and funding
requirements. We expect to make future contribu ons to maintain required funding levels as necessary, and it has been our prac ce to also make voluntary
contribu ons to maintain more prudent funding levels than minimally required. We may con nue to make voluntary contribu ons in the future. These
amounts are es mates and may change based on actual stock market performance, changes in interest rates and any changes in governmental regula ons.
If the employees who par cipate in the Pension Plan re re when they become eligible for re rement over the next several years, or if our plan
experiences adverse market returns on its investments, or if interest rates materially fall, our pension expense and contribu ons to the plans could rise
substan ally over historical levels. The ming and number of employees re ring and selec ng the lump-sum payment op on could result in pension
se lement charges that could materially affect our results of opera ons if we are unable to recover these costs through our electric rates. In addi on,
assump ons related to future costs, returns on investments, interest rates and other actuarial assump ons, including projected re rements, have a
significant impact on our financial posi on and results of opera ons. Those factors are outside of our control.
In addi on to the costs of our Pension Plan, the costs of providing health care benefits to our employees and re rees have increased in recent years. We
believe that our employee benefit costs, including costs related to health care plans for our employees, will con nue to rise. The increasing costs and funding
requirements with our Pension Plan, health care plans and other employee benefits may adversely affect our financial posi on, results of opera ons 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. Substan ally all of OGE Energy's opera ons are conducted by this
subsidiary. Consequently, OGE Energy's opera ng cash flow and its ability to pay dividends and service its indebtedness are dependent upon the opera ng
cash flow of OG&E and the payment of funds by OG&E to OGE Energy in the form of dividends. At December 31, 2023, OGE Energy and OG&E had
outstanding indebtedness and other liabili es of $8.3 billion. OG&E is a separate legal en ty that has no obliga on to pay any amounts due on OGE Energy's
indebtedness or to make any funds available for that purpose. In addi on, OG&E's ability to pay dividends to OGE Energy depends on any statutory and
contractual restric ons that may be applicable to the en ty, which may include requirements to maintain minimum levels of working capital and other assets.
Claims of creditors, including general creditors, of OG&E on its assets will generally have priority over OGE Energy claims (except to the extent that OGE
Energy may be a creditor and its claims are recognized) and claims by OGE Energy shareholders.
In addi on, as discussed above, OG&E is regulated by state u lity commissions in Oklahoma and Arkansas as well as a federal regulatory agency which
generally possess broad powers to ensure that the needs of customers are being met. To the extent that the state commissions or federal regulatory agency
a empt to impose restric ons on the ability of OG&E to pay dividends to OGE Energy, it could adversely affect its ability to con nue to pay dividends.
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GENERAL RISKS
Governmental and market reac ons to events involving other public companies or other energy companies that are beyond our control may have nega ve
impacts on our business, financial posi on, results of opera ons, cash flows and access to capital.
Accoun ng irregulari es at public companies in general, and energy companies in par cular, and inves ga ons by governmental authori es into energy
trading ac vi es and poli cal contribu ons, could lead to public and regulatory scru ny and suspicion for public companies, including those in the regulated
and unregulated u lity business. Accoun ng irregulari es could cause regulators and legislators to review current accoun ng prac ces, financial disclosures
and rela onships between companies and their independent auditors. The capital markets and ra ng agencies also could increase their level of scru ny. We
believe that we are complying with all applicable laws and accoun ng standards, but it is difficult or impossible to predict or control what effect any of these
types of events may have on our business, financial posi on, cash flows or access to the capital markets. It is unclear what addi onal laws or regula ons may
develop, and we cannot predict the ul mate impact of any future changes in accoun ng regula ons or prac ces in general with respect to public companies,
the energy industry or our opera ons specifically. Any new accoun ng standards could affect the way we are required to record revenues, expenses, assets,
liabili es and equity. These changes in accoun ng standards could lead to nega ve impacts on reported earnings or decreases in assets or increases in
liabili es that could, in turn, affect our financial posi on, results of opera ons and cash flows.
Economic condi ons, including infla onary pressures and supply chain disrup ons, could nega vely impact our business and our results of opera ons.
Our opera ons have been and are affected by local, na onal and worldwide economic condi ons. Na onal and global events could adversely affect
and/or exacerbate macroeconomic condi ons, including infla onary pressures, rising interest rates, supply chain disrup ons and economic recessions, which
in turn affect our opera ons and our customers. OG&E has experienced rising costs to produce electricity through increased fuel prices, raw material
infla on, logis cal challenges and certain component shortages. We are dependent upon others, such as fuel suppliers and transporters and suppliers for our
capital projects, to help execute our opera ons. Supply chain disrup on has resulted, and may con nue to result, in delays in construc on ac vi es and
equipment deliveries related to our capital projects.
The consequences of a recession could include a lower level of economic ac vity and uncertainty regarding energy prices and the capital and commodity
markets. A lower level of economic ac vity and general infla on could result in a decline in energy consump on, which could adversely affect our revenues
and future growth. Instability in the financial markets, as a result of recession or otherwise, also could affect the cost of capital and our ability to raise capital.
Economic condi ons may also impact the valua on of certain long-lived assets that are subject to impairment tes ng, poten ally resul ng in impairment
charges, which could have a material adverse impact on our results of opera ons.
Economic condi ons may be impacted by insufficient financial sector liquidity or infla onary pressures, leading to poten al increased unemployment,
which could impact the ability of our customers to pay mely, 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 residen al customers following.
In addi on, economic condi ons, par cularly budget shor alls, could increase the pressure on federal, state and local governments to raise addi onal
funds by increasing corporate tax rates and/or delaying, reducing or elimina ng tax credits, grants or other incen ves that could have a material adverse
impact on our results of opera ons and cash flows.
We are subject to cybersecurity risks and increased reliance on processes dependent on technology.
In the regular course of our business, we handle a range of sensi ve security and customer informa on. We are subject to numerous laws and rules
concerning safeguarding and maintaining the confiden ality of this informa on. A security breach of our informa on systems due to the , ransomware,
viruses, increased use of ar ficial intelligence technologies, denial of service, hacking, acts of war or terrorism, or inappropriate release of certain types of
informa on, including confiden al customer informa on or system opera ng informa on, could have a material adverse impact on our financial posi on,
results of opera ons and cash flows.
OG&E operates in a highly regulated industry that requires the con nued opera on of sophis cated informa on technology systems and network
infrastructure. Despite implementa on of security measures, the technology systems are vulnerable to disability, failures or unauthorized access. Such
failures or breaches of the systems could impact the reliability of OG&E's genera on,
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transmission and distribu on 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 genera on and transmission systems are part of an interconnected system. Therefore,
a disrup on 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' opera ons could also nega vely impact our business. If the technology systems were to fail or be breached and
not recovered in a mely manner, cri cal business func ons could be impaired and sensi ve confiden al data could be compromised, which could have a
material adverse impact on our financial posi on, results of opera ons and cash flows.
Security threats con nue to evolve and adapt. We and our third-party vendors have been subject to, and will likely con nue to be subject to, a empts to
gain unauthorized access to systems and/or confiden al data, or to disrupt opera ons. None of these a empts has individually or in aggregate resulted in a
security incident with a material impact on our financial condi on or results of opera ons. Despite implementa on of security and control measures, there
can be no assurance that we will be able to prevent the unauthorized access of our systems and data, or the disrup on of our opera ons, either of which
could have a material impact. Our security procedures, which include among others, virus protec on so ware, cybersecurity controls and monitoring and our
business con nuity planning, including disaster recovery policies and back-up systems, may not be adequate or implemented properly to fully address the
adverse effect of cybersecurity a acks on our systems, which could adversely impact our opera ons.
We maintain property, casualty and cybersecurity insurance that may cover certain resultant cyber and physical damage or third-party injuries caused by
poten al 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. For these reasons, a significant cyber incident could reduce future net income and cash flows and
impact financial condi on.
The failure of our technology infrastructure, or the failure to enhance exis ng technology infrastructure and implement new technology, could adversely
affect our business.
Our opera ons are dependent upon the proper func oning of our internal systems, including the technology and network infrastructure that support
our underlying business processes. Any significant failure or malfunc on of such technology infrastructure may result in disrup ons of our opera ons. 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 ac vi es and to store sensi ve data. Our technology infrastructure is dependent upon global communica ons and cloud service providers, as
well as their respec ve vendors, many of whom have at some point experienced significant system failures and outages in the past and may experience such
failures and outages in the future. These providers' systems are suscep ble to cybersecurity and data breaches, outages from fire, floods, power loss,
telecommunica ons failures, physical a ack and similar events. Failure to prevent or mi gate data loss from system failures or outages could materially
adversely affect our results of opera ons, financial posi on and cash flows.
In addi on to maintaining our current technology infrastructure, we believe the digital transforma on of our business, including poten al genera ve
ar ficial intelligence, is key to driving internal efficiencies as well as providing addi onal capabili es to customers. Our technology infrastructure is cri cal to
cost-effec ve, reliable daily opera ons and our ability to effec vely serve our customers. We expect our customers to con nue to demand more sophis cated
technology-driven solu ons, and we must enhance or replace our technology infrastructure in response. This involves significant development and
implementa on costs to keep pace with changing technologies and customer demand. If we fail to successfully implement cri cal technology infrastructure,
or if it does not provide the an cipated benefits or meet customer demands, such failure could materially adversely affect our business strategy as well as
impact our results of opera ons, financial posi on and cash flows.
Terrorist a acks, and the threat of terrorist a acks, have resulted in increased costs to our business and could impact our ability to operate cri cal
infrastructure. Con nued hos li es or sustained military campaigns may adversely impact our financial posi on, results of opera ons and cash flows.
In recent years, physical a acks on electric equipment owned by other electric companies in the U.S. resulted in the loss of power for a period of me.
Authori es have indicated they believe these a acks may have been carried out by domes c extremists, as the U.S. electric grid is noted as being highly
vulnerable to domes c terrorism. While OG&E has experienced physical a acks on its electric equipment, these incidents have not been material to its
opera ons. The long-term impact of terrorist a acks and the magnitude of the threat of future terrorist a acks on the electric u lity in general, and on us in
par cular, cannot be known. Increased security measures taken by us as a precau on against possible terrorist a acks have resulted in increased costs to our
business. Uncertainty surrounding con nued hos li es or sustained military campaigns may affect our opera ons in unpredictable ways, including
disrup ons of supplies and markets for our products, and the possibility that our infrastructure facili es could be direct targets of, or
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indirect casual es of, an act of terror. Changes in the insurance markets a ributable to terrorist a acks may make certain types of insurance more difficult for
us to obtain. Moreover, the insurance that may be available to us may be significantly more expensive than exis ng insurance coverage.
Health epidemics and other outbreaks could adversely impact economic ac vity and condi ons worldwide, which could have a material adverse effect on
our results of opera ons and financial condi on.
Health epidemics and other outbreaks could adversely impact economic ac vity and condi ons worldwide, by, among other things, leading to
shutdowns, disrup ng supply chains, increasing unemployment, resul ng in customer slow payment or non-payment and decreasing commercial and
industrial load. In response to health epidemics and other outbreaks, an extended slowdown of the United States' economic growth, demand for
commodi es and/or material changes in governmental policy could result in lower economic growth and lower demand for electricity in our key markets as
well as the ability of various customers, contractors, suppliers and other business partners to fulfill their obliga ons, which could have a material adverse
effect on our results of opera ons, financial condi on and prospects.
We face certain human resource risks associated with the availability of trained and qualified labor to meet our future staffing requirements.
Workforce demographic issues challenge employers na onwide and are of par cular concern to the electric u lity industry. The median age of u lity
workers is higher than the na onal average. Over the next three years, 24.6 percent of our current employees will meet the eligibility requirements to re re.
Failure to hire and adequately train replacement employees, including the transfer of significant internal historical knowledge and exper se to the new
employees, may adversely affect our ability to manage and operate our business.
We may be able to incur substan ally more indebtedness, which may increase the risks created by our indebtedness.
The terms of the indentures governing our debt securi es do not fully prohibit OGE Energy or OG&E from incurring addi onal indebtedness. If we are in
compliance with the financial covenants set forth in our revolving credit agreements and the indentures governing our debt securi es, we may be able to
incur substan al addi onal indebtedness. If we incur addi onal indebtedness, the related risks that we now face may intensify.
Any reduc ons in our credit ra ngs or changes in benchmark interest rates could increase our financing costs and the cost of maintaining certain
contractual rela onships or limit our ability to obtain financing on favorable terms.
We cannot assure you that any of the current credit ra ngs of the Registrants will remain in effect for any given period of me or that a ra ng will not be
lowered or withdrawn en rely by a ra ng agency if, in its judgment, circumstances so warrant. Our ability to access the commercial paper market could be
adversely impacted by a credit ra ngs downgrade or major market disrup ons. Pricing grids associated with our credit facili es could cause annual fees and
borrowing rates to increase if an adverse ra ng impact occurs. The impact of any future downgrade could include an increase in the costs of our short-term
borrowings, but a reduc on in our credit ra ngs would not result in any defaults or accelera ons. Any future downgrade could also lead to higher long-term
borrowing costs and, if below investment grade, would require us to post collateral or le ers of credit.
Beginning December 2022, the Registrants u lize SOFR for their credit facility reference rate. SOFR is a rela vely new reference rate without much
historical rate informa on. The change to SOFR or transi on to other alterna ve rates, whether in connec on with borrowings under the current credit
facili es, or borrowings under replacement facili es or lines of credit, could expose the Registrants' future borrowings to less favorable rates. If the change to
SOFR, or other alterna ve rates, results in increased alterna ve 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 addi onal financing and in pursuing other business opportuni es.
We have revolving credit agreements for working capital, capital expenditures, acquisi ons and other corporate purposes. The credit facili es for OGE
Energy and OG&E have a financial covenant requiring them to maintain a maximum debt to capitaliza on ra o of 70 percent and 65 percent, respec vely. The
levels of our debt could have important consequences, including the following:
•
•
•
the ability to obtain addi onal financing, if necessary, for working capital, capital expenditures, acquisi ons or other purposes may be impaired or
the financing may not be available on favorable terms;
a por on of cash flows will be required to make interest payments on the debt, reducing the funds that would otherwise be available for
opera ons and future business opportuni es; and
our debt levels may limit our flexibility in responding to changing business and economic condi ons.
We are exposed to the credit risk of our key customers and counterpar es, and any material nonpayment or nonperformance by our key customers and
counterpar es could adversely affect our financial posi on, results of opera ons and cash flows.
We are exposed to credit risks in our genera on and retail distribu on opera ons. Credit risk includes the risk that counterpar es who owe us money or
energy will breach their obliga ons. If the counterpar es to these arrangements fail to perform, we may be forced to enter into alterna ve arrangements. In
that event, our financial results could be adversely affected, and we could incur losses.
We have seen increased interest for electric service from emerging industries such as data mining and hydrogen produc on, which are both large
consumers of electricity. If this con nues, these types of customers could represent a significant por on of our revenues.
Item 1B. Unresolved Staff Comments.
None.
Item 1C. Cybersecurity.
Risk Management and Strategy
In the regular course of business, the Registrants handle a range of sensi ve security and customer informa on. The Registrants are subject to numerous
laws and rules concerning safeguarding and maintaining the confiden ality of this informa on. The Registrants u lize a risk-based, comprehensive, systema c
and layered approach to cybersecurity risk, which helps them to con nually assess, iden fy and manage enterprise-wide material cybersecurity risks. The
Registrants have a comprehensive cybersecurity threat detec on and monitoring program for their technology and network infrastructure, which leverages
various systems, processes and opera onal measures to monitor, detect and respond to cyber incidents. The Registrants have established a security incident
response plan, a business resiliency and event management framework, as well as disaster recovery mechanisms, which are tested and updated to prepare
the Registrants to respond to material cybersecurity threats. The Registrants’ cybersecurity processes, including their threat detec on, monitoring and
response protocols, are subject to periodic internal audits. The Registrants’ Enterprise Security team partners with Internal Audit and third-party experts to
conduct periodic penetra on tests and assessments of the Registrants' cybersecurity processes.
Cybersecurity risks are integrated into the Registrants’ Enterprise Risk Management process. The Enterprise Risk Management process engages internal
stakeholders, helps iden fy key internal and external business risks, including cybersecurity risks, and then supports evalua ons of those risks, providing
consistent assessment. Key risks are then assessed using a methodology that includes a quan fica on of poten al financial and opera onal impacts. Priority
cybersecurity risks are assigned internal risk owners which report to the Vice President of Technology, Data and Security, who is responsible for the
Registrants’ Enterprise Security including, among other responsibili es, developing and upda ng risk management plans.
The Enterprise Security team u lizes third-party consultants to regularly conduct a review of the Registrants’ cybersecurity program that includes
assessing their (i) ability to detect and respond to malicious behavior, (ii) configura on of security tools and (iii) security roadmap, training and staffing plans.
The Enterprise Security team also u lizes mul ple sources of threat intelligence
25
informa on from real me 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 iden fy risks from cybersecurity threats associated with their use of
third-party service providers. Enterprise Security works cross-func onally across the companies to review new vendors and their proposed solu ons as they
are engaged by the Registrants. The Enterprise Security team’s monitoring and assessment of third-party cybersecurity prac ces is con nuous and ongoing
throughout the Registrants’ rela onship with the third party. Based on this process, the Enterprise Security team may require specific security controls on the
third-party applica on, system, hardware or so ware being deployed. Enterprise Security monitors vendors for disclosed vulnerabili es and change in scores
from external risk scoring agencies.
The Registrants and their third-party vendors have been subject to, and will likely con nue to be subject to, a empts to gain unauthorized access to
systems, or confiden al data, or to disrupt opera ons. None of these a empts has individually or in aggregate resulted in a security incident with a material
impact on the Registrants financial condi on or results of opera ons. Although prior incidents have not materially affected the Registrants, any future
incidents related to the Registrants' informa on systems due to the , ransomware, viruses, increased use of ar ficial intelligence technologies, denial of
service, hacking, acts of war or terrorism, or inappropriate release of certain types of informa on, including confiden al customer informa on or system
opera ng informa on, could have a materially adverse impact on the Registrants, and affect their business strategy, results of opera ons or its financial
condi on. See “Item 1A. Risk Factors” for further discussion.
Governance
The Board of Directors is responsible for reviewing and overseeing the long-term strategic plans and principal issues facing the Registrants and includes
the oversight of the major risk exposures and the risk management ac vi es of the Registrants. As part of its risk oversight role, the Board delegates specific
roles to its commi ees to help ensure risks, mi ga ons and opportuni es are appropriately monitored and managed. The Audit Commi ee has overall
oversight responsibility over the Registrants’ major financial risks, while the Nomina ng, Corporate Governance and Stewardship Commi ee oversees the
Registrants’ cybersecurity risk exposure and management. These Commi ees and the full Board of Directors are updated regularly by the Vice President of
Technology, Data and Security and the Director of Enterprise Security on cybersecurity risks and related ma ers, including results from audits and
assessments of the Registrants’ cybersecurity prac ces and systems, as well as the results of their incident response and business resiliency exercises.
The Vice President of Technology, Data, and Security leads an informa on security team responsible for management of cybersecurity risk. The Vice
President of Technology, Data and Security has decades of experience relevant to risk management, informa on systems and enterprise security. The Vice
President of Technology, Data and Security serves on the Corporate Risk Oversight Commi ee where cyber risks are regularly discussed and addressed. The
Registrants’ Corporate Risk Oversight Commi ee includes corporate officers and members of management and is responsible for the overall development,
implementa on and enforcement of strategies and policies for all significant risk management ac vi es of the Registrants.
The Registrants’ con ngency plans, including its security incident response plan and event management framework, set forth the processes through
which cybersecurity incidents are managed, including how management is informed of cybersecurity incidents. As part of these plans, incidents are
evaluated, classified and elevated, as necessary, to an execu ve team which includes the Vice President of Technology, Data and Security and other execu ves
on the Registrants’ Corporate Risk Oversight Commi ee. Once elevated, these execu ves are ul mately responsible for the management, mi ga on and
remedia on of incidents.
26
Item 2. Proper es.
OG&E owns and operates an interconnected electric genera on, transmission and distribu on system, located in Oklahoma and western Arkansas,
which included 17 genera ng sta ons with an aggregate capability of 7,116 MWs at December 31, 2023. The following table presents informa on with
respect to OG&E's electric genera ng facili es. Unless otherwise indicated, these electric genera ng facili es are located in Oklahoma.
Year
Installed
Unit Design
Type
Sta on & Unit
Seminole
Muskogee
Sooner
1
2
3
4
5
6
1
2
1971
1973
1975
1977
1978
1984
1979
1980
Horseshoe Lake
5A (B)
1971
5B (B)
1971
Redbud (C)
Mustang
7
8
9
10
1
2
3
4
6
7
8
9
10
11
12
1963
1969
2000
2000
2003
2003
2003
2003
2018
2018
2017
2018
2018
2018
2018
Steam-Turbine
Steam-Turbine
Steam-Turbine
Steam-Turbine
Steam-Turbine
Steam-Turbine
Steam-Turbine
Steam-Turbine
Combus on-
Turbine
Combus on-
Turbine
Steam-Turbine
Steam-Turbine
Combus on-
Turbine
Combus on-
Turbine
Combined Cycle
Combined Cycle
Combined Cycle
Combined Cycle
Combus on-
Turbine
Combus on-
Turbine
Combus on-
Turbine
Combus on-
Turbine
Combus on-
Turbine
Combus on-
Turbine
Combus on-
Turbine
Combined Cycle
Combined Cycle
Steam-Turbine
Steam-Turbine
Fuel
Capability
Gas
Gas
Gas
Gas
Gas
Coal
Coal
Coal
Gas/Jet Fuel
Gas/Jet Fuel
Gas
Gas
Gas
Gas
Gas
Gas
Gas
Gas
Gas
Gas
Gas
Gas
Gas
Gas
Gas
Gas
Gas
Coal/Gas
Coal/Gas
2023
Capacity
Factor (A)
Unit
Capability
(MW)
Sta on
Capability
(MW)
19.9 %
24.1 %
20.5 %
14.8 %
10.9 %
18.0 %
12.1 %
11.8 %
2.6 %
4.8 %
—
11.7 %
20.4 %
6.0 %
37.2 %
43.6 %
41.3 %
45.3 %
12.0 %
14.5 %
18.6 %
21.9 %
13.0 %
21.6 %
2.0 %
52.2 %
57.0 %
19.3 %
23.9 %
500
513
509
489
488
521
519
519
33
31
211
375
45
43
157
154
154
153
57
56
58
57
57
58
57
373
126
161
160
1,522
1,498
1,038
738
618
400
373
126
321
6,634
McClain (D)
Fron er
River Valley
1
1
1
2
Total Genera ng Capability (all sta ons, excluding renewable)
2001
1989
1991
1991
(A) 2023 Capacity Factor = 2023 Net Actual Genera on / (2023 Net Maximum Capacity (Nameplate Ra ng in MWs) x Period Hours (8,760 Hours)). Capacity
Factors are impacted by events that reduce Net Actual Genera on such as outages.
(B) Represents units located at Tinker Air Force Base that are maintained by Horseshoe Lake.
(C) Represents OG&E's 51 percent ownership interest in the Redbud Plant.
(D) Represents OG&E's 77 percent ownership interest in the McClain Plant.
27
In 2023, OG&E re red unit 6 located at the Horseshoe Lake sta on.
Renewable
Sta on
Crossroads
Centennial
OU Spirit
Mustang
Covington
Choctaw Na on
Chickasaw Na on
Branch
Durant 2
Total Genera ng Capability (renewable)
Year Installed
2011
2007
2009
2015
2018
2020
2020
2021
2022
Loca on
Canton, OK
Laverne, OK
Woodward, OK
Oklahoma City, OK
Covington, OK
Durant, OK
Davis, OK
Branch, AR
Durant, OK
Number of
Units
98
80
44
90
4
2
2
2
2
Fuel Capability
Wind
Wind
Wind
Solar
Solar
Solar
Solar
Solar
Solar
2023
Capacity
Factor
(A)
Unit
Capability
(MW)
Sta on
Capability
(MW)
17.8 %
15.6 %
16.0 %
20.8 %
21.6 %
22.2 %
24.4 %
22.6 %
19.7 %
2.30
1.50
2.30
< 0.1
2.5
2.5
2.5
2.5
2.5
228
120
101
3
10
5
5
5
5
482
(A) 2023 Capacity Factor = 2023 Net Actual Genera on / (2023 Net Maximum Capacity (Nameplate Ra ng in MWs) x Period Hours (8,760 Hours)). Capacity
Factors are impacted by events that reduce Net Actual Genera on such as outages.
The following table presents certain opera ng data rela ng to the OG&E's electricity transmission and distribu on assets at December 31, 2023.
Transmission system:
Substa ons
Total capacity (million kV-amps)
Structure miles - lines
Distribu on system:
Substa ons
Total capacity (million kV-amps)
Structure miles - overhead
Miles of underground conduit
Miles of underground conductors
Oklahoma
Arkansas
54
14.1
5,208
351
11.0
29,690
3,150
11,801
7
2.9
347
30
1.0
2,811
273
761
During the three years ended December 31, 2023, both Registrants' gross property, plant and equipment (excluding construc on work in progress)
addi ons were $2.7 billion, and gross re rements were $372.8 million. These addi ons were provided by cash generated from opera ons, short-term
borrowings (through a combina on of bank borrowings and commercial paper), long-term borrowings and permanent financings. The addi ons during this
three-year period amounted to 17.0 percent of gross property, plant and equipment (excluding construc on work in progress) for both Registrants at
December 31, 2023.
Item 3. Legal Proceedings.
In the normal course of business, the Registrants are confronted with issues or events that may result in a con ngent liability. These generally relate to
lawsuits or claims made by third par es, including governmental agencies. When appropriate, management consults with legal counsel and other experts to
assess the claim. If, in management's opinion, the Registrants have incurred a probable loss as set forth by GAAP, an es mate is made of the loss, and the
appropriate accoun ng entries are reflected in the Registrants' financial statements. If the assessment indicates that a poten al loss is not probable but
reasonably possible, the nature of the con ngent ma er, together with an es mate of the range of possible loss, if determinable and material, would be
disclosed. At the present me, based on currently available informa on, except as disclosed in Note 13 within "Item 8. Financial Statements and
Supplementary Data," the Registrants believe that any reasonably possible losses in excess of accrued amounts arising out of pending or threatened lawsuits
or claims would not be quan ta vely material to their financial statements and would not have a material adverse effect on the Registrants' financial posi on,
results of opera ons or cash flows.
28
Item 4. Mine Safety Disclosures.
Not Applicable.
29
PART II
Item 5. Market for Registrant's Common Equity, Related Stockholder Ma ers and Issuer Purchases of Equity Securi es.
OGE Energy's common stock is listed for trading on the New York Stock Exchange under the cker symbol "OGE." At December 31, 2023, there were
11,692 holders of record of OGE Energy's common stock.
Currently, all of OG&E's outstanding common stock is held by OGE Energy. Therefore, there is no public trading market for OG&E's common stock.
Performance Graph
The below graph shows a five-year comparison of cumula ve total returns for OGE Energy's common stock, the S&P 500 Index and the S&P 1500
Composite U li es Sector Index. 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 above graph and related informa on should not be deemed "solici ng material" or to be "filed" with the Securi es Exchange Commission, nor
should such informa on be incorporated by reference into any future filing under the Securi es Act of 1933, as amended, or the Securi es Exchange Act of
1934, as amended, except to the extent that OGE Energy specifically incorporates such informa on by reference into such a filing. The graph and informa on
are included for historical compara ve purposes only and should not be considered indica ve of future stock performance.
Issuer Purchases of Equity Securi es
None.
Item 6. [Reserved]
30
Item 7. Management's Discussion and Analysis of Financial Condi on and Results of Opera ons.
The following combined discussion is separately filed by OGE Energy and OG&E. However, OG&E does not make any representa ons as to informa on
related solely to OGE Energy or the subsidiaries of OGE Energy other than itself.
Overview
OGE Energy is a holding company whose primary investment provides electricity in Oklahoma and western Arkansas. OGE Energy's electric company
opera ons are conducted through its wholly-owned subsidiary, OG&E, which generates, transmits, distributes and sells electric energy in Oklahoma and
western Arkansas and are reported through OGE Energy's electric company business segment. OG&E's rates are subject to regula on by the OCC, the APSC
and the FERC. OG&E was incorporated in 1902 under the laws of the Oklahoma Territory and is the largest electric company in Oklahoma, with a franchised
service territory that includes Fort Smith, Arkansas and the surrounding communi es. OG&E sold its retail natural gas business in 1928 and is no longer
engaged in the natural gas distribu on business.
The accounts of OGE Energy and its wholly-owned subsidiaries, including OG&E, are included in OGE Energy's consolidated financial statements. All
intercompany transac ons and balances are eliminated in such consolida on.
Prior to the December 2, 2021 closing of the Enable and Energy Transfer merger, OGE Energy's former natural gas midstream opera ons segment
included its investment in Enable. Subsequent to the merger and throughout 2022, OGE Energy's natural gas midstream opera ons segment included OGE
Energy's investment in Energy Transfer's equity securi es acquired in the Enable and Energy Transfer merger. 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 securi es and reported the Energy Transfer
investment, along with legacy Enable seconded employee pension and postre rement costs, through OGE Energy's natural gas midstream opera ons
segment. As of the end of September 2022, OGE Energy sold all of its Energy Transfer limited partner units. Therefore, beginning in 2023, OGE Energy no
longer has a natural gas opera ons repor ng segment. Prior to OGE Energy's sale of all Energy Transfer limited partner units, the investment in Energy
Transfer's equity securi es was held through wholly-owned subsidiaries and ul mately OGE Holdings.
Recent Developments
Global Macroeconomic Pressures
Geopoli cal events and related governmental and business responses con nue to have an impact on the Registrants' opera ons, supply chains and end-
user customers. The Registrants have experienced, and are pursuing mi ga on strategies for, raw material infla on, logis cal challenges and certain
component shortages. Supply chain disrup on, including disrup ons related to u lity-scale solar components, may result in delays in construc on ac vi es
and equipment deliveries related to OGE Energy's capital projects. Rising interest rates have increased the cost of debt that OG&E has incurred during 2023 in
order to help fund its capital investment program. The ming and extent of the financial impact from these events have not been material to the Registrants'
opera ons at this me but are s ll uncertain, and the Registrants cannot predict the magnitude of the impact to the results of their business and results of
opera ons.
OG&E's Regulatory Ma ers
Completed regulatory ma ers affec ng current period results are discussed in Note 14 within "Item 8. Financial Statements and Supplementary Data."
OG&E filed an Oklahoma general rate review on December 29, 2023 and expects to submit its final 2024 IRP for Oklahoma and Arkansas in the first quarter of
2024.
Infrastructure Investment and Jobs Act
In early 2023, OG&E applied for federal grants funded through the Infrastructure Investment and Jobs Act and in October 2023 was awarded a $50
million grant under the Grid Resilience and Innova on Partnerships Program, which will be used, along with other investments by OG&E, to fund an
adaptable grid project that is expected to provide grid automa on and improve system reliability for OG&E customers. The grant funds will be used to reduce
the total cost for investments in this adaptable grid project.
31
Summary of OGE Energy 2023 Opera ng 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. 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
deprecia on and amor za on expense as a result of addi onal assets being placed into service, higher interest expense related to two senior
note issuances in January and April of 2023 and higher other opera on and maintenance expense, par ally offset by higher opera ng revenues
(excluding the impact of recoverable fuel, purchased power and direct transmission expense not impac ng 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 opera ons (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, par ally 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. As further discussed in Note 12 within "Item 8. Financial Statements
and Supplementary Data," OGE Energy sold all of Energy Transfer's limited partner units by the end of September 2022; therefore, beginning in
2023 OGE Energy no longer has a natural gas midstream opera ons repor ng segment.
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 Opera ons" 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. Management's Discussion and Analysis of Financial Condi on and Results of Opera ons" of the
Registrants' 2022 Form 10-K.
2024 Outlook
Key assump ons for the 2024 outlook are discussed below.
OGE 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 assump ons:
•
•
•
•
•
•
•
•
•
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 opera ons (primarily the holding company), or a loss of $0.10 per average diluted share;
OG&E experiences normal weather pa erns 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 condi oning demand;
opera ng revenues growth driven by OG&E total approximate load growth (weather normalized) in the residen al 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;
opera ng expenses of approximately $1.145 billion to $1.150 billion, with opera on 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
construc on reduc on to interest expense, and assumes a debt issuance at OG&E of $300 million to $350 million and a debt issuance at other
opera ons (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 construc on;
an effec ve consolidated tax rate of approximately 15.0 percent; and
approximately 201.5 million average diluted shares outstanding.
32
Results of Opera ons
The following discussion and analysis presents factors that affected the Registrants' results of opera ons for the years ended December 31, 2023 and
2022 and the Registrants' financial posi ons at December 31, 2023 and 2022. The following informa on should be read in conjunc on with the financial
statements and notes thereto. Known trends and con ngencies of a material nature are discussed to the extent considered relevant.
OGE Energy
(In millions except per share data)
Net income
Basic average common shares outstanding
Diluted average common shares outstanding
Basic earnings per average common share
Diluted earnings per average common share
Dividends declared per common share
Results by Business Segment
(In millions)
Net income:
OG&E (Electric Company)
Other opera ons (A)
OGE Holdings (Natural Gas Midstream Opera ons) (B)
OGE Energy net income
Year Ended December 31,
2023
2022
416.8 $
200.3
200.9
2.08 $
2.07 $
1.6646 $
Year Ended December 31,
2023
2022
426.4 $
(9.6 )
—
416.8 $
665.7
200.2
200.8
3.33
3.32
1.6482
439.5
(5.1 )
231.3
665.7
$
$
$
$
$
$
(A) Other opera ons primarily includes the opera ons of the holding company, other energy-related investments and consolida ng elimina ons.
(B) As a result of OGE Energy's sale of all Energy Transfer units by the end of September 2022, OGE Energy no longer has a natural gas midstream opera ons
repor ng segment, beginning in 2023. More informa on regarding the change in repor ng segments is discussed in Note 12 within "Item 8. Financial
Statements and Supplementary Data."
33
The following discussion of results of opera ons by business segment includes intercompany transac ons that are eliminated in OGE Energy's
consolidated financial statements.
OG&E (Electric Company)
Year Ended December 31 (Dollars in millions)
Opera ng revenues
Fuel, purchased power and direct transmission expense
Other opera on and maintenance
Deprecia on and amor za on
Taxes other than income
Opera ng income
Allowance for equity funds used during construc on
Other net periodic benefit income
Other income
Other expense
Interest expense
Income tax expense
Net income
Opera ng revenues by classifica on:
Residen al
Commercial
Industrial
Oilfield
Public authori es and street light
System sales revenues
Provision for rate refund
Integrated market
Transmission
Other
Total opera ng revenues
MWh sales by classifica on (In millions)
Residen al
Commercial
Industrial
Oilfield
Public authori es and street light
System sales
Integrated market
Total sales
$
$
$
$
2023
2022
2,674.3 $
911.7
505.0
506.6
99.4
651.6
19.4
6.5
23.9
6.3
199.9
68.8
426.4 $
1,040.4 $
688.4
240.5
211.9
234.9
2,416.1
2.0
71.6
143.0
41.6
2,674.3 $
9.6
8.5
4.2
4.4
3.0
29.7
0.8
30.5
3,375.7
1,662.4
491.9
460.9
98.0
662.5
6.9
1.2
6.5
3.4
157.8
76.4
439.5
1,307.0
818.3
327.5
308.8
299.0
3,060.6
(1.2 )
163.8
131.7
20.8
3,375.7
10.4
7.8
4.3
4.4
3.1
30.0
1.1
31.1
Number of customers
Weighted-average cost of energy per kilowa -hour (In cents)
896,102
888,759
Natural gas
Coal
Total fuel
Total fuel and purchased power
Degree days (A)
Hea ng - Actual
Hea ng - Normal
Cooling - Actual
Cooling - Normal
2.976
3.385
2.926
2.837
3,092
3,568
2,215
1,893
7.032
3.253
5.480
5.096
3,652
3,568
2,385
1,893
(A) Degree days are calculated as follows: The high and low degrees of a par cular day are added together and then averaged. If the calculated average is
above 65 degrees, then the difference between the calculated average and 65 is expressed as cooling degree days, with each degree of difference
equaling one cooling degree day. If the calculated average is below 65 degrees, then the difference between the calculated average and 65 is expressed
as hea ng degree days, with each degree of difference equaling
34
one hea ng degree day. The daily calcula ons are then totaled for the par cular repor ng period. The calcula on of hea ng 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 sec on discusses the primary drivers for the
decrease in net income in 2023 as compared to 2022.
Opera ng revenues decreased $701.4 million, or 20.8 percent, primarily driven by the below factors.
(In millions)
Fuel, purchased power and direct transmission expense (A)
Quan ty impacts (includes weather) (B)
Industrial and oilfield sales
Other
Price variance (C)
Non-residen al demand and related revenues
New customer growth
Wholesale transmission revenue
Guaranteed Flat Bill program (D)
Change in opera ng revenues
$ Change
(750.7 )
(14.5 )
(2.6 )
(2.0 )
10.0
11.4
11.8
12.3
22.9
(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. 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 hea ng degree days and a 7.1 percent decrease in cooling degree days.
(C)
Increased primarily due to the Oklahoma general rate review order received in September 2022 that approved new rates effec ve July 1, 2022 and
increased recovery through rider mechanisms.
(D) The Guaranteed Flat Bill program allows qualifying customers the opportunity to purchase their electricity needs at a set monthly price for an en re year
which can result in variances when actual fuel and purchased power prices differ from what is included in Guaranteed Flat Bill rates.
Fuel, purchased power and direct transmission expense for OG&E consists of fuel used in electric genera on, purchased power and transmission related
charges. As described above, the actual cost of fuel used in electric genera on and certain purchased power costs are generally recoverable from OG&E's
customers through fuel adjustment clauses. 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.
(In millions)
Fuel expense (A)
Purchased power costs:
$ Change
(355.1 )
$
Purchases from SPP (B)
Wind
Other (C)
Transmission expense
Change in fuel, purchased power and direct transmission expense
(A) Decreased primarily due to lower fuel costs related to the genera ng assets u lized during 2023.
(B) Decreased primarily due to lower market prices for fuel during 2023.
Increased par ally due to new capacity agreements during 2023.
(C)
Other opera on and maintenance expense increased $13.1 million, or 2.7 percent, primarily driven by the below factors.
(In millions)
Corporate overheads and alloca ons
Payroll and benefits, net of capitalized labor
Materials and supplies
Other
Contract technical and construc on services
Change in other opera on and maintenance expense
35
(389.6 )
(9.2 )
13.0
(9.8 )
(750.7 )
11.5
10.4
(2.3 )
(3.1 )
(3.4 )
13.1
$ Change
$
$
$
Deprecia on and amor za on expense increased $45.7 million, or 9.9 percent, primarily due to an increase in deprecia on rates effec ve as of July 1,
2022 resul ng from the most recent Oklahoma general rate review order and addi onal assets being placed into service.
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 construc on and lower pension cost.
Interest expense increased $42.1 million, or 26.7 percent, primarily due to higher interest on long-term debt driven by the $450.0 million and $350.0
million senior note issuances in January 2023 and in April 2023, respec vely.
Income tax expense decreased $7.6 million, or 9.9 percent, primarily related to lower pre-tax income and addi onal amor za on of net unfunded
deferred taxes, par ally offset by decreased state tax credit genera on.
OGE Holdings (Natural Gas Midstream Opera ons)
OGE Energy's former natural gas midstream opera ons repor ng segment included OGE Energy's investment in Energy Transfer's equity securi es and
legacy Enable seconded employee pension and postre rement costs. As of the end of September 2022, OGE Energy sold all of its Energy Transfer limited
partner units; therefore, beginning in 2023, OGE Energy no longer has a natural gas midstream opera ons repor ng segment. See "Investment in Equity
Securi es of Energy Transfer" in Note 1 within "Item 8. Financial Statements and Supplementary Data" for further discussion of the ac vity of Energy
Transfer's equity securi es during the year ended 2022.
OGE Holdings' income tax expense decreased $48.1 million, due to OGE Energy's dives ture of all Energy Transfer limited partner units in 2022.
Liquidity and Capital Resources
Cash Flows
OGE Energy
$
Change
%
Change
29.4
*
93.7
Year Ended December 31 (In millions)
Net cash provided from opera ng ac vi es (A)
Net cash used in inves ng ac vi es (B)
Net cash used in financing ac vi es (C)
* Change is greater than 100 percent.
(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 rela ng to the sale of Energy Transfer's limited partner units in 2022,
par ally offset by the one- me receipt of securi za on funds in 2022 from the Oklahoma Development Finance Authority.
1,232.3 $
(1,272.1 ) $
(48.1 ) $
952.4 $
(96.4 ) $
(767.9 ) $
279.9
(1,175.7 )
719.8
$
$
$
2022
2023
(B) Changed primarily due to proceeds received in 2022 from the sale of Energy Transfer's limited partner units and increased investments in technology.
(C) Changed primarily due to an increase in short-term debt of $499.2 million and OG&E's $450.0 million and $350.0 million senior note issuances in
January 2023 and April 2023, respec vely, par ally offset by the repayment of $1.0 billion in senior notes that matured in May 2023.
Working Capital
Working capital is defined as the difference in current assets and current liabili es. OGE Energy's working capital requirements are driven generally by
changes in accounts receivable, accounts payable, commodity prices, credit extended to and the ming of collec ons from OG&E's customers, the level and
ming of spending for maintenance and expansion ac vity, inventory levels and fuel recoveries. The following discussion addresses changes in OGE Energy's
working capital balances at December 31, 2023 compared to December 31, 2022.
36
Cash and Cash Equivalents decreased $87.9 million, or 99.8 percent, primarily due to the use of cash that had been held at December 31, 2022 to help
fund the repayment of $1.0 billion in senior notes that matured in May 2023.
Accounts Receivable and Accrued Unbilled Revenues decreased $42.8 million, or 13.2 percent, primarily due to a decrease in billings to OG&E's retail
customers reflec ng lower usage and a reduc on in the fuel factors beginning in early November 2023.
Fuel Inventories increased $49.7 million, or 45.7 percent, primarily due to net purchase ac vity of coal and natural gas for opera onal resiliency.
Materials and Supplies, at Average Cost increased $73.8 million, or 40.9 percent, primarily due to increased inventory which is partly a result of the
acquisi on of stock to alleviate supply chain disrup ons, fulfillment of near-term capital needs, and infla on impacts of the recent economic environment.
Fuel Clause Recoveries moved from an under recovery posi on of $514.9 million as of December 31, 2022 to an over recovery posi on of $20.5 million
as of December 31, 2023, primarily due to higher recoveries from OG&E retail customers as compared to the actual cost of fuel and purchased power driven
by updated fuel factors implemented in early 2023 to address the exis ng fuel under recovery balance. In November 2023, OG&E implemented reduced fuel
factors.
Other Current Assets decreased $44.7 million, or 43.2 percent, primarily due to a decrease in SPP deposits.
Short-term Debt increased $499.2 million primarily due to increased borrowings for general opera ng needs. The Registrants borrow on a short-term
basis, as necessary, through the issuance of commercial paper under their revolving credit agreements.
Accounts Payable decreased $172.5 million, or 38.4 percent, primarily due to ming of vendor payments and a decrease in fuel and purchased power
payables.
Customer Deposits increased $14.7 million, or 16.6 percent, primarily due to new customer growth and addi onal deposits required to be posted as
customer creditworthiness is reevaluated on a periodic basis.
Accrued Interest increased $16.3 million, or 39.7 percent, primarily due to the interest costs associated with OG&E's $450.0 million and $350.0 million
senior note issuances in January 2023 and April 2023, respec vely.
Accrued Compensa on increased $9.8 million, or 26.5 percent, primarily due to higher accruals for incen ve compensa on based on company
performance in 2023.
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 Ac vi es
In 2023, OGE Energy's primary sources of capital were cash generated from opera ons and the proceeds from the issuance of long- and short-term debt.
Changes in working capital reflect the seasonal nature of OGE Energy's business, the revenue lag between billing and collec on from customers and fuel
inventories. See "Working Capital" for a discussion of significant changes in net working capital requirements as it pertains to opera ng cash flow and
liquidity.
Future Material Cash Requirements
OGE Energy's primary material cash requirements are related to acquiring or construc ng new facili es and replacing or expanding exis ng facili es at
OG&E. Other working capital requirements are expected to be primarily related to maturing debt, opera ng lease obliga ons, fuel clause under recoveries
and other general corporate purposes. Further, working capital requirements can be seasonal. OGE Energy generally meets its cash needs through a
combina on of cash generated from opera ons, short-term borrowings (through a combina on of bank borrowings and commercial paper) and permanent
financings. We believe our cash flows from opera ons, exis ng borrowing capacity, and access to debt and equity capital markets as needed, should be
sufficient to sa sfy our material cash requirements over the short-term and long-term.
37
Capital Expenditures
The following table presents OGE Energy's es mates of capital expenditures for the years 2024 through 2028. These capital investments are customer-
focused and targeted to maintain and improve the safety, resiliency and reliability of OG&E's distribu on and transmission grid and genera on fleet, enhance
the ability of OG&E's system to perform during extreme weather events and to serve OG&E's growing customer base.
(In millions)
Transmission economic expansion & reliability
Oklahoma distribu on economic expansion & reliability
Arkansas distribu on economic expansion & reliability
Genera on reliability
Genera on capacity projects
Technology, fleet & facili es
2027 (A)
2026 (A)
2025 (A)
2028 (A)
2024
Total
$
240 $
725
25
165
—
145
1,300 $
985
3,015
120
770
360
750
6,000
145 $
400
20
140
165
230
1,100 $
180 $
520
25
150
160
115
1,150 $
225 $
705
25
160
—
135
1,250 $
195 $
665
25
155
35
125
1,200 $
Total
$
(A) OG&E expects to con nually evaluate the capital priori za on for transmission, distribu on, technology, and genera on investments based on the
evolving capacity, reliability, and economic growth needs of the electrical power system.
Addi onal capital expenditures beyond those iden fied in the table above, including addi onal incremental growth opportuni es, will be evaluated
based upon the requirements of OG&E's power supply, transmission and distribu on opera onal teams and the expected resultant customer benefits. OG&E
intends to issue requests for proposals for resources to sa sfy the new genera on capacity needs iden fied in OG&E's dra 2024 IRP. OG&E also intends to
file for approval of genera on 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 distribu on system could vary depending on the amount and ming of incremental genera on capacity
investments.
Contractual Obliga ons
The following table presents OGE Energy's total contractual obliga ons for the next five years at December 31, 2023. For further detail of OGE Energy's
contractual obliga ons, which include opera ng leases, long-term debt and purchase obliga ons and commitments (including informa on for maturi es
beyond the next five years), see Notes 4, 9 and 13, respec vely, within "Item 8. Financial Statements and Supplementary Data."
(In millions)
Total contractual obliga ons
Total
2,016.3
352.4 $
611.1 $
477.7 $
225.1 $
350.0 $
2025
2024
2026
2027
2028
$
Amounts recoverable through fuel adjustment clause and
other regulatory mechanisms (A)
Total contractual obliga ons, net
(208.1 )
$
144.3
(190.9 )
$
286.8
(167.2 )
$
57.9
(156.1 )
$
193.9
(105.0 )
506.1 $
(827.3 )
1,189.0
$
(A)
Includes expected recoveries of costs incurred for OG&E's railcar opera ng lease obliga ons, OG&E's minimum fuel purchase commitments, OG&E's
expected wind purchase commitments and OG&E's capacity agreements.
The actual cost of fuel used in electric genera on (which includes the opera ng lease obliga ons for OG&E's railcar leases shown in Note 4 within "Item
8. Financial Statements and Supplementary Data") and certain purchased power costs are passed on to OG&E's customers through fuel adjustment clauses
and other regulatory mechanisms. Accordingly, while the cost of fuel related to opera ng leases and the vast majority of minimum fuel purchase
commitments of OG&E noted in Notes 4 and 13, respec vely, within "Item 8. Financial Statements and Supplementary Data" may increase capital
requirements, such costs are generally recoverable through fuel adjustment clauses and have li le, if any, impact on net capital requirements and future
contractual obliga ons. OG&E's fuel adjustment clauses are subject to periodic review by the OCC and the APSC. Otherwise, as discussed above, OGE Energy
expects to meet these cash requirement needs through cash generated from opera ons, short-term borrowings and permanent financings.
Pension and Postre rement 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 securi es, U.S. 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. During the same me, corporate bond yields, which are used in determining the discount
rate for future pension obliga ons, increased. Funding levels are dependent on returns on plan assets and future discount rates. OGE Energy did not make
any contribu on to its Pension Plan for years 2023 and 2022 but does expect to make a $10.0 million contribu on to its Pension Plan in 2024. OGE Energy
could be required to make addi onal contribu ons if the value of its pension trust and postre rement benefit plan trust assets are adversely impacted by a
major market disrup on in the future.
The following table presents the status of OGE Energy's Pension Plan, the Restora on of Re rement Income Plan and the postre rement benefit plans at
December 31, 2023 and 2022. These amounts have been recorded in Accrued Benefit Obliga ons with the offset in Accumulated Other Comprehensive Loss
(except OG&E's por on, which is recorded as a regulatory asset as discussed in Note 1 within "Item 8. Financial Statements and Supplementary Data") in the
balance sheets. 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.
December 31 (In millions)
Benefit obliga ons
Fair value of plan assets
Funded status at end of year
Common Stock Dividends
Pension Plan
Restora on of Re rement
Income Plan
Postre rement
Benefit Plans
2023
2022
2023
2022
2023
2022
$
$
303.7 $
243.7
(60.0 ) $
358.5 $
293.0
(65.5 ) $
5.5 $
—
(5.5 ) $
5.8 $
—
(5.8 ) $
103.3 $
32.7
(70.6 ) $
101.9
32.8
(69.1 )
OGE Energy's dividend policy is reviewed by the Board of Directors at least annually and is based on numerous factors, including management's
es ma on of the long-term earnings power of its businesses. In 2023, the Board of Directors reviewed a recommenda on from management of an increase
in the quarterly dividend to $0.4182 per share from $0.4141 per share and subsequently approved the recommenda on to become effec ve with the
dividend payment in October 2023.
Financing Ac vi es and Future Sources of Financing
Management expects that cash generated from opera ons, proceeds from the issuance of long- and short-term debt, proceeds from the sales of
common stock to the public through OGE Energy's Automa c Dividend Reinvestment and Stock Purchase Plan, or other offerings will be adequate over the
next three years to meet an cipated cash needs and to fund future growth opportuni es. OGE Energy u lizes short-term borrowings (through a combina on
of bank borrowings and commercial paper) to sa sfy temporary working capital needs and as an interim source of financing capital expenditures un l
permanent financing is arranged.
Short-Term Debt and Credit Facili es
OGE Energy borrows on a short-term basis, as necessary, by issuance of commercial paper and borrowings under its revolving credit agreements and
term credit agreements maturing in one year or less.
OGE Energy has unsecured five-year revolving credit facili es totaling $1.1 billion ($550.0 million for OGE Energy and $550.0 million for OG&E), which
can also be used as le er of credit facili es. OGE Energy also has a $100.0 million floa ng rate unsecured three-year credit agreement, of which $50.0 million
is considered a revolving loan. The following table presents informa on about OGE Energy's revolving credit agreements as of December 31, 2023.
(Dollars in millions)
Balance of outstanding suppor ng le ers of credit
Weighted-average interest rate of outstanding suppor ng le ers of credit
Net available liquidity under revolving credit agreements, commercial paper borrowings and le ers of credit
Balance of cash and cash equivalents
0.4
1.20 %
650.4
0.2
December 31, 2023
$
$
$
39
The following table presents informa on about OGE Energy's total short-term debt ac vity for the year ended December 31, 2023.
(Dollars in millions)
Average balance of short-term debt
Weighted-average interest rate of average balance of short-term debt
Maximum month-end balance of short-term debt
Year Ended December
31, 2023
$
$
269.5
5.63 %
499.2
OG&E must obtain regulatory approval from the FERC in order to borrow on a short-term basis. OG&E has the necessary regulatory approvals to incur up
to $1.0 billion in short-term borrowings at any one me for a two-year period beginning January 1, 2023 and ending December 31, 2024.
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 these issuances were added to OG&E's general funds to be used for general corporate purposes,
including to help fund the repayment of its $500.0 million of 0.553 percent Senior Notes that matured on May 26, 2023, as well as the funding of its capital
investment program and working capital needs.
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 opera ng needs.
Security Ra ngs
OG&E Senior Notes
OG&E Commercial Paper
OGE Energy Senior Notes
OGE Energy Commercial Paper
Moody's Investors Service
Ra ng
A3
P2
Baa1
P2
Outlook
Stable
Stable
Stable
Stable
S&P's Global Ra ngs
Ra ng
A-
A2
BBB
A2
Outlook
Stable
Stable
Stable
Stable
Fitch Ra ngs
Ra ng
A
F2
BBB+
F2
Outlook
Stable
Stable
Stable
Stable
Access to reasonably priced capital is dependent in part on credit and security ra ngs. Generally, lower ra ngs lead to higher financing costs. Pricing
grids associated with OGE Energy's credit facili es could cause annual fees and borrowing rates to increase if an adverse ra ng impact occurs. The impact of
any future downgrade could include an increase in the costs of OGE Energy's short-term borrowings, but a reduc on in OGE Energy's credit ra ngs would not
result in any defaults or accelera ons. Any future downgrade could also lead to higher long-term borrowing costs and, if below investment grade, would
require OGE Energy to post collateral or le ers of credit.
A security ra ng is not a recommenda on to buy, sell or hold securi es. Such ra ng may be subject to revision or withdrawal at any me by the credit
ra ng agency, and each ra ng should be evaluated independently of any other ra ng.
Future financing requirements may be dependent, to varying degrees, upon numerous factors such as general economic condi ons, abnormal weather,
load growth, commodity prices, acquisi ons of other businesses and/or development of projects, ac ons by ra ng agencies, infla on, changes in
environmental laws or regula ons, rate increases or decreases allowed by regulatory agencies, new legisla on, and market entry of compe ng electric power
generators.
Common Stock
OGE Energy expects to issue between $15 million to $25 million of common stock from its Automa c Dividend Reinvestment and Stock Purchase Plan in
2024. See Note 8 within "Item 8. Financial Statements and Supplementary Data" for a discussion of OGE Energy's common stock ac vity.
40
Cri cal Accoun ng Policies and Es mates
The financial statements and notes thereto contain informa on that is per nent to management's discussion and analysis. In preparing the financial
statements, management is required to make es mates and assump ons that affect the reported amounts of assets and liabili es and disclosure of
con ngent assets and con ngent liabili es at the date of the financial statements and the reported amounts of revenues and expenses during the repor ng
period. Actual results could differ from those es mates. Changes to these assump ons and es mates could have a material effect on the Registrants' financial
statements. However, the Registrants believe they have taken reasonable posi ons where assump ons and es mates are used in order to minimize the
nega ve financial impact to the Registrants that could result if actual results vary from the assump ons and es mates.
In management's opinion, the areas where the most significant judgment is exercised include the determina on of pension and postre rement plan
assump ons, income taxes, con ngency reserves, and regulatory assets and liabili es. The selec on, applica on and disclosure of the following cri cal
accoun ng es mates have been discussed with the Audit Commi ee of OGE Energy's Board of Directors. The Registrants discuss their significant accoun ng
policies, including those that do not require management to make difficult, subjec ve or complex judgments or es mates, in Note 1 within "Item 8. Financial
Statements and Supplementary Data."
Pension and Postre rement Plan Assump ons
OGE Energy has a Pension Plan that covers certain employees, including OG&E's employees, hired before December 1, 2009. Effec ve December 1,
2009, OGE Energy's Pension Plan is no longer being offered to employees hired on or a er December 1, 2009. OGE Energy also has defined benefit
postre rement plans that cover certain employees, including OG&E's employees hired prior to February 1, 2020. Pension and other postre rement plan
expenses and liabili es are determined on an actuarial basis and are affected by the market value of plan assets, es mates of the expected return on plan
assets, assumed discount rates, and the level of funding. Actual changes in the fair market value of plan assets and differences between the actual return on
plan assets and the expected return on plan assets could have a material effect on the amount of pension expense ul mately recognized. The Pension Plan
rate assump ons are shown in Note 11 within "Item 8. Financial Statements and Supplementary Data." The assumed return on plan assets is based on
management's expecta on of the long-term return on the plan assets por olio. The discount rate used to compute the present value of plan liabili es is
based generally on rates of high-grade corporate bonds with maturi es similar to the average period over which benefits will be paid. Funding levels are
dependent on returns on plan assets and future discount rates. Higher returns on plan assets and an increase in discount rates will reduce funding
requirements to the Pension Plan.
The following table presents the sensi vity of the Pension Plan funded status to these variables.
Actual plan asset returns
Discount rate
Contribu ons
Income Taxes
Change
+/- 1 percent
+/- 0.25 percent
+/- $10 million
Impact on Funded
Status
+/- $2.4 million
+/- $5.4 million
+/- $10.0 million
The Registrants use the asset and liability method of accoun ng for income taxes. Under this method, a deferred tax asset or liability is recognized for
the es mated future tax effects a ributable to temporary differences between the financial statement basis and the tax basis of assets and liabili es, as well
as tax credit carry forwards and net opera ng loss carry forwards. Deferred tax assets and liabili es are measured using enacted tax rates expected to apply
to taxable income in the years in which those temporary differences are expected to be recovered or se led. The effect on deferred tax assets and liabili es
of a change in tax rates is recognized in the period of the change.
The applica on of income tax law is complex. Laws and regula ons in this area are voluminous and o en ambiguous. Interpreta ons and guidance
surrounding income tax laws and regula ons change over me. Accordingly, it is necessary to make judgments regarding income tax exposure. As a result,
changes in these judgments can materially affect amounts the Registrants recognized in their financial statements. Tax posi ons taken by the Registrants on
their income tax returns that are recognized in the financial statements must sa sfy a more likely than not recogni on threshold, assuming that the posi on
will be examined by taxing authori es with full knowledge of all relevant informa on.
41
Con ngency Reserves
In the normal course of business, the Registrants are confronted with issues or events that may result in a con ngent liability. These generally relate to
lawsuits or claims made by third par es, including governmental agencies. When appropriate, management consults with legal counsel and other experts to
assess the claim. If, in management's opinion, the Registrants have incurred a probable loss as set forth by GAAP, an es mate is made of the loss, and the
appropriate accoun ng entries are reflected in the financial statements.
Regulatory Assets and Liabili es
OG&E, as a regulated electric company, is subject to accoun ng principles for certain types of rate-regulated ac vi es, which provide that certain
incurred costs that would otherwise be charged to expense can be deferred as regulatory assets, based on the expected recovery from customers in future
rates. Likewise, certain actual or an cipated credits that would otherwise reduce expense can be deferred as regulatory liabili es, 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 gran ng such ratemaking treatment.
OG&E records certain incurred costs and obliga ons as regulatory assets or liabili es if, based on regulatory orders or other available evidence, it is
probable that the costs or obliga ons will be included in amounts allowable for recovery or refund in future rates. Management con nuously monitors the
future recoverability of regulatory assets. When in management's judgment future recovery becomes impaired, the amount of the regulatory asset is
adjusted, as appropriate.
Accoun ng Pronouncements
See Note 2 within "Item 8. Financial Statements and Supplementary Data" for further discussion of recently adopted accoun ng standards and recently
issued accoun ng standards that are not yet effec ve that could have a material impact on the Registrants' financial posi on, results of opera ons or cash
flows upon adop on.
Commitments and Con ngencies
In the normal course of business, the Registrants are confronted with issues or events that may result in a con ngent liability. These generally relate to
lawsuits or claims made by third par es, including governmental agencies. When appropriate, management consults with legal counsel and other experts to
assess the claim. If, in management's opinion, the Registrants have incurred a probable loss as set forth by GAAP, an es mate is made of the loss, and the
appropriate accoun ng entries are reflected in the financial statements. If the assessment indicates that a poten al loss is not probable but reasonably
possible, the nature of the con ngent ma er, together with an es mate of the range of possible loss, if determinable and material, would be disclosed. At the
present me, based on currently available informa on, the Registrants believe that any reasonably possible losses in excess of accrued amounts arising out of
pending or threatened lawsuits or claims would not be quan ta vely material to their financial statements and would not have a material adverse effect on
their financial posi on, results of opera ons or cash flows. See Notes 13 and 14 within "Item 8. Financial Statements and Supplementary Data" and "Item 3.
Legal Proceedings" for further discussion of the Registrants' commitments and con ngencies.
Environmental Laws and Regula ons
The ac vi es of OG&E are subject to numerous stringent and complex federal, state and local laws and regula ons governing environmental protec on.
These laws and regula ons can change, restrict or otherwise impact the Registrants' business ac vi es in many ways, including the handling or disposal of
waste material, planning for future construc on ac vi es to avoid or mi gate harm to threatened or endangered species and requiring the installa on and
opera on of emissions or pollu on control equipment. Failure to comply with these laws and regula ons could result in the assessment of administra ve,
civil and criminal penal es, the imposi on of remedial requirements and the issuance of orders enjoining future opera ons. Management believes that all of
the Registrants' opera ons are in substan al compliance with current federal, state and local environmental standards.
President Biden's Administra on has taken a number of ac ons that adopt policies and affect environmental regula ons, including issuance of execu ve
orders that instruct the EPA and other execu ve agencies to review certain rules that affect OG&E with a view to achieving na onwide reduc ons in
greenhouse gas emissions. OG&E is monitoring these ac ons which are in various stages of
42
implementa on. At this point in me, the impacts of these ac ons on the Registrants' results of opera ons, if any, cannot be determined with any certainty.
Environmental regula on can increase the cost of planning, design, ini al installa on and opera on of OG&E's facili es. Management con nues to
evaluate its compliance with exis ng and proposed environmental legisla on and regula ons and implement appropriate environmental programs in a
compe ve market.
Air
OG&E's opera ons are subject to the Federal Clean Air Act of 1970, as amended, and comparable state laws and regula ons. These laws and regula ons
regulate emissions of air pollutants from various industrial sources, including electric genera ng units and also impose various monitoring and repor ng
requirements. Such laws and regula ons may require that OG&E obtain pre-approval for the construc on or modifica on of certain projects or facili es
expected to produce air emissions or result in the increase of exis ng air emissions, obtain and strictly comply with air permits containing various emissions
and opera onal limita ons or install emission control equipment. OG&E likely will be required to incur certain capital expenditures in the future for air
pollu on control equipment and technology in connec on with obtaining and maintaining opera ng permits and approvals for air emissions.
Cross State Air Pollu on Rule
The EPA revised the NAAQS for ozone in 2015. Although Oklahoma complies with the revised standard, the Federal Clean Air Act of 1970, as amended,
requires states to submit to the EPA for approval a SIP to prohibit in-state sources from contribu ng significantly to nona ainment of the NAAQS in another
state. On October 28, 2018, Oklahoma submi ed its SIP to the EPA related to these "Good Neighbor" requirements. On January 31, 2023, the EPA
disapproved the SIPs of 21 states, including Oklahoma. On March 2, 2023, the Oklahoma A orney General and the ODEQ jointly filed a Pe on for Review of
the SIP disapproval in the Tenth Circuit. On March 16, 2023, OG&E filed a Pe on for Review of the SIP disapproval in the Tenth Circuit. On June 6, 2023,
OG&E, together with the Oklahoma A orney General, the ODEQ, Tulsa Cement LLC and Western Farmers Electric Coopera ve, jointly filed a mo on with the
Tenth Circuit reques ng 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 February 16, 2024, the Tenth Circuit granted a mo on to transfer venue to the U.S. Court of Appeals for the District of Columbia. The oral
argument originally scheduled for March 21, 2024 is now vacated. Currently, the ming of when oral argument will take place in the D.C. Circuit is unknown,
and OG&E is evalua ng the effects of the transfer of venue.
In a separate but related ma er, on April 6, 2022, the EPA also published a proposed FIP related to the "Good Neighbor" requirements intended to
reduce interstate NOX emissions contribu ons. 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 aforemen oned SIP disapprovals. Among other changes, the EPA
finalized a revision of the current Oklahoma NOX emissions budget for electric genera ng units, including OG&E's units, which began in 2023. Under the
terms of the FIP, the emissions budget will decline over me based on the level of reduc ons that the EPA has determined is achievable through par cular
emissions controls. 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. On July 7, 2023, the A orney General of Oklahoma and other pe oners filed a mo on in the Tenth
Circuit Court to stay the EPA's final FIP for Oklahoma. On July 31, 2023, the pe oners filed a joint, unopposed mo on reques ng that the court abate further
proceedings pending resolu on of the Utah and Oklahoma SIP disapproval challenges, and the court granted this mo on on August 2, 2023. The pe oners
will be required to no fy the court within five days a er the SIP disapproval challenge is resolved. The FIP became effec ve August 4, 2023; however, as long
as the stay of the EPA's disapproval of the Oklahoma SIP discussed above remains in place, the EPA may not enforce the Good Neighbor FIP. In an interim final
rule published in the Federal Register on September 29, 2023, the EPA stayed the Good Neighbor Plan's requirements for emissions sources in Oklahoma. In
addi on, in October 2023, several state and industry pe oners filed emergency applica ons for a stay of the EPA’s Good Neighbor FIP in the U.S. Supreme
Court. Oral argument to decide whether to grant these applica ons is scheduled for February 21, 2024.
In light of the issuance of the FIP, OG&E has been evalua ng various control strategies to reduce emissions at its genera ng units, which can range from
some combina on of purchase of emission allowances, installa on of selec ve cataly c reduc on controls, conversion of coal-fired units to gas-fired units or
re rement and replacement of capacity. OG&E expects to submit its final 2024 IRP to the OCC and APSC in the first quarter of 2024, which will evaluate
various poten al compliance op ons related to the EPA's Good Neighbor FIP. Due to the uncertainty rela ng to the disapproval of the SIP and implementa on
of the FIP, OG&E cannot determine
43
the cost to comply with certainty, as such costs are dependent upon the ming and outcome of the li ga on discussed above, the par cular control strategies
ul mately selected for each unit, the terms and ming of regulatory approvals required from the OCC and the me period necessary to complete the
projects. However, OG&E preliminarily es mates 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 effec veness of the FIP. 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 mely basis.
Par culate Ma er NAAQS
On February 7, 2024, the EPA issued a final rule resul ng from its reconsidera on of the primary (health-based) and secondary (welfare-based) NAAQS
for PM, which were set in 2013 and which the EPA declined to revise in 2020. The final rule lowers the primary annual PM2.5 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 PM2.5 NAAQS.
The EPA will determine which areas of the country meet the standards, such as making ini al a ainment/nona ainment designa ons, no later than two
years a er new standards are issued. States must develop and submit a ainment plans no later than 18 months a er the EPA finalizes nona ainment
designa ons. The revised NAAQS could impact regional air quality goals and emission limits for emission sources; however, it is unknown at this me what, if
any, poten al material impacts to OG&E individual opera ng permit emission limits will result from the EPA ac ons.
Regional Haze
In July 2020, the ODEQ no fied OG&E that the Horseshoe Lake genera ng units would be included in Oklahoma's second Regional Haze implementa on
period evalua on of visibility impairment impacts to the Wichita Mountains. OG&E submi ed an analysis of all poten al control measures for NOX on these
units to the ODEQ. The ODEQ submi ed a revised SIP to the EPA on August 12, 2022. It is unknown at this me what the outcome, or any poten al material
impacts, if any, will be from the evalua ons by OG&E, the ODEQ and the EPA.
Mercury and Air Toxics Standards
On April 24, 2023, the EPA published in the Federal Register a proposed rule, Na onal Emission Standards for Hazardous Air Pollutants: Coal- and Oil-
Fired Electric U lity Steam Genera ng Units - Review of the Residual Risk and Technology Review. The proposal contains the results of the EPA’s review of the
May 2020 risk and technology review for the Mercury and Air Toxics Standards and proposes changes to certain emission standards and compliance
measures. OG&E par cipated with trade associa ons to provide comments to the EPA on June 23, 2023. It is unknown what poten al material impacts, if any,
will be from the final ac on by the EPA. The EPA has indicated they an cipate finalizing the rule in April 2024.
Greenhouse Gas
OG&E monitors possible changes in legal standards for emissions of greenhouse gases, including CO2, sulfur hexafluoride and methane, including
President Biden Administra on's target of a 50 to 52 percent reduc on in economy-wide net greenhouse gas emissions from 2005 levels by 2030 with full
decarboniza on of the electric power industry by 2035. If legisla on or regula ons are passed at the federal or state levels in the future requiring mandatory
reduc ons of CO2 and other greenhouse gases at OG&E's facili es, this could result in significant addi onal compliance costs that would affect OG&E's future
financial posi on, results of opera ons and cash flows if such costs are not recovered through regulated rates.
On May 23, 2023, the EPA proposed rules to reduce emissions of greenhouse gases from fossil fuel-fired electric genera ng units under Clean Air Act
Sec on 111. The proposal encompasses both Sec on 111(b) and 111(d) rulemakings for new units and exis ng units, respec vely. In par cular, the proposed
rules would (i) strengthen the current New Source Performance Standards for newly built fossil fuel-fired sta onary combus on turbines (generally natural
gas-fired); (ii) establish emission guidelines for states to follow in limi ng carbon pollu on from exis ng fossil fuel-fired steam electric genera ng units
(including coal, oil, and natural gas-fired units); and (iii) establish emission guidelines for large, frequently used exis ng fossil fuel-fired sta onary combus on
turbines (generally natural gas-fired). OG&E filed comments regarding the proposal on August 8, 2023 and par cipated with trade associa ons to develop
44
industry-focused comments. Regional transmission organiza ons, including the SPP, separately filed a joint comment le er to the EPA on August 8, 2023,
no ng that there is a need for the EPA to add specific measures to the proposed greenhouse gas rules to address reliability. On November 20, 2023, the EPA
published in the Federal Register a request for addi onal comments focused on reliability. OG&E par cipated with industry groups to provide comments to
the EPA on December 20, 2023. The EPA has indicated they an cipate finalizing the regula ons in April 2024. It is unknown what the outcome, or any
poten al material impacts, if any, will be from the final ac on by the EPA.
As a member of the SPP Integrated Marketplace, OG&E customers have access to clean energy resources while maintaining reliability and affordability.
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
NOX have been reduced by approximately 80 percent, and emissions of SO2 have been reduced by approximately 95 percent. Direct emission reduc ons are
due to factors such as OG&E’s conversion of certain coal units to natural gas units, its par cipa on in the SPP integrated market, and its ac ve engagement
with customers in OG&E’s SmartHours and Load Reduc on Programs which helps reduce the amount of genera on required to serve peak demand. OG&E is
also planning to deploy more renewable energy sources that do not emit greenhouse gases. OG&E has leveraged its geographic posi on to develop
renewable energy resources and completed transmission investments to deliver the renewable energy.
Endangered Species
Certain federal laws, including the Bald and Golden Eagle Protec on Act, the Migratory Bird Treaty Act and the Endangered Species Act, provide special
protec on to certain designated species. These laws and any state equivalents provide for significant civil and criminal penal es for unpermi ed ac vi es
that result in harm to or harassment of certain protected animals and plants, including damage to their habitats. If such species are located in an area in
which OG&E conducts opera ons, or if addi onal species in those areas become subject to protec on, OG&E's opera ons and development projects,
par cularly transmission, wind or solar projects, could be restricted or delayed, or OG&E could be required to implement expensive mi ga on measures.
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 lis ng decision is expected by September
2024. OG&E is closely monitoring this issue due to possible future impacts; however, it is unknown at this me what, if any, material impacts will result from
the USFWS ac on.
Waste
OG&E's opera ons generate wastes that are subject to the Federal Resource Conserva on and Recovery Act of 1976 as well as comparable state laws
which impose detailed requirements for the handling, storage, treatment and disposal of waste.
During 2023, approximately 94 percent of the ash from OG&E's River Valley, Muskogee and Sooner facili es was recovered and reused in various ways,
including soil stabiliza on, landfill cover, road base construc on and cement and concrete produc on. Reusing fly ash reduces the need to manufacture
cement resul ng in reduc ons in greenhouse gas emissions from cement and concrete produc on. Based on es mates from the American Coal Ash
Associa on, OG&E fly ash reuse helped avoid over 3.5 million tons of CO2 emissions in the last 16 years.
OG&E has sought and will con nue to seek pollu on preven on opportuni es and to evaluate the effec veness of its waste reduc on, reuse and
recycling efforts. 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 addi onal savings gained through the reduc on and/or avoidance of disposal costs and the reduc on in material purchases due to
the reuse of exis ng materials. Similar savings are an cipated in future years.
Water
OG&E's opera ons are subject to the Federal Clean Water Act and comparable state laws and regula ons. These laws and regula ons impose detailed
requirements and strict controls regarding the discharge of pollutants into state and federal waters.
In 2015, the EPA issued a final rule addressing the effluent limita on guidelines for power plants under the Federal Clean Water Act. The final rule
establishes technology- and performance-based standards that may apply to discharges of six waste streams
45
including bo om ash transport water. On April 12, 2017, the EPA granted a Pe on for Reconsidera on of the 2015 Rule. On October 13, 2020, the EPA
published a final rule to revise the technology-based effluent limita ons for flue gas desulfuriza on wastewater and bo om ash transport water. On August 3,
2021, the EPA published no ce in the Federal Register that it will undertake a supplemental rulemaking to revise the effluent limita on guidelines rule a er
comple ng its review of the October 2020 rule. The exis ng effluent limita on guidelines will remain in effect while the EPA undertakes this new rulemaking,
with a compliance date of no later than December 31, 2025. On March 29, 2023, the EPA published a proposed rule to revise the effluent limita on guidelines
for flue gas desulfuriza on wastewater, bo om ash transport water and combus on residual leachate. The proposed rule would prohibit any discharge from
bo om ash transport water systems and has a compliance date of December 31, 2029. OG&E has begun installa on of dry bo om ash handling technology
that will comply with the rule. The final rule is expected in April 2024.
Since the purchase of the Redbud facility in 2008, OG&E made investments in the infrastructure that have led to OG&E's average use of approximately
2.4 billion gallons per year of treated municipal effluent for cooling water at Redbud and McClain. This use of treated municipal effluent offsets the need for
fresh water as cooling water, making fresh water available for other beneficial uses like drinking water, irriga on and recrea on.
Site Remedia on
The Comprehensive Environmental Response, Compensa on and Liability Act of 1980 and comparable state laws impose liability, without regard to the
legality of the original conduct, on certain classes of persons responsible for the release of hazardous substances into the environment. Because OG&E u lizes
various products and generates wastes that are considered hazardous substances for purposes of the Comprehensive Environmental Response,
Compensa on and Liability Act of 1980, OG&E could be subject to liability for the costs of cleaning up and restoring sites where those substances have been
released to the environment. At this me, it is not an cipated that any associated liability will cause a significant impact to OG&E.
Item 7A. Quan ta ve and Qualita ve Disclosures About Market Risk.
Market risks are, in most cases, risks that are ac vely traded in a marketplace and have been well studied in regards to quan fica on. Market risks
include, but are not limited to, changes in interest rates and commodity prices. 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 opera ons to the extent
any fuel price changes are not recovered in customer rates.
Risk Oversight Commi ee
The Registrants manage market risks using a risk commi ee structure. OGE Energy's Risk Oversight Commi ee, which consists of the Chief Financial
Officer, other corporate officers and members of management, is responsible for the overall development, implementa on and enforcement of strategies and
policies for all significant risk management ac vi es of the Registrants. In 2023, this commi ee and the Registrants' management applied a holis c
perspec ve of risk assessment and applica on of its strategies and policies to manage the Registrants' overall financial performance. The Chief Financial
Officer, ac ng in his role as the principal financial officer and as a member of the Risk Oversight Commi ee, reports periodically to the Audit Commi ee of
OGE Energy's Board of Directors on the Registrants' risk profile affec ng an cipated financial results, including any significant risk issues. The Audit Commi ee
updates the Board of Directors regarding the company's risk management prac ces and the steps management has taken to monitor and control applicable
risks.
Risk Policies
Management u lizes risk policies to control the amount of market risk exposure. These policies are designed to provide the Audit Commi ee of OGE
Energy's Board of Directors and senior execu ves of the Registrants with confidence that the risks taken on by the Registrants' business ac vi es are in
accordance with their expecta ons 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. The Registrants manage their interest
rate exposure by monitoring and limi ng the effects of market changes in interest rates. The Registrants may u lize interest rate deriva ves to alter interest
rate exposure in an a empt to reduce the effects of these changes. Interest rate deriva ves would be used solely to modify interest rate exposure and not to
modify the overall leverage of the debt por olio, but the Registrants have no intent at this me to u lize interest rate deriva ves.
The fair value of the Registrants' long-term debt is based on quoted market prices and es mates of current rates available for similar issues with similar
maturi es or by calcula ng the net present value of the monthly payments discounted by the Registrants' current borrowing rate. The following table
presents the Registrants' long-term debt maturi es and the weighted-average interest rates by maturity date.
Year Ended December 31
(Dollars in millions)
OGE Energy (holding company)
variable-rate debt (A):
Principal amount
Weighted-average interest rate
OG&E fixed-rate debt (A):
Principal amount
Weighted-average interest rate
OG&E variable-rate debt (B):
Principal amount
Weighted-average interest rate
$
$
$
2024
2025
2026
2027
2028
Therea er
Total
12/31/23
Fair Value
— $
— %
50.0 $
6.340 %
— $
— %
— $
— %
— $
— %
— $
— %
50.0 $
6.340 %
50.0
— $
— %
— $
— %
— $
— %
125.0 $
6.650 %
500.0 $ 3,569.2 $ 4,194.2 $
4.660 %
4.340 %
4.680 %
3,929.4
— $
— %
79.4 $
4.030 %
— $
— %
56.0 $
4.050 %
— $
— %
— $
— %
135.4 $
4.040 %
135.4
(A) Prior to or when these debt obliga ons mature, the Registrants may refinance all or a por on of such debt at then-exis ng market interest rates which
may be more or less than the interest rates on the maturing debt.
(B) A hypothe cal change of 100 basis points in the underlying variable interest rate incurred by OG&E would change interest expense by $1.4 million
annually.
47
Item 8. Financial Statements and Supplementary Data.
OGE ENERGY CORP.
CONSOLIDATED STATEMENTS OF INCOME
Year Ended December 31 (In millions except per share data)
OPERATING REVENUES
Revenues from contracts with customers
Other revenues
Opera ng revenues
FUEL, PURCHASED POWER AND DIRECT TRANSMISSION EXPENSE
OPERATING EXPENSES
Other opera on and maintenance
Deprecia on and amor za on
Taxes other than income
Opera ng expenses
OPERATING INCOME
OTHER INCOME (EXPENSE)
Allowance for equity funds used during construc on
Other net periodic benefit income (expense)
Gain (loss) on equity securi es (Note 1)
Equity in earnings of unconsolidated affiliates
Gain on Enable/Energy Transfer transac on, net
Other income
Other expense
Net other income
INTEREST EXPENSE
Interest on long-term debt
Allowance for borrowed funds used during construc on
Interest on short-term debt and other interest charges
Interest expense
INCOME BEFORE TAXES
INCOME TAX EXPENSE
NET INCOME
BASIC AVERAGE COMMON SHARES OUTSTANDING
DILUTED AVERAGE COMMON SHARES OUTSTANDING
BASIC EARNINGS PER AVERAGE COMMON SHARE
DILUTED EARNINGS PER AVERAGE COMMON SHARE
2023
2022
2021
2,607.3 $
67.0
2,674.3
911.7
502.6
506.6
103.2
1,112.4
650.2
19.4
5.6
—
—
—
48.2
(29.0 )
44.2
205.0
(7.1 )
23.5
221.4
473.0
56.2
416.8 $
200.3
200.9
2.08 $
2.07 $
3,304.2 $
71.5
3,375.7
1,662.4
3,588.7
65.0
3,653.7
2,127.6
501.4
460.9
101.5
1,063.8
649.5
6.9
(12.9 )
282.1
—
—
74.6
(44.6 )
306.1
162.1
(4.0 )
8.2
166.3
789.3
123.6
665.7 $
200.2
200.8
3.33 $
3.32 $
463.1
416.0
102.8
981.9
544.2
6.7
(6.1 )
(8.6 )
169.8
344.4
26.3
(39.9 )
492.6
154.8
(3.5 )
7.0
158.3
878.5
141.2
737.3
200.1
200.3
3.68
3.68
$
$
$
$
The accompanying Combined Notes to Financial Statements are an integral part hereof.
48
OGE ENERGY CORP.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
Year Ended December 31 (In millions)
Net income
Other comprehensive income (loss), net of tax:
Pension Plan and Restora on of Re rement Income Plan:
2023
2022
2021
$
416.8 $
665.7 $
737.3
Amor za on of prior service cost, net of tax of $0.1, $0.1 and $0.0, respec vely
Amor za on of deferred net loss, net of tax of $0.2, $0.2 and $0.9, respec vely
Net gain (loss) arising during the period, net of tax of $1.0, ($2.4) and $0.0,
respec vely
Prior service cost arising during the period, net of tax of $0.0, $0.0 and ($0.3),
respec vely
Se lement cost, net of tax of $0.4, $4.3 and $2.7, respec vely
Postre rement benefit plans:
Amor za on of prior service credit, net of tax of $0.0, ($0.1) and ($0.4), respec vely
Amor za on of deferred net (gain) loss, net of tax of ($0.1), $0.0 and $0.0,
respec vely
Net gain (loss) arising during the period, net of tax of ($0.2), $1.7 and ($0.2),
respec vely
Other comprehensive gain from unconsolidated affiliates, net of tax $0.0, $0.0 and $0.3,
respec vely
Other comprehensive income, net of tax
Comprehensive income
$
0.2
0.9
3.3
—
1.2
—
(0.1 )
(0.8 )
0.2
1.4
(7.6 )
—
13.6
(0.2 )
—
5.5
—
4.7
421.5 $
—
12.9
678.6 $
0.1
1.6
1.4
(1.1 )
6.0
(1.4 )
0.1
(0.7 )
1.3
7.3
744.6
The accompanying Combined Notes to Financial Statements are an integral part hereof.
49
OGE ENERGY CORP.
CONSOLIDATED STATEMENTS OF CASH FLOWS
Year Ended December 31 (In millions)
CASH FLOWS FROM OPERATING ACTIVITIES
Net income
Adjustments to reconcile net income to net cash provided from (used in) opera ng
ac vi es:
2023
2022
2021
$
416.8 $
665.7 $
737.3
Deprecia on and amor za on
Deferred income taxes and other tax credits, net
(Gain) loss on investment in equity securi es (Note 1)
Gain on Enable/Energy Transfer transac on (Note 1)
Equity in earnings of unconsolidated affiliates
Distribu ons from unconsolidated affiliates
Allowance for equity funds used during construc on
Stock-based compensa on expense
Regulatory assets
Regulatory liabili es
Other assets
Other liabili es
Change in certain current assets and liabili es:
Accounts receivable and accrued unbilled revenues, net
Income taxes receivable
Fuel, materials and supplies inventories
Fuel recoveries
Other current assets
Accounts payable
Other current liabili es
Net cash provided from (used in) opera ng ac vi es
CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditures (less allowance for equity funds used during construc on)
Proceeds from sales of equity securi es
Cash received in Enable/Energy Transfer transac on (Note 1)
Cost of removal and other
Net cash used in inves ng ac vi es
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from long-term debt
Payment of long-term debt
Increase (decrease) in short-term debt
Dividends paid on common stock
Cash paid for employee equity-based compensa on and expense of common stock
Net cash (used in) provided from financing ac vi es
NET CHANGE IN CASH AND CASH EQUIVALENTS
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR
CASH AND CASH EQUIVALENTS AT END OF YEAR
SUPPLEMENTAL CASH FLOW INFORMATION
Cash paid during the period for:
Interest (net of interest capitalized of $7.1, $4.0 and $3.5, respec vely)
Income taxes (net of income tax refunds)
NON-CASH INVESTING AND FINANCING ACTIVITIES
Power plant long-term service agreement
Investment in Energy Transfer's equity securi es (Note 1)
$
$
$
$
$
506.6
11.6
—
—
—
—
(19.4 )
13.1
(92.1 )
(12.2 )
—
5.0
42.8
2.5
(122.8 )
535.4
44.6
(136.3 )
36.7
1,232.3
(1,178.2 )
—
—
(93.9 )
(1,272.1 )
788.3
(1,000.1 )
499.2
(333.2 )
(2.3 )
(48.1 )
(87.9 )
88.1
0.2 $
202.4 $
41.5 $
0.7 $
— $
460.9
(154.0 )
(282.1 )
—
—
—
(6.9 )
9.7
702.2
(9.1 )
18.9
(6.6 )
(97.0 )
(18.1 )
(130.1 )
(363.0 )
(30.2 )
155.4
36.7
952.4
(1,050.9 )
1,067.2
—
(112.7 )
(96.4 )
49.3
(0.1 )
(486.9 )
(329.3 )
(0.9 )
(767.9 )
88.1
—
88.1 $
164.0 $
276.0 $
0.8 $
— $
416.0
125.9
8.6
(353.0 )
(169.8 )
73.4
(6.7 )
9.8
(874.9 )
12.2
(9.8 )
(8.1 )
(1.9 )
5.5
(3.4 )
(180.5 )
(22.7 )
7.5
4.7
(229.9 )
(778.5 )
—
35.0
(89.0 )
(832.5 )
997.8
(0.1 )
391.9
(324.9 )
(3.4 )
1,061.3
(1.1 )
1.1
—
156.4
8.7
2.4
793.7
The accompanying Combined Notes to Financial Statements are an integral part hereof.
50
OGE ENERGY CORP.
CONSOLIDATED BALANCE SHEETS
December 31 (In millions)
ASSETS
CURRENT ASSETS
Cash and cash equivalents
Accounts receivable, less reserve of $2.2 and $1.9, respec vely
Accrued unbilled revenues
Income taxes receivable
Fuel inventories
Materials and supplies, at average cost
Fuel clause under recoveries
Other
Total current assets
OTHER PROPERTY AND INVESTMENTS
Other
Total other property and investments
PROPERTY, PLANT AND EQUIPMENT
In service
Construc on work in progress
Total property, plant and equipment
Less: accumulated deprecia on
Net property, plant and equipment
DEFERRED CHARGES AND OTHER ASSETS
Regulatory assets
Other
Total deferred charges and other assets
TOTAL ASSETS
2023
2022
$
0.2 $
208.8
72.7
18.2
158.5
254.3
—
58.8
771.5
114.0
114.0
15,588.2
522.2
16,110.4
4,809.4
11,301.0
577.6
26.6
604.2
$
12,790.7
$
88.1
250.1
74.2
20.7
108.8
180.5
514.9
103.5
1,340.8
105.8
105.8
14,695.2
436.1
15,131.3
4,584.5
10,546.8
524.3
27.0
551.3
12,544.7
The accompanying Combined Notes to Financial Statements are an integral part hereof.
51
December 31 (In millions)
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Short-term debt
Accounts payable
Dividends payable
Customer deposits
Accrued taxes
Accrued interest
Accrued compensa on
Long-term debt due within one year
Fuel clause over recoveries
Other
Total current liabili es
LONG-TERM DEBT
DEFERRED CREDITS AND OTHER LIABILITIES
Accrued benefit obliga ons
Deferred income taxes
Deferred investment tax credits
Regulatory liabili es
Other
Total deferred credits and other liabili es
Total liabili es
COMMITMENTS AND CONTINGENCIES (NOTE 13)
STOCKHOLDERS' EQUITY
Common stockholders' equity
Retained earnings
Accumulated other comprehensive loss, net of tax
Treasury stock, at cost
Total stockholders' equity
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY
OGE ENERGY CORP.
CONSOLIDATED BALANCE SHEETS (Con nued)
2023
2022
$
$
499.2 $
276.4
83.8
103.5
47.6
57.4
46.8
—
20.5
44.0
1,179.2
4,340.5
172.7
1,300.8
11.3
1,061.6
213.0
2,759.4
8,279.1
1,145.1
3,373.7
(7.2 )
—
4,511.6
12,790.7 $
—
448.9
82.9
88.8
54.0
41.1
37.0
999.9
—
49.6
1,802.2
3,548.7
176.9
1,233.5
12.0
1,147.1
210.9
2,780.4
8,131.3
1,134.5
3,290.9
(11.9 )
(0.1 )
4,413.4
12,544.7
The accompanying Combined Notes to Financial Statements are an integral part hereof.
52
OGE ENERGY CORP.
CONSOLIDATED STATEMENTS OF CAPITALIZATION
December 31 (In millions except per share data)
STOCKHOLDERS' EQUITY
Common stock, par value $0.01 per share; authorized 450.0 shares; and outstanding 200.3 shares
and 200.2 shares, respec vely
Premium on common stock
Retained earnings
Accumulated other comprehensive loss, net of tax
Treasury stock, at cost, 0.0 and 0.0 shares, respec vely
Total stockholders' equity
LONG-TERM DEBT
SERIES
Senior Notes - OGE Energy
0.703%
5.375% - 6.375%
Senior Notes - OG&E
0.553%
6.65%
6.50%
3.80%
3.30%
3.25%
5.40%
5.75%
6.45%
5.85%
5.25%
3.90%
4.55%
4.00%
4.15%
3.85%
5.60%
3.80%
Other Bonds - OG&E
1.85% - 4.75%
1.85% - 4.60%
1.85% - 4.75%
Unamor zed debt expense
Unamor zed discount
Total long-term debt
DUE DATE
Senior Notes, Series Due May 26, 2023
Term Loan Due May 24, 2025
Senior Notes, Series Due May 26, 2023
Senior Notes, Series Due July 15, 2027
Senior Notes, Series Due April 15, 2028
Senior Notes, Series Due August 15, 2028
Senior Notes, Series Due March 15, 2030
Senior Notes, Series Due April 1, 2030
Senior Notes, Series Due January 15, 2033
Senior Notes, Series Due January 15, 2036
Senior Notes, Series Due February 1, 2038
Senior Notes, Series Due June 1, 2040
Senior Notes, Series Due May 15, 2041
Senior Notes, Series Due May 1, 2043
Senior Notes, Series Due March 15, 2044
Senior Notes, Series Due December 15, 2044
Senior Notes, Series Due April 1, 2047
Senior Notes, Series Due August 15, 2047
Senior Notes, Series Due April 1, 2053
Tinker Debt, Due August 31, 2062
Garfield Industrial Authority, January 1, 2025
Muskogee Industrial Authority, January 1, 2025
Muskogee Industrial Authority, June 1, 2027
Less: long-term debt due within one year
Total long-term debt (excluding long-term debt due within one year)
Total capitaliza on (including long-term debt due within one year)
$
2023
2022
$
2.0 $
1,143.1
3,373.7
(7.2 )
—
4,511.6
—
50.0
—
125.0
100.0
400.0
300.0
300.0
450.0
110.0
200.0
250.0
250.0
250.0
250.0
250.0
300.0
300.0
350.0
9.2
47.0
32.4
56.0
(27.9 )
(11.2 )
4,340.5
—
4,340.5
8,852.1 $
2.0
1,132.5
3,290.9
(11.9 )
(0.1 )
4,413.4
500.0
50.0
500.0
125.0
100.0
400.0
300.0
300.0
—
110.0
200.0
250.0
250.0
250.0
250.0
250.0
300.0
300.0
—
9.3
47.0
32.4
56.0
(22.2 )
(8.9 )
4,548.6
(999.9 )
3,548.7
8,962.0
The accompanying Combined Notes to Financial Statements are an integral part hereof.
53
OGE ENERGY CORP.
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
Common Stock
Treasury Stock
Shares
Value
Shares
Value
Common Retained
Earnings
Stock
Premium
on
Accumulat
ed Other
Comprehe
nsive
(Loss)
Income
Total
200.1 $
—
2.0
—
0.1 $
—
(5.3 ) $ 1,122.6 $ 2,544.6 $
737.3
—
—
(32.1 ) $ 3,631.8
737.3
—
—
—
—
—
—
—
7.3
7.3
—
—
200.1 $
—
—
—
2.0
—
—
(0.1 )
— $
—
(326.5 )
—
—
5.2
—
1.2
(0.1 ) $ 1,123.8 $ 2,955.4 $
665.7
—
—
—
—
(326.5 )
6.4
(24.8 ) $ 4,056.3
665.7
—
—
—
—
—
—
—
12.9
12.9
—
0.1
200.2 $
—
—
—
2.0
—
—
—
— $
—
—
—
(330.2 )
—
—
8.7
(0.1 ) $ 1,132.5 $ 3,290.9 $
416.8
—
—
—
—
(330.2 )
8.7
(11.9 ) $ 4,413.4
416.8
—
—
—
—
—
—
—
4.7
4.7
—
0.1
200.3 $
—
—
2.0
—
—
— $
—
(334.0 )
—
0.1
— $ 1,143.1 $ 3,373.7 $
—
10.6
—
—
(334.0 )
10.7
(7.2 ) $ 4,511.6
(In millions)
Balance at December 31, 2020
Net income
Other comprehensive income, net of
tax
Dividends declared on common stock
($1.6250 per share)
Stock-based compensa on
Balance at December 31, 2021
Net income
Other comprehensive income, net of
tax
Dividends declared on common stock
($1.6482 per share)
Stock-based compensa on
Balance at December 31, 2022
Net income
Other comprehensive income, net of
tax
Dividends declared on common stock
($1.6646 per share)
Stock-based compensa on
Balance at December 31, 2023
The accompanying Combined Notes to Financial Statements are an integral part hereof.
54
OKLAHOMA GAS AND ELECTRIC COMPANY
STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
Year Ended December 31 (In millions)
OPERATING REVENUES
Revenues from contracts with customers
Other revenues
Opera ng revenues
FUEL, PURCHASED POWER AND DIRECT TRANSMISSION EXPENSE
OPERATING EXPENSES
Other opera on and maintenance
Deprecia on and amor za on
Taxes other than income
Opera ng expenses
OPERATING INCOME
OTHER INCOME (EXPENSE)
Allowance for equity funds used during construc on
Other net periodic benefit income (expense)
Other income
Other expense
Net other income
INTEREST EXPENSE
Interest on long-term debt
Allowance for borrowed funds used during construc on
Interest on short-term debt and other interest charges
Interest expense
INCOME BEFORE TAXES
INCOME TAX EXPENSE
NET INCOME
Other comprehensive income, net of tax
COMPREHENSIVE INCOME
2023
2022
2021
$
2,607.3 $
67.0
2,674.3
911.7
3,304.2 $
71.5
3,375.7
1,662.4
3,558.7
65.0
3,653.7
2,127.6
505.0
506.6
99.4
1,111.0
651.6
19.4
6.5
23.9
(6.3 )
43.5
200.4
(7.1 )
6.6
199.9
495.2
68.8
426.4
—
426.4 $
491.9
460.9
98.0
1,050.8
662.5
6.9
1.2
6.5
(3.4 )
11.2
157.4
(4.0 )
4.4
157.8
515.9
76.4
439.5
—
439.5 $
464.7
416.0
99.3
980.0
546.1
6.7
(4.3 )
7.1
(1.8 )
7.7
152.7
(3.5 )
2.8
152.0
401.8
41.8
360.0
—
360.0
$
The accompanying Combined Notes to Financial Statements are an integral part hereof.
55
OKLAHOMA GAS AND ELECTRIC COMPANY
STATEMENTS OF CASH FLOWS
Year Ended December 31 (In millions)
CASH FLOWS FROM OPERATING ACTIVITIES
Net income
Adjustments to reconcile net income to net cash provided from (used in) opera ng
ac vi es:
2023
2022
2021
$
426.4 $
439.5 $
360.0
Deprecia on and amor za on
Deferred income taxes and other tax credits, net
Allowance for equity funds used during construc on
Stock-based compensa on expense
Regulatory assets
Regulatory liabili es
Other assets
Other liabili es
Change in certain current assets and liabili es:
Accounts receivable and accrued unbilled revenues, net
Fuel, materials and supplies inventories
Fuel recoveries
Other current assets
Accounts payable
Income taxes payable - parent
Other current liabili es
Net cash provided from (used in) opera ng ac vi es
CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditures (less allowance for equity funds used during construc on)
Cost of removal
Net cash used in inves ng ac vi es
CASH FLOWS FROM FINANCING ACTIVITIES
Changes in advances with parent
Capital contribu on from OGE Energy
Proceeds from long-term debt
Payment of long-term debt
Dividends paid on common stock
Net cash provided from (used in) financing ac vi es
NET CHANGE IN CASH AND CASH EQUIVALENTS
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR
CASH AND CASH EQUIVALENTS AT END OF YEAR
SUPPLEMENTAL CASH FLOW INFORMATION
Cash paid during the period for:
Interest (net of interest capitalized of $7.1, $4.0 and $3.5, respec vely)
Income taxes (net of income tax refunds)
NON-CASH INVESTING AND FINANCING ACTIVITIES
Power plant long-term service agreement
$
$
$
$
506.6
15.4
(19.4 )
3.1
(92.1 )
(12.2 )
4.7
0.3
42.1
(122.8 )
535.4
51.1
(131.1 )
9.4
34.6
1,251.5
(1,178.2 )
(91.0 )
(1,269.2 )
460.9
220.5
(6.9 )
2.9
702.2
(9.1 )
—
(5.6 )
(96.6 )
(130.1 )
(363.0 )
(30.1 )
135.8
8.0
19.3
1,347.7
(1,050.9 )
(109.3 )
(1,160.2 )
229.2
—
788.8
(500.1 )
(500.0 )
17.9
0.2
—
0.2 $
(187.4 )
—
—
(0.1 )
—
(187.5 )
—
—
— $
416.0
44.6
(6.7 )
2.2
(874.9 )
12.2
(2.2 )
(11.2 )
(3.0 )
(3.4 )
(180.5 )
(21.4 )
(11.0 )
0.7
3.3
(275.3 )
(778.5 )
(83.4 )
(861.9 )
372.5
530.0
499.8
(0.1 )
(265.0 )
1,137.2
—
—
—
180.7 $
44.2 $
154.6 $
(152.6 ) $
148.9
(3.2 )
0.7 $
0.8 $
2.4
The accompanying Combined Notes to Financial Statements are an integral part hereof.
56
OKLAHOMA GAS AND ELECTRIC COMPANY
BALANCE SHEETS
December 31 (In millions)
ASSETS
CURRENT ASSETS
Cash and cash equivalents
Accounts receivable, less reserve of $2.2 and $1.9, respec vely
Accrued unbilled revenues
Advances to parent
Fuel inventories
Materials and supplies, at average cost
Fuel clause under recoveries
Other
Total current assets
OTHER PROPERTY AND INVESTMENTS
PROPERTY, PLANT AND EQUIPMENT
In service
Construc on work in progress
Total property, plant and equipment
Less: accumulated deprecia on
Net property, plant and equipment
DEFERRED CHARGES AND OTHER ASSETS
Regulatory assets
Other
Total deferred charges and other assets
TOTAL ASSETS
2023
2022
$
0.2 $
208.8
72.7
—
158.5
254.3
—
46.7
741.2
4.6
15,582.1
522.2
16,104.3
4,809.4
11,294.9
577.6
24.3
601.9
12,642.6 $
$
—
249.4
74.2
91.0
108.8
180.5
514.9
97.8
1,316.6
4.4
14,689.1
436.1
15,125.2
4,584.5
10,540.7
524.3
24.5
548.8
12,410.5
The accompanying Combined Notes to Financial Statements are an integral part hereof.
57
December 31 (In millions)
LIABILITIES AND STOCKHOLDER'S EQUITY
CURRENT LIABILITIES
Accounts payable
Advances from parent
Customer deposits
Accrued taxes
Accrued interest
Accrued compensa on
Long-term debt due within one year
Fuel clause over recoveries
Other
Total current liabili es
LONG-TERM DEBT
DEFERRED CREDITS AND OTHER LIABILITIES
Accrued benefit obliga ons
Deferred income taxes
Deferred investment tax credits
Regulatory liabili es
Other
Total deferred credits and other liabili es
Total liabili es
COMMITMENTS AND CONTINGENCIES (NOTE 13)
STOCKHOLDER'S EQUITY
Common stockholder's equity
Retained earnings
Total stockholder's equity
OKLAHOMA GAS AND ELECTRIC COMPANY
BALANCE SHEETS (Con nued)
2023
2022
$
228.5 $
147.7
103.5
47.2
56.6
37.0
—
20.5
43.6
684.6
4,290.6
96.2
1,340.8
11.3
1,061.6
182.8
2,692.7
7,667.9
395.8
—
88.8
46.5
40.8
27.8
500.0
—
49.3
1,149.0
3,498.9
98.3
1,271.1
12.0
1,147.1
188.9
2,717.4
7,365.3
1,577.7
3,397.0
4,974.7
12,642.6 $
1,574.6
3,470.6
5,045.2
12,410.5
TOTAL LIABILITIES AND STOCKHOLDER'S EQUITY
$
The accompanying Combined Notes to Financial Statements are an integral part hereof.
58
OKLAHOMA GAS AND ELECTRIC COMPANY
STATEMENTS OF CAPITALIZATION
December 31 (In millions except per share data)
STOCKHOLDER'S EQUITY
Common stock, par value $2.50 per share; authorized 100.0 shares; and outstanding 40.4 shares and
40.4 shares, respec vely
Premium on common stock
Retained earnings
Total stockholder's equity
LONG-TERM DEBT
SERIES
Senior Notes
0.553%
6.65%
6.50%
3.80%
3.30%
3.25%
5.40%
5.75%
6.45%
5.85%
5.25%
3.90%
4.55%
4.00%
4.15%
3.85%
5.60%
3.80%
Other Bonds
1.85% - 4.75%
1.85% - 4.60%
1.85% - 4.75%
Unamor zed debt expense
Unamor zed discount
Total long-term debt
DUE DATE
Senior Notes, Series Due May 26, 2023
Senior Notes, Series Due July 15, 2027
Senior Notes, Series Due April 15, 2028
Senior Notes, Series Due August 15, 2028
Senior Notes, Series Due March 15, 2030
Senior Notes, Series Due April 1, 2030
Senior Notes, Series Due January 15, 2033
Senior Notes, Series Due January 15, 2036
Senior Notes, Series Due February 1, 2038
Senior Notes, Series Due June 1, 2040
Senior Notes, Series Due May 15, 2041
Senior Notes, Series Due May 1, 2043
Senior Notes, Series Due March 15, 2044
Senior Notes, Series Due December 15, 2044
Senior Notes, Series Due April 1, 2047
Senior Notes, Series Due August 15, 2047
Senior Notes, Series Due April 1, 2053
Tinker Debt, Due August 31, 2062
Garfield Industrial Authority, January 1, 2025
Muskogee Industrial Authority, January 1, 2025
Muskogee Industrial Authority, June 1, 2027
2023
2022
$
100.9 $
1,476.8
3,397.0
4,974.7
100.9
1,473.7
3,470.6
5,045.2
—
125.0
100.0
400.0
300.0
300.0
450.0
110.0
200.0
250.0
250.0
250.0
250.0
250.0
300.0
300.0
350.0
9.2
47.0
32.4
56.0
(27.8 )
(11.2 )
4,290.6
—
4,290.6
9,265.3 $
500.0
125.0
100.0
400.0
300.0
300.0
—
110.0
200.0
250.0
250.0
250.0
250.0
250.0
300.0
300.0
—
9.3
47.0
32.4
56.0
(21.9 )
(8.9 )
3,998.9
(500.0 )
3,498.9
9,044.1
Less: long-term debt due within one year
Total long-term debt (excluding long-term debt due within one year)
Total capitaliza on (including long-term debt due within one year)
$
The accompanying Combined Notes to Financial Statements are an integral part hereof.
59
(In millions)
Balance at December 31, 2020
Net income
Dividends declared on common stock
Capital contribu on from OGE Energy
Stock-based compensa on
Balance at December 31, 2021
Net income
Stock-based compensa on
Balance at December 31, 2022
Net income
Dividends declared on common stock
Stock-based compensa on
Balance at December 31, 2023
OKLAHOMA GAS AND ELECTRIC COMPANY
STATEMENTS OF CHANGES IN STOCKHOLDER'S EQUITY
Common Stock
Shares
Outstanding
Value
Premium on
Common Stock
Retained
Earnings
Total
40.4 $
—
—
—
—
40.4 $
—
—
40.4 $
—
—
—
40.4 $
100.9 $
—
—
—
—
100.9 $
—
—
100.9 $
—
—
—
100.9 $
938.6 $
—
—
530.0
2.2
1,470.8 $
—
2.9
1,473.7 $
—
—
3.1
1,476.8 $
2,936.1 $
360.0
(265.0 )
—
—
3,031.1 $
439.5
—
3,470.6 $
426.4
(500.0 )
—
3,397.0 $
3,975.6
360.0
(265.0 )
530.0
2.2
4,602.8
439.5
2.9
5,045.2
426.4
(500.0 )
3.1
4,974.7
The accompanying Combined Notes to Financial Statements are an integral part hereof.
60
Index of Combined Notes to Financial Statements
COMBINED NOTES TO FINANCIAL STATEMENTS
The Combined Notes to the Financial Statements are a combined presenta on for OGE Energy and OG&E. The following table indicates the Registrant(s)
to which each Note applies.
Note 1. Summary of Significant Accoun ng Policies
Note 2. Accoun ng Pronouncements
Note 3. Revenue Recogni on
Note 4. Leases
Note 5. Fair Value Measurements
Note 6. Stock-Based Compensa on
Note 7. Income Taxes
Note 8. Common Equity
Note 9. Long-Term Debt
Note 10. Short-Term Debt and Credit Facili es
Note 11. Re rement Plans and Postre rement Benefit Plans
Note 12. Report of Business Segments
Note 13. Commitments and Con ngencies
Note 14. Rate Ma ers and Regula on
1. Summary of Significant Accoun ng Policies
Organiza on
OGE Energy
X
X
X
X
X
X
X
X
X
X
X
X
X
X
OG&E
X
X
X
X
X
X
X
X
X
X
X
X
X
OGE Energy is a holding company whose primary investment provides electricity in Oklahoma and western Arkansas. OGE Energy's electric company
opera ons are conducted through its wholly-owned subsidiary, OG&E, which generates, transmits, distributes and sells electric energy in Oklahoma and
western Arkansas and are reported through OGE Energy's electric company business segment. OG&E's rates are subject to regula on by the OCC, the APSC
and the FERC. OG&E was incorporated in 1902 under the laws of the Oklahoma Territory and is the largest electric company in Oklahoma, with a franchised
service territory that includes Fort Smith, Arkansas and the surrounding communi es. OG&E sold its retail natural gas business in 1928 and is no longer
engaged in the natural gas distribu on business.
The accounts of OGE Energy and its wholly-owned subsidiaries, including OG&E, are included in OGE Energy's consolidated financial statements. All
intercompany transac ons and balances are eliminated in such consolida on.
During 2022, OGE Energy accounted for its investment in Energy Transfer as an investment in equity securi es and reported the Energy Transfer
investment, along with legacy Enable seconded employee pension and postre rement costs, through OGE Energy's natural gas midstream opera ons
segment. As of the end of September 2022, OGE Energy sold all of its Energy Transfer limited partner units. Therefore, beginning in 2023, OGE Energy no
longer has a natural gas opera ons repor ng segment. Prior to OGE Energy's sale of all Energy Transfer limited partner units, the investment in Energy
Transfer's equity securi es was held through wholly-owned subsidiaries and ul mately OGE Holdings.
Accoun ng Records
The accoun ng records of OG&E are maintained in accordance with the Uniform System of Accounts prescribed by the FERC and adopted by the OCC
and the APSC. Addi onally, OG&E, as a regulated electric company, is subject to accoun ng principles for certain types of rate-regulated ac vi es, which
provide that certain incurred costs that would otherwise be charged to expense can be deferred as regulatory assets, based on the expected recovery from
customers in future rates. Likewise, certain actual or an cipated credits that would otherwise reduce expense can be deferred as regulatory liabili es, based
on the expected flowback to customers
61
in future rates. Management's expected recovery of deferred costs and flowback of deferred credits generally results from specific decisions by regulators
gran ng such ratemaking treatment.
OG&E records certain incurred costs and obliga ons as regulatory assets or liabili es if, based on regulatory orders or other available evidence, it is
probable that the costs or obliga ons will be included in amounts allowable for recovery or refund in future rates.
The following table presents a summary of OG&E's regulatory assets and liabili es.
December 31 (In millions)
REGULATORY ASSETS
Current:
Oklahoma Energy Efficiency Rider under recoveries (A)
Oklahoma fuel clause under recoveries
Arkansas fuel clause under recoveries
Other (A)
Total current regulatory assets
Non-current:
Oklahoma deferred storm expenses
Pension tracker
Benefit obliga ons regulatory asset
Arkansas Winter Storm Uri costs
Sooner Dry Scrubbers
Arkansas deferred pension expenses
Unamor zed loss on reacquired debt
COVID-19 impacts
Oklahoma SAP S/4 HANA deferred expenses
Fron er Plant deferred expenses
Other
Total non-current regulatory assets
REGULATORY LIABILITIES
Current:
Oklahoma fuel clause over recoveries
SPP cost tracker over recovery (B)
Arkansas fuel clause over recoveries
Other (B)
Total current regulatory liabili es
Non-current:
Income taxes refundable to customers, net
Accrued removal obliga ons, net
Other
Total non-current regulatory liabili es
(A)
(B)
Included in Other Current Assets in the balance sheets.
Included in Other Current Liabili es in the balance sheets.
2023
2022
3.8 $
—
—
2.7
6.5 $
261.1 $
91.9
89.4
71.0
17.2
12.7
7.2
6.8
6.0
3.6
10.7
577.6 $
15.6 $
10.4
4.9
2.3
33.2 $
7.7
474.3
40.6
4.7
527.3
206.3
57.2
119.7
78.2
18.1
12.3
8.0
7.7
0.7
5.2
10.9
524.3
—
3.0
—
2.5
5.5
838.0 $
222.0
1.6
1,061.6 $
894.7
250.5
1.9
1,147.1
$
$
$
$
$
$
$
$
OG&E recovers program costs related to the Energy Efficiency Program in Oklahoma through the Energy Efficiency Rider, which operates on a three-year
program cycle. The current program cycle, which runs through 2024, includes recovery of (i) energy efficiency program costs, (ii) lost revenues associated with
certain achieved energy efficiency and demand savings, (iii) performance-based incen ves and (iv) costs associated with research and development
investments.
OG&E includes in expense any Oklahoma storm-related opera on and maintenance expenses up to $2.7 million annually and defers to a regulatory
asset any addi onal expenses incurred over $2.7 million. OG&E typically recovers the amounts deferred each year over a five to ten year period in accordance
with historical prac ce.
62
OG&E recovers specific amounts of pension and postre rement medical costs in rates approved in its Oklahoma rate reviews. In accordance with
approved orders, OG&E defers the difference between actual pension and postre rement medical expenses and the amount approved in its last Oklahoma
rate review as a regulatory asset or regulatory liability. These amounts have been recorded in the Pension tracker regulatory asset in the table above and are
being recovered over a 15 year period.
The benefit obliga ons regulatory asset is comprised of expenses recorded which are probable of future recovery and that have not yet been recognized
as components of net periodic benefit cost, including net loss and prior service cost. These expenses are recorded as a regulatory asset, as OG&E historically
has recovered and currently recovers pension and postre rement benefit plan expense in its electric rates. If, in the future, the regulatory bodies indicate a
change in policy related to the recovery of pension and postre rement benefit plan expenses, this could cause the benefit obliga ons regulatory asset
balance to be reclassified to accumulated other comprehensive income.
The following table presents a summary of the components of the benefit obliga ons regulatory asset.
December 31 (In millions)
Pension Plan and Restora on of Re rement Income Plan:
Net loss
Postre rement Benefit Plans:
Net loss
Total
2023
2022
$
$
75.9 $
13.5
89.4 $
110.0
9.7
119.7
In February 2021, Winter Storm Uri resulted in record winter peak demand for electricity and extremely high natural gas and purchased power prices in
OG&E's service territory. In January 2023, the APSC ordered OG&E to amor ze the deferred costs in a regulatory asset balance over 10 years using a weighted
average cost of capital as a carrying charge.
As approved by the OCC, OG&E deferred the non-fuel incremental opera on and maintenance expenses, deprecia on, debt cost associated with the
capital investment and related ad valorem taxes for the Dry Scrubbers at Sooner Units 1 and 2 as a regulatory asset, and these costs are being recovered over
25 years.
Arkansas includes a certain level of pension expense in base rates. When the Pension Plan experiences a se lement, which represents an accelera on of
future pension costs, OG&E defers to a regulatory asset the Arkansas jurisdic onal por on of each se lement, which historically has been recovered from
customers over the average life of the remaining plan par cipants. A por on of these se lements is being recovered in current rates, and recovery of
addi onal amounts will be requested as addi onal se lements occur. For addi onal informa on related to se lements, see Note 11.
Unamor zed loss on reacquired debt is comprised of unamor zed debt issuance costs related to the early re rement of OG&E's long-term debt. These
amounts are recorded in interest expense and are being amor zed over the term of the long-term debt which replaced the previous long-term debt. The
unamor zed loss on reacquired debt is recovered as a part of OG&E's cost of capital.
In response to the COVID-19 pandemic, the OCC and APSC issued orders allowing OG&E to defer certain expenses related to its COVID-19 response, such
as incremental expenses that were related to the suspension of or delay in disconnec on of service and addi onal expenses associated with ensuring the
con nuity of electric u lity service. As approved by the OCC, OG&E is recovering the Oklahoma jurisdic onal por on of these costs over five years.
As approved by the OCC, OG&E established a regulatory asset to defer the Oklahoma jurisdic onal por on of opera on and maintenance costs
associated with OG&E's SAP S/4 HANA enterprise resource planning system project. These costs will be included for considera on in a future rate proceeding.
OG&E deferred to a regulatory asset the Oklahoma jurisdic onal por on of costs, including non-fuel opera on and maintenance expenses, deprecia on,
taxes other than income taxes and a return on capital, for its investment in the Fron er plant. As approved by the OCC, OG&E is recovering these costs over a
five year period.
Fuel clause under and over recoveries are generated from OG&E's customers when OG&E's cost of fuel either exceeds or is less than the amount billed
to its customers, respec vely. OG&E's fuel recovery clauses are designed to smooth the impact of fuel price vola lity on customers' bills. As a result, OG&E
under recovers fuel costs in periods of rising fuel prices above the baseline charge for
63
fuel and over recovers fuel costs when prices decline below the baseline charge for fuel. Provisions in the fuel clauses are intended to allow OG&E to amor ze
under and over recovery balances.
OG&E recovers certain SPP costs related to base plan charges from its customers and refunds certain SPP revenues received to its customers in
Oklahoma through the SPP cost tracker and in Arkansas through the transmission cost recovery rider.
Income taxes refundable to customers, net, primarily represents the reduc on in accumulated deferred income taxes that resulted from the reduc on in
the federal income tax rate as part of the Tax Cuts and Jobs Act of 2017 as well as other state tax rate changes, par ally offset by income taxes recoverable
from customers primarily related to the equity component of the allowance for funds used during construc on. These net liabili es will be returned to
customers in varying amounts over approximately 80 years, and the assets will be amor zed over the es mated remaining life of the assets to which they
relate, as the temporary differences that generated the income tax benefits turn-around.
Accrued removal obliga ons, net represents asset removal costs previously recovered from ratepayers.
Management con nuously monitors the future recoverability of regulatory assets. When in management's judgment future recovery becomes impaired,
the amount of the regulatory asset is adjusted, as appropriate. If OG&E were required to discon nue the applica on of accoun ng principles for certain types
of rate-regulated ac vi es for some or all of its opera ons, it could result in wri ng off the related regulatory assets or liabili es, which could have significant
financial effects.
Use of Es mates
In preparing the financial statements, management is required to make es mates and assump ons that affect the reported amounts of assets and
liabili es and disclosure of con ngent assets and con ngent liabili es at the date of the financial statements and the reported amounts of revenues and
expenses during the repor ng period. Actual results could differ from those es mates. Changes to these assump ons and es mates could have a material
effect on the Registrants' financial statements. However, the Registrants believe they have taken reasonable posi ons where assump ons and es mates are
used in order to minimize the nega ve financial impact to the Registrants that could result if actual results vary from the assump ons and es mates. In
management's opinion, the areas where the most significant judgment is exercised include the determina on of pension and postre rement plan
assump ons, income taxes, con ngency reserves, and regulatory assets and liabili es.
Cash and Cash Equivalents
For purposes of the financial statements, the Registrants consider all highly liquid investments purchased with an original maturity of three months or
less to be cash equivalents. These investments are carried at cost, which approximates fair value.
Allowance for Uncollec ble Accounts Receivable
Customer balances are generally wri en off if not collected within six months a er the final billing date. The allowance for uncollec ble accounts
receivable for OG&E is generally calculated by mul plying the last six months of electric revenue by the provision rate, which is based on a 12-month
historical average of actual balances wri en off and is adjusted for current condi ons and supportable forecasts as necessary. To the extent the historical
collec on rates, when incorpora ng forecasted condi ons, are not representa ve of future collec ons, there could be an effect on the amount of
uncollec ble expense recognized. Also, a por on of the uncollec ble provision related to fuel within the Oklahoma jurisdic on is being recovered through the
fuel adjustment clause. The allowance for uncollec ble accounts receivable is a reduc on to Accounts Receivable in the balance sheets and is included in
Other Opera on and Maintenance Expense in the statements of income. The allowance for uncollec ble accounts receivable was $2.2 million and $1.9
million at December 31, 2023 and 2022, respec vely.
New business customers are required to provide a security deposit in the form of cash, bond or irrevocable le er of credit that is refunded when the
account is closed. New residen al customers whose outside credit scores indicate an elevated risk are required to provide a security deposit that is refunded
based on customer protec on rules defined by the OCC and the APSC. The payment behavior of all exis ng customers is con nuously monitored, and, if the
payment behavior indicates sufficient risk within the meaning of the applicable u lity regula on, customers will be required to provide a security deposit.
64
Fuel Inventories
Fuel inventories for the genera on of electricity consist of coal, natural gas, oil and alterna ve fuel. OG&E uses the weighted-average cost method of
accoun ng for inventory that is physically added to or withdrawn from storage or stockpiles. OG&E held $158.5 million and $108.8 million of fuel inventory at
December 31, 2023 and 2022, respec vely.
Property, Plant and Equipment
All property, plant and equipment is recorded at cost. Newly constructed plant is added to plant balances at cost which includes contracted services,
direct labor, materials, overhead, transporta on costs and the allowance for funds used during construc on. Replacements of units of property are
capitalized as plant. For assets that belong to a common plant account, the replaced plant is removed from plant balances, and the cost of such property net
of any salvage proceeds is charged to Accumulated Deprecia on. For assets that do not belong to a common plant account, the replaced plant is removed
from plant balances with the related accumulated deprecia on, and the remaining balance net of any salvage proceeds is recorded as a loss in the statements
of income as Other Expense. Repair and replacement of minor items of property are included in the statements of income as Other Opera on and
Maintenance Expense.
The following tables present OG&E's ownership interest in the jointly-owned McClain Plant and the jointly-owned Redbud Plant, and, as disclosed below,
only OG&E's ownership interest is reflected in the property, plant and equipment and accumulated deprecia on balances in these tables. The owners of the
remaining interests in the McClain Plant and the Redbud Plant are responsible for providing their own financing of capital expenditures. Also, only OG&E's
propor onate interests of any direct expenses of the McClain Plant and the Redbud Plant, such as fuel, maintenance expense and other opera ng expenses,
are included in the applicable financial statement cap ons in the statements of income.
December 31, 2023 (In millions)
McClain Plant (A)
265.4 $
548.9 $
Redbud Plant (A)(B)
(A) Construc on work in progress was $0.3 million and $2.0 million for the McClain and Redbud Plants, respec vely.
(B) This amount includes a plant acquisi on adjustment of $148.3 million and accumulated amor za on of $83.8 million.
77 % $
51 % $
129.2 $
245.5 $
136.2
303.4
Percentage
Ownership
Total Property,
Plant and
Equipment
Accumulated
Deprecia on
Net Property,
Plant and
Equipment
December 31, 2022 (In millions)
261.9 $
McClain Plant (A)
542.1 $
Redbud Plant (A)(B)
(A) Construc on work in progress was $0.7 million and $1.5 million for the McClain and Redbud Plants, respec vely.
(B) This amount includes a plant acquisi on adjustment of $148.3 million and accumulated amor za on of $78.3 million.
77 % $
51 % $
119.4 $
225.2 $
142.5
316.9
Percentage
Ownership
Total Property,
Plant and
Equipment
Accumulated
Deprecia on
Net Property,
Plant and
Equipment
The following tables present the Registrants' major classes of property, plant and equipment and related accumulated deprecia on.
December 31, 2023 (In millions)
OG&E:
Distribu on assets
Electric genera on assets (A)
Transmission assets (B)
Intangible plant
Other property and equipment
OG&E property, plant and equipment
Non-OG&E property, plant and equipment
Total OGE Energy property, plant and equipment
Total Property,
Plant and
Equipment
Accumulated
Deprecia on
Net Property,
Plant and
Equipment
$
$
6,290.1 $
5,295.9
3,306.7
568.5
643.1
16,104.3
6.1
16,110.4 $
1,564.3 $
2,081.0
707.6
219.8
236.7
4,809.4
—
4,809.4 $
4,725.8
3,214.9
2,599.1
348.7
406.4
11,294.9
6.1
11,301.0
(A) This amount includes a plant acquisi on adjustment of $148.3 million and accumulated amor za on of $83.8 million.
(B) This amount includes a plant acquisi on adjustment of $3.3 million and accumulated amor za on of $1.1 million.
65
December 31, 2022 (In millions)
OG&E:
Distribu on assets
Electric genera on assets (A)
Transmission assets (B)
Intangible plant
Other property and equipment
OG&E property, plant and equipment
Non-OG&E property, plant and equipment
Total OGE Energy property, plant and equipment
Total Property,
Plant and
Equipment
Accumulated
Deprecia on
Net Property,
Plant and
Equipment
$
$
5,781.3 $
5,188.1
3,180.5
384.0
591.3
15,125.2
6.1
15,131.3 $
1,527.1 $
1,982.7
667.9
193.6
213.2
4,584.5
—
4,584.5 $
4,254.2
3,205.4
2,512.6
190.4
378.1
10,540.7
6.1
10,546.8
(A) This amount includes a plant acquisi on adjustment of $148.3 million and accumulated amor za on of $78.3 million.
(B) This amount includes a plant acquisi on adjustment of $3.3 million and accumulated amor za on of $1.0 million.
OG&E's unamor zed computer so ware costs, included in intangible plant above, were $203.1 million and $143.2 million at December 31, 2023 and
2022, respec vely. OG&E's amor za on expense for computer so ware costs was $33.4 million, $23.5 million and $18.1 million for the years ended
December 31, 2023, 2022 and 2021, respec vely.
Deprecia on and Amor za on
Deprecia on expense was $421.6 million, $388.5 million and $361.5 million for the years ended December 31, 2023, 2022 and 2021, respec vely. The
provision for deprecia on, which was 2.8 percent, 2.7 percent and 2.6 percent of the average depreciable u lity plant for 2023, 2022 and 2021, respec vely,
is calculated using the straight-line method over the es mated service life of the associated assets. Deprecia on is provided at the unit level for produc on
plant and at the account or sub-account level for all other plant and is based on the average life group method. In 2024, the provision for deprecia on is
projected to be 2.8 percent of the average depreciable u lity plant.
Amor za on of intangible assets is calculated using the straight-line method. Of the remaining amor zable intangible plant balance at December 31,
2023, 45.7 percent will be amor zed over 6.7 years, 43.7 percent will be amor zed over 13.8 years, 10.2 percent will be amor zed over 15.0 years, and the
remaining 0.4 percent will be amor zed over 22.4 years.
Amor za on of plant acquisi on adjustments is provided on a straight-line basis over the es mated remaining service life of the acquired assets. Plant
acquisi on adjustments include $148.3 million for the Redbud Plant, which is being amor zed over a 27 year life, and $3.3 million for certain transmission
substa on facili es in OG&E's service territory, which is being amor zed over a 37 to 59-year period.
Asset Re rement Obliga ons
OG&E has asset re rement obliga ons primarily associated with the removal of company-owned wind turbines on leased land, as well as the removal of
asbestos from certain power genera ng sta ons. OG&E has recorded asset re rement obliga ons that are being accreted over their respec ve lives ranging
from two to 68 years. Asset re rement obliga ons are included in Other Deferred Credits and Other Liabili es in the Registrants' balance sheets.
The following table presents changes to OG&E's asset re rement obliga ons during the years ended December 31, 2023 and 2022.
(In millions)
Balance at January 1
Accre on expense
Liabili es se led (A)
Revisions in es mated cash flows (B)
Balance at December 31
$
$
2023
2022
78.3 $
0.7
—
2.3
81.3 $
80.2
0.6
(2.5 )
—
78.3
(A) Asset re rement obliga ons were se led for asbestos removal at OG&E's genera ng facili es.
(B) Assump ons changed related to the es mated ming and es mated cost of the removal of asbestos at OG&E's genera ng facili es.
66
Accruals for environmental costs are recognized when it is probable that a liability has been incurred and the amount of the liability can be reasonably
es mated. Costs are charged to expense or deferred as a regulatory asset based on expected recovery from customers in future rates, if they relate to the
remedia on of condi ons caused by past opera ons or if they are not expected to mi gate or prevent contamina on from future opera ons. Where
environmental expenditures relate to facili es currently in use, such as pollu on control equipment, the costs may be capitalized and depreciated over the
future service periods. Es mated remedia on costs are recorded at undiscounted amounts, independent of any insurance or rate recovery, based on prior
experience, assessments and current technology. Accrued obliga ons are regularly adjusted as environmental assessments and es mates are revised and
remedia on efforts proceed. For sites where OG&E has been designated as one of several poten ally responsible par es, the amount accrued represents
OG&E's es mated share of the cost. OG&E had $27.5 million and $24.2 million in accrued environmental liabili es at December 31, 2023 and 2022,
respec vely, which are included in OG&E's asset re rement obliga ons.
Allowance for Funds Used During Construc on
Allowance for funds used during construc on, a non-cash item, is reflected as an increase to Net Other Income and a reduc on to Interest Expense in
the statements of income and as an increase to Construc on Work in Progress in the balance sheets. Allowance for funds used during construc on is
calculated according to the FERC requirements for the imputed cost of equity and borrowed funds. Allowance for funds used during construc on rates,
compounded semi-annually, were 7.0 percent, 4.8 percent and 7.4 percent for the years ended December 31, 2023, 2022 and 2021, respec vely.
Collec on of Sales Tax
In the normal course of its opera ons, OG&E collects sales tax from its customers. OG&E records a current liability for sales taxes when it bills its
customers and eliminates this liability when the taxes are remi ed to the appropriate governmental authori es. OG&E excludes the sales tax collected from
its opera ng revenues.
Revenue Recogni on
General
OG&E recognizes revenue from electric sales when power is delivered to customers. The performance obliga on to deliver electricity is generally
created and sa sfied simultaneously, and the provisions of the regulatory-approved tariff determine the charges OG&E may bill the customer, payment due
date and other per nent rights and obliga ons of both par es. OG&E measures its customers' metered usage and sends bills to its customers throughout
each month. As a result, there is a significant amount of customers' electricity consump on that has not been billed at the end of each month. OG&E accrues
an es mate of the revenues for electric sales delivered since the latest billings. Unbilled revenue is presented in Accrued Unbilled Revenues in the balance
sheets and in Revenues from Contracts with Customers in the statements of income based on es mates of usage and prices during the period. The es mates
that management uses in this calcula on could vary from the actual amounts to be paid by customers.
Integrated Market and Transmission
OG&E currently owns and operates transmission and genera on facili es as part of a ver cally integrated u lity. OG&E is a member of the SPP regional
transmission organiza on and has transferred opera onal authority, but not ownership, of OG&E's transmission facili es to the SPP. The SPP has
implemented FERC-approved regional day-ahead and real- me markets for energy and opera ng services, as well as associated transmission conges on
rights. Collec vely, the three markets operate together under the global name, SPP Integrated Marketplace. OG&E represents owned and contracted
genera on assets and customer load in the SPP Integrated Marketplace for the sole benefit of its customers. OG&E has not par cipated in the SPP Integrated
Marketplace for any specula ve trading ac vi es.
OG&E records the SPP Integrated Marketplace transac ons as sales or purchases per FERC Order 668, which requires that purchases and sales be
recorded on a net basis for each se lement period of the SPP Integrated Marketplace. Purchases and sales are based on the fixed transac on price
determined by the market at the me of the purchase or sale and the MWh quan ty purchased or sold. These results are reported as Revenues from
Contracts with Customers or Fuel, Purchased Power and Direct Transmission Expense in the statements of income. OG&E's revenues, expenses, assets and
liabili es may be adversely affected by changes in the organiza on, opera ng and regula on by the FERC or the SPP.
67
OG&E's transmission revenues are generated by the use of OG&E's transmission network by the SPP, which operates the network, on behalf of other
transmission owners. OG&E recognizes revenue on the sale of transmission service to its customers over me as the service is provided in the amount OG&E
has a right to invoice. Transmission service to the SPP is billed monthly based on a fixed transac on price determined by OG&E's FERC-approved formula
transmission rates along with other SPP-specific charges and the megawa quan ty reserved.
Other Revenues
Other Revenues in the statements of income is comprised of certain rider revenue that includes alterna ve revenue measures as defined in ASC 980,
"Regulated Opera ons," which details two types of alterna ve revenue programs. The first type adjusts billings for the effects of weather abnormali es or
broad external factors or to compensate OG&E for demand-side management ini a ves (i.e., no-growth plans and similar conserva on efforts). The second
type provides for addi onal billings (i.e., incen ve awards) for the achievement of certain objec ves, such as reducing costs, reaching specified milestones or
demonstra vely improving customer service. Once the specific events permi ng billing of the addi onal revenues under either program type have been
completed, OG&E recognizes the addi onal revenues if (i) the program is established by an order from OG&E's regulatory commission that allows for
automa c adjustment of future rates; (ii) the amount of addi onal revenues for the period is objec vely determinable and is probable of recovery; and (iii)
the addi onal revenues will be collected within 24 months following the end of the annual period in which they are recognized.
Fuel Adjustment Clauses
The actual cost of fuel used in electric genera on and certain purchased power costs are generally recoverable from OG&E's customers through fuel
adjustment clauses. The fuel adjustment clauses are subject to periodic review by the OCC and the APSC.
Leases
The Registrants evaluate all contracts under ASC 842 to determine if the contract is or contains a lease and to determine classifica on as an opera ng or
finance lease. If a lease is iden fied, the Registrants recognize a right-of-use asset and a lease liability in their balance sheets. The Registrants recognize and
measure a lease liability when they conclude the contract contains an iden fied asset that the Registrants control through having the right to obtain
substan ally all of the economic benefits and the right to direct the use of the iden fied asset. The liability is equal to the present value of lease payments,
and the asset is based on the liability, subject to adjustment, such as for ini al direct costs. Further, the Registrants u lize an incremental borrowing rate for
purposes of measuring lease liabili es, if the discount rate is not implicit in the lease. To calculate the incremental borrowing rate, the Registrants start with a
current pricing report for their senior unsecured notes, which indicates rates for periods reflec ve of the lease term, and adjust for the effects of collateral to
arrive at the secured incremental borrowing rate. As permi ed by ASC 842, the Registrants made an accoun ng policy elec on to not apply the balance sheet
recogni on requirements to short-term leases and to not separate lease components from non-lease components when recognizing and measuring lease
liabili es. For income statement purposes, the Registrants record opera ng lease expense on a straight-line basis.
Income Taxes
OGE Energy files consolidated income tax returns in the U.S. federal jurisdic on and various state jurisdic ons. OG&E is a part of the consolidated tax
return of OGE Energy. Income taxes are generally allocated to each company in the affiliated group, including OG&E, based on its stand-alone taxable income
or loss. Federal investment tax credits previously claimed on electric company property have been deferred and will be amor zed to income over the life of
the related property. The Registrants use the asset and liability method of accoun ng for income taxes. Under this method, a deferred tax asset or liability is
recognized for the es mated future tax effects a ributable to temporary differences between the financial statement basis and the tax basis of assets and
liabili es as well as tax credit carry forwards and net opera ng loss carry forwards. Deferred tax assets and liabili es are measured using enacted tax rates
expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or se led. The effect on deferred tax
assets and liabili es of a change in tax rates is recognized in the period of the change. The Registrants recognize interest related to unrecognized tax benefits
in Interest Expense and recognize penal es in Other Expense in the statements of income. Deferred tax assets are evaluated for future realiza on and
reduced by a valua on allowance to the extent the Registrants believe they will not be realized.
68
Accrued Vaca on
The Registrants accrue vaca on pay monthly by establishing a liability for vaca on earned. Vaca on may be taken as earned and is charged against the
liability. At the end of each year, the liability represents the amount of vaca on earned but not taken.
Related Party Transac ons
OGE Energy charges opera ng costs to OG&E based on several factors, and opera ng costs directly related to OG&E are assigned as such. Opera ng
costs incurred for the benefit of OG&E are allocated either as overhead based primarily on labor costs or using the "Distrigas" method, which is a three-factor
formula that uses an equal weigh ng of payroll, net opera ng revenues and gross property, plant and equipment. OGE Energy adopted this method as a
result of a recommenda on by the OCC Staff and believes this method provides a reasonable basis for alloca ng common expenses.
OGE Energy charged opera ng costs to OG&E of $148.3 million, $135.5 million and $139.3 million during the years ended December 31, 2023, 2022 and
2021, respec vely. In 2023 and 2021, OG&E declared $500.0 million and $265.0 million of dividends to OGE Energy, respec vely. In 2022, OG&E declared no
dividends to OGE Energy.
Accumulated Other Comprehensive Income (Loss)
The following table presents changes in the components of accumulated other comprehensive income (loss) a ributable to OGE Energy during 2023 and
2022. All amounts below are presented net of tax.
(In millions)
Balance at December 31, 2021
Other comprehensive income (loss) before reclassifica ons
Amounts reclassified from accumulated other comprehensive income (loss)
Se lement cost
Net current period other comprehensive income (loss)
Balance at December 31, 2022
Other comprehensive income (loss) before reclassifica ons
Amounts reclassified from accumulated other comprehensive income (loss)
Se lement cost
Net current period other comprehensive income (loss)
Balance at December 31, 2023
69
Pension Plan and
Restora on of Re rement
Income Plan
Postre rement Benefit
Plans
Net Gain
(Loss)
Prior
Service Cost
(Credit)
Net Gain
(Loss)
Prior
Service Cost
(Credit)
Total
$
$
(24.9 ) $
(7.6 )
1.4
13.6
7.4
(17.5 )
3.3
0.9
1.2
5.4
(12.1 ) $
(1.2 ) $
—
0.2
—
0.2
(1.0 )
—
0.2
—
0.2
(0.8 ) $
1.1 $
5.5
—
—
5.5
6.6
(0.8 )
(0.1 )
—
(0.9 )
5.7 $
0.2 $
—
(0.2 )
—
(0.2 )
—
—
—
—
—
— $
(24.8 )
(2.1 )
1.4
13.6
12.9
(11.9 )
2.5
1.0
1.2
4.7
(7.2 )
The following table presents significant amounts reclassified out of accumulated other comprehensive income (loss) by the respec ve line items in net
income during the years ended December 31, 2023 and 2022.
Details about Accumulated Other Comprehensive Income (Loss)
Components
(In millions)
Amor za on of Pension Plan and Restora on of Re rement Income Plan
items:
Actuarial losses
Prior service cost
Se lement cost
Amor za on of postre rement benefit plans items:
Prior service credit
Actuarial gains
Total reclassifica ons for the period, net of tax
Amount Reclassified from Accumulated
Other Comprehensive Income (Loss)
Year Ended December 31,
2022
2023
Affected Line Item in
OGE Energy's Statements of Income
$
$
$
$
$
(1.1 ) $
(0.3 )
(1.6 )
(3.0 )
(0.7 )
(2.3 ) $
— $
0.2
0.2
0.1
0.1 $
(1.6 ) (A)
(0.3 ) (A)
(17.9 ) (A)
(19.8 ) Income Before Taxes
(4.6 ) Income Tax Expense
(15.2 ) Net Income
0.3 (A)
— (A)
0.3 Income Before Taxes
0.1 Income Tax Expense
0.2 Net Income
(2.2 ) $
(15.0 ) Net Income
(A) These accumulated other comprehensive income (loss) components are included in the computa on of net periodic benefit cost (see Note 11 for
addi onal informa on).
Investment in Unconsolidated Affiliates and Related Party Transac ons (Enable)
On December 2, 2021, Energy Transfer completed its acquisi on of Enable, and as part of the transac on, Energy Transfer also acquired the general
partner interests of Enable from OGE Energy and CenterPoint for cash considera on. OGE Energy accounted for its investment in Enable as an equity method
investment un l the merger with Energy Transfer closed on December 2, 2021. As a result of the transac on, OGE Energy recorded a pre-tax gain of $344.4
million, which contemplates the December 2, 2021 fair value of the Energy Transfer securi es, the December 2, 2021 balance of OGE Energy's equity method
investment in Enable, the $35.0 million cash payment received as part of the transac on ($5.0 million from Energy Transfer and $30.0 million from
CenterPoint), the accumulated other comprehensive loss impact of OGE Energy's share of Enable's interest rate deriva ve losses and OGE Energy's
transac on costs of $8.6 million. Further discussion of the transac on can be found in OGE Energy's 2021 Form 10-K.
OGE Energy considered distribu ons received from Enable which did not exceed cumula ve equity in earnings subsequent to the date of investment to
be a return on investment and were classified as opera ng ac vi es in the statements of cash flows. Distribu ons received from Enable were $73.4 million
during the year ended December 31, 2021.
In this Form 10-K, Enable ac vity is included for the relevant por on of OGE Energy's 2021 informa on presented through December 2, 2021. The below
informa on is provided for prior year context.
The following table presents a reconcilia on of OGE Energy's equity in earnings of unconsolidated affiliates for the period of January 1, 2021 through
December 2, 2021.
(In millions)
Enable net income used to calculate OGE Energy's equity in earnings
OGE Energy's percent ownership at period end
OGE Energy's por on of Enable net income
Amor za on of basis difference and dilu on recogni on (A)
Equity in earnings of unconsolidated affiliates
(A)
Includes loss on dilu on, net of propor onal basis difference recogni on.
70
$
$
$
470.0
25.5 %
119.8
50.0
169.8
Related Party Transac ons - OGE Energy and Enable
Prior to December 2, 2021, OGE Energy charged opera ng costs to Enable based on several factors, and opera ng costs directly related to Enable were
assigned as such.
Further, OGE Energy and Enable were par es to several agreements whereby OGE Energy provided specified support services to Enable, such as certain
informa on technology, payroll and benefits administra on. Under these agreements, OGE Energy charged opera ng costs to Enable of $0.3 million for the
period of January 1, 2021 through December 2, 2021.
OGE Energy also provided re rement benefits and re ree health care benefits to employees previously seconded to Enable. OGE Energy billed Enable
for reimbursement of $12.2 million in 2021 for employment costs under the former seconding agreement. As of a result of the merger between Enable and
Energy Transfer, the seconding agreement was terminated, and those employees were no longer employed by OGE Energy. If lump sum payments were made
to those employees previously seconded to Enable, OGE Energy would recognize a se lement or curtailment of the pension/re ree health care charges,
which would increase expense at OGE Energy by $4.1 million. Se lement and curtailment charges associated with the employees previously seconded to
Enable are not reimbursable to OGE Energy.
Related Party Transac ons - OG&E and Enable
Enable provided gas transporta on services to OG&E pursuant to agreements that granted Enable the responsibility of delivering natural gas to OG&E's
genera ng facili es and performing an imbalance service. Upon the closing of the merger between Enable and Energy Transfer, these contracts were assumed
by Energy Transfer. The following table presents summarized related party transac ons between OG&E and Enable during the period of January 1, 2021
through December 2, 2021.
(In millions)
Opera ng revenues:
Electricity to power electric compression assets
Fuel, purchased power and direct transmission expense:
Natural gas transporta on services
Natural gas sales
Investment in Equity Securi es of Energy Transfer
$
$
$
13.3
32.7
(33.5 )
For the period of December 2, 2021 through September 30, 2022, OGE Energy accounted for its investment in Energy Transfer's equity securi es as an
equity investment with a readily determinable fair value under ASC 321, "Investments – Equity Securi es." As of the end of September 2022, OGE Energy sold
all of its 95.4 million Energy Transfer limited partner units, resul ng in pre-tax net proceeds of $1,067.2 million. Prior to exi ng its Energy Transfer investment,
OGE Energy presented the Energy Transfer equity securi es at fair value in its balance sheet. OGE Energy presented realized gains and losses of the equity
securi es, as well as dividend income from the investment, within the Other Income (Expense) sec on in its 2022 and 2021 statements of income, as
appropriate. During the year ended December 31, 2022, OGE Energy recognized a gain of $282.1 million related to its investment in Energy Transfer's equity
securi es. Due to OGE Energy's sale of all Energy Transfer limited partner units, at December 31, 2022, there was no unrecognized gain or loss related to the
investment. For the period between December 2, 2021 and December 31, 2021, OGE Energy had an unrealized loss of $8.6 million related to its investment in
Energy Transfer's equity securi es. During the year ended December 31, 2022, OGE Energy received distribu ons of $34.0 million from Energy Transfer, which
are presented within Other Income in OGE Energy's 2022 consolidated statements of income.
Reclassifica ons
Certain prior year amounts have been reclassified to conform to current year presenta on. The Registrants changed the classifica on of removal costs
related to long-lived assets in their 2022 and 2021 cash flow statements to conform with current year presenta on. The 2022 and 2021 reclassifica ons of
$109.3 million and $83.4 million, respec vely, from Regulatory Liabili es in Net Cash Provided from/Used in Opera ng Ac vi es to Cost of Removal and Other
in Net Cash Used in Inves ng Ac vi es did not impact previously reported Net Change in Cash and Cash Equivalents.
71
2. Accoun ng Pronouncements
In September 2022, the Financial Accoun ng Standards Board issued ASU 2022-04, "Liabili es - Supplier Finance Programs (Subtopic 405-50)." The
amendments in this update require that a buyer in a supplier finance program disclose in each annual repor ng period: (i) the key terms of the program,
including a descrip on of the payment terms and assets pledged as security or other forms of guarantees provided for the commi ed payment to the finance
provider and (ii) the amount outstanding that remains unpaid by the buyer as of year-end, a descrip on of where those obliga ons are presented in the
balance sheet and a rollforward of those obliga ons during the annual period. The standard was effec ve January 1, 2023, except for the amendment on
rollforward informa on, which was effec ve January 1, 2024. The Registrants have adopted this standard, which did not result in a material impact on their
financial statements and related disclosures.
In November 2023, the Financial Accoun ng Standards Board issued ASU 2023-07, "Segment Repor ng (Topic 280) Improvements to Reportable
Segment Disclosures." The amendments in this update improve financial repor ng by requiring disclosure of incremental segment informa on on an annual
and interim basis. The standard is effec ve for fiscal years beginning a er December 15, 2023 and interim periods within fiscal years beginning a er
December 15, 2024. Early adop on is permi ed. The Registrants are currently evalua ng the impact of adop ng this standard on their financial statements.
In December 2023, the Financial Accoun ng Standards Board issued ASU 2023-09, "Income Taxes (Topic 740) Improvements to Income Tax Disclosures."
The amendments in this update require public en es on an annual basis to (i) disclose specific categories in the rate reconcilia on and (ii) provide addi onal
informa on for reconciling items that meet a quan ta ve threshold. Further, the amendments require en es to disclose on an annual basis income taxes
paid (net of refunds received) disaggregated by federal (na onal), state and foreign taxes and to disaggregate the informa on by jurisdic on based on a
quan ta ve threshold. The standard is effec ve January 1, 2025, and early adop on is permi ed. The Registrants are currently evalua ng the impact of
adop ng this standard on their financial statements.
The Registrants believe that other recently adopted and recently issued accoun ng standards that are not yet effec ve do not appear to have a material
impact on the Registrants' financial posi on, results of opera ons or cash flows upon adop on.
3. Revenue Recogni on
The following table presents OG&E's revenues from contracts with customers disaggregated by customer classifica on. OG&E's opera ng revenues
disaggregated by customer classifica on can be found in "OG&E (Electric Company) Results of Opera ons" within "Item 7. Management's Discussion and
Analysis of Financial Condi on and Results of Opera ons."
(In millions)
Residen al
Commercial
Industrial
Oilfield
Public authori es and street light
System sales revenues
Provision for rate refund
Integrated market
Transmission
Other
Revenues from contracts with customers
2023
Year Ended December 31,
2022
2021
1,008.6 $
674.6
229.6
207.8
228.5
2,349.1
2.0
71.6
143.0
41.6
2,607.3 $
1,272.6 $
803.3
317.3
304.3
291.6
2,989.1
(1.2 )
163.8
131.7
20.8
3,304.2 $
1,309.1
749.1
323.1
312.8
284.4
2,978.5
—
468.9
140.2
1.1
3,588.7
$
$
72
4. Leases
Based on their evalua on of all contracts under ASC 842, as described in Note 1, the Registrants concluded they have opera ng lease obliga ons as
described below.
OG&E Railcar Lease Agreement
Effec ve February 1, 2024, OG&E renewed its February 1, 2019 railcar lease agreement for 770 rotary gondola railcars to transport coal from Wyoming
to OG&E's coal-fired genera on units. Rental payments are charged to fuel expense and are recoverable through OG&E's fuel adjustment clauses. On
February 1, 2029, OG&E has the op on to either purchase the railcars at a s pulated fair market value or renew the lease. If OG&E chooses not to purchase
the railcars or renew the lease agreement, it would be responsible for the difference between the actual fair value of the railcars and the s pulated fair
market value, up to a maximum of $3.2 million.
OG&E holds an addi onal railcar lease agreement for 135 rotary gondola railcars to transport coal with a term of October 1, 2022 to December 31, 2025.
OG&E Wind Farm Land Lease Agreements
OG&E has opera ng leases related to land for OG&E's Centennial, OU Spirit and Crossroads wind farms with terms of nine to 13 years remaining,
depending on the lease. The Centennial lease has rent escala ons which increase annually based on the Consumer Price Index. While lease liabili es are not
remeasured as a result of changes to the Consumer Price Index, changes to the Consumer Price Index are treated as variable lease payments and recognized
in the period in which the obliga on for those payments was incurred. The OU Spirit and Crossroads leases each have rent escala ons which increase a er
five and 10 years. Although the leases are cancellable, OG&E is required to make annual lease payments as long as the wind turbines are located on the land.
OG&E does not expect to terminate the leases un l the wind turbines reach the end of their useful life.
Financial Statement Informa on and Maturity Analysis of Lease Liabili es
The following tables present amounts recognized for opera ng leases in the Registrants' statements of income, statements of cash flows and balance
sheets and supplemental informa on related to those amounts recognized.
(In millions)
Opera ng lease cost
Cash paid for amounts included in the measurement of lease
liabili es:
OGE Energy
Year Ended December 31,
2022
2023
2021
OG&E
Year Ended December 31,
2022
2023
2021
$
6.4 $
5.9 $
6.3 $
6.4 $
5.9 $
5.7
Opera ng cash flows for opera ng leases
Right-of-use assets obtained in exchange for new opera ng
lease liabili es
$
$
5.2 $
5.3 $
6.3 $
5.2 $
5.3 $
— $
1.5 $
— $
— $
1.5 $
5.7
—
OGE Energy
OG&E
(Dollars in millions)
Right-of-use assets at period end (A)
Opera ng lease liabili es at period end (B)
Opera ng lease weighted-average remaining lease term (in years)
Opera ng lease weighted-average discount rate
(A)
(B)
Included in Property, Plant and Equipment in the Registrants' balance sheets.
Included in Other Deferred Credits and Other Liabili es in the Registrants' balance sheets.
December 31, 2023 December 31, 2022 December 31, 2023 December 31, 2022
30.2
$
34.8
$
11.6
4.0 %
30.2 $
34.8 $
11.6
4.0 %
25.9 $
30.5 $
11.4
4.0 %
25.9 $
30.5 $
11.4
4.0 %
73
The following table presents a maturity analysis of the Registrants' opera ng lease liabili es.
Future minimum opera ng lease payments as of December 31:
(In millions)
2024
2025
2026
2027
2028
Therea er
Total future minimum lease payments
Less: Imputed interest
Present value of net minimum lease payments
5. Fair Value Measurements
OGE Energy
OG&E
$
$
3.7 $
3.5
3.0
3.0
3.1
22.6
38.9
8.4
30.5 $
3.7
3.5
3.0
3.0
3.1
22.6
38.9
8.4
30.5
The classifica on of the Registrants' fair value measurements requires judgment regarding the degree to which market data is observable or
corroborated by observable market data. GAAP establishes a fair value hierarchy that priori zes the inputs used to measure fair value based on observable
and unobservable data. The hierarchy categorizes the inputs into three levels, with the highest priority given to quoted prices in ac ve markets for iden cal
unrestricted assets or liabili es (Level 1) and the lowest priority given to unobservable inputs (Level 3). Financial assets and liabili es are classified in their
en rety based on the lowest level of input that is significant to the fair value measurement. The three levels defined in the fair value hierarchy are as follows:
Level 1 inputs are quoted prices in ac ve markets for iden cal unrestricted assets or liabili es that are accessible at the measurement date.
Level 2 inputs are inputs other than quoted prices in ac ve markets included within Level 1 that are either directly or indirectly observable at the
repor ng date for the asset or liability for substan ally the full term of the asset or liability. Level 2 inputs include quoted prices for similar assets or liabili es
in ac ve markets and quoted prices for iden cal or similar assets or liabili es in markets that are not ac ve.
Level 3 inputs are prices or valua on techniques for the asset or liability that require inputs that are both significant to the fair value measurement and
unobservable (i.e., supported by li le or no market ac vity). Unobservable inputs reflect the repor ng en ty's own assump ons about the assump ons that
market par cipants would use in pricing the asset or liability (including assump ons about risk).
The Registrants had no financial instruments measured at fair value on a recurring basis at December 31, 2023 and 2022. The following table presents
the carrying amount and fair value of the Registrants' financial instruments at December 31, 2023 and 2022, as well as the classifica on level within the fair
value hierarchy.
December 31 (In millions)
Long-term Debt (including Long-term Debt due within one year):
OGE Energy Senior Notes
OGE Energy Term Loan
OG&E Senior Notes
OG&E Industrial Authority Bonds
Tinker Debt
6. Stock-Based Compensa on
2023
2022
Carrying
Amount
Fair
Value
Carrying
Amount
Fair
Value
Classifica on
$
$
$
$
$
— $
49.9 $
4,146.0 $
135.4 $
9.2 $
— $
50.0 $
3,922.3 $
135.4 $
7.1 $
499.9 $
49.8 $
3,854.2 $
135.4 $
9.3 $
491.2
50.0
3,477.1
135.4
7.3
Level 2
Level 2
Level 2
Level 2
Level 3
In 2022, OGE Energy adopted, and its shareholders approved, the 2022 Stock Incen ve Plan. The 2022 Stock Incen ve Plan replaced the 2013 Stock
Incen ve Plan, and no further awards will be granted under the 2013 Stock Incen ve Plan. Under the 2022 Stock Incen ve Plan, restricted stock, restricted
stock units, stock op ons, stock apprecia on rights and performance units may be
74
granted to officers, directors and other key employees of OGE Energy and its subsidiaries, including OG&E. OGE Energy has authorized the issuance of up to
8,417,755 shares under the 2022 Stock Incen ve Plan.
The following table presents the Registrants' pre-tax compensa on expense and related income tax benefit for the years ended December 31, 2023,
2022 and 2021 related to performance units and restricted stock units for the Registrants' employees.
Year Ended December 31 (In millions)
Performance units
Restricted stock units
Total compensa on expense
Income tax benefit
2023
OGE Energy
2022
2021
2023
OG&E
2022
2021
$
$
$
9.3 $
3.8
13.1 $
3.2 $
7.2 $
2.5
9.7 $
2.3 $
7.5 $
2.3
9.8 $
2.5 $
2.2 $
0.9
3.1 $
0.7 $
2.2 $
0.7
2.9 $
0.7 $
1.8
0.4
2.2
0.6
During the year ended December 31, 2021, 154,523 shares of treasury stock were used to sa sfy payouts of earned performance units and restricted
stock unit grants to the Registrants' employees pursuant to OGE Energy's 2013 Stock Incen ve Plan.
During the year ended December 31, 2022, OGE Energy issued 27,278 shares of new common stock pursuant to OGE Energy's 2013 Stock Incen ve Plan
and issued an immaterial amount of treasury stock to sa sfy payouts of restricted stock unit grants to the Registrants' employees.
During the year ended December 31, 2023, OGE Energy issued 82,321 shares of new common stock pursuant to OGE Energy's 2013 Stock Incen ve Plan
and issued 2,371 shares of treasury stock to sa sfy payouts of earned performance units and restricted stock unit grants to the Registrants' employees.
Performance Units
Under the Stock Incen ve Plan, OGE Energy has issued performance units which represent the value of one share of OGE Energy's common stock. The
performance units provide for accelerated ves ng if there is a change in control (as defined in the Stock Incen ve Plan). Each performance unit is subject to
forfeiture if the recipient terminates employment with OGE Energy or a subsidiary prior to the end of the primarily three-year award cycle for any reason
other than death, disability or re rement. In the event of death, disability or re rement, a par cipant will receive a prorated payment based on such
par cipant's number of full months of service during the award cycle, further adjusted based on the achievement of the performance goals during the award
cycle. The Registrants es mate expected forfeitures in accoun ng for performance unit compensa on expense.
The performance units granted are con ngently awarded and will be payable in shares of OGE Energy's common stock subject to the condi on that the
number of performance units, if any, earned by the employees upon the expira on of a primarily three-year award cycle (i.e., three-year cliff ves ng period) is
dependent on OGE Energy's total shareholder return ranking rela ve to a peer group of companies. These performance units are classified as equity in the
balance sheets. If there is no or only a par al payout for the performance units at the end of the award cycle, the unearned performance units are cancelled.
Payout requires approval of the Compensa on Commi ee of OGE Energy's Board of Directors. Payouts, if any, are all made in common stock and are
considered made when the payout is approved by the Compensa on Commi ee.
The fair value of the performance units was es mated on the grant date using a la ce-based valua on model that factors in informa on, including the
expected dividend yield, expected price vola lity, risk-free interest rate and the probable outcome of the market condi on, over the expected life of the
performance units. Compensa on expense for the performance units is a fixed amount determined at the grant date fair value and is recognized over the
primarily three-year award cycle regardless of whether performance units are awarded at the end of the award cycle. Dividends are accrued on a quarterly
basis pending achievement of payout criteria and are included in the fair value calcula ons. Expected price vola lity is based on the historical vola lity of OGE
Energy's common stock for the past three years and is simulated using the Geometric Brownian Mo on process. The risk-free interest rate for the
performance unit grants is based on the three-year U.S. Treasury yield curve in effect at the me of the grant. The expected life of the units is based on the
non-vested period since incep on of the award cycle. There are no post-ves ng restric ons related to OGE Energy's performance units. The following table
presents the number of performance units granted and the assump ons used to calculate the grant date fair value of the performance units.
75
Number of units granted
Fair value of units granted
Expected dividend yield
Expected price vola lity
Risk-free interest rate
Expected life of units (in years)
Restricted Stock Units
2023
OGE Energy
2022
2021
2023
OG&E
2022
2021
$
213,442
43.74 $
4.2 %
31.0 %
4.47 %
2.85
216,437
41.10 $
4.8 %
29.0 %
1.71 %
2.85
249,909
38.14 $
4.7 %
29.0 %
0.22 %
2.84
65,069
43.74 $
4.2 %
31.0 %
4.47 %
2.85
60,923
41.10 $
4.8 %
29.0 %
1.71 %
2.85
68,720
38.14
4.7 %
29.0 %
0.22 %
2.85
Under the Stock Incen ve Plan, OGE Energy has issued restricted stock units to certain exis ng non-officer employees as well as other execu ves upon
hire to a ract and retain individuals to be compe ve in the marketplace. The restricted stock units vest primarily in a three-year award cycle (i.e., three-year
cliff ves ng period). Prior to ves ng, each restricted stock unit is subject to forfeiture if the recipient ceases to render substan al services to OGE Energy or a
subsidiary. These restricted stock units may not be sold, assigned, transferred or pledged and are subject to a risk of forfeiture.
The fair value of the restricted stock units was based on the closing market price of OGE Energy's common stock on the grant date. Compensa on
expense for the restricted stock units is a fixed amount determined at the grant date fair value and is recognized as services are rendered by employees over a
primarily three-year ves ng period. Also, for those restricted stock units that vest in one-third annual increments over a three-year cycle, OGE Energy treats
its restricted stock units as mul ple separate awards by recording compensa on expense separately for each tranche whereby a substan al por on of the
expense is recognized in the earlier years in the requisite service period.
Dividends will only be paid on restricted stock unit awards that vest; therefore, only the present value of dividends expected to vest are included in the
fair value calcula ons. The expected life of the restricted stock units is based on the non-vested period since incep on of the primarily three-year award
cycle. There are no post-ves ng restric ons related to OGE Energy's restricted stock units. The following table presents the number of restricted stock units
granted and the grant date fair value.
Restricted stock units granted
Fair value of restricted stock units granted
Performance Units and Restricted Stock Units Ac vity
2023
114,926
37.52 $
OGE Energy
2022
116,539
35.72 $
$
2021
2023
OG&E
2022
2021
89,197
31.11 $
35,034
37.52 $
32,804
35.72 $
22,911
30.91
The following tables present a summary of the ac vity for the Registrants' performance units and restricted stock units for the year ended December 31,
2023. The table designated as "OGE Energy" below includes the OG&E standalone ac vity, as OGE Energy represents consolidated results.
OGE Energy
Performance Units
Restricted Stock Units
(Dollars in millions)
Units/shares outstanding at 12/31/22
Granted
Converted
Vested
Forfeited
Units/shares outstanding at 12/31/23
Units/shares fully vested at 12/31/23
Number
of Units
Aggregate Intrinsic
Value
Number
of Shares
Aggregate Intrinsic
Value
608,375
213,442
(161,690 )
N/A
(8,009 )
652,118
(A)
(B) $
$
234,672
(C) $
76
3.7
28.8
12.7
189,483
114,926
N/A
(76,664 )
(4,599 )
223,146
N/A
$
$
2.7
7.8
N/A
OG&E
(Dollars in millions)
Units/shares outstanding at 12/31/22
Granted
Converted
Vested
Forfeited
Employee migra on
Units/shares outstanding at 12/31/23
Performance Units
Restricted Stock Units
Number
of Units
Aggregate Intrinsic
Value
Number
of Shares
Aggregate Intrinsic
Value
170,623
65,069
(44,550 )
N/A
(5,889 )
(1,416 )
183,837
(A)
(B) $
(D)
$
1.0
8.0
52,759
35,034
N/A
(20,265 )
(2,725 )
(559 )
64,244
$
$
(D)
0.7
2.2
Units/shares fully vested at 12/31/23
N/A
(C) $
(A) For performance units, this represents the target number of performance units granted. Actual number of performance units earned, if any, is
63,506
3.4
N/A
dependent upon performance and may range from zero percent to 200 percent of the target.
(B) These amounts represent performance units that vested at December 31, 2022, which were se led in February 2023.
(C) These amounts represent performance units that vested at December 31, 2023. Actual expected amounts to be paid out in 2024 will differ based on the
percentage at which the performance metric was met and are dependent upon Compensa on Commi ee approval.
(D) Due to certain employees transferring between OG&E and OGE Energy.
The following tables present a summary of the ac vity for the Registrants' non-vested performance units and restricted stock units for the year ended
December 31, 2023. The table designated as "OGE Energy" below includes the OG&E standalone ac vity, as OGE Energy represents consolidated results.
Performance Units
Restricted Stock Units
OGE Energy
Units/shares non-vested at 12/31/22
Granted
Vested
Forfeited
Units/shares non-vested at 12/31/23
OG&E
Units/shares non-vested at 12/31/22
Granted
Vested
Forfeited
Employee migra on
Units/shares non-vested at 12/31/23
Number
of Units
Weighted-Average
Grant Date
Fair Value
Number
of Shares
Weighted-Average
Grant Date
Fair Value
446,685
213,442
(234,672 )
(8,009 )
417,446
$
(A) $
$
$
$
39.53
43.74
38.14
40.66
42.44
189,483
114,926
(76,664 )
(4,599 )
223,146
$
$
$
$
$
33.75
37.52
30.95
34.52
36.64
Performance Units
Restricted Stock Units
Number
of Units
Weighted-Average
Grant Date
Fair Value
Number
of Shares
Weighted-Average
Grant Date
Fair Value
126,073
65,069
(63,506 )
(5,889 )
(1,416 )
120,331
$
(A) $
$
$
(B) $
$
39.53
43.74
38.14
40.92
38.36
42.49
52,759
35,034
(20,265 )
(2,725 )
(559 )
64,244
$
$
$
$
(B) $
$
33.78
37.52
30.91
35.17
32.25
36.68
(A) For performance units, this represents the target number of performance units granted. Actual number of performance units earned, if any, is
dependent upon performance and may range from zero percent to 200 percent of the target.
(B) Due to certain employees transferring between OG&E and OGE Energy.
77
Fair Value of Vested Performance Units and Restricted Stock Units
The following table presents a summary of the Registrants' fair value for vested performance units and restricted stock units.
Year Ended December 31 (In millions)
Performance units
Restricted stock units
Unrecognized Compensa on Cost
2023
OGE Energy
2022
2021
2023
OG&E
2022
2021
$
$
9.0 $
2.4 $
6.2 $
2.1 $
8.1 $
2.2 $
2.4 $
0.6 $
1.7 $
0.5 $
2.3
0.5
The following table presents a summary of the Registrants' unrecognized compensa on cost for non-vested performance units and restricted stock units
and the weighted-average periods over which the compensa on cost is expected to be recognized.
OGE Energy
OG&E
Unrecognized
Compensa on
Cost
(In millions)
$
$
8.3
3.6
11.9
Weighted
Average
to be
Recognized
(In years)
Unrecognized
Compensa on
Cost
(In millions)
1.68 $
1.67
$
2.4
1.1
3.5
Weighted
Average
to be
Recognized
(In years)
1.70
1.69
December 31, 2023
Performance units
Restricted stock units
Total unrecognized compensa on cost
7. Income Taxes
Income Tax Expense (Benefit)
The following table presents the components of income tax expense (benefit).
Year Ended December 31 (In millions)
Provision (benefit) for current income taxes:
Federal
State
Total provision (benefit) for current income taxes
Provision (benefit) for deferred income taxes, net:
Federal
State
Total provision (benefit) for deferred income taxes, net
Total income tax expense
2023
OGE Energy
2022
2021
2023
OG&E
2022
2021
$
$
46.1 $
(2.2 )
43.9
18.1
(5.8 )
12.3
56.2 $
250.8 $
28.8
279.6
(110.8 )
(45.2 )
(156.0 )
123.6 $
16.4 $
1.7
18.1
133.1
(10.0 )
123.1
141.2 $
48.9 $
3.7
52.6
18.8
(2.6 )
16.2
68.8 $
(141.2 ) $
(0.9 )
(142.1 )
219.9
(1.4 )
218.5
76.4 $
(9.0 )
9.0
—
58.3
(16.5 )
41.8
41.8
OGE Energy files consolidated income tax returns in the U.S. federal jurisdic on and various state jurisdic ons. OG&E is a part of the consolidated
income tax return of OGE Energy. With few excep ons, the Registrants are no longer subject to U.S. federal tax or state and local examina ons by tax
authori es for years prior to 2020. Income taxes are generally allocated to each company in the affiliated group, including OG&E, based on its stand-alone
taxable income or loss. Federal investment tax credits previously claimed on electric company property have been deferred and will be amor zed to income
over the life of the related property. Oklahoma investment tax credits are also earned on investments in electric genera ng facili es which further reduce
OG&E's effec ve tax rate.
78
The following table presents a reconcilia on of the statutory tax rates to the effec ve income tax rate.
Year Ended December 31
Statutory federal tax rate
State income taxes, net of federal income tax
benefit
Stock-based compensa on
Execu ve compensa on limita on
Amor za on of net unfunded deferred taxes
Federal renewable energy credit (A)
Remeasurement of state deferred taxes due to Energy Transfer
merger
Remeasurement of state deferred tax liabili es
401(k) dividends
Other
Effec ve income tax rate
2023
OGE Energy
2022
2021
2023
OG&E
2022
2021
21.0 %
21.0 %
21.0 %
21.0 %
21.0 %
21.0 %
(1.3 )
0.1
0.2
(7.0 )
—
—
—
(0.3 )
(0.8 )
11.9 %
(1.0 )
—
0.1
(3.2 )
—
—
(0.6 )
(0.2 )
(0.4 )
15.7 %
0.9
0.1
0.1
(2.1 )
(2.0 )
(1.1 )
(0.6 )
(0.2 )
—
16.1 %
0.3
—
—
(6.7 )
—
—
—
—
(0.7 )
13.9 %
(0.4 )
—
—
(5.0 )
—
—
—
—
(0.8 )
14.8 %
(1.4 )
—
—
(4.6 )
(4.4 )
—
—
—
(0.2 )
10.4 %
(A) Represents credits primarily associated with the produc on from OG&E's wind farms.
The deferred tax provisions are recognized as costs in the ratemaking process by the commissions having jurisdic on over the rates charged by OG&E.
The following table presents the components of Deferred Income Taxes at December 31, 2023 and 2022.
$
December 31 (In millions)
Deferred income tax liabili es, net:
Accelerated deprecia on and other property related differences
Regulatory assets
Pension Plan
Corporate owned life insurance
Bond redemp on-unamor zed costs
Income taxes recoverable from customers, net
State tax credits
Regulatory liabili es
Asset re rement obliga ons
Postre rement medical and life insurance benefits
Accrued liabili es
Deferred federal investment tax credits
Accrued vaca on
Uncollec ble accounts
Other
Total deferred income tax liabili es, net
$
OGE Energy
OG&E
2023
2022
2023
2022
1,753.8 $
67.6
21.8
2.6
1.4
(202.7 )
(228.8 )
(54.4 )
(19.7 )
(20.8 )
(13.2 )
(2.7 )
(1.4 )
(0.5 )
(2.2 )
1,300.8
$
1,714.5 $
54.8
18.0
2.4
1.6
(216.7 )
(221.2 )
(60.8 )
(18.8 )
(19.2 )
(11.2 )
(2.9 )
(1.4 )
(0.5 )
(5.1 )
1,233.5
$
1,753.8 $
67.6
37.9
—
1.4
(202.7 )
(213.5 )
(54.4 )
(19.7 )
(14.0 )
(5.5 )
(2.7 )
(1.4 )
(0.4 )
(5.6 )
1,340.8
$
1,714.5
54.7
35.4
—
1.6
(216.7 )
(208.5 )
(60.8 )
(18.8 )
(12.7 )
(7.3 )
(2.9 )
(1.1 )
(0.5 )
(5.8 )
1,271.1
As of December 31, 2023, the Registrants have classified $14.7 million of unrecognized tax benefits as a reduc on of deferred tax assets recorded.
Management is currently unaware of any issues under review that could result in significant addi onal payments, accruals or other material devia on from
this amount.
The following table presents a reconcilia on of the Registrants' total gross unrecognized tax benefits as of the years ended December 31, 2023, 2022
and 2021.
(In millions)
Balance at January 1
Tax posi ons related to current year:
Addi ons
Reduc ons
Balance at December 31
2023
2022
2021
$
20.7 $
22.4 $
7.9
—
28.6 $
—
(1.7 )
20.7 $
$
21.9
1.7
(1.2 )
22.4
79
The Registrants recognize tax benefits from an uncertain tax posi on only if it is more likely than not the tax posi on will be sustained on examina on by
taxing authori es based on the technical merits of the posi on. The tax benefits in the financial statements from such posi ons are then measured based on
the largest benefit that has a greater than 50 percent likelihood of being realized on se lement. In 2023, the Registrants recorded a $7.9 million reserve
related to a state tax posi on taken associated with the sale of Energy Transfer units.
Where applicable, the Registrants classify income tax-related interest and penal es as interest expense and other expense, respec vely. During the years
ended December 31, 2023, 2022 and 2021, there were no income tax-related interest or penal es recorded with regard to uncertain tax posi ons.
As of December 31, 2023, 2022 and 2021, there were $22.6 million, $16.4 million and $18.1 million, respec vely, of unrecognized tax benefits that, if
recognized, would affect the annual effec ve tax rate.
The following table presents a summary of the Registrants' tax credits carried forward as deferred tax assets. Under current law, the Registrants expect
future taxable income will be sufficient to u lize all credits before they begin to expire a er 2028.
(In millions)
State tax credits:
Oklahoma investment tax credits
Oklahoma capital investment board credits
Oklahoma zero emission tax credits
N/A - not applicable
OGE Energy
OG&E
Carry
Forward
Amount
Deferred Tax
Asset
Carry
Forward
Amount
Deferred Tax
Asset
Earliest
Expira on
Date
$
$
$
259.1 $
12.8 $
16.0 $
204.7 $
12.8 $
11.3 $
239.8 $
12.8 $
16.0 $
189.4
12.8
11.3
N/A
N/A
2028
In connec on with its investment in Energy Transfer during 2022, OGE Energy an cipated opera ng losses in various state jurisdic ons. As discussed in
Note 1, OGE Energy has fully disposed of its investment in Energy Transfer, and it does not expect future taxable income in these states. Therefore, as of
December 31, 2022, OGE Energy recorded a valua on allowance of $2.7 million, which eliminated the related deferred tax asset balance. During 2023, OGE
Energy received final informa on which resulted in taxable income instead of opera ng losses for tax year 2022. The valua on allowance originally recorded
in 2022 was eliminated when the final 2022 tax returns were filed in 2023.
8. Common Equity
OGE Energy
Automa c Dividend Reinvestment and Stock Purchase Plan
OGE Energy issued no new shares of common stock under its Automa c Dividend Reinvestment and Stock Purchase Plan in 2023. Under the terms of the
Automa c Dividend Reinvestment and Stock Purchase Plan, OGE Energy may, from me to me, issue new shares to sa sfy purchases under the plan or have
shares purchased on the open market. At December 31, 2023, there were 4,899,178 shares of unissued common stock reserved for issuance under OGE
Energy's Automa c Dividend Reinvestment and Stock Purchase Plan.
80
Earnings Per Share
Basic earnings per share is calculated by dividing net income a ributable to OGE Energy by the weighted-average number of OGE Energy's common
shares outstanding during the period. In the calcula on of diluted earnings per share, weighted-average shares outstanding are increased for addi onal
shares that would be outstanding if poten ally dilu ve securi es were converted to common stock. Poten ally dilu ve securi es for OGE Energy consist of
performance units and restricted stock units. The following table presents the calcula on of basic and diluted earnings per share for OGE Energy.
(In millions except per share data)
Net income
Average common shares outstanding:
416.8 $
665.7 $
737.3
2021
2023
2022
$
Basic average common shares outstanding
Effect of dilu ve securi es:
Con ngently issuable shares (performance and restricted stock units)
Diluted average common shares outstanding
Basic earnings per average common share
Diluted earnings per average common share
An -dilu ve shares excluded from earnings per share calcula on
200.3
200.2
0.6
200.9
2.08 $
2.07 $
—
0.6
200.8
3.33 $
3.32 $
—
200.1
0.2
200.3
3.68
3.68
—
$
$
Dividend Restric ons
OGE Energy's Cer ficate of Incorpora on places restric ons on the amount of common stock dividends it can pay when preferred stock is outstanding.
Before OGE Energy can pay any dividends on its common stock, the holders of any of its preferred stock that may be outstanding are en tled to receive their
dividends at the respec ve rates as may be provided for the shares of their series. As there is no preferred stock outstanding, that restric on did not place
any effec ve limit on OGE Energy's ability to pay dividends to its shareholders. OGE Energy u lizes dividends from OG&E to pay dividends to its shareholders.
Pursuant to the leverage restric on in OGE Energy's revolving credit agreement, OGE Energy must maintain a percentage of debt to total capitaliza on at
a level that does not exceed 70 percent. The payment of cash dividends indirectly results in an increase in the percentage of debt to total capitaliza on, which
results in the restric on of approximately $930.9 million of OGE Energy's retained earnings from being paid out in dividends. Accordingly, approximately $2.4
billion of OGE Energy's retained earnings as of December 31, 2023 are unrestricted for the payment of dividends.
OG&E
There were no new shares of OG&E common stock issued in 2023, 2022 or 2021.
Dividend Restric ons
Pursuant to the Federal Power Act, OG&E is restricted from paying dividends from its capital accounts. Dividends are paid from retained earnings.
Pursuant to the leverage restric on in OG&E's revolving credit agreement, OG&E must maintain a percentage of debt to total capitaliza on at a level that
does not exceed 65 percent. The payment of cash dividends indirectly results in an increase in the percentage of debt to total capitaliza on, which results in
the restric on of approximately $733.3 million of OG&E's retained earnings from being paid out in dividends. Accordingly, approximately $2.7 billion of
OG&E's retained earnings as of December 31, 2023 are unrestricted for the payment of dividends.
9. Long-Term Debt
A summary of the Registrants' long-term debt is included in the statements of capitaliza on. At December 31, 2023, the Registrants were in compliance
with all of their debt agreements.
Maturi es of OGE Energy's consolidated long-term debt during the next five years consist of $129.4 million in 2025, $181.0 million in 2027 and $500.0
million in 2028. Maturi es of OG&E's long-term debt during the next five years consist of $79.4 million in 2025, $181.0 million in 2027 and $500.0 million in
2028. All other long-term debt of the Registrants matures a er 2028.
81
The Registrants have previously incurred costs related to debt refinancing. Unamor zed loss on reacquired debt is classified as a Non-Current Regulatory
Asset in the balance sheets. Unamor zed debt expense and unamor zed premium and discount on long-term debt are classified as Long-Term Debt in the
balance sheets and are being amor zed over the life of the respec ve 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 these issuances were added to OG&E's general funds to be used for general corporate purposes,
including to help fund the repayment of its $500.0 million 0.553 percent Senior Notes that matured on May 26, 2023 and the funding of its capital investment
program and working capital needs.
OGE Energy has a $100.0 million floa ng rate unsecured three-year credit agreement, of which $50.0 million is considered a revolving loan and $50.0
million is considered a term loan. For the year ended December 31, 2023, the interest rate for the $50.0 million drawn on the term loan under this credit
agreement ranged from 5.375 percent to 6.375 percent. For addi onal informa on related to this credit agreement, see Note 10.
In 2021, OGE Energy issued $500.0 million of 0.703 percent Senior Notes, and OG&E issued $500.0 million of 0.553 percent Senior Notes. The
Registrants repaid each of the $500.0 million Senior Notes that matured on May 26, 2023.
OG&E Industrial Authority Bonds
OG&E has tax-exempt pollu on control bonds with op onal redemp on provisions that allow the holders to request repayment of the bonds on any
business day. The following table presents informa on about these bonds, which can be tendered at the op on of the holder during the next 12 months.
Series
Date Due
1.85% —
1.85% —
1.85% —
4.75% Garfield Industrial Authority, January 1, 2025
4.60% Muskogee Industrial Authority, January 1, 2025
4.75% Muskogee Industrial Authority, June 1, 2027
Total (redeemable during next 12 months)
Amount
(In millions)
$
$
47.0
32.4
56.0
135.4
All of these bonds are subject to an op onal tender at the request of the holders, at 100 percent of the principal amount, together with accrued and
unpaid interest to the date of purchase. The bond holders, on any business day, can request repayment of the bond by delivering an irrevocable no ce to the
tender agent sta ng the principal amount of the bond, payment instruc ons for the purchase price and the business day the bond is to be purchased. The
repayment op on may only be exercised by the holder of a bond for the principal amount. When a tender no ce has been received by the trustee, a third-
party remarke ng agent for the bonds will a empt to remarket any bonds tendered for purchase. This process occurs once per week. Since the original
issuance of these series of bonds in 1995 and 1997, the remarke ng agent has successfully remarketed all tendered bonds. If the remarke ng agent is unable
to remarket any such bonds, OG&E is obligated to repurchase such unremarketed bonds. As OG&E has both the intent and ability to refinance the bonds on a
long-term basis and such ability is supported by an ability to consummate the refinancing, the bonds are classified as Long-Term Debt in the balance sheets.
OG&E believes that it has sufficient liquidity to meet these obliga ons.
10. Short-Term Debt and Credit Facili es
The Registrants borrow on a short-term basis, as necessary, by the issuance of commercial paper and by borrowings under their revolving credit
agreements. OGE Energy also borrows under term credit agreements maturing in one year or less, as necessary.
The following table presents informa on regarding the Registrants' revolving credit agreements at December 31, 2023.
En ty
Aggregate
Commitment
Amount Outstanding
(A)
Weighted-Average
Interest Rate
Expira on
OGE Energy (B)
OGE Energy (C)
OG&E (D)(E)
Total
$
$
(In millions)
550.0 $
50.0
550.0
1,150.0 $
499.2
—
0.4
499.6
5.78 %(F)
— (F)
1.20 %(F)
5.77 %
December 18, 2028 (G)
May 24, 2025
December 18, 2028 (G)
(A)
Includes direct borrowings under the revolving credit agreements, commercial paper borrowings and le ers of credit at December 31, 2023.
82
(B) This bank facility is available to back up OGE Energy's commercial paper borrowings and to provide revolving credit borrowings. This bank facility can
also be used as a le er of credit facility.
(C) OGE Energy has a $100.0 million floa ng rate unsecured three-year credit agreement, of which $50.0 million is considered a revolving loan and $50.0
million is considered a term loan. The credit agreement, under certain circumstances, may be increased to a maximum commitment limit of $135.0
million and includes a maximum leverage ra o of 0.65 to 1.0. The other covenants under this credit agreement are substan ally the same as OGE
Energy's exis ng $550.0 million revolving credit agreement.
(D) This bank facility is available to back up OG&E's commercial paper borrowings and to provide revolving credit borrowings. This bank facility can also be
used as a le er of credit facility.
(E) OG&E has an intercompany borrowing agreement with OGE Energy whereby OG&E has access to up to $450.0 million of OGE Energy's revolving credit
amount. This agreement has a termina on date of December 18, 2028. At December 31, 2023, there was $85.1 million in intercompany borrowings
under this agreement. At December 31, 2023, OG&E had $147.7 million in advances from parent.
(F) Represents the weighted-average interest rate for the outstanding borrowings under the revolving credit agreements, commercial paper borrowings and
(G)
le ers of credit.
In December 2022, the Registrants entered into an amendment to their credit facility that gave each of the Registrants the op on of extending such
commitments for up to two addi onal one-year periods. On December 18, 2023, the Registrants u lized the first extension op on for an addi onal one-
year period extending the term un l December 2028.
OGE Energy's credit facility has a financial covenant requiring that OGE Energy maintains a maximum debt to capitaliza on ra o of 70 percent, as
defined in such facility. OG&E's credit facility has a financial covenant requiring that OG&E maintains a maximum debt to capitaliza on ra o of 65 percent, as
defined in such facility. The Registrants' facili es each also contain covenants which restrict the respec ve borrower and certain of its subsidiaries in respect
of, among other things, mergers and consolida ons, sales of all or substan ally all assets, incurrence of liens and transac ons with affiliates. The Registrants'
facili es are each subject to accelera on upon the occurrence of any default, including, among others, payment defaults on such facili es, breach of
representa ons, warran es and covenants, accelera on of indebtedness (other than intercompany and non-recourse indebtedness) of $100.0 million or
more in the aggregate, change of control (as defined in each such facility), nonpayment of uninsured judgments in excess of $100.0 million and the
occurrence of certain Employee Re rement Income Security Act and bankruptcy events, subject where applicable to specified cure periods.
The Registrants' ability to access the commercial paper market could be adversely impacted by a credit ra ngs downgrade or major market disrup ons.
Pricing grids associated with the Registrants' credit facili es could cause annual fees and borrowing rates to increase if an adverse ra ng impact occurs. The
impact of any future downgrade could include an increase in the costs of the Registrants' short-term borrowings, but a reduc on in the Registrants' credit
ra ngs would not result in any defaults or accelera ons. Any future downgrade could also lead to higher long-term borrowing costs and, if below investment
grade, would require the Registrants to post collateral or le ers of credit.
OG&E must obtain regulatory approval from the FERC in order to borrow on a short-term basis. OG&E has the necessary regulatory approvals to incur up
to $1.0 billion in short-term borrowings at any one me for a two-year period beginning January 1, 2023 and ending December 31, 2024.
11. Re rement Plans and Postre rement Benefit Plans
OGE Energy sponsors defined benefit pension plans, 401(k) savings plans and other postre rement plans covering certain employees of the Registrants.
Pension Plan and Restora on of Re rement Income Plan
OGE Energy periodically makes contribu ons to the Pension Plan considering informa on such as net periodic pension expense and funded status from
OGE Energy's actuarial consultants. Such contribu ons are intended to provide not only for benefits a ributed to service to date but also for those expected
to be earned in the future. OGE Energy did not make a contribu on to its Pension Plan during 2023 and 2022 but does expect to make a $10.0 million
contribu on to its Pension Plan in 2024. Any addi onal contribu on to the Pension Plan during 2024 would be a discre onary contribu on, an cipated to be
in the form of cash, and is not required to sa sfy the minimum regulatory funding requirement specified by the Employee Re rement Income Security Act of
1974, as amended. OGE Energy could be required to make addi onal contribu ons if the value of its pension trust and postre rement benefit plan trust
assets are adversely impacted by a major market disrup on in the future.
83
In accordance with ASC Topic 715, "Compensa on - Re rement Benefits," a one- me se lement charge is required to be recorded by an organiza on
when lump sum payments or other se lements that relieve the organiza on from the responsibility for the pension benefit obliga on during the plan year
exceed the service cost and interest cost components of the organiza on's net periodic pension cost. During 2023, 2022 and 2021, the Registrants
experienced an increase in both the number of employees elec ng to re re and the amount of lump sum payments paid to such employees upon re rement,
which resulted in the Registrants recording pension plan se lement charges as presented in the Pension Plan net periodic benefit cost tables below. The
pension se lement charges did not require a cash outlay by the Registrants and did not increase total pension expense over me, as the charges were an
accelera on of costs that otherwise would be recognized as pension expense in future periods.
OGE Energy provides a Restora on of Re rement Income Plan to those par cipants in OGE Energy's Pension Plan whose benefits are subject to certain
limita ons of the Code. Par cipants in the Restora on of Re rement Income Plan receive the same benefits that they would have received under OGE
Energy's Pension Plan in the absence of limita ons imposed by the federal tax laws. The Restora on of Re rement Income Plan is intended to be an unfunded
plan.
OG&E's employees par cipate in OGE Energy's Pension Plan and Restora on of Re rement Income Plan.
Obliga ons and Funded Status
The details of the funded status of OGE Energy's Pension Plan, the Restora on of Re rement Income Plan and the postre rement benefit plans and the
amounts included in the balance sheets for 2023 and 2022 are included in the following tables. These amounts have been recorded in Accrued Benefit
Obliga ons with the offset in Accumulated Other Comprehensive Loss (except OG&E's por on, which is recorded as a regulatory asset as discussed in Note 1)
in the balance sheets. 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. The benefit obliga on for OGE Energy's Pension Plan and the Restora on of Re rement
Income Plan represents the projected benefit obliga on, while the benefit obliga on for the postre rement benefit plans represents the accumulated
postre rement benefit obliga on. The accumulated postre rement benefit obliga on for OGE Energy's Pension Plan and Restora on of Re rement Income
Plan differs from the projected benefit obliga on in that the former includes no assump on about future compensa on levels.
84
OGE Energy
OG&E
Pension Plan
Restora on of
Re rement
Income Plan
Pension Plan
Restora on of Re rement
Income Plan
2023
2022
2023
2022
2023
2022
2023
2022
$
$
$
$
$
358.5 $
5.4
15.9
(62.8 )
0.8
(14.1 )
303.7 $
293.0 $
27.6
—
(62.8 )
(14.1 )
243.7 $
(60.0 ) $
502.9 $
7.6
15.7
(95.8 )
(56.9 )
(15.0 )
358.5 $
486.0 $
(82.2 )
—
(95.8 )
(15.0 )
293.0 $
(65.5 ) $
5.8 $
1.0
0.3
(1.4 )
(0.2 )
—
5.5 $
— $
—
1.4
(1.4 )
—
— $
(5.5 ) $
5.9 $
1.1
0.2
(1.5 )
0.1
—
5.8 $
— $
—
0.2
(0.2 )
—
— $
(5.8 ) $
288.5 $
4.4
12.6
(57.7 )
2.7
(11.9 )
238.6 $
238.9 $
22.1
—
(57.7 )
(11.9 )
191.4 $
(47.2 ) $
363.2 $
6.2
12.1
(38.8 )
(41.3 )
(12.9 )
288.5 $
353.0 $
(62.4 )
—
(38.8 )
(12.9 )
238.9 $
(49.6 ) $
0.5 $
—
—
(0.7 )
0.2
—
— $
— $
—
0.7
(0.7 )
—
— $
— $
0.5
—
—
—
—
—
0.5
—
—
—
—
—
—
(0.5 )
$
289.5 $
342.7 $
4.9 $
4.8 $
226.5 $
275.2 $
— $
0.4
December 31 (In millions)
Change in benefit obliga on
Beginning obliga ons
Service cost
Interest cost
Plan se lements
Actuarial losses (gains)
Benefits paid
Ending obliga ons
Change in plans' assets
Beginning fair value
Actual return on plans' assets
Employer contribu ons
Plan se lements
Benefits paid
Ending fair value
Funded status at end of year
Accumulated postre rement
benefit obliga on
For the year ended December 31, 2023, actuarial losses were primarily due to more lump sum payouts than expected, par ally offset by demographic
experience. For the year ended December 31, 2022, Pension Plan actuarial gains were primarily due to significantly higher discount rates, par ally offset by
demographic experience and a larger than expected amount of early 2023 lump sum payouts.
December 31 (In millions)
Change in benefit obliga on
Beginning obliga ons
Service cost
Interest cost
Par cipants' contribu ons
Actuarial losses (gains)
Benefits paid
Ending obliga ons
Change in plans' assets
Beginning fair value
Actual return on plans' assets
Employer contribu ons
Par cipants' contribu ons
Benefits paid
Ending fair value
Funded status at end of year
OGE Energy
Postre rement Benefit Plans
OG&E
Postre rement Benefit Plans
2023
2022
2023
2022
101.9 $
0.1
5.2
3.4
4.9
(12.2 )
103.3 $
32.8 $
1.9
6.8
3.4
(12.2 )
32.7 $
(70.6 ) $
137.3 $
0.2
3.5
3.5
(29.1 )
(13.5 )
101.9 $
44.3 $
(8.2 )
6.7
3.5
(13.5 )
32.8 $
(69.1 ) $
76.4 $
0.1
3.9
2.4
4.0
(9.5 )
77.3 $
29.8 $
1.7
5.2
2.4
(9.5 )
29.6 $
(47.7 ) $
102.4
0.1
2.7
2.4
(21.0 )
(10.2 )
76.4
39.9
(7.4 )
5.1
2.4
(10.2 )
29.8
(46.6 )
$
$
$
$
$
85
Net Periodic Benefit Cost
The following tables present the net periodic benefit cost components, before considera on of capitalized amounts, of OGE Energy's Pension Plan,
Restora on of Re rement Income Plan and postre rement benefit plans that are included in the financial statements. Service cost is presented within Other
Opera on and Maintenance Expense, and the remaining net periodic benefit cost components as listed in the following tables are presented within Other Net
Periodic Benefit Income (Expense) in the statements of income. OG&E recovers specific amounts of pension and postre rement medical costs in rates
approved in its Oklahoma rate reviews. In accordance with approved orders, OG&E defers the difference between actual pension and postre rement medical
expenses and the amount approved in its last Oklahoma rate review as a regulatory asset or regulatory liability. These amounts have been recorded in the
Pension tracker in the regulatory assets and liabili es table in Note 1 and within Other Net Periodic Benefit Income (Expense) in the statements of income.
$
OGE Energy
Year Ended December 31
(In millions)
Service cost
Interest cost
Expected return on plan assets
Amor za on of net loss
Amor za on of unrecognized prior service
cost (A)
Se lement cost
Total net periodic benefit cost
Less: Amount paid by unconsolidated
affiliates
Net periodic benefit cost
$
Pension Plan
Restora on of Re rement
Income Plan
2023
2022
2021
2023
2022
2021
5.4 $
15.9
(16.2 )
8.0
—
21.8
34.9
—
34.9 $
7.6 $
15.7
(25.4 )
8.9
—
30.6
37.4
—
37.4 $
11.2 $
13.3
(34.1 )
9.4
—
41.3
41.1
(0.2 )
41.3 $
1.0 $
0.3
—
—
0.3
0.5
2.1
—
2.1 $
1.1 $
0.2
—
0.2
0.2
0.3
2.0
—
2.0 $
0.8
0.1
—
0.2
0.1
2.1
3.3
0.1
3.2
(A) Unamor zed prior service cost is amor zed on a straight-line basis over the average remaining service period to the first eligibility age of par cipants
who are expected to receive a benefit and are ac ve at the date of the plan amendment.
OG&E
Year Ended December 31
(In millions)
Service cost
Interest cost
Expected return on plan assets
Amor za on of net loss
Se lement cost
$
Total net periodic benefit cost
Plus: Amount allocated from OGE Energy
Net periodic benefit cost
$
Pension Plan
Restora on of Re rement
Income Plan
2023
2022
2021
2023
2022
2021
4.4 $
12.6
(12.9 )
6.9
20.4
31.4
3.0
34.4 $
6.2 $
12.1
(19.6 )
7.4
12.9
19.0
5.2
24.2 $
7.7 $
9.7
(24.7 )
7.0
33.1
32.8
6.5
39.3 $
— $
—
—
—
0.4
0.4
1.7
2.1 $
— $
—
—
—
—
—
1.5
1.5 $
—
—
—
0.1
1.6
1.7
1.5
3.2
In addi on to the net periodic benefit cost amounts recognized, as presented in the table above, for the Pension and Restora on of Re rement Income
Plans in 2023, 2022 and 2021, the Registrants recognized the following:
Year Ended December 31 (In millions)
Change in pension expense to maintain allowed recoverable amount in Oklahoma
jurisdic on (A)
Deferral of pension expense related to pension se lement charges included in the above
line item:
Oklahoma jurisdic on (A)
Arkansas jurisdic on (A)
$
$
$
2023
2022
2021
33.3 $
15.2 $
23.0
20.1 $
1.9 $
15.4 $
1.4 $
37.9
3.5
(A)
Included in the pension regulatory asset in each jurisdic on, as indicated in the regulatory assets and liabili es table in Note 1.
86
Year Ended December 31 (In millions)
Service cost
Interest cost
Expected return on plan assets
Amor za on of net loss
Amor za on of unrecognized prior service cost (A)
Total net periodic benefit cost (income)
Less: Amount paid by unconsolidated affiliates (B)
Plus: Amount allocated from OGE Energy (B)
OGE Energy
Postre rement Benefit Plans
2022
2023
2021
$
0.1 $
5.2
(1.7 )
(0.2 )
—
3.4
—
0.2 $
3.5
(1.8 )
1.5
(3.8 )
(0.4 )
—
0.2 $
3.4
(1.8 )
2.8
(6.9 )
(2.3 )
(0.5 )
Net periodic benefit cost (income)
$
3.4 $
(0.4 ) $
(1.8 ) $
OG&E
Postre rement Benefit Plans
2022
2023
2021
0.1 $
3.9
(1.6 )
—
—
2.4
0.5
2.9 $
0.1 $
2.7
(1.6 )
1.5
(3.6 )
(0.9 )
—
(0.9 ) $
0.1
2.6
(1.7 )
2.7
(5.0 )
(1.3 )
(0.5 )
(1.8 )
(A) Unamor zed prior service cost is amor zed on a straight-line basis over the average remaining service period to the first eligibility age of par cipants
who are expected to receive a benefit and are ac ve at the date of the plan amendment.
"Amount paid by unconsolidated affiliates" is only applicable to OGE Energy. "Amount allocated from OGE Energy" is only applicable to OG&E.
(B)
In addi on to the net periodic benefit cost or income amounts recognized, as presented in the table above, for the postre rement benefit plans in 2023,
2022 and 2021, the Registrants recognized the following:
Year Ended December 31 (In millions)
Change in postre rement expense to maintain allowed recoverable amount in Oklahoma jurisdic on (A)
(A)
$
Included in the pension regulatory asset, as indicated in the regulatory assets and liabili es table in Note 1.
2023
2022
2021
4.4 $
0.6 $
(0.4 )
The following table presents the amount of net periodic benefit cost capitalized and a ributable to each of the Registrants for OGE Energy's Pension
Plan and postre rement benefit plans in 2023, 2022 and 2021.
(In millions)
Capitalized por on of net periodic pension benefit cost
$
Capitalized por on of net periodic postre rement benefit cost $
2023
OGE Energy
2022
2021
2023
OG&E
2022
2021
2.2 $
0.1 $
3.0 $
0.2 $
3.4 $
0.2 $
1.9 $
0.1 $
2.5 $
0.1 $
2.9
0.1
87
Rate Assump ons
Year Ended December 31
Assump ons to determine benefit obliga ons:
Discount rate
Rate of compensa on increase
Interest credi ng rate
Assump ons to determine net periodic benefit cost:
Discount rate
Expected return on plan assets
Rate of compensa on increase
Interest credi ng rate
N/A - not applicable
Pension Plan and
Restora on of Re rement Income Plan
2021
2022
2023
Postre rement
Benefit Plans
2022
2021
2023
5.40 %
4.20 %
3.50 %
5.45 %
7.00 %
4.20 %
3.50 %
5.45 %
4.20 %
3.50 %
4.01 %
7.00 %
4.20 %
3.50 %
2.75 %
4.20 %
3.50 %
2.63 %
7.00 %
4.20 %
3.50 %
5.35 %
N/A
N/A
5.40 %
4.00 %
N/A
N/A
5.40 %
N/A
N/A
2.80 %
4.00 %
N/A
N/A
2.80 %
N/A
N/A
2.45 %
4.00 %
N/A
N/A
The discount rate used to compute the present value of plan liabili es is based generally on rates of high-grade corporate bonds with maturi es similar
to the average period over which benefits will be paid. The discount rate used to determine net benefit cost for the current year is the same discount rate
used to determine the benefit obliga on as of the previous year's balance sheet date, unless a plan se lement occurs during the current year that requires an
updated discount rate for net periodic cost measurement. For 2023 and 2022, the Pension Plan discount rates used to determine net periodic benefit cost are
disclosed on a weighted-average basis.
The overall expected rate of return on plan assets assump on is used in determining net periodic benefit cost. The rate of return on plan assets
assump on is the average long-term rate of earnings expected on the funds currently invested and to be invested for the purpose of providing benefits
specified by the Pension Plan or postre rement benefit plans. This assump on is reexamined at least annually and updated as necessary. The rate of return
on plan assets assump on reflects a combina on of historical return analysis, forward-looking return expecta ons and the plans' current and expected asset
alloca on.
The assumed health care cost trend rates have a significant effect on the amounts reported for postre rement medical benefit plans. Future health care
cost trend rates are assumed to be 6.75 percent in 2024 with the rates trending downward to 4.50 percent by 2033.
Pension Plan
Pension Plan Investments, Policies and Strategies
The Pension Plan assets are held in a trust which follows an investment policy and strategy designed to reduce the funded status vola lity of the Plan by
u lizing liability driven inves ng. The purpose of liability-driven inves ng is to structure the asset por olio to more closely resemble the pension liability and
thereby more effec vely hedge against changes in the liability. The investment policy follows a glide path approach that shi s a higher por olio weigh ng to
fixed income as the Plan's funded status increases. The following table presents the targeted fixed income and equity alloca ons at different funded status
levels.
Projected Benefit Obliga on Funded Status
Thresholds
Fixed income
Equity
Total
<90%
50%
50%
100%
95%
58%
42%
100%
100%
65%
35%
100%
105%
73%
27%
100%
110%
80%
20%
100%
115%
85%
15%
100%
120%
90%
10%
100%
88
Within the por olio's overall alloca on to equi es, the funds are allocated according to the guidelines in the following table.
Minimum
35%
5%
5%
10%
Target Alloca on
40%
15%
25%
20%
Domes c Large Cap Equity
Domes c Mid-Cap Equity
Domes c Small-Cap Equity
Interna onal Equity
Asset Class
Maximum
60%
25%
30%
30%
OGE Energy has retained an investment consultant responsible for the general investment oversight, analysis, monitoring investment guideline
compliance and providing quarterly reports to certain of the Registrants' members and OGE Energy's Investment Commi ee. The various investment
managers used by the trust operate within the general opera ng objec ves as established in the investment policy and within the specific guidelines
established for each investment manager's respec ve por olio.
The por olio is rebalanced at least on an annual basis to bring the asset alloca ons of various managers in line with the target asset alloca on listed
above. More frequent rebalancing may occur if there are drama c price movements in the financial markets which may cause the trust's exposure to any
asset class to exceed or fall below the established allowable guidelines.
To evaluate the progress of the por olio, investment performance is reviewed quarterly. It is, however, expected that performance goals will be met
over a full market cycle, normally defined as a three- to five-year period. Analysis of performance is within the context of the prevailing investment
environment and the advisors' investment style. The goal of the trust is to provide a rate of return consistently from three percent to five percent over the
rate of infla on (as measured by the na onal Consumer Price Index) on a fee adjusted basis over a typical market cycle of no less than three years and no
more than five years. Each investment manager is expected to outperform its respec ve benchmark.
89
The following table presents a list of each asset class u lized with appropriate compara ve benchmark(s) each manager is evaluated against and the
focus of the asset class.
Asset Class
Ac ve Dura on Fixed Income (A)
(B)
Compara ve Benchmark(s)
Bloomberg Barclays Aggregate
Long Dura on Fixed Income (A)(B) Dura on blended Barclays Long
Government/Credit & Barclays Universal
Equity Index (B)(C)
Mid-Cap Equity (B)(C)
Standard & Poor's 500 Index
Russell Midcap Index
Russell Midcap Value Index
Small-Cap Equity (B)(C)
Interna onal Equity (D)
Russell 2000 Index
Russell 2000 Value Index
Morgan Stanley Capital Interna onal ACWI ex-
U.S.
Focus of Asset Class
- Maximize risk-adjusted performance while providing long bond exposure
managed according to the manager's forecast on interest rates.
- All invested assets must reach at or above Baa3 or BBB- investment
grade.
- Limited five percent exposure to any single issuer, except the U.S.
Government or affiliates.
- Maximize risk-adjusted performance.
- At least 75 percent of invested assets must reach at or above Baaa3 or
BBB- investment grade.
- Limited five percent exposure to any single issuer, except the U.S.
Government or affiliates.
- May invest up to 10 percent of the market value in conver ble bonds as
long as quality guidelines are met.
- May invest up to 15 percent of the market value in private placement,
including 144A securi es with or without registra on rights and allow for
futures to be traded in the por olio.
- Focus on replica ng the performance of the S&P 500 Index.
- Focus on undervalued stocks expected to earn average return and pay
out higher than average dividends.
- Invest in companies with market capitaliza ons lower than average
company on public exchanges:
- Price/earnings ra o at or near referenced
- Small dividend yield and return on equity at or near referenced index;
and
- Earnings per share growth rate at or near referenced index.
- Invest in non-dollar denominated equity securi es.
- Diversify the overall trust investments.
Investment grades are by Moody's Investors Service, S&P Global Ra ngs or Fitch Ra ngs.
(A)
(B) The purchase of any of OGE Energy's equity, debt or other securi es is prohibited.
(C) No more than five percent can be invested in any one stock at the me of purchase and no more than 10 percent a er accoun ng for price apprecia on.
Op ons or financial futures may not be purchased unless prior approval from OGE Energy's Investment Commi ee is received. The purchase of
securi es on margin, securi es lending, private placement purchases and venture capital purchases are prohibited. The aggregate posi ons in any
company may not exceed one percent of the fair market value of its outstanding stock.
(D) The manager of this asset class is required to operate under certain restric ons including regional constraints, diversifica on requirements and
percentage of U.S. securi es. All securi es are freely traded on a recognized stock exchange, and there are no over-the-counter deriva ves. The
following investment categories are excluded: op ons (other than traded currency op ons), commodi es, futures (other than currency futures or
currency hedging), short sales/margin purchases, private placements, unlisted securi es and real estate (but not real estate shares).
90
Pension Plan Investments
The following tables present the Pension Plan's investments that are measured at fair value on a recurring basis at December 31, 2023 and 2022. There
were no Level 3 investments held by the Pension Plan at December 31, 2023 and 2022.
(In millions)
Common stocks
U.S. Treasury notes and bonds (B)
Mortgage- and asset-backed securi es
Corporate fixed income and other securi es
Commingled fund (C)
Foreign government bonds
U.S. municipal bonds
Money market fund
Mutual funds
Preferred stocks
U.S. Treasury futures:
Cash collateral
Forward contracts:
Receivable (foreign currency)
Total Pension Plan investments
Interest and dividends receivable
Receivable from broker for securi es sold
Payable to broker for securi es purchased
Total OGE Energy Pension Plan assets
Pension Plan investments a ributable to affiliates
Total OG&E Pension Plan assets
(In millions)
Common stocks
U.S. Treasury notes and bonds (B)
Mortgage- and asset-backed securi es
Corporate fixed income and other securi es
Commingled fund (C)
Foreign government bonds
U.S. municipal bonds
Money market fund
Mutual fund
Preferred stocks
U.S. Treasury futures:
Cash collateral
Forward contracts:
Receivable (foreign currency)
Total Pension Plan investments
Interest and dividends receivable
Receivable from broker for securi es sold
Payable to broker for securi es purchased
Total OGE Energy Pension Plan assets
Pension Plan investments a ributable to affiliates
Total OG&E Pension Plan assets
$
$
$
December 31, 2023
Level 1
Level 2
Net Asset Value
(A)
—
—
—
—
13.8
—
—
1.3
—
—
—
—
15.1
56.9 $
42.4
22.0
54.6
13.8
0.2
0.3
1.3
55.3
1.0
56.9 $
42.4
—
—
—
—
—
—
55.3
1.0
0.3
0.3
— $
—
22.0
54.6
—
0.2
0.3
—
—
—
—
—
155.9 $
0.1
77.2 $
0.1
248.2 $
1.4
8.3
(14.2 )
243.7
(52.3 )
191.4
$
$
$
December 31, 2022
Level 1
Level 2
Net Asset Value
(A)
71.9 $
44.6
26.2
65.5
18.2
0.5
0.9
5.9
60.4
1.5
71.9 $
44.6
—
—
—
—
—
—
60.4
1.5
— $
—
26.2
65.5
—
0.5
0.9
—
—
—
0.3
0.3
—
—
178.7 $
0.1
93.2 $
0.1
296.0 $
1.6
20.6
(25.2 )
293.0
(54.1 )
238.9
—
—
—
—
18.2
—
—
5.9
—
—
—
—
24.1
(A) GAAP allows the measurement of certain investments that do not have a readily determinable fair value at the net asset value. These investments do
not consider the observability of inputs; therefore, they are not included within the fair value hierarchy.
91
(B) This category represents U.S. Treasury notes and bonds with a Moody's Investors Service ra ng of Aaa and Government Agency Bonds with a Moody's
Investors Service ra ng of A1 or higher.
(C) This category represents units of par cipa on in a commingled fund that primarily invested in stocks of interna onal companies and emerging markets.
As defined in the fair value hierarchy, Level 1 inputs are quoted prices in ac ve markets for iden cal unrestricted assets or liabili es that are accessible
by the Pension Plan at the measurement date. Level 2 inputs are inputs other than quoted prices in ac ve markets included within Level 1 that are either
directly or indirectly observable at the repor ng date for the asset or liability for substan ally the full term of the asset or liability. Level 2 inputs include
quoted prices for similar assets or liabili es in ac ve markets and quoted prices for iden cal or similar assets or liabili es in markets that are not ac ve. Level
3 inputs are prices or valua on techniques for the asset or liability that require inputs that are both significant to the fair value measurement and
unobservable (i.e., supported by li le or no market ac vity). Unobservable inputs reflect the Plan's own assump ons about the assump ons that market
par cipants would use in pricing the asset or liability (including assump ons about risk).
Expected Benefit Payments
The following table presents the benefit payments the Registrants expect to pay related to the Pension Plan and Restora on of Re rement Income Plan.
These expected benefits are based on the same assump ons used to measure OGE Energy's benefit obliga on at the end of the year and include benefits
a ributable to es mated future employee service.
(In millions)
2024
2025
2026
2027
2028
2029-2033
Postre rement Benefit Plans
OGE Energy
OG&E
$
$
$
$
$
$
44.4 $
28.1 $
27.9 $
34.2 $
28.0 $
122.7 $
35.4
22.2
22.4
21.1
21.0
96.3
In addi on to providing pension benefits, OGE Energy provides certain medical and life insurance benefits for eligible re red members. Regular, full-
me, ac ve employees hired prior to February 1, 2000 whose age and years of credited service total or exceed 80 or have a ained at least age 55 with 10 or
more years of service at the me of re rement are en tled to postre rement medical benefits, while employees hired on or a er February 1, 2000 are not
en tled to postre rement medical benefits. Eligible re rees must contribute such amount as OGE Energy specifies from me to me toward the cost of
coverage for postre rement benefits. The benefits are subject to deduc bles, co-payment provisions and other limita ons. OG&E charges postre rement
benefit costs to expense and includes an annual amount as a component of the cost-of-service in future ratemaking proceedings.
OGE Energy's contribu on to the medical costs for pre-65 aged eligible re rees are fixed at the 2011 level, and OGE Energy covers future annual medical
infla onary cost increases up to five percent. Increases in excess of five percent annually are covered by the pre-65 aged re ree in the form of premium
increases. OGE Energy provides Medicare-eligible re rees and their Medicare-eligible spouses an annual fixed contribu on to an OGE Energy-sponsored
health reimbursement arrangement. Medicare-eligible re rees are able to purchase individual insurance policies supplemental to Medicare through a third-
party administrator and use their health reimbursement arrangement funds for reimbursement of medical premiums and other eligible medical expenses.
92
Postre rement Plans Investments
The following tables present the postre rement benefit plans' investments that are measured at fair value on a recurring basis at December 31, 2023
and 2022. There were no Level 2 investments held by the postre rement benefit plans at December 31, 2023 and 2022.
(In millions)
Group re ree medical insurance contract
Mutual funds
Total OGE Energy plan investments
Plan investments a ributable to affiliates
Total OG&E plan investments
(In millions)
Group re ree medical insurance contract
Mutual funds
Total OGE Energy plan investments
Plan investments a ributable to affiliates
Total OG&E plan investments
December 31,
2023
Level 1
Level 3
— $
15.9
15.9 $
16.8 $
15.9
32.7 $
(3.1 )
29.6
December 31,
2022
Level 1
Level 3
— $
11.2
11.2 $
21.6 $
11.2
32.8 $
(3.0 )
29.8
$
$
$
$
$
$
16.8
—
16.8
21.6
—
21.6
The group re ree medical insurance contract invests in a pool of common stocks, bonds and money market accounts, of which a significant por on is
comprised of mortgage-backed securi es. The unobservable input included in the valua on of the contract includes the approach for determining the
alloca on of the postre rement benefit plans' pro-rata share of the total assets in the contract.
The following table presents a reconcilia on of the postre rement benefit plans' investments that are measured at fair value on a recurring basis using
significant unobservable inputs (Level 3).
Year Ended December 31 (In millions)
Group re ree medical insurance contract:
Beginning balance
Claims paid
Realized losses
Investment fees
Interest income
Ending balance
2023
21.6
(4.5 )
(0.9 )
(0.1 )
0.7
16.8
$
$
Medicare Prescrip on Drug, Improvement and Moderniza on Act of 2003
The Medicare Prescrip on Drug, Improvement and Moderniza on Act of 2003 expanded coverage for prescrip on drugs. The following table presents
the gross benefit payments the Registrants expect to pay related to the postre rement benefit plans, including prescrip on drug benefits.
(In millions)
2024
2025
2026
2027
2028
2029-2033
Post-Employment Benefit Plan
OGE Energy
OG&E
13.9 $
11.5 $
10.9 $
9.9 $
9.0 $
36.9 $
10.5
8.6
8.0
7.4
6.8
27.8
$
$
$
$
$
$
Disabled employees receiving benefits from OGE Energy's Group Long-Term Disability Plan are en tled to con nue par cipa ng in OGE Energy's Medical
Plan along with their dependents. The post-employment benefit obliga on represents the actuarial present
93
value of es mated future medical benefits that are a ributed to employee service rendered prior to the date as of which such informa on is presented. The
obliga on also includes future medical benefits expected to be paid to current employees par cipa ng in the Group Long-Term Disability Plan and their
dependents, as defined in OGE Energy's Medical Plan.
The post-employment benefit obliga on is determined by an actuary on a basis similar to the accumulated postre rement benefit obliga on. The
es mated future medical benefits are projected to grow with expected future medical cost trend rates and are discounted for interest at the discount rate
and for the probability that the par cipant will discon nue receiving benefits from OGE Energy's Group Long-Term Disability Plan due to death, recovery from
disability or eligibility for re ree medical benefits. OGE Energy's post-employment benefit obliga on was $1.7 million and $1.8 million at December 31, 2023
and 2022, respec vely, of which $1.3 million and $1.3 million, respec vely, was OG&E's por on of the obliga on.
401(k) Plan
OGE Energy provides a 401(k) Plan, and each regular full- me employee of OGE Energy or a par cipa ng affiliate is eligible to par cipate in the 401(k)
Plan immediately upon hire. All other employees of OGE Energy or a par cipa ng affiliate are eligible to become par cipants in the 401(k) Plan a er
comple ng one year of service as defined in the 401(k) Plan. Par cipants may contribute each pay period any whole percentage between two percent and 75
percent of their compensa on, as defined in the 401(k) Plan, for that pay period. Par cipants who have reached age 50 before the close of a year are allowed
to make addi onal contribu ons referred to as "Catch-Up Contribu ons," subject to certain limita ons of the Code. Par cipants may designate, at their
discre on, all or any por on of their contribu ons as: (i) a before-tax contribu on under Sec on 401(k) of the Code subject to the limita ons thereof, (ii) a
contribu on made on a non-Roth a er-tax basis or (iii) a Roth contribu on. The 401(k) Plan also includes an eligible automa c contribu on arrangement and
provides for a qualified default investment alterna ve consistent with the U.S. Department of Labor regula ons. Par cipants may elect, in accordance with
the 401(k) Plan procedures, to have their future salary deferral rate to be automa cally increased annually on a date and in an amount as specified by the
par cipant in such elec on. For employees hired or rehired on or a er December 1, 2009, OGE Energy contributes to the 401(k) Plan, on behalf of each
par cipant, 200 percent of the par cipant's contribu ons up to five percent of compensa on.
No OGE Energy contribu ons are made with respect to a par cipant's Catch-Up Contribu ons, rollover contribu ons or with respect to a par cipant's
contribu ons based on over me payments, pay-in-lieu of over me for exempt personnel, special lump-sum recogni on awards and lump-sum merit awards
included in compensa on for determining the amount of par cipant contribu ons. Once made, OGE Energy's contribu on may be directed to any available
investment op on in the 401(k) Plan. OGE Energy match contribu ons vest over a three-year period. A er two years of service, par cipants become 20
percent vested in their OGE Energy contribu on account and become fully vested on comple ng three years of service. In addi on, par cipants fully vest
when they are eligible for normal or early re rement under the Pension Plan requirements, in the event of their termina on due to death or permanent
disability or upon a ainment of age 65 while employed by OGE Energy or its affiliates. OGE Energy contributed $19.6 million, $17.1 million and $15.4 million
in 2023, 2022 and 2021, respec vely, to the 401(k) Plan, of which $16.0 million, $13.9 million and $12.0 million, respec vely, related to OG&E.
Deferred Compensa on Plan
OGE Energy provides a nonqualified deferred compensa on plan which is intended to be an unfunded plan. The plan's primary purpose is to provide a
tax-deferred capital accumula on vehicle for a select group of management, highly compensated employees and non-employee members of OGE Energy's
Board of Directors and to supplement such employees' 401(k) Plan contribu ons as well as offering this plan to be compe ve in the marketplace.
Eligible employees who enroll in the plan have the following deferral op ons: (i) eligible employees may elect to defer up to a maximum of 70 percent of
base salary and 100 percent of annual bonus awards or (ii) eligible employees may elect a deferral percentage of base salary and bonus awards based on the
deferral percentage elected for a year under the 401(k) Plan with such deferrals to start when maximum deferrals to the qualified 401(k) Plan have been
made because of limita ons in that plan. Eligible directors who enroll in the plan may elect to defer up to a maximum of 100 percent of directors' mee ng
fees and annual retainers. OGE Energy matches employee (but not non-employee director) deferrals to make up for any match lost in the 401(k) Plan because
of deferrals to the deferred compensa on plan and to allow for a match that would have been made under the 401(k) Plan on that por on of either the first
six percent of total compensa on or the first five percent of total compensa on, depending on prior par cipant elec ons, deferred that exceeds the limits
allowed in the 401(k) Plan. Matching credits vest based on years of service, with full ves ng a er three years or, if earlier, on re rement, disability, death, a
change in control of OGE Energy or termina on of the
94
plan. Deferrals, plus any OGE Energy match, are credited to a recordkeeping account in the par cipant's name. Earnings on the deferrals are indexed to the
assumed investment funds selected by the par cipant. In 2023, those investment op ons included an OGE Energy Common Stock fund, whose value was
determined based on the stock price of OGE Energy's Common Stock. OGE Energy accounts for the contribu ons related to its execu ve officers in this plan as
Accrued Benefit Obliga ons and accounts for the contribu ons related to OGE Energy's directors in this plan as Other Deferred Credits and Other Liabili es in
the balance sheets. The investment associated with these contribu ons is accounted for as Other Property and Investments in the balance sheets. The
apprecia on of these investments is accounted for as Other Income, and the increase in the liability under the plan is accounted for as Other Expense in the
statements of income.
Supplemental Execu ve Re rement Plan
OGE Energy provides a supplemental execu ve re rement plan in order to a ract and retain lateral hires or other execu ves designated by the
Compensa on Commi ee of OGE Energy's Board of Directors who may not otherwise qualify for a sufficient level of benefits under OGE Energy's Pension
Plan and Restora on of Re rement Income Plan. The supplemental execu ve re rement plan is intended to be an unfunded plan and not subject to the
benefit limita ons of the Code. For the actuarial equivalence calcula ons, the supplemental execu ve re rement plan provides that (i) mortality rates shall be
based on the unisex mortality table issued under Internal Revenue Service No ce 2018-02 for purposes of determining the minimum present value under
Code Sec on 417(e)(3) for distribu ons with annuity star ng dates that occur during stability periods beginning in the 2019 calendar year and (ii) the interest
rate shall be five percent.
12. Report of Business Segments
OGE Energy reports its opera ons primarily through a single segment, cap oned "electric company," which is engaged in the genera on, transmission,
distribu on and sale of electric energy. The "other opera ons" cap on primarily includes the opera ons of the holding company and other energy-related
investments. Intersegment revenues are recorded at prices comparable to those of unaffiliated customers and are affected by regulatory considera ons. Prior
to the Enable and Energy Transfer merger closing on December 2, 2021, OGE Energy's natural gas midstream opera ons segment included its equity method
investment in Enable. During 2022, OGE Energy held an investment in Energy Transfer's equity securi es and reported the investment's ac vity, as well as
Enable legacy pension and postre rement costs, through the natural gas midstream opera ons segment. As of the end of September 2022, OGE Energy sold
all of Energy Transfer's limited partner units; therefore, beginning in 2023, OGE Energy no longer has a natural gas midstream opera ons segment. The
following tables present the results of OGE Energy's business segments for the years ended December 31, 2023, 2022 and 2021.
2023
(In millions)
Opera ng revenues
Fuel, purchased power and direct transmission expense
Other opera on and maintenance
Deprecia on and amor za on
Taxes other than income
Opera ng income (loss)
Other income
Interest expense
Income tax expense (benefit)
Net income (loss)
Total assets
Capital expenditures
Electric
Company
Other
Opera ons
Elimina ons
Total
2,674.3 $
911.7
505.0
506.6
99.4
651.6
43.5
199.9
68.8
426.4 $
12,642.6 $
1,178.2 $
— $
—
(2.4 )
—
3.8
(1.4 )
8.1
28.9
(12.6 )
(9.6 ) $
301.1 $
— $
— $
—
—
—
—
—
(7.4 )
(7.4 )
—
— $
2,674.3
911.7
502.6
506.6
103.2
650.2
44.2
221.4
56.2
416.8
(153.0 ) $
— $
12,790.7
1,178.2
$
$
$
$
95
2022
(In millions)
Opera ng revenues
Fuel, purchased power and direct transmission expense
Other opera on and maintenance
Deprecia on and amor za on
Taxes other than income
Opera ng income (loss)
Gain on equity securi es
Other income
Interest expense
Income tax expense (benefit)
Net income (loss)
Total assets
Capital expenditures
2021
(In millions)
Opera ng revenues
Fuel, purchased power and direct transmission expense
Other opera on and maintenance
Deprecia on and amor za on
Taxes other than income
Opera ng income (loss)
Equity in earnings of unconsolidated affiliates
Gain on Enable/Energy Transfer transac on, net
Other income (expense)
Interest expense
Income tax expense (benefit)
Net income (loss)
Total assets
Capital expenditures
13. Commitments and Con ngencies
Purchase Obliga ons and Commitments
Electric
Company
Natural Gas
Midstream
Opera ons
Other
Opera ons Elimina ons
Total
3,375.7 $
1,662.4
491.9
460.9
98.0
662.5
—
11.2
157.8
76.4
439.5 $
12,410.5 $
1,050.9 $
— $
—
12.6
—
0.1
(12.7 )
282.1
10.0
—
48.1
231.3 $
1.2 $
— $
— $
—
(3.1 )
—
3.4
(0.3 )
—
4.9
10.6
(0.9 )
(5.1 ) $
— $
—
—
—
—
—
—
(2.1 )
(2.1 )
—
— $
3,375.7
1,662.4
501.4
460.9
101.5
649.5
282.1
24.0
166.3
123.6
665.7
683.7 $
— $
(550.7 ) $
— $
12,544.7
1,050.9
Electric
Company
Natural Gas
Midstream
Opera ons
Other
Opera ons Elimina ons
Total
3,653.7 $
2,127.6
464.7
416.0
99.3
546.1
—
—
7.7
152.0
41.8
360.0 $
11,688.0 $
778.5 $
— $
—
1.6
—
0.2
(1.8 )
169.8
344.4
(26.4 )
—
101.0
385.0 $
786.6 $
— $
— $
—
(3.2 )
—
3.3
(0.1 )
—
—
(2.0 )
7.2
(1.6 )
(7.7 ) $
— $
—
—
—
—
—
—
—
(0.9 )
(0.9 )
—
— $
3,653.7
2,127.6
463.1
416.0
102.8
544.2
169.8
344.4
(21.6 )
158.3
141.2
737.3
350.3 $
— $
(218.5 ) $
— $
12,606.4
778.5
$
$
$
$
$
$
$
$
The following table presents the Registrants' future purchase obliga ons and commitments es mated for the next five years.
2024
2025
2027
2026
2028
Total
(In millions)
Purchase obliga ons and commitments:
Minimum purchase commitments
Es mated wind power purchase commitments
Capacity commitments
Long-term service agreement commitments
Genera on capacity construc on commitments
Total purchase obliga ons and commitments
$
$
118.4 $
56.6
32.4
14.8
126.5
348.7 $
100.5 $
56.9
33.0
16.6
137.8
344.8 $
69.7 $
57.3
40.2
16.6
38.3
222.1 $
56.9 $
57.8
41.4
9.9
—
166.0 $
46.6 $
58.4
—
3.0
—
108.0 $
392.1
287.0
147.0
60.9
302.6
1,189.6
OG&E Minimum Purchase Commitments
OG&E has coal contracts for purchases through December 31, 2025. OG&E may also purchase coal through spot purchases on an as-needed basis. As a
par cipant in the SPP Integrated Marketplace, OG&E purchases its natural gas supply through short-term
96
agreements. OG&E relies on a combina on of natural gas base load agreements and call agreements, whereby OG&E has the right but not the obliga on to
purchase a defined quan ty of natural gas, combined with day and intra-day purchases to meet the demands of the SPP Integrated Marketplace.
OG&E has natural gas transporta on service contracts with Energy Transfer, ONEOK, Inc. and Southern Star, which grant these companies the
responsibility of delivering natural gas to OG&E's genera ng facili es. The contracts with Energy Transfer end in December 2024 and December 2038; the
contracts with ONEOK, Inc. end in December 2024 and August 2037; and the contract with Southern Star ends in December 2024.
OG&E Es mated Wind Power Purchase Commitments
The following table presents OG&E's wind purchased power contracts.
Company
CPV Keenan
Edison Mission Energy
NextEra Energy
Loca on
Woodward County, OK
Dewey County, OK
Blackwell, OK
Original Term of
Contract
20 years
20 years
20 years
Expira on of
Contract
2030
2031
2032
MWs
152.0
130.0
60.0
The following table presents a summary of OG&E's wind power purchases for the years ended December 31, 2023, 2022 and 2021.
Year Ended December 31 (In millions)
CPV Keenan
Edison Mission Energy
NextEra Energy
Total wind power purchased
OG&E Capacity Commitments
2023
2022
2021
$
$
23.0 $
20.5
5.3
48.8 $
25.8 $
24.9
7.3
58.0 $
27.3
21.7
6.8
55.8
In 2022, the SPP approved an increase in the planning reserve margin from 12 percent to 15 percent. Due to near-term genera on requirements, in
2023, OG&E entered into short-term power purchase agreements to meet the addi onal capacity needs in each of the years between 2024 and 2027.
OG&E Long-Term Service Agreement Commitments
OG&E has a long-term parts and service maintenance contract for the upkeep of the McClain Plant. In May 2013, a new contract was signed that is
expected to run for the earlier of 128,000 factored-fired hours or 4,800 factored-fired starts. Based on historical usage and current expecta ons for future
usage, this contract is expected to run un l 2035. The contract requires payments based on both a fixed and variable cost component, depending on how
much the McClain Plant is used.
OG&E has a long-term parts and service maintenance contract for the upkeep of the Redbud Plant. In March 2013, the contract was amended to extend
the contract coverage for an addi onal 24,000 factored-fired hours resul ng in a maximum of the earlier of 144,000 factored-fired hours or 4,500 factored-
fired starts. Based on historical usage and current expecta ons for future usage, this contract is expected to run un l 2032. The contract requires payments
based on both a fixed and variable cost component, depending on how much the Redbud Plant is used.
97
OG&E Genera on Capacity Construc on Commitments
OG&E has various genera on capacity construc on projects, such as plans to install two combus on turbines totaling 448 megawa s at its exis ng
Horseshoe Lake genera ng facility. The new genera ng units are expected to be placed into service in late 2026.
Environmental Laws and Regula ons
The ac vi es of OG&E are subject to numerous stringent and complex federal, state and local laws and regula ons governing environmental protec on.
These laws and regula ons can change, restrict or otherwise impact the Registrants' business ac vi es in many ways, including the handling or disposal of
waste material, planning for future construc on ac vi es to avoid or mi gate harm to threatened or endangered species and requiring the installa on and
opera on of emissions or pollu on control equipment. Failure to comply with these laws and regula ons could result in the assessment of administra ve,
civil and criminal penal es, the imposi on of remedial requirements and the issuance of orders enjoining future opera ons. Management believes that all of
the Registrants' opera ons are in substan al compliance with current federal, state and local environmental standards.
Environmental regula on can increase the cost of planning, design, ini al installa on and opera on of OG&E's facili es. Management con nues to
evaluate its compliance with exis ng and proposed environmental legisla on and regula ons and implement appropriate environmental programs in a
compe ve market.
Other
In the normal course of business, the Registrants are confronted with issues or events that may result in a con ngent liability. These generally relate to
lawsuits or claims made by third par es, including governmental agencies. When appropriate, management consults with legal counsel and other experts to
assess the claim. If, in management's opinion, the Registrants have incurred a probable loss as set forth by GAAP, an es mate is made of the loss, and the
appropriate accoun ng entries are reflected in the financial statements. If the assessment indicates that a poten al loss is not probable but reasonably
possible, the nature of the con ngent ma er, together with an es mate of the range of possible loss, if determinable and material, would be disclosed. At the
present me, based on currently available informa on, the Registrants believe that any reasonably possible losses in excess of accrued amounts arising out of
pending or threatened lawsuits or claims would not be quan ta vely material to their financial statements and would not have a material adverse effect on
their financial posi on, results of opera ons or cash flows.
In July 2023, OG&E was named, along with its contractor, as a defendant in a lawsuit filed by an apartment owner and its insurance companies seeking
in excess of $60.0 million in damages related to a fire at an apartment building under construc on in Oklahoma City. Several addi onal defendants have also
been named. OG&E disputes the claims in the lawsuit and intends to vigorously defend this ac on. If OG&E was ul mately deemed liable for damages in
connec on with this incident, OG&E believes its exis ng insurance policies will cover its costs, in excess of a required reten on (the amount of which is not
material), to sa sfy any liability it may have. Due to the uncertain and preliminary nature of this li ga on, the outcome cannot be predicted, and OG&E is
unable to provide a range of possible loss in this ma er.
14. Rate Ma ers and Regula on
Regula on and Rates
OG&E's retail electric tariffs are regulated by the OCC in Oklahoma and by the APSC in Arkansas. The issuance of certain securi es by OG&E is also
regulated by the OCC and the APSC. OG&E's transmission ac vi es, short-term borrowing authoriza on and accoun ng prac ces are subject to the
jurisdic on of the FERC. The Secretary of the U.S. Department of Energy has jurisdic on over some of OG&E's facili es and opera ons. In 2023, 86 percent of
OG&E's electric revenue was subject to the jurisdic on of the OCC, eight percent to the APSC and six percent to the FERC.
98
The OCC and the APSC require that, among other things, (i) OGE Energy permits the OCC and the APSC access to the books and records of OGE Energy
and its affiliates rela ng to transac ons with OG&E; (ii) OGE Energy employ accoun ng and other procedures and controls to protect against subsidiza on of
non-u lity ac vi es by OG&E's customers; and (iii) OGE Energy refrain from pledging OG&E assets or income for affiliate transac ons. In addi on, the FERC
has access to the books and records of OGE Energy and its affiliates as the FERC deems relevant to costs incurred by OG&E or necessary or appropriate for the
protec on of u lity customers with respect to the FERC jurisdic onal rates.
Completed Regulatory Ma ers
APSC Proceedings
Arkansas 2022 Formula Rate Plan Filing
In October 2022, OG&E filed its fi h evalua on report under its Formula Rate Plan, and on February 1, 2023, OG&E and the APSC Staff filed a non-
unanimous joint se lement agreement, which included an annual electric revenue increase of $9.6 million. The Arkansas A orney General and the Arkansas
Valley Electric Consumers agreed not to oppose the se lement. On March 2, 2023, the APSC issued a final order approving the non-unanimous se lement
agreement, and new rates became effec ve April 1, 2023.
Horseshoe Lake Moderniza on Plan
On July 12, 2023, OG&E filed an applica on at the APSC seeking authoriza on to commence construc on of two combus on turbines totaling 448
megawa s at its exis ng Horseshoe Lake genera ng facility. The Horseshoe Lake project is expected to cost approximately $331 million, excluding financing
costs and property taxes, and the new genera ng units are expected to be placed into service in late 2026. Arkansas law requires a public u lity to seek
approval from the APSC to commence construc on of a power-genera ng facility located outside the boundaries of the state of Arkansas. The APSC Staff filed
direct tes mony on September 15, 2023 recommending that the APSC grant OG&E approval to construct the combus on turbines, subject to a prudence
review in a future proceeding. On October 16, 2023, the APSC issued an order which states that OG&E has complied with applicable Arkansas law and may
commence construc on of the Horseshoe Lake genera ng facility.
OCC Proceedings
2021 Oklahoma Fuel Prudency
On July 1, 2022, the OCC Public U lity Division Staff filed their applica on ini a ng the review of the 2021 fuel adjustment clause and prudence review.
On February 21, 2023, a Joint S pula on and Se lement Agreement was filed, and the OCC approved the Se lement Agreement on April 20, 2023. The
Se lement Agreement provides that: (i) OG&E's prac ces, policies and judgment for fuel procurement during 2021 were prudent; (ii) OG&E's power purchase
costs and expenses, monthly fuel filings and processes and fuel-related investments and decisions for 2021 were fair, just and reasonable and (iii) OG&E
exercised prudent judgment pertaining to all such ma ers and that the electric genera on, purchased power and fuel procurement expenses were prudently
incurred. Further, the s pula ng par es agreed to certain revisions of the fuel clause adjustment tariff, including a revised semi-annual fuel clause adjustment
factor redetermina on process which will be subject to the OCC Public U lity Division approval or denial. Pursuant to the Se lement Agreement, OG&E
submi ed new fuel factors to the OCC on October 10, 2023 and met with stakeholders on October 12, 2023. This adjustment was es mated to result in an
average monthly residen al bill decrease of approximately $21 beginning November 1, 2023.
Horseshoe Lake Moderniza on Plan
On May 31, 2023, OG&E filed an applica on at the OCC seeking approval for the cost associated with the purchase and installa on of two combus on
turbines totaling 448 megawa s at its exis ng Horseshoe Lake genera ng facility. The Horseshoe Lake project is expected to cost approximately $331 million,
excluding financing costs and property taxes, and the new genera ng units are expected to be placed into service in late 2026. On November 21, 2023, the
OCC approved a non-unanimous, non-contested Joint S pula on and Se lement Agreement that was entered into by OG&E and certain intervenors, which
allows for recovery of the jurisdic onal por on of expenses up to $275 million, plus financing costs and property taxes, related to this project through a
recovery mechanism when the new genera ng units are placed into service. In accordance with the se lement agreement, OG&E is required to file a
99
general rate review to include the new genera ng units in base rates no later than one year a er the implementa on of the recovery mechanism.
SPP Proceedings
Planning Reserve Margin
On July 26, 2022, the SPP Board of Directors approved a planning reserve margin increase from 12 percent to 15 percent that each load serving en ty,
such as OG&E, must maintain. This change was effec ve for the summer of 2023. OG&E secured short-term bilateral contracts for the capacity needed to
sa sfy the 2023 requirements brought about by the increase to the SPP’s planning reserve margin.
Pending Regulatory Ma ers
Various proceedings pending before state or federal regulatory agencies are described below. Unless stated otherwise, the Registrants cannot predict
when the regulatory agency will act or what ac on the regulatory agency will take. The Registrants' financial results are dependent in part on mely and
construc ve decisions by the regulatory agencies that set OG&E's rates.
APSC Proceedings
2023 Formula Rate Plan Filing
On October 2, 2023, OG&E filed its final evalua on report under its Formula Rate Plan, including a request to increase its Arkansas retail revenues by
$4.7 million. On December 28, 2023, the APSC Staff filed tes mony recommending an annual electric revenue increase of $3.5 million. No other party filed
tes mony responsive to OG&E's proposed rate adjustment. On January 30, 2024, OG&E and the APSC Staff filed an uncontested joint se lement agreement,
which included an annual electric revenue increase of $3.5 million. The APSC is expected to issue a final order in this ma er in March 2024, with new rates to
be effec ve April 1, 2024.
Capacity Power Purchase Agreement Cost Recovery
On October 4, 2023, OG&E filed an applica on at the APSC seeking approval of a methodology for recovery of capacity costs associated with short-term
power purchase agreements entered into to meet capacity needs in each of the years between 2023 and 2027. On December 29, 2023, the Administra ve
Law Judge issued an order authorizing OG&E to defer to a regulatory asset its capacity costs associated with short-term power purchase agreements for 2023,
along with a carrying charge at the commission-approved customer deposit interest rate. The order requires OG&E and the par es to the case to develop a
procedural schedule to address treatment for any expenses beyond the calendar year 2023.
FERC Proceedings
Order for Sponsored Transmission Upgrades within SPP
Under A achment Z2 of the SPP Open Access Transmission Tariff, costs of par cipant-funded, or "sponsored," transmission upgrades may be recovered
from other SPP customers whose transmission service depends on capacity enabled by the upgrade. The SPP Tariff required the SPP to charge for these
upgrades beginning in 2008, but the SPP did not begin charging its customers for these upgrades un l 2016 due to informa on system limita ons. At that
me, the SPP sought a waiver of a me limita on in its tariff that otherwise would have prevented it from wai ng un l 2016 to bill for the 2008 through 2015
period. The FERC granted the waiver, and the SPP then billed OG&E as a user for these Z2 charges while simultaneously credi ng OG&E as a sponsor of Z2
transmission upgrades, resul ng in OG&E being a net recipient of sponsored upgrade credits. The majority of these net credits were refunded to customers
through OG&E's various rate riders that include SPP ac vity with the remaining amounts retained by OG&E.
Several companies that were net payers of Z2 charges sought rehearing of the FERC's 2016 order approving the waiver and then appealed it. While that
appeal was pending, the FERC obtained a remand and then reversed itself and ruled that the SPP tariff provision that prohibited the 2008 through 2015
charges could not be waived. It ordered the SPP to develop a plan to refund the payments but not to implement the refunds un l further ordered to do so. In
response, in April 2019, OG&E filed a request for rehearing at the FERC.
100
The next month, it also filed a Complaint at the FERC against the SPP contending that the SPP and not OG&E should bear the cost of any refunds resul ng
from the SPP's tariff viola on and that SPP’s ac ons also violated its contracts with OG&E. In February 2020, the FERC denied OG&E's request for rehearing
but did not consider SPP's refund plan. No date for payment of refunds was established. In August 2021, the U.S. Court of Appeals for the District of Columbia
Circuit denied OG&E's pe on for review of the FERC's order denying the waiver and requiring refunds. A er denying rehearing of its ruling, the court of
appeals returned the ma er in November 2021 to the FERC for further proceedings in accordance with its opinion. The FERC has not acted on that remand.
If the FERC proceeds to order refunds in full, OG&E es mates it would be required to refund $13.0 million, which is net of amounts paid to other u li es
for upgrades and would be subject to interest at the FERC-approved rate. The SPP has stated in filings with the FERC both before and a er the court of
appeals decision that there are considerable complexi es in implemen ng the refunds that will have to be resolved before they can be paid. Payment of
refunds would shi recovery of these upgrade credits to future periods. The SPP filed a report on January 4, 2022 confirming that administering refunds
would be complex and could take years unless the SPP is allowed to make certain simplifying assump ons. The SPP also urged that all pending complaint
proceedings, including OG&E's complaint and three similar complaints against the SPP, be resolved before any refund process is ordered to begin. OG&E and
other par es filed responses to the SPP report, and the ma er remains pending at the FERC. Of the $13.0 million, the Registrants would be impacted by $5.0
million in expense that ini ally benefited the Registrants in 2016, and OG&E customers would incur a net impact of $8.0 million in expense through rider
mechanisms or the FERC formula rate. As of December 31, 2023, the Registrants' reserve remains at $13.0 million plus es mated interest for a poten al
refund.
In November 2022, the FERC issued an order denying OG&E's complaint against the SPP. It also issued orders gran ng the other three complaints against
the SPP in part but awarded no relief. All four complainants mely sought rehearing of these orders. On June 27, 2023, the FERC made final its orders gran ng
in part complaints filed against the SPP by OG&E and three other project sponsors (or groups thereof) on claims arising from the SPP’s failure to implement
A achment Z2 so that project sponsors could be paid as required under the tariff, but awarding no relief. OG&E and the other complainants have appealed to
the U.S. Court of Appeals for the Eighth Circuit, where the ma er has been briefed and is awai ng the scheduling of oral argument. It will likely be decided by
the summer of 2024.
In June 2020, the FERC approved, effec ve July 1, 2020, an SPP proposal to eliminate A achment Z2 revenue credi ng and replace it with a different rate
mechanism that would provide project sponsors, such as OG&E, the same level of recovery. This elimina on of the A achment Z2 revenue credi ng would
only prospec vely impact OG&E and its recovery of any future upgrade costs that it may incur as a project sponsor subsequent to July 2020. All of the exis ng
projects that are eligible to receive revenue credits under A achment Z2 will remain eligible, which includes the $13.0 million that is at issue in the remand
from OG&E's appeal and in OG&E's complaint proceeding.
OCC Proceedings
Oklahoma Retail Electric Supplier Cer fied Territory Act Causes
As previously disclosed, several rural electric coopera ve electricity suppliers filed complaints with the OCC alleging that OG&E, because it was providing
service to large loads in another supplier's territory, had violated the Oklahoma Retail Electric Supplier Cer fied Territory Act. OG&E believes it is lawfully
serving customers under specific exemp ons under this act that allow it to serve customers having a load of one megawa or greater. There were five
complaint cases ini ated at the OCC, and the OCC issued decisions on each of them. The OCC ruled in favor of the electric coopera ves in three of those cases
under statutory interpreta on and ruled in favor of OG&E in two of those cases under injunc ve theory. All five of those cases were appealed to the
Oklahoma Supreme Court.
On April 4, 2023, the Oklahoma Supreme Court issued its opinion which vacated the OCC's injunc ons with respect to four of the cases and held that the
Oklahoma Retail Electric Supplier Cer fied Territory Act does not limit the mechanism by which OG&E may provide service to large loads in another supplier's
territory pursuant to the one megawa excep on. The one pending legal issue le for the Oklahoma Supreme Court to resolve is a statutory interpreta on on
how a supplier calculates "connected load for ini al full opera on" for purposes of the exemp on under the act. If the Oklahoma Supreme Court ul mately
were to find that the customers being served in this single case are not exempted from the Oklahoma Retail Electric Supplier Cer fied Territory Act, OG&E
would have to evaluate the recoverability of some plant investments made to serve these customers and may also be required to reimburse the cer fied
territory supplier in this case for an amount of lost revenue. Such amounts would not be expected to be material to the Registrants' results of opera ons.
101
2022 Oklahoma Fuel Prudency
On June 29, 2023, the Public U lity Division Staff filed their applica on ini a ng the review of the 2022 fuel adjustment clause and prudence review.
OG&E filed its minimum filing requirements and suppor ng tes mony on August 29, 2023. The OCC Staff filed tes mony on January 19, 2024 recommending
that the OCC find OG&E's 2022 fuel costs prudent.
2023 Oklahoma General Rate Review
On December 29, 2023, OG&E filed a general rate review in Oklahoma seeking a rate increase of $332.5 million and a 10.5 percent return on equity
based on a common equity percentage of 53.50 percent. The rate review seeks recovery of $1.3 billion of net capital investment since the last general rate
review. A hearing on the merits is scheduled for June 17, 2024.
SPP Proceedings
Resource Capacity Accredita on
In July 2022, the SPP Board of Directors approved a new unit accredita on methodology for conven onal genera on which requires submi al to and
approval from the FERC prior to becoming effec ve. On March 2, 2023, the FERC rejected the SPP’s proposed capacity accredita on methodology for wind
and solar generators. Following the FERC’s rejec on, the SPP began an extensive review of both the methodology proposed for thermal resources which had
not yet been submi ed to the FERC, and the accredita on methodology for wind and solar generators. These methodologies were reviewed and approved by
both the Regional State Commi ee and the SPP Board of Directors in late October 2023 and will be submi ed to the FERC for approval. If approved by the
FERC, both methodologies are expected to be effec ve in 2026 and may contribute to OG&E’s incremental capacity needs.
102
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Stockholders and the Board of Directors of OGE Energy Corp.
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheets and consolidated statements of capitaliza on of OGE Energy Corp. (the Company) as of
December 31, 2023 and 2022, the related consolidated statements of income, comprehensive income, changes in stockholders' equity and cash flows for
each of the three years in the period ended December 31, 2023, and the related notes and financial statement schedule listed in the Index at Item 15(a)
(collec vely referred to as the "consolidated financial statements"). In our opinion, the consolidated financial statements present fairly, in all material
respects, the financial posi on of the Company at December 31, 2023 and 2022, and the results of its opera ons and its cash flows for each of the three years
in the period ended December 31, 2023, in conformity with U.S. generally accepted accoun ng principles.
We also have audited, in accordance with the standards of the Public Company Accoun ng Oversight Board (United States) (PCAOB), the Company’s internal
control over financial repor ng as of December 31, 2023, based on criteria established in Internal Control-Integrated Framework issued by the Commi ee of
Sponsoring Organiza ons of the Treadway Commission (2013 framework), and our report dated February 20, 2024, expressed an unqualified opinion thereon.
Basis for Opinion
These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's financial
statements based on our audits. We are a public accoun ng firm registered with the PCAOB and are required to be independent with respect to the Company
in accordance with the U.S. federal securi es laws and the applicable rules and regula ons of the Securi es and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing
procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond
to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits
also included evalua ng the accoun ng principles used and significant es mates made by management, as well as evalua ng the overall presenta on of the
financial statements. We believe that our audits provide a reasonable basis for our opinion.
Cri cal Audit Ma er
The cri cal audit ma er communicated below is a ma er arising from the current period audit of the financial statements that was communicated or
required to be communicated to the audit commi ee and that: (1) relates to accounts or disclosures that are material to the financial statements and (2)
involved our especially challenging, subjec ve or complex judgments. The communica on of the cri cal audit ma er does not alter in any way our opinion on
the consolidated financial statements, taken as a whole, and we are not, by communica ng the cri cal audit ma er below, providing a separate opinion on
the cri cal audit ma er or on the accounts or disclosures to which it relates.
103
Regulatory Assets and Liabili es
Descrip on of the
Ma er
As discussed in Note 1 to the consolidated financial statements, the Company conducts its electric u lity opera ons through
Oklahoma Gas & Electric Company (OG&E). OG&E is a regulated u lity subject to accoun ng principles for rate-regulated ac vi es.
As such, certain incurred costs that would otherwise be charged to expense are deferred as regulatory assets, based on the expected
recovery from customers in future rates. Likewise, certain actual or an cipated credits that would otherwise reduce expense are
deferred as regulatory liabili es, based on the expected refund to customers in future rates. OG&E records items as regulatory assets
or liabili es if, based on regulatory orders or other available evidence, it is probable that the costs or obliga ons will be included in
amounts allowable for recovery or refund in future rates.
Audi ng regulatory assets and liabili es is complex as it requires specialized knowledge of rate-regulated ac vi es and judgments as
to ma ers that could affect the recording or upda ng of regulatory assets and liabili es.
How We
Addressed the
Ma er in Our
Audit
We obtained an understanding, evaluated the design, and tested the opera ng effec veness of internal controls over the Company's
accoun ng for regulatory assets and liabili es, including, among others, controls over management's assessment of the likelihood of
approval by regulators for any new ma ers and controls over the evalua on of filings with regulatory bodies on exis ng regulatory
assets and liabili es, including factors that may affect the ming or nature of recoverability.
We performed audit procedures that included, among others, reviewing evidence of correspondence with regulatory bodies to test
that the Company appropriately evaluated informa on obtained from regulatory rulings. For example, we assessed the recoverability,
considering informa on obtained from regulatory rulings, of various regulatory assets. In addi on, we tested that amor za on of
regulatory assets and liabili es corresponded to relevant regulatory rulings. For example, we tested whether the regulatory assets and
liabili es were appropriately amor zed through the Company's rates charged to customers based on rulings from regulatory bodies.
/s/ Ernst & Young LLP
We have served as the Company's auditor since 2002.
Oklahoma City, Oklahoma
February 20, 2024
104
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Stockholder and the Board of Directors of Oklahoma Gas and Electric Company
Opinion on the Financial Statements
We have audited the accompanying balance sheets and statements of capitaliza on of Oklahoma Gas and Electric Company (the Company) as of December
31, 2023 and 2022, the related statements of income and comprehensive income, changes in stockholder's equity and cash flows for each of the three years
in the period ended December 31, 2023, and the related notes and financial statement schedule listed in the Index at Item 15(a) (collec vely referred to as
the "financial statements"). In our opinion, the financial statements present fairly, in all material respects, the financial posi on of the Company at December
31, 2023 and 2022, and the results of its opera ons and its cash flows for each of the three years in the period ended December 31, 2023, in conformity with
U.S. generally accepted accoun ng principles.
We also have audited, in accordance with the standards of the Public Company Accoun ng Oversight Board (United States) (PCAOB), the Company's internal
control over financial repor ng as of December 31, 2023, based on criteria established in Internal Control-Integrated Framework issued by the Commi ee of
Sponsoring Organiza ons of the Treadway Commission (2013 framework), and our report dated February 20, 2024, expressed an unqualified opinion thereon.
Basis for Opinion
These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's financial
statements based on our audits. We are a public accoun ng firm registered with the PCAOB and are required to be independent with respect to the Company
in accordance with the U.S. federal securi es laws and the applicable rules and regula ons of the Securi es and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing
procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond
to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits
also included evalua ng the accoun ng principles used and significant es mates made by management, as well as evalua ng the overall presenta on of the
financial statements. We believe that our audits provide a reasonable basis for our opinion.
Cri cal Audit Ma er
The cri cal audit ma er communicated below is a ma er arising from the current period audit of the financial statements that was communicated or
required to be communicated to the audit commi ee and that: (1) relates to accounts or disclosures that are material to the financial statements and (2)
involved our especially challenging, subjec ve or complex judgments. The communica on of the cri cal audit ma er does not alter in any way our opinion on
the financial statements, taken as a whole, and we are not, by communica ng the cri cal audit ma er below, providing a separate opinion on the cri cal
audit ma er or on the accounts or disclosures to which it relates.
105
Regulatory Assets and Liabili es
Descrip on of the
Ma er
As discussed in Note 1 to the financial statements, OG&E is a regulated u lity subject to accoun ng principles for rate-regulated
ac vi es. As such, certain incurred costs that would otherwise be charged to expense are deferred as regulatory assets, based on the
expected recovery from customers in future rates. Likewise, certain actual or an cipated credits that would otherwise reduce expense
are deferred as regulatory liabili es, based on the expected refund to customers in future rates. OG&E records items as regulatory
assets or liabili es if, based on regulatory orders or other available evidence, it is probable that the costs or obliga ons will be
included in amounts allowable for recovery or refund in future rates.
Audi ng regulatory assets and liabili es is complex as it requires specialized knowledge of rate-regulated ac vi es and judgments as
to ma ers that could affect the recording or upda ng of regulatory assets and liabili es.
How We
Addressed the
Ma er in Our
Audit
We obtained an understanding, evaluated the design, and tested the opera ng effec veness of internal controls over the Company's
accoun ng for regulatory assets and liabili es, including, among others, controls over management's assessment of the likelihood of
approval by regulators for any new ma ers and controls over the evalua on of filings with regulatory bodies on exis ng regulatory
assets and liabili es, including factors that may affect the ming or nature of recoverability.
We performed audit procedures that included, among others, reviewing evidence of correspondence with regulatory bodies to test
that the Company appropriately evaluated informa on obtained from regulatory rulings. For example, we assessed the recoverability,
considering informa on obtained from regulatory rulings, of various regulatory assets. In addi on, we tested that amor za on of
regulatory assets and liabili es corresponded to relevant regulatory rulings. For example, we tested whether the regulatory assets and
liabili es were appropriately amor zed through the Company's rates charged to customers based on rulings from regulatory bodies.
/s/ Ernst & Young LLP
We have served as the Company's auditor since 2002.
Oklahoma City, Oklahoma
February 20, 2024
106
Item 9. Changes in and Disagreements with Accountants on Accoun ng and Financial Disclosure.
None.
Item 9A. Controls and Procedures.
The Registrants maintain a set of disclosure controls and procedures designed to ensure that informa on required to be disclosed by the Registrants in
reports that they file or submit under the Securi es Exchange Act of 1934 is recorded, processed, summarized and reported within the me periods specified
in the Securi es and Exchange Commission rules and forms. In addi on, the disclosure controls and procedures ensure that informa on required to be
disclosed is accumulated and communicated to management, including the chief execu ve officer and chief financial officer, allowing mely decisions
regarding required disclosure. As of the end of the period covered by this report, based on an evalua on carried out under the supervision and with the
par cipa on of the Registrants' management, including the chief execu ve officer and chief financial officer, of the effec veness of the Registrants' disclosure
controls and procedures (as such term is defined in Rules 13a-15(e) and 15(d)-15(e) under the Securi es Exchange Act of 1934), the chief execu ve officer
and chief financial officer have concluded that the Registrants' disclosure controls and procedures are effec ve.
No change in the Registrants' internal control over financial repor ng has occurred during the most recently completed fiscal quarter that has materially
affected, or is reasonably likely to materially affect, the Registrants' internal control over financial repor ng (as such term is defined in Rules 13a-15(f) and
15d-15(f) under the Securi es Exchange Act of 1934).
Management's Report on Internal Control Over Financial Repor ng
The management of the Registrants is responsible for establishing and maintaining adequate internal control over financial repor ng. The Registrants'
internal control systems were designed to provide reasonable assurance to management and OGE Energy's Board of Directors regarding the prepara on and
fair presenta on of published financial statements. All internal control systems, no ma er how well designed, have inherent limita ons. Therefore, even
those systems determined to be effec ve can provide only reasonable assurance with respect to financial statement prepara on and presenta on.
The Registrants' management assessed the effec veness of their internal control over financial repor ng as of December 31, 2023. In making this
assessment, it used the criteria set forth by the Commi ee of Sponsoring Organiza ons of the Treadway Commission in Internal Control-Integrated
Framework (2013). Based on our assessment, we believe that, as of December 31, 2023, the Registrants' internal control over financial repor ng is effec ve
based on those criteria.
The Registrants' independent auditors have issued an a esta on report on the Registrants' internal control over financial repor ng. This report appears
on the following page.
/s/ Sean Trauschke
Sean Trauschke, Chairman of the Board, President
and Chief Execu ve Officer
/s/ W. Bryan Buckler
W. Bryan Buckler
Chief Financial Officer
/s/ Sarah R. Stafford
Sarah R. Stafford, Controller
and Chief Accoun ng Officer
107
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Stockholders and the Board of Directors of OGE Energy Corp.
Opinion on Internal Control Over Financial Repor ng
We have audited OGE Energy Corp.'s internal control over financial repor ng as of December 31, 2023, based on criteria established in Internal Control-
Integrated Framework issued by the Commi ee of Sponsoring Organiza ons of the Treadway Commission (2013 framework), (the COSO criteria). In our
opinion, OGE Energy Corp. (the Company) maintained, in all material respects, effec ve internal control over financial repor ng as of December 31, 2023,
based on the COSO criteria.
We also have audited, in accordance with the standards of the Public Company Accoun ng Oversight Board (United States) (PCAOB), the consolidated balance
sheets and consolidated statements of capitaliza on of the Company as of December 31, 2023 and 2022, the related consolidated statements of income,
comprehensive income, changes in stockholders’ equity and cash flows for each of the three years in the period ended December 31, 2023, and the related
notes and financial statement schedule listed in the Index at Item 15(a) and our report dated February 20, 2024 expressed an unqualified opinion thereon.
Basis for Opinion
The Company's management is responsible for maintaining effec ve internal control over financial repor ng and for its assessment of the effec veness of
internal control over financial repor ng included in the accompanying Management's Report on Internal Control Over Financial Repor ng. Our responsibility
is to express an opinion on the Company's internal control over financial repor ng based on our audit. We are a public accoun ng firm registered with the
PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securi es laws and the applicable rules and
regula ons of the Securi es and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether effec ve internal control over financial repor ng was maintained in all material respects.
Our audit included obtaining an understanding of internal control over financial repor ng, assessing the risk that a material weakness exists, tes ng and
evalua ng the design and opera ng effec veness of internal control based on the assessed risk, and performing such other procedures as we considered
necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.
Defini on and Limita ons of Internal Control Over Financial Repor ng
A company's internal control over financial repor ng is a process designed to provide reasonable assurance regarding the reliability of financial repor ng and
the prepara on of financial statements for external purposes in accordance with generally accepted accoun ng principles. A company's internal control over
financial repor ng includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly
reflect the transac ons and disposi ons of the assets of the company; (2) provide reasonable assurance that transac ons are recorded as necessary to permit
prepara on of financial statements in accordance with generally accepted accoun ng principles, and that receipts and expenditures of the company are being
made only in accordance with authoriza ons of management and directors of the company; and (3) provide reasonable assurance regarding preven on or
mely detec on of unauthorized acquisi on, use, or disposi on of the company's assets that could have a material effect on the financial statements.
Because of its inherent limita ons, internal control over financial repor ng may not prevent or detect misstatements. Also, projec ons of any evalua on of
effec veness to future periods are subject to the risk that controls may become inadequate because of changes in condi ons, or that the degree of
compliance with the policies or procedures may deteriorate.
/s/ Ernst & Young LLP
Oklahoma City, Oklahoma
February 20, 2024
108
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Stockholder and the Board of Directors of Oklahoma Gas and Electric Company
Opinion on Internal Control Over Financial Repor ng
We have audited Oklahoma Gas and Electric Company's internal control over financial repor ng as of December 31, 2023, based on criteria established in
Internal Control-Integrated Framework issued by the Commi ee of Sponsoring Organiza ons of the Treadway Commission (2013 framework), (the COSO
criteria). In our opinion, Oklahoma Gas and Electric Company (the Company) maintained, in all material respects, effec ve internal control over financial
repor ng as of December 31, 2023, based on the COSO criteria.
We also have audited, in accordance with the standards of the Public Company Accoun ng Oversight Board (United States) (PCAOB), the balance sheets and
statements of capitaliza on of the Company as of December 31, 2023 and 2022, the related statements of income and comprehensive income, changes in
stockholder’s equity and cash flows for each of the three years in the period ended December 31, 2023, and the related notes and financial statement
schedule listed in the Index at Item 15(a) and our report dated February 20, 2024 expressed an unqualified opinion thereon.
Basis for Opinion
The Company's management is responsible for maintaining effec ve internal control over financial repor ng and for its assessment of the effec veness of
internal control over financial repor ng included in the accompanying Management's Report on Internal Control Over Financial Repor ng. Our responsibility
is to express an opinion on the Company's internal control over financial repor ng based on our audit. We are a public accoun ng firm registered with the
PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securi es laws and the applicable rules and
regula ons of the Securi es and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether effec ve internal control over financial repor ng was maintained in all material respects.
Our audit included obtaining an understanding of internal control over financial repor ng, assessing the risk that a material weakness exists, tes ng and
evalua ng the design and opera ng effec veness of internal control based on the assessed risk, and performing such other procedures as we considered
necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.
Defini on and Limita ons of Internal Control Over Financial Repor ng
A company's internal control over financial repor ng is a process designed to provide reasonable assurance regarding the reliability of financial repor ng and
the prepara on of financial statements for external purposes in accordance with generally accepted accoun ng principles. A company's internal control over
financial repor ng includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly
reflect the transac ons and disposi ons of the assets of the company; (2) provide reasonable assurance that transac ons are recorded as necessary to permit
prepara on of financial statements in accordance with generally accepted accoun ng principles, and that receipts and expenditures of the company are being
made only in accordance with authoriza ons of management and directors of the company; and (3) provide reasonable assurance regarding preven on or
mely detec on of unauthorized acquisi on, use, or disposi on of the company's assets that could have a material effect on the financial statements.
Because of its inherent limita ons, internal control over financial repor ng may not prevent or detect misstatements. Also, projec ons of any evalua on of
effec veness to future periods are subject to the risk that controls may become inadequate because of changes in condi ons, or that the degree of
compliance with the policies or procedures may deteriorate.
/s/ Ernst & Young LLP
Oklahoma City, Oklahoma
February 20, 2024
109
Item 9B. Other Informa on.
During the three months ended December 31, 2023, no director or officer of the Registrants adopted or terminated a “Rule 10b5-1 trading
arrangement” or “non-Rule 10b5-1 trading arrangement,” as each term is defined in Item 408(a) of Regula on S-K.
Item 9C. Disclosure Regarding Foreign Jurisdic ons that Prevent Inspec ons.
None.
110
Item 10. Directors, Execu ve Officers and Corporate Governance.
Code of Ethics Policy
PART III
OGE Energy maintains a code of ethics for our chief execu ve officer and senior financial officers, including the chief financial officer and chief
accoun ng officer, which is available for public viewing on OGE Energy's website at www.oge.com/governance. The code of ethics will be provided, free of
charge, upon request. OGE Energy intends to sa sfy the disclosure requirements under Sec on 5, Item 5.05 of Form 8-K regarding an amendment to, or
waiver from, a provision of the code of ethics by pos ng such informa on on its website at the loca on specified above. OGE Energy will also include in its
proxy statement informa on regarding the Audit Commi ee financial experts.
OGE Energy. Informa on regarding OGE Energy's execu ve officers is set forth in "Part I, Item 1. Business - Informa on About the Registrants' Execu ve
Officers." As permi ed by General Instruc on G of Form 10-K, the informa on required by Item 10, other than informa on regarding the execu ve officers
and the Code of Ethics, will be set forth in OGE Energy's defini ve proxy statement for the 2024 Annual Mee ng of Shareholders, which is expected to be filed
with the Securi es and Exchange Commission on or about April 1, 2024. Such proxy statement is incorporated herein by reference.
OG&E. Under the reduced disclosure format permi ed by General Instruc on I(2)(c) of Form 10-K, the informa on otherwise required by Item 10 for
OG&E has been omi ed.
Item 11. Execu ve Compensa on
OGE Energy. As permi ed by General Instruc on G of Form 10-K, the informa on required by Item 11 will be set forth in OGE Energy's defini ve proxy
statement for the 2024 Annual Mee ng of Shareholders, which is expected to be filed with the Securi es and Exchange Commission on or about April 1,
2024. Such proxy statement is incorporated herein by reference.
OG&E. Under the reduced disclosure format permi ed by General Instruc on I(2)(c) of Form 10-K, the informa on otherwise required by Item 11 for
OG&E has been omi ed.
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Ma ers.
OGE Energy. As permi ed by General Instruc on G of Form 10-K, the informa on required by Item 12 will be set forth in OGE Energy's defini ve proxy
statement for the 2024 Annual Mee ng of Shareholders, which is expected to be filed with the Securi es and Exchange Commission on or about April 1,
2024. Such proxy statement is incorporated herein by reference.
OG&E. Under the reduced disclosure format permi ed by General Instruc on I(2)(c) of Form 10-K, the informa on otherwise required by Item 12 for
OG&E has been omi ed.
Item 13. Certain Rela onships and Related Transac ons, and Director Independence.
OGE Energy. As permi ed by General Instruc on G of Form 10-K, the informa on required by Item 13 will be set forth in OGE Energy's defini ve proxy
statement for the 2024 Annual Mee ng of Shareholders, which is expected to be filed with the Securi es and Exchange Commission on or about April 1,
2024. Such proxy statement is incorporated herein by reference.
OG&E. Under the reduced disclosure format permi ed by General Instruc on I(2)(c) of Form 10-K, the informa on otherwise required by Item 13 for
OG&E has been omi ed.
111
Item 14. Principal Accountant Fees and Services.
The following discussion relates to the audit fees paid by OGE Energy to its principal independent accountants for the services provided to OGE Energy
and its subsidiaries, including OG&E.
Fees for Principal Independent Accountants
Year Ended December 31
Integrated audit of OGE Energy and its subsidiaries financial statements and internal control over
financial repor ng
Services in support of debt and stock offerings
Other (A)
Total audit fees (B)
Employee benefit plan audits
Other compliance services
Total audit-related fees
Assistance with examina ons and other return issues
Review of federal and state tax returns
Total tax prepara on and compliance fees
Total tax fees
Total fees
2023
2022
$
$
1,404,500
62,000
430,375
1,896,875
144,000
79,530
223,530
229,383
54,400
283,783
283,783
2,404,188
$
$
1,232,000
59,000
447,500
1,738,500
138,000
—
138,000
219,892
34,000
253,892
253,892
2,130,392
(A)
Includes reviews of the financial statements included in the Registrants' Quarterly Reports on Form 10-Q, audits of OGE Energy's subsidiaries,
prepara on for Audit Commi ee mee ngs, agreed-upon procedures and fees for consul ng with the Registrants' execu ves regarding accoun ng issues.
(B) The aggregate audit fees include fees billed for the audit of the Registrants' annual financial statements and for the reviews of the financial statements
included in the Registrants' Quarterly Reports on Form 10-Q. For 2023, this amount includes es mated billings for the comple on of the 2023 audit,
which services were rendered a er year-end.
All Other Fees
There were no other fees billed by the principal independent accountants to OGE Energy in 2023 and 2022 for other services.
Audit Commi ee Pre-Approval Procedures
Rules adopted by the Securi es and Exchange Commission in order to implement requirements of the Sarbanes-Oxley Act of 2002 require public
company audit commi ees to pre-approve audit and non-audit services. OGE Energy's Audit Commi ee follows procedures pursuant to which audit, audit-
related and tax services, and all permissible non-audit services are pre-approved by category of service. The fees are budgeted, and actual fees versus the
budget are monitored throughout the year. During the year, circumstances may arise when it may become necessary to engage the principal independent
accountants for addi onal services not contemplated in the original pre-approval. In those instances, OGE Energy will obtain the specific pre-approval of the
Audit Commi ee before engaging the principal independent accountants. The procedures require the Audit Commi ee to be informed of each service, and
the procedures do not include any delega on of the Audit Commi ee's responsibili es to management. The Audit Commi ee may delegate pre-approval
authority to one or more of its members. The member to whom such authority is delegated will report any pre-approval decisions to the Audit Commi ee at
its next scheduled mee ng.
For 2023, 100 percent of the audit fees, audit-related fees and tax fees were pre-approved by the Audit Commi ee or the Chairman of the Audit
Commi ee pursuant to delegated authority.
112
Item 15. Exhibit and Financial Statement Schedules.
(a) 1. Financial Statements
PART IV
(i)
The following financial statements are included in Part II, Item 8 of this Annual Report:
OGE Energy
•
•
•
•
•
•
•
•
•
•
Consolidated Statements of Income for the years ended December 31, 2023, 2022 and 2021
Consolidated Statements of Comprehensive Income for the years ended December 31, 2023, 2022 and 2021
Consolidated Statements of Cash Flows for the years ended December 31, 2023, 2022 and 2021
Consolidated Balance Sheets at December 31, 2023 and 2022
Consolidated Statements of Capitaliza on at December 31, 2023 and 2022
Consolidated Statements of Changes in Stockholders' Equity for the years ended December 31, 2023, 2022 and 2021
Notes to Consolidated Financial Statements
Report of Independent Registered Public Accoun ng Firm (Audit of Financial Statements)
Management's Report on Internal Control Over Financial Repor ng
Report of Independent Registered Public Accoun ng Firm (Audit of Internal Control over Financial Repor ng)
OG&E
•
•
•
•
•
•
•
•
•
•
Statements of Income for the years ended December 31, 2023, 2022 and 2021
Statements of Comprehensive Income for the years ended December 31, 2023, 2022 and 2021
Statements of Cash Flows for the years ended December 31, 2023, 2022 and 2021
Balance Sheets at December 31, 2023 and 2022
Statements of Capitaliza on at December 31, 2023 and 2022
Statements of Changes in Stockholder's Equity for the years ended December 31, 2023, 2022 and 2021
Notes to Financial Statements
Report of Independent Registered Public Accoun ng Firm (Audit of Financial Statements)
Management's Report on Internal Control Over Financial Repor ng
Report of Independent Registered Public Accoun ng Firm (Audit of Internal Control over Financial Repor ng)
The reports of the Registrants' independent registered public accoun ng firm (PCAOB ID:42) with respect to the above-referenced financial
statements and their reports on internal control over financial repor ng are included in Item 8 and Item 9A of this Form 10-K. Their consents for
each Registrant appear as Exhibit 23.01 and Exhibit 23.02 of this Form 10-K.
2. Financial Statement Schedule (included in Part IV)
•
Schedule II - Valua on and Qualifying Accounts
All other schedules have been omi ed since the required informa on is not applicable or is not material, or because the informa on required is
included in the respec ve financial statements or notes thereto.
113
3. Exhibits
Exhibit No.
3.01
3.02
3.03
3.04
4.01
4.02
4.03
4.04
4.05
4.06
4.07
4.08
4.09
4.10
4.11
4.12
4.13
Descrip on
Copy of Restated OGE Energy Corp. Cer ficate of Incorpora on. (Filed as Exhibit 3.01 to OGE Energy's
Form 10-Q for the quarter ended June 30, 2013 (File No. 1-12579) and incorporated by reference herein).
Copy of Amended OGE Energy Corp. By-laws dated February 22, 2017. (Filed as Exhibit 3.01 to OGE
Energy's Form 8-K filed February 23, 2017 (File No. 1-12579) and incorporated by reference herein).
Copy of Restated Oklahoma Gas and Electric Company Cer ficate of Incorpora on. (Filed as Exhibit 3.01
to OG&E's Form 8-K filed May 19, 2011 (File No. 1-1097) and incorporated by reference herein).
Copy of Amended Oklahoma Gas and Electric Company By-laws dated November 30, 2015. (Filed as
Exhibit 3.02 to OGE Energy's Form 8-K filed November 30, 2015 (File No. 1-12579) and incorporated by
reference herein).
Trust Indenture dated October 1, 1995, from OG&E to Boatmen's First Na onal Bank of Oklahoma,
Trustee. (Filed as Exhibit 4.02 to OG&E's Form 8-K filed October 24, 1995 and incorporated by reference
herein).
Supplemental Indenture No. 2, dated as of July 1, 1997, being a supplemental instrument to Exhibit 4.01
hereto. (Filed as Exhibit 4.01 to OG&E's Form 8-K filed July 17, 1997 (File No. 33-1532) and incorporated
by reference herein).
Supplemental Indenture No. 3, dated as of April 1, 1998, being a supplemental instrument to Exhibit 4.01
hereto. (Filed as Exhibit 4.01 to OG&E's Form 8-K filed April 16, 1998 (File No. 33-1532) and incorporated
by reference herein).
Supplemental Indenture No. 5 dated as of October 24, 2001, being a supplemental instrument to Exhibit
4.01 hereto. (Filed as Exhibit 4.06 to OG&E's Registra on Statement No. 333-104615 and incorporated by
reference herein).
Supplemental Indenture No. 6 dated as of August 1, 2004, being a supplemental instrument to Exhibit
4.01 hereto. (Filed as Exhibit 4.02 to OG&E's Form 8-K filed August 6, 2004 (File No 1-1097) and
incorporated by reference herein).
Supplemental Indenture No. 7 dated as of January 1, 2006, being a supplemental instrument to Exhibit
4.01 hereto. (Filed as Exhibit 4.02 to OG&E's Form 8-K filed January 6, 2006 (File No. 1-1097) and
incorporated by reference herein).
Supplemental Indenture No. 8 dated as of January 15, 2008, being a supplemental instrument to Exhibit
4.01 hereto. (Filed as Exhibit 4.01 to OG&E's Form 8-K filed January 31, 2008 (File No. 1-1097) and
incorporated by reference herein).
Supplemental Indenture No. 9 dated as of September 1, 2008, being a supplemental instrument to Exhibit
4.01 hereto. (Filed as Exhibit 4.01 to OG&E's Form 8-K filed September 9, 2008 (File No. 1-1097) and
incorporated by reference herein).
Supplemental Indenture No. 10 dated as of December 1, 2008, being a supplemental instrument to
Exhibit 4.01 hereto. (Filed as Exhibit 4.01 to OG&E's Form 8-K filed December 11, 2008 (File No. 1-1097)
and incorporated by reference herein).
Supplemental Indenture No. 11 dated as of June 1, 2010, being a supplemental instrument to Exhibit 4.01
hereto. (Filed as Exhibit 4.01 to OG&E's Form 8-K filed June 8, 2010 (File No. 1-1097) and incorporated by
reference herein).
Supplemental Indenture No. 12 dated as of May 15, 2011, being a supplemental instrument to Exhibit
4.01 hereto. (Filed as Exhibit 4.01 to OG&E's Form 8-K filed May 27, 2011 (File No. 1-1097) and
incorporated by reference herein).
Supplemental Indenture No. 13 dated as of May 1, 2013, being a supplemental instrument to Exhibit 4.01
hereto. (Filed as Exhibit 4.01 to OG&E's Form 8-K filed May 13, 2013 (File No. 1-1097) and incorporated by
reference herein).
Supplemental Indenture No. 14 dated as of March 15, 2014, being a supplemental instrument to Exhibit
4.01 hereto. (Filed as Exhibit 4.01 to OG&E's Form 8-K filed March 25, 2014 (File No. 1-1097) and
incorporated by reference herein).
114
OGE Energy
OG&E
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
4.14
4.15
4.16
4.17
4.18
4.19
4.20
4.21
4.22
4.23
4.24
4.25
4.26
4.27
4.28+
10.01
10.02
10.03
Supplemental Indenture No. 15 dated as of December 1, 2014, being a supplemental instrument to
Exhibit 4.01 hereto. (Filed as Exhibit 4.01 to OG&E's Form 8-K filed December 11, 2014 (File No. 1-1097)
and incorporated by reference herein).
Supplemental Indenture No. 16 dated as of March 15, 2017, being a supplemental instrument to Exhibit
4.01 hereto. (Filed as Exhibit 4.01 to OG&E's Form 8-K filed March 31, 2017 (File No. 1-1097) and
incorporated by reference herein).
Supplemental Indenture No. 17 dated as of August 1, 2017, being a supplemental instrument to Exhibit
4.01 hereto. (Filed as Exhibit 4.01 to OG&E's Form 8-K filed August 11, 2017 (File No. 1-1097) and
incorporated by reference herein).
Supplemental Indenture No. 18 dated as of April 26, 2018, being a supplemental instrument to Exhibit
4.01 hereto. (Filed as Exhibit 4.21 to OG&E's Registra on Statement on Form S-3ASR filed May 18, 2018
(File No. 333-225030-01) and incorporated by reference herein).
Supplemental Indenture No. 19 dated as of August 15, 2018, being a supplemental instrument to Exhibit
4.01 hereto. (Filed as Exhibit 4.01 to OG&E's Form 8-K filed August 17, 2018 (File No. 1-1097) and
incorporated by reference herein).
Supplemental Indenture No. 20 dated as of June 1, 2019, being a supplemental instrument to Exhibit 4.01
hereto. (Filed as Exhibit 4.01 to OG&E's Form 8-K filed June 7, 2019 (File No. 1-1097) and incorporated by
reference herein).
Supplemental Indenture No. 21 dated as of April 1, 2020, being a supplemental instrument to Exhibit 4.01
hereto. (Filed as Exhibit 4.01 to OG&E's Form 8-K filed April 1, 2020 (File No. 1-1097) and incorporated by
reference herein).
Supplemental Indenture No. 22 dated as of May 27, 2021, being a supplemental instrument to Exhibit
4.01 hereto. (Filed as Exhibit 4.02 to OG&E's Form 8-K filed May 27, 2021 (File No. 1-1097) and
incorporated by reference herein).
Supplemental Indenture No. 23 dated as of January 5, 2023, being a supplemental instrument to Exhibit
4.01 hereto. (Filed as Exhibit 4.01 to OG&E's Form 8-K filed January 5, 2023 (File No. 1-1097) and
incorporated by reference herein).
Supplemental Indenture No. 24 dated as of April 3, 2023, being a supplemental instrument to Exhibit 4.01
hereto. (Filed as Exhibit 4.01 to OG&E's Form 8-K filed April 3, 2023 (File No. 1-1097) and incorporated by
reference herein).
Indenture dated as of November 1, 2004 between OGE Energy Corp. and UMB Bank, N.A., as trustee.
(Filed as Exhibit 4.01 to OGE Energy's Form 8-K filed November 12, 2004 (File No. 1-12579) and
incorporated by reference herein).
Supplemental Indenture No. 2 dated as of November 24, 2014 between OGE Energy and UMB Bank, N.A,
as trustee, crea ng the Senior Notes. (Filed as Exhibit 4.01 to OGE Energy's Form 8-K filed November 24,
2014 (File No. 1-12579) and incorporated by reference herein).
Supplemental Indenture No. 3 dated as of April 26, 2018, being a supplemental instrument to Exhibit 4.22
hereto. (Filed as Exhibit 4.04 to OGE Energy's Registra on Statement on Form S-3ASR filed May 18, 2018
(File No. 333-225030) and incorporated by reference herein).
Supplemental Indenture No. 4 dated as of May 27, 2021, being a supplemental instrument to Exhibit 4.22
hereto. (Filed as Exhibit 4.01 to OGE Energy's Form 8-K filed May 27, 2021 (File No. 1-12579) and
incorporated by reference herein).
Descrip on of Capital Stock.
Amended and Restated Facility Opera ng Agreement for the McClain Genera ng Facility dated as of July
9, 2004 between OG&E and the Oklahoma Municipal Power Authority. (Filed as Exhibit 10.03 to OGE
Energy's Form 10-Q for the quarter ended June 30, 2004 (File No. 1-12579) and incorporated by reference
herein).
Amended and Restated Ownership and Opera on Agreement for the McClain Genera ng Facility dated as
of July 9, 2004 between OG&E and the Oklahoma Municipal Power Authority. (Filed as Exhibit 10.04 to
OGE Energy's Form 10-Q for the quarter ended June 30, 2004 (File No. 1-12579) and incorporated by
reference herein).
Opera ng and Maintenance Agreement for the Transmission Assets of the McClain Genera ng Facility
dated as of August 25, 2003 between OG&E and the Oklahoma
115
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
10.04*
10.05*
10.06*
10.07*
10.08*
10.09*
10.10*+
10.11*+
10.12*
10.13*
10.14*
10.15*
10.16*
10.17*
10.18*
10.19*
10.20
10.21
Municipal Power Authority. (Filed as Exhibit 10.05 to OGE Energy's Form 10-Q for the quarter ended June
30, 2004 (File No. 1-12579) and incorporated by reference herein).
Form of Split Dollar Agreement. (Filed as Exhibit 10.32 to OGE Energy's Form 10-K for the year ended
December 31, 2004 (File No. 1-12579) and incorporated by reference herein).
OGE Energy Supplemental Execu ve Re rement Plan, as amended and restated. (Filed as Exhibit 10.01 to
OGE Energy's Form 10-Q for the quarter ended September 30, 2019 (File No. 1-12579) and incorporated
by reference herein).
Amendment No. 1 to the OGE Energy Corp. Supplemental Execu ve Re rement Plan. (Filed as Exhibit
10.01 to OGE Energy's Form 10-Q for the quarter ended June 30, 2021 (File No. 1-12579) and
incorporated by reference herein).
OGE Energy Restora on of Re rement Income Plan, as amended and restated. (Filed as Exhibit 10.04 to
OGE Energy's Form 10-Q for the quarter ended March 31, 2008 (File No. 1-12579) and incorporated by
reference herein).
Amendment No. 1 to OGE Energy's Restora on of Re rement Income Plan. (Filed as Exhibit 10.40 to OGE
Energy's Form 10-K for the year ended December 31, 2009 (File No. 1-12579) and incorporated by
reference herein).
Form of Employment Agreement for all exis ng and future officers of OGE Energy rela ng to change of
control. (Filed as Exhibit 10.28 to OGE Energy's Form 10-K for the year ended December 31, 2011 (File No.
1-12579) and incorporated by reference herein).
OGE Energy's Director Compensa on.
OGE Energy's Execu ve Officer Compensa on.
OGE Energy's 2013 Stock Incen ve Plan. (Filed as Annex B to OGE Energy's Proxy Statement for the 2013
Annual Mee ng of Shareowners (File No. 1-12579) and incorporated by reference herein).
OGE Energy's 2022 Stock Incen ve Plan. (Filed as Appendix B to OGE Energy's Proxy Statement for the
2022 Annual Mee ng of Shareholder (File No. 1-12579) and incorporated by reference herein).
OGE Energy's 2023 Annual Execu ve Incen ve Compensa on Plan. (Filed as Exhibit 10.14 to OGE Energy's
Form 10-K for the year ended December 31, 2022 (File No. 1-12579) and incorporated by reference
herein).
Form of Performance Unit Agreement under OGE Energy's 2013 Stock Incen ve Plan. (Filed as Exhibit
10.01 to OGE Energy's Form 10-Q for the quarter ended June 30, 2017 (File No. 1-12579) and
incorporated by reference herein).
Form of Restricted Stock Unit Agreement under OGE Energy's 2013 Stock Incen ve Plan. (Filed as Exhibit
10.01 to OGE Energy's Form 10-Q for the quarter ended March 31, 2019 (File No. 1-12579) and
incorporated by reference herein).
Form of Performance Unit Agreement under OGE Energy's 2022 Stock Incen ve Plan. (Filed as Exhibit
10.17 to OGE Energy's Form 10-K for the year ended December 31, 2022 (File No. 1-12579) and
incorporated by reference herein).
Form of Restricted Stock Unit Agreement under OGE Energy's 2022 Stock Incen ve Plan. (Filed as Exhibit
10.18 to OGE Energy's Form 10-K for the year ended December 31, 2022 (File No. 1-12579) and
incorporated by reference herein).
OGE Energy Corp. Deferred Compensa on Plan (As amended and restated effec ve October 1, 2016).
(Filed as Exhibit 10.37 to OGE Energy's Form 10-K for the year ended December 31, 2016 (File No. 1-
12579) and incorporated by reference herein).
Copy of the Se lement Agreement filed with the APSC on April 20, 2017. (Filed as Exhibit 99.02 to OGE
Energy's Form 8-K filed May 24, 2017 (File No. 1-12579) and incorporated by reference herein).
Amended and Restated Credit Agreement dated as of December 17, 2021 by and among OGE Energy
Corp. and Wells Fargo Bank, Na onal Associa on, as Agent, JPMorgan Chase Bank, N.A. and Mizuho Bank,
Ltd., as Co-Syndica on Agents, MUFG Union Bank, N.A., Royal Bank of Canada and U.S. Bank Na onal
Associa on, as Co-Documenta on Agents, and the lenders from me to me par es thereto. (Filed as
Exhibit 99.01 to OGE Energy's Form 8-K filed December 21, 2021 (File No. 1-12579) and incorporated by
reference herein).
116
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
10.22
10.23
10.24
10.25
21.01+
23.01+
23.02+
24.01+
24.02+
31.01+
31.02+
32.01+
32.02+
97.01+
99.01
99.02
101.INS
101.SCH
104
First Amendment dated as of December 19, 2022, to Amended and Restated Credit Agreement dated as
of December 17, 2021, by and among OGE Energy, the Lenders thereto, Wells Fargo Bank, Na onal
Associa on, as Agent, JPMorgan Chase Bank, N.A. and Mizuho Bank, Ltd., as Co-Syndica on Agents, and
MUFG Bank, Ltd., Royal Bank of Canada and U.S. Bank Na onal Associa on, as Co-Documenta on Agents.
(Filed as Exhibit 10.01 to OGE Energy's Form 8-K filed December 19, 2022 (File No. 1-12579) and
incorporated by reference herein).
Amended and Restated Credit Agreement dated as of December 17, 2021 by and among Oklahoma Gas
and Electric Company and Wells Fargo Bank, Na onal Associa on, as Agent, JPMorgan Chase Bank, N.A.
and Mizuho Bank, Ltd., as Co-Syndica on Agents, MUFG Union Bank, N.A., Royal Bank of Canada and U.S.
Bank Na onal Associa on, as Co-Documenta on Agents, and the lenders from me to me par es
thereto. (Filed as Exhibit 99.02 to OG&E's Form 8-K filed December 21, 2021 (File No. 1-1097) and
incorporated by reference herein).
First Amendment dated as of December 19, 2022, to Amended and Restated Credit Agreement dated as
of December 17, 2021, by and among OG&E, the Lenders thereto, Wells Fargo Bank, Na onal Associa on,
as Agent, JPMorgan Chase Bank, N.A. and Mizuho Bank, Ltd., as Co-Syndica on Agents, and MUFG Bank,
Ltd., Royal Bank of Canada and U.S. Bank Na onal Associa on, as Co-Documenta on Agents. (Filed as
Exhibit 10.02 to OG&E's Form 8-K filed December 19, 2022 (File No. 1-1097) and incorporated by
reference herein).
Le er of extension dated as of December 18, 2023 for OGE Energy's and OG&E's credit agreements dated
as of December 17, 2021, as amended, by and among OGE Energy and OG&E, for their respec ve credit
facility, the Lenders thereto, Wells Fargo Bank, Na onal Associa on, as Agent, JPMorgan Chase Bank, N.A.
and Mizuho Bank, Ltd., as Co-Syndica on Agents, and MUFG Bank, Ltd., Royal Bank of Canada and U.S.
Bank Na onal Associa on, as Co-Documenta on Agents. (Filed as Exhibit 10.01 to OGE Energy's Form 8-K
filed December 20, 2023 (File No. 1-12579) and incorporated by reference herein).
Subsidiaries of OGE Energy.
Consent of Ernst & Young LLP.
Consent of Ernst & Young LLP.
Power of A orney.
Power of A orney.
Cer fica ons Pursuant to Rule 13a-14(a)/15d-14(a) As Adopted Pursuant to Sec on 302 of the Sarbanes-
Oxley Act of 2002.
Cer fica ons Pursuant to Rule 13a-14(a)/15d-14(a) As Adopted Pursuant to Sec on 302 of the Sarbanes-
Oxley Act of 2002.
Cer fica on Pursuant to 18 U.S.C. Sec on 1350 As Adopted Pursuant to Sec on 906 of the Sarbanes-
Oxley Act of 2002.
Cer fica on Pursuant to 18 U.S.C. Sec on 1350 As Adopted Pursuant to Sec on 906 of the Sarbanes-
Oxley Act of 2002.
Execu ve Compensa on Clawback Policy.
Credit Agreement dated as of May 24, 2022 by and among OGE Energy Corp., the Lenders and BOKF NA,
dba Bank of Oklahoma as Sole Administra ve Agent, Sole Syndica on Agent, Lead Arranger and Sole
Bookrunner (Filed as Exhibit 99.01 to OGE Energy's Form 10-Q for the quarter ended June 30, 2022 (File
No. 1-12579) and incorporated by reference herein).
Copy of the APSC Se lement Agreement approval dated May 18, 2017. (Filed as Exhibit 99.01 to OGE
Energy's Form 8-K filed May 24, 2017 (File No. 1-12579) and incorporated by reference herein).
Inline XBRL Instance Document - the instance document does not appear in the interac ve data file
because its XBRL tags are embedded within the Inline XBRL document.
Inline XBRL Taxonomy Extension Schema With Embedded Linkbase Documents.
Cover Page Interac ve Data File - the cover page XBRL tags are embedded within the Inline XBRL
document (included in Exhibit 101).
117
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
* Represents execu ve compensa on plans and arrangements.
+ Represents exhibits filed herewith. All exhibits not so designated are incorporated by reference to a
prior filing, as indicated.
118
OGE ENERGY CORP.
OKLAHOMA GAS AND ELECTRIC COMPANY
SCHEDULE II - Valua on and Qualifying Accounts
Balance at
Beginning of
Period
Addi ons
Charged to
Costs and
Expenses
Deduc ons (A)
Balance at End
of Period
(in millions)
2.6
$
3.2
$
3.4
$
2.4
$
2.8
$
3.3
$
1.9
$
5.7
$
5.4
$
2.4
1.9
2.2
Descrip on
Balance at December 31, 2021
Reserve for Uncollec ble Accounts
Balance at December 31, 2022
Reserve for Uncollec ble Accounts
Balance at December 31, 2023
Reserve for Uncollec ble Accounts
(A) Uncollec ble accounts receivable wri en off, net of recoveries.
Item 16. Form 10-K Summary.
None.
$
$
$
119
Pursuant to the requirements of Sec on 13 or 15(d) of the Securi es Exchange Act of 1934, as amended, the Registrant has duly caused this Report to
be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Oklahoma City, and State of Oklahoma on February 20th, 2024.
SIGNATURES
OGE ENERGY CORP.
(Registrant)
By /s/ Sean Trauschke
Sean Trauschke
Chairman of the Board, President
and Chief Execu ve Officer
Pursuant to the requirements of the Securi es Exchange Act of 1934, as amended, this Report has been signed below by the following persons on behalf
of the Registrant in the capaci es and on the dates indicated.
Signature
Title
Date
/s/ Sean Trauschke
Sean Trauschke
/s/ W. Bryan Buckler
W. Bryan Buckler
/s/ Sarah R. Stafford
Sarah R. Stafford
Frank A. Bozich
Peter D. Clarke
Cathy R. Gates
David L. Hauser
Luther C. Kissam, IV
Judy R. McReynolds
David E. Rainbolt
J. Michael Sanner
Sheila G. Talton
Principal Execu ve
Officer and Director;
February 20, 2024
Principal Financial Officer;
February 20, 2024
Principal Accoun ng Officer;
February 20, 2024
Director;
Director;
Director;
Director;
Director;
Director;
Director;
Director;
Director;
/s/ Sean Trauschke
By Sean Trauschke (a orney-in-fact)
February 20, 2024
120
Pursuant to the requirements of Sec on 13 or 15(d) of the Securi es Exchange Act of 1934, as amended, the Registrant has duly caused this Report to
be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Oklahoma City, and State of Oklahoma on February 20th, 2024.
SIGNATURES
OKLAHOMA GAS AND ELECTRIC COMPANY
(Registrant)
By /s/ Sean Trauschke
Sean Trauschke
Chairman of the Board, President
and Chief Execu ve Officer
Pursuant to the requirements of the Securi es Exchange Act of 1934, as amended, this Report has been signed below by the following persons on behalf
of the Registrant in the capaci es and on the dates indicated.
Signature
Title
Date
/s/ Sean Trauschke
Sean Trauschke
/s/ W. Bryan Buckler
W. Bryan Buckler
/s/ Sarah R. Stafford
Sarah R. Stafford
Frank A. Bozich
Peter D. Clarke
Cathy R. Gates
David L. Hauser
Luther C. Kissam, IV
Judy R. McReynolds
David E. Rainbolt
J. Michael Sanner
Sheila G. Talton
/s/ Sean Trauschke
By Sean Trauschke (a orney-in-fact)
Principal Execu ve
Officer and Director;
February 20, 2024
Principal Financial Officer;
February 20, 2024
Principal Accoun ng Officer;
February 20, 2024
Director;
Director;
Director;
Director;
Director;
Director;
Director;
Director;
Director;
February 20, 2024
121
DESCRIPTION OF SECURITIES
Exhibit 4.28
The following descrip on of the common stock of OGE Energy Corp., an Oklahoma corpora on, is a summary of the general terms thereof and is
qualified in its en rety by the provisions of our cer ficate of incorpora on, as amended and restated (the "Restated Cer ficate of Incorpora on"), and bylaws,
as amended and restated (the "Bylaws"), copies of both of which have been filed as exhibits to our most recent Annual Report on Form 10-K filed with the
Securi es and Exchange Commission, and the laws of the state of Oklahoma.
Authorized Shares
Under our Restated Cer ficate of Incorpora on, we are authorized to issue 450,000,000 shares of common stock, par value $0.01 per share, of
which 200,330,340 shares were outstanding on January 31, 2024. We are also authorized to issue 5,000,000 shares of preferred stock, par value $0.01 per
share. No shares of preferred stock are currently outstanding. Our common stock is our only security registered under Sec on 12 of the Securi es Exchange
Act of 1934.
Without shareholder approval, we may issue preferred stock in the future in such series as may be designated by our board of directors. In crea ng
any such series, our board of directors has the authority to fix the rights and preferences of each series with respect to, among other things, the dividend
rate, redemp on provisions, liquida on preferences, sinking fund provisions, conversion rights and vo ng rights. The terms of any series of preferred stock
that we may issue in the future may provide the holders of such preferred stock with rights that are senior to the rights of the holders of our common stock.
Dividend Rights
Before we can pay any dividends on our common stock, the holders of our preferred stock that may be outstanding are en tled to receive their
dividends at the respec ve rates as may be provided for the shares of their series. Currently, there are no shares of our preferred stock outstanding. Because
we are a holding company and conduct all of our opera ons through our subsidiary, our cash flow and ability to pay dividends will be dependent on the
earnings and cash flow of our subsidiary and the distribu on or other payment of those earnings to us in the form of dividends. We expect to derive
principally all of the funds required by us to enable us to pay dividends on our common stock from dividends paid by Oklahoma Gas and Electric Company
("OG&E") on its common stock. Our ability to receive dividends on OG&E's common stock is subject to the prior rights of the holders of any OG&E preferred
stock that may be outstanding, any covenants of OG&E's cer ficate of incorpora on and OG&E's debt instruments limi ng the ability of OG&E to pay
dividends and the ability of public u lity commissions that regulate OG&E to effec vely restrict the payment of dividends by OG&E.
Vo ng Rights
Each holder of common stock is en tled to one vote per share upon all ma ers upon which shareowners have the right to vote and generally will
vote together as one class. Our board of directors has the authority to fix conversion and vo ng rights for any new series of preferred stock (including the
right to elect directors upon a failure to pay dividends), provided that no share of preferred stock can have more than one vote per share.
Our Restated Cer ficate of Incorpora on also contains "fair price" provisions, which require the approval by the holders of at least 80 percent of
the vo ng power of our outstanding vo ng stock as a condi on for mergers, consolida ons, sales of substan al assets, issuances of capital stock and certain
other business combina ons and transac ons involving us and any substan al (10 percent or more) holder of our vo ng stock unless the transac on is either
approved by a majority of the members of our board of directors who are unaffiliated with the substan al holder or specified minimum price and procedural
requirements are met. The provisions summarized in the foregoing sentence may be amended only by the approval of the holders of at least 80 percent of
the vo ng power of our outstanding vo ng stock. Our vo ng stock consists of all outstanding shares en tled to vote generally in the elec on of directors and
currently consists of our common stock.
Our vo ng stock does not have cumula ve vo ng rights for the elec on of directors. Our Restated Cer ficate of Incorpora on and By-Laws
currently contain provisions sta ng that: (1) directors may be removed only with the approval of the holders of at least a majority of the vo ng power of our
shares generally en tled to vote; (2) any vacancy on the board of directors will be filled only by the remaining directors then in office, though less than a
quorum; (3) advance no ce of introduc on by shareowners of business at annual shareowner mee ngs and of shareowner nomina ons for the elec on of
directors must be given and that certain informa on must be provided with respect to such ma ers; (4) shareowner ac on may be taken only at an annual
mee ng of shareowners or a
special mee ng of shareowners called by the President or the board of directors; and (5) the foregoing provisions may be amended only by the approval of
the holders of at least 80 percent of the vo ng power of the shares generally en tled to vote. These provisions, along with the "fair price" provisions
discussed above, the business combina on and control share acquisi on provision discussed below, may deter a empts to cause a change in control of our
company (by proxy contest, tender offer or otherwise) and will make more difficult a change in control that is opposed by our board of directors.
Liquida on Rights
Subject to possible prior rights of holders of preferred stock that may be issued in the future, in the event of our liquida on, dissolu on or winding
up, whether voluntary or involuntary, the holders of our common stock are en tled to receive the remaining assets and funds pro rata, according to the
number of shares of common stock held.
Other Provisions
Oklahoma has enacted legisla on aimed at regula ng takeovers of corpora ons and restric ng specified business combina ons with interested
shareholders. Under the Oklahoma General Corpora on Act, a shareowner who acquires more than 15 percent of the outstanding vo ng shares of a
corpora on subject to the statute, but less than 85 percent of such shares, is prohibited from engaging in specified “business combina ons” with the
corpora on for three years a er the date that the shareowner became an interested stockholder. This provision does not apply if (1) before the acquisi on
date the corpora on's board of directors has approved either the business combina on or the transac on in which the shareowner became an interested
shareowner or (2) the corpora on's board of directors approves the business combina on and at least two- thirds of the outstanding vo ng stock of the
corpora on not owned by the interested shareowner vote to authorize the business combina on. The term “business combina on” encompasses a wide
variety of transac ons with or caused by an interested shareowner in which the interested shareowner receives or could receive a benefit on other than a pro
rata basis with other shareowners, including mergers, specified asset sales, specified issuances of addi onal shares to the interested shareowner, transac ons
with the corpora on that increase the propor onate interest of the interested shareowner or transac ons in which the interested shareowner receives
certain other benefits.
Oklahoma law also contains control share acquisi on provisions. These provisions generally require the approval of the holders of a majority of the
corpora on's vo ng shares held by disinterested shareowners before a person purchasing one-fi h or more of the corpora on's vo ng shares can vote the
shares in excess of the one-fi h interest. Similar shareholder approvals are required at one-third and majority thresholds.
The board of directors may allot and issue shares of common stock for such considera on, not less than the par value thereof, as it may from me
to me determine. No holder of common stock has the preemp ve right to subscribe for or purchase any part of any new or addi onal issue of stock or
securi es conver ble into stock. Our common stock is not subject to further calls or to assessment by us.
Lis ng
Our common stock is listed on the New York Stock Exchange.
Transfer Agent and Registrar
Computershare is the Transfer Agent and Registrar for our common stock.
OGE Energy Corp.
Director Compensa on
Exhibit 10.10
Compensa on of non-management directors of OGE Energy Corp. ("OGE Energy") in 2023 included an annual retainer fee of $267,500, of which
$115,000 was payable in cash in quarterly installments and $152,500 was deposited in the director's account under OGE Energy's Deferred Compensa on
Plan and converted to 4,317.7 common stock units based on the closing price of OGE Energy's Common Stock on December 12, 2023. In 2023, the
independent directors did not receive addi onal compensa on for a ending Board or commi ee mee ngs but were instead paid a quarterly cash retainer.
The lead director that served in 2023 received an addi onal $30,000 cash retainer in 2023. The chair of each of the Compensa on, Nomina ng, Corporate
Governance and Stewardship and Audit Commi ees that served in 2023 received an addi onal $15,000 annual cash retainer in 2023. Each member of the
Audit Commi ee also received an addi onal annual retainer of $5,000. These amounts represent the total fees paid to directors in their capaci es as
directors of OGE Energy and Oklahoma Gas and Electric Company in 2023.
Under OGE Energy's Deferred Compensa on Plan, non-management directors may defer payment of all or part of their quarterly and annual cash
retainer fee, which deferred amounts in 2023 were credited to their account as of the scheduled payment date. Amounts credited to the accounts are
assumed to be invested in one or more of the investment op ons permi ed under OGE Energy's Deferred Compensa on Plan. In 2023, those investment
op ons included an OGE Energy Common Stock fund, whose value was determined based on the stock price of OGE Energy's Common Stock. When an
individual ceases to be a director of OGE Energy, all amounts credited under OGE Energy's Deferred Compensa on Plan are paid in cash in a lump sum or
installments. In certain circumstances, par cipants may also be en tled to in-service withdrawals from OGE Energy's Deferred Compensa on Plan.
On December 5, 2023, the Compensa on Commi ee met to consider director compensa on. At that mee ng, the Compensa on Commi ee
recommended, and the Board subsequently approved, to make no changes in the annual cash retainer in 2024, and the annual equity retainer, credited on
December 12, 2023, was increased from $140,000 to $152,500.
OGE Energy Corp.
Execu ve Officer Compensa on
Exhibit 10.11
Execu ve Compensa on
In December 2023, the Compensa on Commi ee of the OGE Energy Corp. ("OGE Energy") board of directors took ac ons se ng execu ves' salaries
and target amount of annual incen ve awards for 2024. In February 2024, the Compensa on Commi ee took ac on se ng execu ves' target amounts of
long-term compensa on awards for 2024. Execu ve compensa on was set by the Compensa on Commi ee a er considera on of, among other things,
individual performance and market-based data on compensa on for execu ves with similar du es. Payouts of 2024 annual incen ve award targets and
performance-based long-term awards are dependent on achievement of specified corporate goals established by the Compensa on Commi ee, and no
officer is assured of any payout.
Salary
The Compensa on Commi ee established the base salaries for its senior execu ve group. The salaries for 2024 for the OGE Energy officers who are
expected to be named in the Summary Compensa on Table in OGE Energy's 2024 Proxy Statement are listed in the table below.
Execu ve Officer
Sean Trauschke, Chairman, President and Chief Execu ve Officer
W. Bryan Buckler, Chief Financial Officer
William H. Sultemeier, General Counsel, Corporate Secretary and Chief Compliance Officer
Donnie O. Jones, Vice President - U lity Opera ons of OG&E
Cris na F. McQuis on, Vice President - Corporate Responsibility and Stewardship
Establishment of 2024 Annual Incen ve Awards
2024 Base Salary
$1,204,622
$509,304
$517,394
$454,553
$362,022
As stated above, at its December 2023 mee ng, the Compensa on Commi ee approved the target amount of annual incen ve awards, expressed as a
percentage of salary, with the officer having the ability, depending upon achievement of the 2024 corporate goals to receive from 0 percent to 200 percent of
such targeted amount. For 2024, the targeted amount ranged from 45 percent to 110 percent of the approved 2024 base salary for the execu ve officers in
the above table.
Establishment of Long-Term Awards
At its February 2024 mee ng, the Compensa on Commi ee approved the level of target long-term incen ve awards, expressed as a percentage of
salary. For the 2024 awards granted, the targeted amount ranged from 140 percent to 400 percent of the approved 2024 base salary for the execu ve officers
receiving this long-term award in the above table. The performance-based por on of the long-term incen ve awards allow the officer to receive from 0
percent to 200 percent of such targeted amount at the end of a three-year performance period depending upon achievement of the corporate goals. The
me-based por on of the long-term incen ve awards allow the officers to receive the granted amount at the end of a three-year ves ng period depending
upon con nued employment.
Other Benefits
Re rement Benefits. A significant amount of OGE Energy's employees hired before December 1, 2009, including execu ve officers, are eligible to
par cipate in OGE Energy's Pension Plan and certain employees are eligible to par cipate in OGE Energy's Restora on of Re rement Income Plan that enables
par cipants, including execu ve officers, to receive the same benefits that they would have received under OGE Energy's Pension Plan in the absence of
limita ons imposed by the federal tax laws. In addi on, the supplemental execu ve re rement plan, which was adopted in 1993 and amended in subsequent
years, provides a supplemental execu ve re rement plan in order to a ract and retain execu ves designated by the Compensa on Commi ee of OGE
Energy's Board of Directors who may not otherwise qualify for a sufficient level of benefits under OGE Energy's Pension Plan and Restora on of Re rement
Income Plan. Mr. Trauschke is the only employee who par cipates in the supplemental execu ve re rement plan.
Almost all employees of OGE Energy, including execu ve officers, also are eligible to par cipate in our 401(k) Plan. Par cipants may contribute each pay
period any whole percentage between two percent and 75 percent of their compensa on, as defined in the 401(k) Plan, for that pay period. Par cipants who
have a ained age 50 before the close of a year are allowed to make addi onal contribu ons referred to as "Catch-Up Contribu ons," subject to certain
limita ons of the Code. Par cipants may designate, at their
discre on, all or any por on of their contribu ons as: (i) a before-tax contribu on under Sec on 401(k) of the Code subject to the limita ons thereof; (ii) an
a er-tax Roth contribu on; or (iii) a contribu on made on a non-Roth a er-tax basis. The 401(k) Plan also includes an eligible automa c contribu on
arrangement and provides for a qualified default investment alterna ve consistent with the U.S. Department of Labor regula ons. Par cipants may elect, in
accordance with the 401(k) Plan procedures, to have his or her future salary deferral rate to be automa cally increased annually on a date and in an amount
as specified by the par cipant in such elec on. For employees hired or rehired on or a er December 1, 2009, OGE Energy contributes to the 401(k) Plan, on
behalf of each par cipant, 200 percent of the par cipant's contribu ons up to five percent of compensa on. OGE Energy contribu on for employees hired or
rehired before December 1, 2009 varies depending on the par cipant's hire date, elec on with respect to par cipa on in the Pension Plan and, in some
cases, years of service.
No OGE Energy contribu ons are made with respect to a par cipant's Catch-Up Contribu ons, rollover contribu ons, or with respect to a par cipant's
contribu ons based on over me payments, pay-in-lieu of over me for exempt personnel, special lump-sum recogni on awards and lump-sum merit awards
included in compensa on for determining the amount of par cipant contribu ons. Once made, OGE Energy's contribu on may be directed to any available
investment op on in the 401(k) Plan. OGE Energy match contribu ons vest over a three-year period. A er two years of service, par cipants become 20
percent vested in their OGE Energy contribu on account and become fully vested on comple ng three years of service. In addi on, par cipants fully vest
when they are eligible for normal or early re rement under the Pension Plan, in the event of their termina on due to death or permanent disability or upon
a ainment of age 65 while employed by OGE Energy or its affiliates.
OGE Energy provides a nonqualified deferred compensa on plan which is intended to be an unfunded plan. The plan's primary purpose is to provide a
tax-deferred capital accumula on vehicle for a select group of management, highly compensated employees and non-employee members of the Board of
Directors of OGE Energy and to supplement such employees' 401(k) Plan contribu ons as well as offering this plan to be compe ve in the marketplace.
Eligible employees who enroll in the plan have the following deferral op ons: (i) eligible employees may elect to defer up to a maximum of 70 percent of base
salary and 100 percent of annual incen ve awards or (ii) eligible employees may elect a deferral percentage of base salary and annual incen ve awards based
on the deferral percentage elected for a year under the 401(k) Plan with such deferrals to start when maximum deferrals to the qualified 401(k) Plan have
been made because of limita ons in that plan. Eligible directors who enroll in the plan may elect to defer up to a maximum of 100 percent of directors'
mee ng fees and annual retainers.
OGE Energy matches employee (but not non-employee director) deferrals to make up for any match lost in the 401(k) Plan because of deferrals to the
deferred compensa on plan, and to allow for a match that would have been made under the 401(k) Plan on that por on of either the first six percent of total
compensa on or the first five percent of total compensa on, depending on prior par cipant elec ons, deferred that exceeds the limits allowed in the 401(k)
Plan. Matching credits vest based on years of service, with full ves ng a er three years or, if earlier, on re rement, disability, death, a change in control of
OGE Energy or termina on of the plan.
Deferrals, plus any OGE Energy match, are credited to a recordkeeping account in the par cipant's name. Earnings on the deferrals are indexed to the
assumed investment funds selected by the par cipant. In 2023, those investment op ons included an OGE Energy Common Stock fund, whose value was
determined based on the stock price of OGE Energy's Common Stock.
Normally, payments under the deferred compensa on plan begin within one year a er re rement. For these purposes, normal re rement age is 65 and
the minimum age to qualify for early re rement is age 55 with at least five years of service. Benefits will be paid, at the elec on of the par cipant, either in a
lump sum or a stream of annual payments for up to 15 years, or a combina on thereof. Par cipants whose employment terminates before they qualify for
re rement will receive their vested account balance in one lump sum following termina on as provided in the plan. Par cipants also will be en tled to pre-
and post-re rement survivor benefits. If the par cipant dies while in employment before re rement, his or her beneficiary will receive a payment of the
account balance plus a supplemental survivor benefit equal to two mes the total amount of base salary and annual incen ve payments deferred under the
plan. If the par cipant dies following re rement, his or her beneficiary will con nue to receive the remaining vested account balance. Addi onally, eligible
surviving spouses will be en tled to a life me survivor annuity payable annually. The amount of the annuity is based on 50 percent of the par cipant's
account balance at re rement, the spouse's age and actuarial assump ons established by OGE Energy's Plan Administra on Commi ee.
At any me prior to re rement, a par cipant may withdraw all or part of amounts a ributable to his or her vested account balance under the deferred
compensa on plan at December 31, 2004, subject to a penalty of 10 percent of the amount withdrawn. In addi on, at the me of the ini al deferral elec on,
a par cipant may elect to receive one or more in-service distribu ons on specified dates without penalty. Hardship withdrawals, without penalty, may also be
permi ed at the discre on of OGE Energy's Plan Administra on Commi ee.
Perquisites. OGE Energy also offers execu ve officers a limited amount of perquisites. These include payment of social membership dues at dining and
country clubs for certain execu ve officers, an annual physical exam for all execu ve officers, a reloca on program and in some instances the use of a
company car. In reviewing the perquisites and the benefits under the 401(k)
Plan, Deferred Compensa on Plan, Pension Plan, Restora on of Re rement Income Plan and supplemental execu ve re rement plan, the Compensa on
Commi ee seeks to provide par cipants with benefits at least commensurate with those offered by other u li es of comparable size.
Change-of-Control Provisions and Employment Agreements. None of OGE Energy's execu ve officers has an employment agreement with OGE Energy.
Each of the execu ve officers has a change of control agreement that becomes effec ve upon a change of control. If an execu ve officer's employment is
terminated by OGE Energy "without cause" following a change of control, the execu ve officer is en tled to the following payments: (i) all accrued and unpaid
compensa on and a prorated annual incen ve payout and (ii) a severance payment equal to 2.99 mes the sum of such officer's (a) annual base salary and
(b) highest recent annual incen ve payout. The change of control agreements are considered to be double trigger agreements because payment will only be
made following a change of control and termina on of employment. The 2.99 mes mul ple for change-of-control payments was selected because at the
me it was considered standard. Although many companies also include provisions for tax gross-up payments to cover any excise taxes on excess parachute
payments, OGE Energy's Board of Directors decided not to include this addi onal benefit in OGE Energy's agreements. Instead, under OGE Energy's
agreements if the excise tax would be imposed, the change-of-control payments will be reduced to a point where no excise tax would be payable, if such
reduc on would result in a greater a er-tax payment.
In addi on, pursuant to the terms of OGE Energy's incen ve compensa on plans, upon a change of control, all performance units will vest and be paid
out immediately in cash as if the applicable performance goals had been sa sfied at target levels; all restricted stock units will vest and be paid out
immediately in cash; and any annual incen ve award outstanding for the year in which the par cipant's termina on occurs for any reason, other than cause,
within 24 months a er the change of control will be paid in cash at target level on a prorated basis.
OGE Energy Corp.
Subsidiaries of the Registrant
Oklahoma Gas and Electric Company
Oklahoma
Name of Subsidiary
Jurisdic on of Incorpora on
Exhibit 21.01
Percentage of
Ownership
100.0
The above listed subsidiary has been consolidated in the Registrant's financial statements. Certain of OGE Energy's subsidiaries have been omi ed from
the list above in accordance with Rule 1-02(w) of Regula on S-X.
Exhibit 23.01
We consent to the incorpora on by reference in the following Registra on Statements:
Consent of Independent Registered Public Accoun ng Firm
(1) Registra on Statement (Form S-8 No. 333-92423) pertaining to the deferred compensa on plan of OGE Energy Corp.,
(2) Registra on Statement (Form S-8 No. 333-104497) pertaining to the employees' stock ownership and re rement savings plan of OGE Energy
Corp.,
(3) Registra on Statement (Form S-8 No. 333-190406) pertaining to the employees' stock ownership and re rement savings plan of OGE Energy
Corp.,
(4) Registra on Statement (Form S-8 No. 333-190405) pertaining to the 2013 stock incen ve plan of OGE Energy Corp.,
(5) Registra on Statement (Form S-3ASR No. 333-255823) pertaining to common stock and debt securi es of OGE Energy Corp.,
(6) Registra on Statement (Form S-8 No. 333-266540) pertaining to the OGE Energy Corp. 2022 Stock Incen ve Plan of OGE Energy Corp., and
(7) Registra on Statement (Form S-3ASR No. 333-274748) pertaining to the dividend reinvestment and stock purchase plan of OGE Energy Corp.;
of our reports dated February 20, 2024, with respect to the consolidated financial statements and schedule of OGE Energy Corp. and the effec veness of
internal control over financial repor ng of OGE Energy Corp. included in this Annual Report (Form 10-K) of OGE Energy Corp. for the year ended December
31, 2023.
/s/ Ernst & Young LLP
Oklahoma City, Oklahoma
February 20, 2024
Consent of Independent Registered Public Accoun ng Firm
Exhibit 23.02
We consent to the incorpora on by reference in the Registra on Statement (Form S-3ASR No. 333-255823-01) of Oklahoma Gas and Electric Company of our
reports dated February 20, 2024, with respect to the financial statements and schedule of Oklahoma Gas and Electric Company, and the effec veness of
internal control over financial repor ng of Oklahoma Gas and Electric Company, included in this Annual Report (Form 10-K) for the year ended December 31,
2023.
/s/ Ernst & Young LLP
Oklahoma City, Oklahoma
February 20, 2024
Power of A orney
Exhibit 24.01
WHEREAS, OGE ENERGY CORP., an Oklahoma corpora on (herein referred to as the "Company"), is about to file with the Securi es and Exchange
Commission, under the provisions of the Securi es Exchange Act of 1934, as amended, its annual report on Form 10-K for the year ended December 31,
2023; and
WHEREAS, each of the undersigned holds the office or offices in the Company herein-below set opposite his or her name, respec vely;
NOW, THEREFORE, each of the undersigned hereby cons tutes and appoints SEAN TRAUSCHKE, W. BRYAN BUCKLER and SARAH R. STAFFORD and each
of them individually, his or her a orney with full power to act for him or her and in his or her name, place and stead, to sign his or her name in the capacity or
capaci es set forth below to said Form 10-K and to any and all amendments thereto, and hereby ra fies and confirms all that said a orney may or shall
lawfully do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned have hereunto set their hands this 20th day of February, 2024.
Sean Trauschke, Chairman, Principal
Execu ve Officer and Director
Frank A. Bozich, Director
Peter D. Clarke, Director
Cathy R. Gates, Director
David L. Hauser, Director
Luther C. Kissam, IV
Judy R. McReynolds, Director
David E. Rainbolt, Director
J. Michael Sanner, Director
Sheila G. Talton, Director
W. Bryan Buckler, Principal Financial
Officer
Sarah R. Stafford, Principal Accoun ng
Officer
STATE OF OKLAHOMA
COUNTY OF OKLAHOMA
)
)
)
SS
/s/ Sean Trauschke
/s/ Frank A. Bozich
/s/ Peter D. Clarke
/s/ Cathy R. Gates
/s/ David L. Hauser
/s/ Luther C. Kissam, IV
/s/ Judy R. McReynolds
/s/ David E. Rainbolt
/s/ J. Michael Sanner
/s/ Sheila G. Talton
/s/ W. Bryan Buckler
/s/ Sarah R. Stafford
On the date indicated above, before me, Kelly Hamilton-Coyer, Notary Public in and for said County and State, the above named directors and officers of
OGE ENERGY CORP., an Oklahoma corpora on, known to me to be the persons whose names are subscribed to the foregoing instrument, severally
acknowledged to me that they executed the same as their own free act and deed.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official seal on the 20th day of February, 2024.
My commission expires:
July 6, 2025
/s/ Kelly G. Hamilton-Coyer
By: Kelly G. Hamilton-Coyer
Notary Public
Power of A orney
Exhibit 24.02
WHEREAS, OKLAHOMA GAS AND ELECTRIC COMPANY, an Oklahoma corpora on (herein referred to as the "Company"), is about to file with the
Securi es and Exchange Commission, under the provisions of the Securi es Exchange Act of 1934, as amended, its annual report on Form 10-K for the year
ended December 31, 2023; and
WHEREAS, each of the undersigned holds the office or offices in the Company herein-below set opposite his or her name, respec vely;
NOW, THEREFORE, each of the undersigned hereby cons tutes and appoints SEAN TRAUSCHKE, W. BRYAN BUCKLER and SARAH R. STAFFORD and each
of them individually, his or her a orney with full power to act for him or her and in his or her name, place and stead, to sign his or her name in the capacity or
capaci es set forth below to said Form 10-K and to any and all amendments thereto, and hereby ra fies and confirms all that said a orney may or shall
lawfully do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned have hereunto set their hands this 20th day of February, 2024.
Sean Trauschke, Chairman, Principal
Execu ve Officer and Director
Frank A. Bozich, Director
Peter D. Clarke, Director
Cathy R. Gates, Director
David L. Hauser, Director
Luther C. Kissam, IV
Judy R. McReynolds, Director
David E. Rainbolt, Director
J. Michael Sanner, Director
Sheila G. Talton, Director
W. Bryan Buckler, Principal Financial
Officer
Sarah R. Stafford, Principal Accoun ng
Officer
STATE OF OKLAHOMA
COUNTY OF OKLAHOMA
)
)
)
SS
/s/ Sean Trauschke
/s/ Frank A. Bozich
/s/ Peter D. Clarke
/s/ Cathy R. Gates
/s/ David L. Hauser
/s/ Luther C. Kissam, IV
/s/ Judy R. McReynolds
/s/ David E. Rainbolt
/s/ J. Michael Sanner
/s/ Sheila G. Talton
/s/ W. Bryan Buckler
/s/ Sarah R. Stafford
On the date indicated above, before me, Kelly Hamilton-Coyer, Notary Public in and for said County and State, the above named directors and officers of
OKLAHOMA GAS AND ELECTRIC COMPANY, an Oklahoma corpora on, known to me to be the persons whose names are subscribed to the foregoing
instrument, severally acknowledged to me that they executed the same as their own free act and deed.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official seal on the 20th day of February, 2024.
/s/ Kelly G. Hamilton-Coyer
By: Kelly G. Hamilton-Coyer
Notary Public
My commission expires:
July 6, 2025
Exhibit 31.01
CERTIFICATIONS
I, Sean Trauschke, cer fy that:
1. I have reviewed this annual report on Form 10-K of OGE Energy Corp.;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the
statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial informa on included in this report, fairly present in all material respects the financial
condi on, results of opera ons and cash flows of the registrant as of, and for, the periods presented in this report;
4. The registrant's other cer fying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange
Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial repor ng (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant
and have:
a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that
material informa on rela ng to the registrant, including its consolidated subsidiaries, is made known to us by others within those en es, par cularly during
the period in which this report is being prepared;
b) designed such internal control over financial repor ng, or caused such internal control over financial repor ng to be designed under our supervision, to
provide reasonable assurance regarding the reliability of financial repor ng and the prepara on of financial statements for external purposes in accordance
with generally accepted accoun ng principles;
c) evaluated the effec veness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effec veness of
the disclosure controls and procedures, as of the end of the period covered by this report based on such evalua on; and
d) disclosed in this report any change in the registrant's internal control over financial repor ng that occurred during the registrant's most recent fiscal
quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the
registrant's internal control over financial repor ng; and
5. The registrant's other cer fying officer and I have disclosed, based on our most recent evalua on of internal control over financial repor ng, to the
registrant's auditors and the audit commi ee of the registrant's board of directors (or persons performing the equivalent func ons):
a) all significant deficiencies and material weaknesses in the design or opera on of internal control over financial repor ng which are reasonably likely to
adversely affect the registrant's ability to record, process, summarize and report financial informa on; and
b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over
financial repor ng.
Date: February 20, 2024
/s/ Sean Trauschke
Sean Trauschke
Chairman of the Board, President and Chief Execu ve
Officer
CERTIFICATIONS
I, W. Bryan Buckler, cer fy that:
1. I have reviewed this annual report on Form 10-K of OGE Energy Corp.;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the
statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial informa on included in this report, fairly present in all material respects the financial
condi on, results of opera ons and cash flows of the registrant as of, and for, the periods presented in this report;
4. The registrant's other cer fying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange
Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial repor ng (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant
and have:
a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that
material informa on rela ng to the registrant, including its consolidated subsidiaries, is made known to us by others within those en es, par cularly during
the period in which this report is being prepared;
b) designed such internal control over financial repor ng, or caused such internal control over financial repor ng to be designed under our supervision, to
provide reasonable assurance regarding the reliability of financial repor ng and the prepara on of financial statements for external purposes in accordance
with generally accepted accoun ng principles;
c) evaluated the effec veness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effec veness of
the disclosure controls and procedures, as of the end of the period covered by this report based on such evalua on; and
d) disclosed in this report any change in the registrant's internal control over financial repor ng that occurred during the registrant's most recent fiscal
quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the
registrant's internal control over financial repor ng; and
5. The registrant's other cer fying officer and I have disclosed, based on our most recent evalua on of internal control over financial repor ng, to the
registrant's auditors and the audit commi ee of the registrant's board of directors (or persons performing the equivalent func ons):
a) all significant deficiencies and material weaknesses in the design or opera on of internal control over financial repor ng which are reasonably likely to
adversely affect the registrant's ability to record, process, summarize and report financial informa on; and
b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over
financial repor ng.
Date: February 20, 2024
/s/ W. Bryan Buckler
W. Bryan Buckler
Chief Financial Officer
Exhibit 31.02
CERTIFICATIONS
I, Sean Trauschke, cer fy that:
1. I have reviewed this annual report on Form 10-K of Oklahoma Gas and Electric Company;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the
statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial informa on included in this report, fairly present in all material respects the financial
condi on, results of opera ons and cash flows of the registrant as of, and for, the periods presented in this report;
4. The registrant's other cer fying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange
Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial repor ng (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant
and have:
a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that
material informa on rela ng to the registrant, including its consolidated subsidiaries, is made known to us by others within those en es, par cularly during
the period in which this report is being prepared;
b) designed such internal control over financial repor ng, or caused such internal control over financial repor ng to be designed under our supervision, to
provide reasonable assurance regarding the reliability of financial repor ng and the prepara on of financial statements for external purposes in accordance
with generally accepted accoun ng principles;
c) evaluated the effec veness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effec veness of
the disclosure controls and procedures, as of the end of the period covered by this report based on such evalua on; and
d) disclosed in this report any change in the registrant's internal control over financial repor ng that occurred during the registrant's most recent fiscal
quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the
registrant's internal control over financial repor ng; and
5. The registrant's other cer fying officer and I have disclosed, based on our most recent evalua on of internal control over financial repor ng, to the
registrant's auditors and the audit commi ee of the registrant's board of directors (or persons performing the equivalent func ons):
a) all significant deficiencies and material weaknesses in the design or opera on of internal control over financial repor ng which are reasonably likely to
adversely affect the registrant's ability to record, process, summarize and report financial informa on; and
b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over
financial repor ng.
Date: February 20, 2024
/s/ Sean Trauschke
Sean Trauschke
Chairman of the Board, President and Chief Execu ve
Officer
CERTIFICATIONS
I, W. Bryan Buckler, cer fy that:
1. I have reviewed this annual report on Form 10-K of Oklahoma Gas and Electric Company;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the
statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial informa on included in this report, fairly present in all material respects the financial
condi on, results of opera ons and cash flows of the registrant as of, and for, the periods presented in this report;
4. The registrant's other cer fying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange
Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial repor ng (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant
and have:
a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that
material informa on rela ng to the registrant, including its consolidated subsidiaries, is made known to us by others within those en es, par cularly during
the period in which this report is being prepared;
b) designed such internal control over financial repor ng, or caused such internal control over financial repor ng to be designed under our supervision, to
provide reasonable assurance regarding the reliability of financial repor ng and the prepara on of financial statements for external purposes in accordance
with generally accepted accoun ng principles;
c) evaluated the effec veness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effec veness of
the disclosure controls and procedures, as of the end of the period covered by this report based on such evalua on; and
d) disclosed in this report any change in the registrant's internal control over financial repor ng that occurred during the registrant's most recent fiscal
quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the
registrant's internal control over financial repor ng; and
5. The registrant's other cer fying officer and I have disclosed, based on our most recent evalua on of internal control over financial repor ng, to the
registrant's auditors and the audit commi ee of the registrant's board of directors (or persons performing the equivalent func ons):
a) all significant deficiencies and material weaknesses in the design or opera on of internal control over financial repor ng which are reasonably likely to
adversely affect the registrant's ability to record, process, summarize and report financial informa on; and
b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over
financial repor ng.
Date: February 20, 2024
/s/ W. Bryan Buckler
W. Bryan Buckler
Chief Financial Officer
Cer fica on Pursuant to 18 U.S.C. Sec on 1350
As Adopted Pursuant to Sec on 906 of the Sarbanes-Oxley Act of 2002
Exhibit 32.01
In connec on with the Annual Report of OGE Energy Corp. ("OGE Energy") on Form 10-K for the year ended December 31, 2023, as filed with the
Securi es and Exchange Commission (the "Report"), each of the undersigned does hereby cer fy, pursuant to 18 U.S.C. Sec on 1350, as adopted pursuant to
Sec on 906 of the Sarbanes-Oxley Act of 2002, that:
1) The Report fully complies with the requirements of Sec on 13(a) or 15(d) of the Securi es Exchange Act of 1934; and
2) The informa on contained in the Report fairly presents, in all material respects, the financial condi on and results of opera ons of OGE Energy.
February 20, 2024
/s/ Sean Trauschke
Sean Trauschke
Chairman of the Board, President and Chief
Execu ve Officer
/s/ W. Bryan Buckler
W. Bryan Buckler
Chief Financial Officer
Cer fica on Pursuant to 18 U.S.C. Sec on 1350
As Adopted Pursuant to Sec on 906 of the Sarbanes-Oxley Act of 2002
Exhibit 32.02
In connec on with the Annual Report of Oklahoma Gas and Electric Company ("OG&E") on Form 10-K for the year ended December 31, 2023, as filed
with the Securi es and Exchange Commission (the "Report"), each of the undersigned does hereby cer fy, pursuant to 18 U.S.C. Sec on 1350, as adopted
pursuant to Sec on 906 of the Sarbanes-Oxley Act of 2002, that:
1) The Report fully complies with the requirements of Sec on 13(a) or 15(d) of the Securi es Exchange Act of 1934; and
2) The informa on contained in the Report fairly presents, in all material respects, the financial condi on and results of opera ons of OG&E.
February 20, 2024
/s/ Sean Trauschke
Sean Trauschke
Chairman of the Board, President and Chief
Execu ve Officer
/s/ W. Bryan Buckler
W. Bryan Buckler
Chief Financial Officer
OGE ENERGY CORP.
INCENTIVE COMPENSATION CLAWBACK POLICY
Exhibit 97.01
This Incen ve Compensa on Clawback Policy has been adopted by the Compensa on Commi ee of the Board of Directors of OGE Energy Corp., effec ve as
of October 2, 2023.
1.
Purpose. The purpose of this Policy is to describe the circumstances in which Execu ve Officers will be required to repay or return Erroneously
Awarded Compensa on to members of the Company Group. This Policy is intended to comply with, and shall be interpreted to be consistent
with, Sec on 303A.14 of the Listed Company Manual of the NYSE that was adopted to implement Rule 10D-1 under the Securi es Exchange Act
of 1934, as amended. Capitalized terms not otherwise defined have the meaning set forth in Sec on 3. Each Execu ve Officer shall be required
to sign and return to the Company the Acknowledgement Form a ached hereto as Exhibit A pursuant to which such Execu ve Officer will agree
to be bound by the terms and comply with this Policy.
2.
Repayment of Erroneously Awarded Compensa on.
a.
b.
In the event of an Accoun ng Restatement, the Commi ee shall recover reasonably promptly the amount of any Erroneously Awarded
Compensa on, determined in accordance with this Policy and applicable laws and regula ons.
The Commi ee shall have broad discre on to determine the appropriate means of recovery of Erroneously Awarded Compensa on
based on all applicable facts and circumstances and taking into account the me value of money and the cost to shareholders of
delaying recovery. Such means and methods of recovery may include, without limita on, (i) seeking reimbursement of all or part of any
cash or equity-based award, (ii) cancelling prior cash or equity-based awards, whether vested or unvested or paid or unpaid, (iii)
cancelling or offse ng against any planned future cash or equity-based awards, (iv) forfeiture of deferred compensa on, subject to
compliance with Sec on 409A of the Internal Revenue Code and the regula ons promulgated thereunder, (v) entering into a repayment
plan and (vi) any other method authorized by applicable law or contract. For the avoidance of doubt, except as set forth in Sec on2 (c)
below, in no event may the Company Group accept an amount that is less than the amount of Erroneously Awarded Compensa on in
sa sfac on of an Execu ve Officer’s obliga ons hereunder.
c.
Notwithstanding anything herein to the contrary, the Company shall not be required to take the ac ons contemplated by Sec on 2(a) or
Sec on 2(b) above if one of the following condi ons is met and the Commi ee determines that recovery would be:
i.
ii.
iii.
The direct expenses paid to a third party to assist in enforcing the Policy against an Execu ve Officer would exceed the amount to
be recovered, a er the Company has made a reasonable a empt to recover the applicable Erroneously Awarded Compensa on,
documented such a empts and provided such documenta on to NYSE;
Recovery would violate home country law where that law was adopted prior to November 28, 2022, provided that, before
determining that it would be imprac cable to recover any amount of Erroneously Awarded Compensa on based on viola on of
home country law, the Company has obtained an opinion of home country counsel, acceptable to NYSE, that recovery would
result in such a viola on and a copy of the opinion is provided to NYSE; or
Recovery would likely cause an otherwise tax-qualified re rement plan, under which benefits are broadly available to employees
of the Company Group, to fail to meet the requirements of 26 U.S.C. 401(a)(13) or 26 U.S.C. 411(a) and regula ons thereunder.
For purposes of clarity, this Clawback Excep on only applies to tax-qualified re rement plans and does not apply to other plans,
including long term disability, life insurance, and supplemental execu ve re rement plans, or any other compensa on that is
based on Incen ve-Based Compensa on in such plans, such as earnings accrued on no onal amounts of Incen ve-Based
Compensa on contributed to such plans.
3.
Defini ons. For purposes of this Policy, the following capitalized terms shall have the meanings set forth below.
a.
b.
c.
d.
e.
f.
g.
h.
i.
j.
k.
“Accoun ng Restatement” shall mean an accoun ng restatement (i) due to the material noncompliance of the Company with any
financial repor ng requirement under the securi es laws, including any required accoun ng restatement to correct an error in
previously issued financial restatements that is material to the previously issued financial statements (a “Big R” restatement), or (ii) that
corrects an error that is not material to previously issued financial statements, but would result in a material misstatement if the error
were not corrected in the current period or le uncorrected in the current period (a “li le r” restatement).
“Board” shall mean the Board of Directors of the Company.
“Clawback Eligible Incen ve Compensa on” shall mean, in connec on with an Accoun ng Restatement and with respect to each
individual who served as an Execu ve Officer at any me during the applicable performance period for any Incen ve-based
Compensa on (whether or not such Execu ve Officer is serving at the me the Erroneously Awarded Compensa on is required to be
repaid to the Company Group),all Incen ve-based Compensa on Received by such Execu ve Officer (i) on or a er the Effec ve Date, (ii)
a er beginning service as an Execu ve Officer, (iii) while the Company has a class of securi es listed on a na onal securi es exchange or
a na onal securi es associa on, and (iv) during the applicable Clawback Period.
“Clawback Period” shall mean, with respect to any Accoun ng Restatement, the three completed fiscal years of the Company
immediately preceding the Restatement Date and any transi on period (that results from a change in the Company’s fiscal year) of less
than nine months within or immediately following those three completed fiscal years.
“Commi ee” shall mean the Compensa on Commi ee of the Board.
“Company” shall mean OGE Energy Corp., an Oklahoma corpora on.
“Company Group” shall mean the Company, together with each of its direct and indirect subsidiaries.
“Effec ve Date” shall mean October 2, 2023.
“Erroneously Awarded Compensa on” shall mean, with respect to each Execu ve Officer in connec on with an Accoun ng
Restatement, the amount of Clawback Eligible Incen ve Compensa on that exceeds the amount of Incen ve-based Compensa on that
otherwise would have been Received had it been determined based on the restated amounts, computed without regard to any taxes
paid. For Incen ve-based Compensa on based on (or derived from) stock price or total shareholder return where the amount of
Erroneously Awarded Compensa on is not subject to mathema cal recalcula on directly from the informa on in the applicable
Accoun ng Restatement, the amount shall be determined by the Commi ee based on a reasonable es mate of the effect of the
Accoun ng Restatement on the stock price or total shareholder return upon which the Incen ve-based Compensa on was Received (in
which case, the Company shall maintain documenta on of such determina on of that reasonable es mate and provide such
documenta on to the NYSE).
“Execu ve Officer” shall mean each individual who is or was designated by the Board as an “officer” of the Company for purposes of
Sec on 16 under the Securi es Exchange Act of 1934. Iden fica on of an execu ve officer for purposes of this Policy would include at a
minimum execu ve officers iden fied in the Form 10-K pursuant to item 401 (b) of Regula on S-K.
“Financial Repor ng Measures” shall mean measures that are determined and presented in accordance with the accoun ng principles
used in preparing the Company’s financial statements, and all other measures that are derived wholly or in part from such measures.
Stock price and total shareholder return (and any measures that are derived wholly or in part from stock price or total shareholder
return) shall for purposes of this Policy be considered Financial
Repor ng Measures. For the avoidance of doubt, a Financial Repor ng Measure need not be presented in the Company’s financial
statements or included in a filing with the SEC.
l.
“Incen ve-based Compensa on” shall mean any compensa on that is granted, earned or vested based wholly or in part upon the
a ainment of a Financial Repor ng Measure. For purposes of clarity, Incen ve-Based Compensa on includes compensa on that is in
any plan, other than tax-qualified re rement plans, including long term disability, life insurance, and supplemental execu ve re rement
plans, and any other compensa on that is based on such Incen ve-Based Compensa on, such as earnings accrued on no onal amounts
of Incen ve-Based Compensa on contributed to such plans.
m.
“NYSE” shall mean the New York Stock Exchange.
n.
o.
p.
“Policy” shall mean this Policy for the Recovery of Erroneously Awarded Compensa on, as the same may be amended and/or restated
from me to me.
“Received” shall, with respect to any Incen ve-based Compensa on, mean actual or deemed receipt,and Incen ve-based
Compensa on shall be deemed received in the Company’s fiscal period during which the Financial Repor ng Measure specified in the
Incen ve-based Compensa on award is a ained, even if payment or grant of the Incen ve-based Compensa on occurs a er the end of
that period.
“Restatement Date” shall mean the earlier to occur of (i) the date the Board, a commi ee of the Board or the officers of the Company
authorized to take such ac on if Board ac on is not required, concludes, or reasonably should have concluded, that the Company is
required to prepare an Accoun ng Restatement, or (ii) the date a court, regulator or other legally authorized body directs the Company
to prepare an Accoun ng Restatement.
q.
“SEC” shall mean the U.S. Securi es and Exchange Commission.
Repor ng and Disclosure. The Company shall file all disclosures with respect to this Policy in accordance with the requirements of the federal
securi es laws, including the disclosure required by the applicable SEC filings.
Indemnifica on Prohibi on. No member of the Company Group shall be permi ed to indemnify any Execu ve Officer against (i) the loss of any
Erroneously Awarded Compensa on that is repaid, returned or recovered pursuant to the terms of this Policy, or (ii) any claims rela ng to the
Company Group’s enforcement of its rights under this Policy.Further, no member of the Company Group shall pay or reimburse the cost of
insurance against recovery of any Erroneously Awarded Compensa on, or enter into any agreement that exempts any Incen ve-based
Compensa on from the applica on of this Policy or that waives the Company Group’s right to recovery of any Erroneously Awarded
Compensa on and this Policy shall supersede any such agreement(whether entered into before, on or a er the Effec ve Date).
Administra on and Interpreta on. This Policy shall be administered by the Commi ee. The Commi ee is authorized to interpret and construe
this Policy and to make all determina ons necessary, appropriate, or advisable for the administra on of this Policy. Any determina ons made
by the Commi ee shall be final and binding on all affected individuals.
Effec ve Date. This Policy shall be effec ve as of the Effec ve Date.
Amendment; Termina on. The Commi ee may amend this Policy from me to me in its discre on and shall amend this Policy as it deems
necessary, including as and when it determines that it is legally required by any federal securi es laws, SEC rule or the rules of any na onal
securi es exchange or na onal securi es associa on on which the Company’s securi es are listed. The Commi ee may terminate this Policy at
any me. Notwithstanding anything in this Sec on 8 to the contrary,no amendment or termina on of this Policy shall be effec ve if such
amendment or termina on would (a er taking into account any ac ons taken by the Company contemporaneously with such amendment or
termina on) cause the Company to violate any federal securi es laws, SEC rule or the rules of any na onal securi es exchange or na onal
securi es associa on on which the Company’s securi es are listed.
4.
5.
6.
7.
8.
9.
Other Recoupment Rights; No Addi onal Payments. The Commi ee intends that this Policy will be applied to the fullest extent of the law. The
Commi ee may require that any employment agreement, equity award agreement, or any other agreement entered into on or a er the
Effec ve Date shall, as a condi on to the grant of any benefit thereunder, require an Execu ve Officer to agree to abide by the terms of this
Policy. Any right of recoupment under this Policy is in addi on to, and not in lieu of, any other remedies or rights of recoupment that may be
available to the Company Group under applicable law, regula on or rule or pursuant to the terms of any similar policy in any employment
agreement, equity award agreement, or similar agreement and any other legal remedies available to the Company Group; provided that there
shall be no duplica on of recovery under this Policy and 15 U.S.C. Sec on 7243 (Sec on 304 of The Sarbanes-Oxley of 2002).
10.
Successors. This Policy shall be binding and enforceable against all Execu ve Officers and their beneficiaries, heirs, executors, administrators or
other legal representa ves.
*
*
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Exhibit A
OGE ENERGY CORP.
INCENTIVE COMPENSATION CLAWBACK POLICY
ACKNOWLEDGEMENT FORM
By signing below, the undersigned acknowledges and confirms that the undersigned has received and reviewed a copy of the OGE Energy Corp. Incen ve
Compensa on Clawback Policy (the “Policy”). Capitalized terms used but not otherwise defined in this Acknowledgement Form (this “Acknowledgement
Form”) shall have the meanings ascribed to such terms in the Policy.
By signing this Acknowledgement Form, the undersigned acknowledges and agrees that the undersigned is and will con nue to be subject to the Policy and
that the Policy will apply both during and a er the undersigned’s employment with the Company Group. Further, by signing below, the undersigned agrees to
abide by the terms of the Policy, including, without limita on, by returning any Erroneously Awarded Compensa on (as defined in the Policy) to the Company
Group to the extent required by, and in a manner permi ed by, the Policy.
Signature
Print Name
Date