Good morning. At this time, I would like to welcome everyone to the OGE Energy Corporation earnings call. (Operator Instructions) Mr. Tidwell, you may begin your conference.

Good morning, everyone, and welcome to OGE Energy Corporation's first quarter 2009 earnings call. I am Todd Tidwell, Director of Investor Relations. With me today I have Pete Delaney, Chairman, President, and CEO of OGE Energy Corp.; Scott Forbes, Controller for OGE Energy Corp.; Dan Harris, Senior Vice President and CEO[sic] of OGE Energy Corp. and President of Enogex; and several other members of the management team to address any questions that you may have. In addition, I would also like to welcome our new CFO of OGE Energy Corp., Sean Trauschke. In terms of the call today, we will first hear from Pete Delaney, followed by an explanation of first quarter results from Scott Forbes, and finally, as always, we will answer your questions. I would like to remind you that this conference is being webcast, and you may follow along on our website at www.oge.com. In addition, the conference call and accompanying slides, including required nonGAAP reconciliation information will be archived following the call on that same website. Before we begin the presentation, I would like to direct your attention to the safe harbor statement regarding forwardlooking statements. This is an SEC requirement for financial statements and simply states that we cannot guarantee forwardlooking financial results, but this is our best estimate to date. I will now turn the call over to Pete Delaney for his opening comments, Pete.

Good morning, everyone, and welcome to our first quarter earnings call. As is our custom, Scott Forbes will provide a more detailed overview of our financial results; and I will discuss the principal factors that frame management's outlook for 2009 and beyond. First, I would like to express our excitement over the appointment of Sean Trauschke as our chief financial officer. He has been with us for a sum total of about seven days. You may not hear from him today, but you will have plenty of opportunity to hear from him in the future. We are pleased with our financial performance during the first quarter. Our results are on plan, despite milder weather at the utility and an unplanned mark to market loss associated with natural gas in storage at Enogex. These two items reduced our net operating income by around $12 million. The primary reasons we remained on plan despite those items is our favorable projected market conditions at Enogex and cost management efforts at the utility that held O&M flat after adjusting for last year's onetime charge. We've been able to keep O&M flat this year despite the additional operating costs associated with the purchase of the Redbud plant last fall. While the Oklahoma economy continues to weaken, we see no reason to change our outlook from late last year when we forecasted a reduction of kilowatt, in our kilowatt-hour sales growth to 1% in 2009. At the utility, customer count grew at 9/10 of 1% in the first quarter, which accounted for approximately $2 million increase in gross margin. This is in line with our expectations. Oklahoma's outlook remains more resilient than other regions, and we expect continued customer growth in 2009, although as I mentioned at a lower rate than 2008. The metro area unemployment…

For the first quarter, we reported net income of $16.8 million or $0.18 per average diluted share as compared to net income of $13 million or $0.14 per average diluted share in the first quarter of 2008. On slide 4, you can see the contribution by business unit on a comparative basis. At OG&E, net income for the first quarter of 2009 was $1.3 million or $0.01 per share as compared to a net loss of $11.3 million or $0.12 per share in the first quarter of 2008. Some of the primary drivers, our gross margin on revenues increased $19.9 million or over 13%. I will go over those details in the next slide. Operation and maintenance expense decreased $9 million, primarily due to a decrease of $2.6 million from outside services associated with a major power plant overhaul in the first quarter of 2008 and a onetime item which increased expenses $9.5 million in the first quarter of 2008. The decreases were partially offset by higher employee costs, primarily salaries and benefits of $2 million. Depreciation and amortization expense increased $9.2 million, primarily due to the Redbud facility being placed in service and the amortization of the storm regulatory asset as well as additional assets being placed in service. Other income had a positive variance of $4 million, in part due to an increase in allowance for equity funds used during construction and gains from the guarantee flat bill program. Interest expense increased $4.8 million due to higher levels of longterm debt that was issued during 2008, partially offset by the cost of a treasury lock in the first quarter of 2008, as well as lower shortterm interest and borrowings. Gross margin was $165.7 million in the first quarter of 2009 as compared to $145.8 million in the same…

Thank you. Now we'll take your questions.

(Operator Instructions) Our first question comes from Brian Russo, go ahead please.

Good morning. Could you first just go over what could be considered onetime gains or losses in the first quarter? You mentioned something earlier regarding a hedging benefit. And then also something negative.

We did incur a lower of cost or market writedown at Enogex just based on the price drop in natural gas, and this was for the gas that was in storage and that was $5.8 million. In the first quarter of 2008, we had a onetime charge of $9.5 million for costs that had been overcapitalized, payroll costs that were overcapitalized. And we had some hedging gains in the first quarter of 2009 related to our operational storage hedges at Enogex.

Are those realized or unrealized?

Those were realized.

How much was that?

After tax, it was $3.3 million.

The $5.8 million that you mentioned earlier, is that a pretax number?

That is pretax.

Also, can you just talk about the trends that you're seeing in the Frac spread since the beginning of the year?

Spreads have improved a little bit since the beginning of the year. They're up about $0.50. So we're seeing kind of a steady trend upward, but that's primarily not due to changes in liquids prices, but the depression of the natural gas price.

And where is the current market Frac?

It's about $3.82.

And what about volume growth? I think embedded in your guidance assumptions is, what, 10% to 12% volume growth? Did you see that in the first quarter?

We have seen that. Actually the quarter over quarter increase is about 16%. I think that, we've said it before, about 10% to 12%, 12% and we still think we're on track for that.

And you're assuming 1% growth, low growth, at the utility?

We're assuming 1% in the kilowatt-hour sales growth, roughly, for 2009.

Also, any benefits from the stimulus package that you can talk about in terms of your renewable build out maybe in terms of treasury grants or ITC, TGC?

We're looking at that both from the transmission side in terms of loan guarantees in the stimulus bill; and also on the wind side, of course, you have the investment tax credit versus production tax credit. We're kind of analyzing all of our alternatives there, and we'll look to participate in the stimulus package to the extent we can.

And then, correct me if I'm wrong, but the OG&E utility guidance, the high end, did it move up to $1.98 from $1.93?

Yes, it did.

Any particular driver of that?

That was updated last time. It has not changed since the 10K filing.

Our next question is from David Frank, go ahead please.

Good morning. Just a couple questions. What was the impact of weather on OG margin versus normal? I think versus last year you said it was roughly 5pointsomething million, but what was it versus normal? $5.9 million.

The weather was below normal, and it was roughly comparable to the change compared to last year. Last year was actually a fairly normal year for the first quarter. So the reduction compared to last year was virtually the same as normal, change in normal. About somewhere between $5.5 million and $6 million

I'm confused. The weather negatively impacted you $5.9 million in the first quarter of this year versus what?

That was compared to last year. It negatively affected us. That was about the same as the change against normal.

Okay, got it.

Our plan is based on normal. So when we talked about impacting our plan that we were referring to is sales relative to normal.

So last year was about a normal year, I got it. Then, do you have any update on the current wind RFP, I forget the name of it.

The wind RFP? We don't have a name for the wind RFP, but we do have, we're in that process, we do have the bids in. They're being evaluated. I believe the month of May there will be some decisions made to get that down to the amount that we need. We do expect to get 300 megawatts out of the process, and then we'll move forward to get those approved by the Oklahoma Corporation Commission sometime this summer, late summer, probably.

So is there a list of winners that's going to come out this month? Or is that an internal short list?

It will probably be later this summer made known publicly.

Later this summer. Do you have a rough time frame?

No, we don't. We don't have a public notification of the short list of the bidders. We are going through the multiple bids by multiple developers now. We are going to cull that down to the short list by the end of the month. Then negotiate with those folks and, depending on the negotiations, then go to the commission. At that point it will become public.

But you guys are participating in this, correct?

We did submit a bid, yes.

No word on whether or not you're going to be on the short list?

No.

And then, Pete, you spoke of investment in opportunities outside of what you've outlined in your current CapEx program. Maybe it was just me, but you sounded as if you might have something specific in mind. Is that the case or was that a misinterpretation on my part?

I think what we've tried to outline in our disclosure and we put a table, somewhat different, we laid out our capital program and we have a category I talked about are known and committed projects, which are those projects, you know, our distribution, transmission projects that we've committed to build for the Southwest Power Pool. It has in there for this year our wind speed transmission line. It has in our OU spirit wind farm and some other transmission, 345 transmission, lines that we are proceeding with. Not included in those numbers are, for example, I mentioned we just in the last two weeks, Southwest Power Pool independent board approved a set of called portfolio 3E of 345 kV transmission build out. Our portion of that plus a line that we are building for a cooperative equates to that 200, roughly, $250 million of investment capital for transmission that I mentioned in my comments. Now the process is that we will sometime in the next 60 days, say 30 to 60 days, get a notice to construct from the Southwest Power Pool. After we get notice to construct, we have, I think, around a 90day period of which to decide that yes, we will undertake those obligations to build. Then we would set about going through the process of getting those lines put up. That $250 million is not in our known and committedto projects because while they're known, we haven't committed to them. Another example would be the Tall Grass transmission, 765 with AEP MidAmerican. Where that has not been approved, that's about another $250 million, our portion. That has not been approved by the Southwest Power Pool. There's a regional cost allocation that has to be resolved. That line is just one of the much larger, longerterm 765 kV build out that may be undertaken here in the Southwest Power Pool. Those are particularly what we have in mind. But also we would be, investments for opportunities at Enogex. Again, we have the $50 million in our known and committedto because those are projects that we've committed to for our customers. As well as capital required, our maintenance capital for our system at Enogex. There are, of course, opportunities that we look at there as well which we would think would be accretive to our value and those are the things that we clearly do have in mind and are looking at.

So the $250 million is incremental to that existing, that 5 you have with your existing CapEx forecast.

That is correct. That's all outlined in our Q.

And then potentially more transmission or more wind could come online.

That's correct.

Should we expect that the $250 million will be funded 50% with equity issued in the market or some portion of that?

We'll look at it, depending on how it's going to come out over time, the different timing of the projects. We're looking at our cash flow. We'll look at all those issues. Over time, our goal is to maintain our strong capital structure at OG&E. But, you know, you manage that over time doesn't mean every time you do financing of a discrete asset it's 50/50, but we have our capitalization targets and manage to those over time.

We have Brian Russo on line, go ahead please.

Thanks for taking my followup question. Just curious, it seems like the capital markets have loosened up a little bit. I'm just wondering what your thoughts are on your previous attempts to harvest the value of Enogex and anything you guys may be looking at in the near and intermediate term on that.

In referring to the partnership with Energy Transfer Partners, I think we have obviously, we have seen improvement in the MLP market, the equity market, debt markets. I am not sure about the bank markets. But we have seen improvement there. From our perspective as management from the Enogex business, we continue to strive to make sure that the value of Enogex is realized in our OGE energy stock. And one of the primary reasons behind that partnership was we felt that partnership with Energy Transfer would really help us realize that value as well as position Enogex in terms of a bigger platform. Our efforts with regard to Enogex remain the same. That would be looking for opportunities to strengthen that platform and opportunities to be able to get that stock or that value realized in our OG Energy stock. Our strategic objectives remain the same, and we'll continue to go down that path and look at opportunities. But meanwhile, as I said, the company is well positioned. It's got good cash flow. We're comfortable with how it's positioned today.

So if I interpret you correctly, it seems like you're comfortable managing the business as part of the OGE enterprise today and you'll look for opportunities in the future?

We're always looking at opportunities, sure. We'll look at opportunities and try to make opportunities happen the best that we can.

We have a question from Jeff Gildersleeve. Go ahead please.

Good morning, it's Chris Shelton. I heard you mention, I think, in your prepared remarks that Enogex had been sort of ahead of your plan for the quarter. I just wanted to get a feel versus the last report how you guys are feeling on that business? It seems like maybe a little more positive than when the K had come out. Just wanted to gauge that.

I will turn it over to Keith, but, yes, we're operating on plan. We have seen some higher commodity spreads and when we gave our guidance was in October of 2008. I think we all feel like we have been operating in this environment so we have got a little bit more clarity than we did in October of 2008. But Keith Mitchell, do you have any comments?

No, Pete, I will just reiterate those comments. That is the actual budget was set back in '08, and we said last time that we were taking certain cost reduction measures and we would expect it to be below budget. But if you looked at what we had been planning for it to be, we are right on plan, slightly above plan because of the cost reduction measures and the market improvements we have seen.

And then I guess in your plan, the Frac spreads that you assumed, was it 219 to 360 and is that right? Does that sound right?

No. In the plan, let me grab it here, it was 238 to 291. We updated that last quarter.

The current spreads are north of that now, right?

Remember that's a realized spread so that takes into account our hedges.

Exactly. But I guess directionally, the current market seems like it's more favorable than it was before.

The other thing that I would point out is that in addition to just the processing margins, we have seen higher than planned cross-haul revenues. The transportation segment has certainly turned out more favorable than what we had in our forecast.

And how is ethane? I know you guys were pretty down on ethane originally. How has that market kind of looked of late?

We have been in recovery mode, and we project to be in recovery mode while, again, as gas prices being down and it's been creating some opportunities for us to recover, I think.

I show no more questions in the queue at this time.

In summary, I'd just like to say that we're very pleased with our first quarter performance. We remain excited about the direction of this company. We're reaffirming our earnings guidance and remain optimistic about our ability to effectively manage the company through this market environment. That said, continued vigilance over the condition of the financial system in the uncertainty in the economy is appropriate, and we need to proceed with our capital and operating plans thoughtfully. We will maintain ample financial flexibility outlined here as it is our belief that such flexibility is required to be successful in this environment. Again, I want to thank you for your interest in the company and participating this morning. You all have a great day.

This does conclude today's conference call. You may now disconnect.