Good day ladies and gentlemen and welcome to the Q4, 2013 OGE Energy Earnings Conference Call. My name is Mark and I'll be your operator for today. At this time all participants are in listen-only mode. Later we will conduct a question-and-answer session. [Operator Instructions] As a reminder, this conference is being recorded for replay purposes. I would now like to turn the conference over to Todd Tidwell. Please proceed sir.

Thank you, Mark and good morning everyone and welcome to OGE Energy Corp’s fourth quarter 2013 earnings call. I’m Todd Tidwell, Director of Investor Relations and with me today I have Pete Delaney, Chairman, President and CEO of OGE Energy Corp.; and Sean Trauschke, President of OG&E and CFO of OGE Energy Corp. In terms of the call today, we will first hear from Pete, followed by an explanation from Sean of fourth quarter results and year-to-date results 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 oge.com. In addition, the conference call and accompanying slides will be archived following the call on that same website. Before we begin the presentation, I would like to direct your attention to the Safe Harbor statement regarding forward-looking statements. This is an SEC requirement for financial statements and simply states that we cannot guarantee forward-looking financial results, but this is our best estimate to date. I would also like to remind you that the presentation of our results reflect the 2-for-1 stock split which was effected July 1, 2013. In addition because Enable Midstream is in the process of an Initial Public Offering, we will not be discussing or answering any questions regarding the guidance for Enable or the S-1 filing. Once the IPO is complete, Enable will be able to provide you additional information. I will now turn the call over to Pete Delaney for his opening comments. Pete?

Thank you, Todd. Good morning everyone and thank you for joining us this morning. This morning we reported full year 2013 earnings of a $1.94 per share, compared to $1.79 per share in 2012 and are pleased to report that both of our businesses reported higher earnings for the year, as well as in the fourth quarter, reporting earnings per share for the quarter of $0.29 compared to $0.19 in 2012. Our primary driver, as in past periods, for increased consolidated earnings was due to our interest in Enable partnership and transmission earnings at the utility. Our 2014 consolidated earnings guidance is a $1.94 to $2.06 per average share, in line with our long-term growth rate of 5% to 7%. From 2010 to the midpoint of our 2014 guidance, we will have achieved just over 7% annual growth rate, which is at the top of our long-term growth targets. Sean will discuss the guidance for each of our businesses later in the call. Earnings at the utility continue to be driven by our FERC jurisdictional transmission projects and secondly by customer growth. As expected, operation and maintenance costs in the last quarter were higher as we completed generating plant maintenance deferred earlier in the year. However, for the full year O&M expenses were 2% lower, due primarily to attrition associated with retirements. As we have said for some time, the Company continues to focus on productivity and operational efficiencies in order to mitigate the impact of environmental compliance costs on the customer’s bill. As you know we are concerned about the substantial rate increase to customers due to Regional Haze compliance. We originally planned to provide details on this call about our compliance plan but we do not anticipate that a stay of the federal implementation plan would be in…

Thank you Pete and good morning. For the fourth quarter we reported net income of $58 million or $0.29 per share as compared to net income of $39 million or $0.19 per share in 2012. The contribution by business unit on a comparative basis is listed on the slide. And for the full-year 2013, we reported net income of $388 million $1.94 per share, as compared to net income of $355 million or $1.79 per share in 2012. I would like to point out that the loss of the holding company is primarily due to the costs associated with the formation of the Enable Midstream Partnership. At OG&E, net income for the quarter was $29 million or $0.15 per share, as compared to net income of $28 million or $0.14 per share in 2012. For the quarter gross margin came in stronger as we saw an increase of $18 million or 7%, primarily due to transmission revenues and positive weather. Heating degree days were 25% above last year and 13% above normal. Now looking at some of the other key drivers, O&M increased $8 million primarily due to the timing of planned power plant maintenance for the quarter as compared to last year. Interest expense increased $2 million primarily due to the additional long-term debt issued in May of 2013. And finally, income tax expense increased $4 million, due to our higher tax rate and a higher pre-tax net income. Our tax rate was 28% in the fourth quarter, compared to 22% in 2012. Now turning to the full year at OG&E, net income for the year was $293 million or $1.47 per share, as compared to net income of $280 million or $1.41 per share in 2012. Gross margin for 2013 came in stronger as we saw an increase…

[Operator Instructions] Your first question comes from Matt Tucker from KeyBanc Capital Markets. Please proceed.

First question, does your Enable guidance reflect the forecast that were provided in the S-1 yesterday or something different?

It does represent what was submitted in the S-1 yesterday. And keep in mind that forecast in the S-1 that went out yesterday is for -- basically from March 31 of this -- it’s first quarter to first quarter. It’s not a full calendar’14. So there are some adjustments there, but it does reflect an updated S-1 filing.

The amortization of the basis difference, that you recorded in 2013 if we annualize that, is that like a good annual run rate going forward?

Yes, it is and so I think we’ve said on our last call that’s roughly $2.5 million a month or something like that.

And does that get re-measured when the IPO occurs or was that kind of locked in when the MLP was formed?

No, that’s kind of locked in.

And then the $10.4 million fair value adjustment, does that recur at all?

Yes.

That does. Is it the same level this year?

Matt, just let me make sure we say this correctly. So both of those items combined are just shy of $2.5 million a month, okay. And those go on for 30 years. And those will be recurring.

And what tax rate are you assuming on equity earnings for ’14?

38%.

38%. And then, of the state deferred tax benefit that you recorded in 2013, how much of that hit the fourth quarter?

Very little. Most of it was in the third quarter. I think we indicated there was $17 million adjustment in the third quarter and I think yearend was $21 million and that’s a pre-tax number, I mean -- yes, after tax number.

Your next question comes from the line of Brian Russo from Ladenburg Thalmann. Please proceed.

Just on the CapEx at the utility in the slide presentation. Just on the environment CapEx, I realize you’ll update that after the Regional Haze conclusion, but don’t you also have MACT-related spending?

Yes.

And how much is that and why isn’t it in the CapEx table?

Well, it is in the CapEx table there. If you look at our CapEx table there, down under other projects, we have activated carbon injection, do you see that?

Yes.

Yes, okay, we do have some capital in there for activated carbon injection. We -- we're -- obviously with our Regional Haze process, the opportunity we have on the utility MATS for a particular matter is we’re certainly looking at DSI, but that also is impacted by what we ultimately decide to do relative to our Regional Haze strategy. And so that’s why it’s not in there. Is that fair enough?

Yes. And just in terms of the House Bill that allows for recovery of environmental compliance costs, would you seek a tracker for recovery rather than file a general rate case and then also could you get cash recovery on that tracker or was it just AEFUDC.

Brian, it’s pretty wide open, the statutes I recall don’t provide for cash earnings. In other words it allows the Commission to grant CIP and rate base. It does not mandate that. So it’s actually pretty open in terms of how that recovery would go. We are -- of course we all know that either we’re concerned about the impact on the customers and that the greater the cash earnings on our construction, the lower ultimate cost to customers. So we will strongly make that argument. We would think that was in the best interest of our customers, but it can take a lot of different forms, whether it’s a tracker or we do a separate rate case filing. So it’s pretty far -- it’s open and as you said, when we find out what the Supreme Court does in the United States, we will announce our plan and then provide greater details on our filing strategy.

Okay, so to clarify, you can, you’re allowed to do like a single issue filing for a tracker. It doesn’t have to be in the context of the general rate case?

That’s correct.

And in that context, the filing for a tracker, are the return parameters consistent with the last general rate case or can the OCC adjust the returns?

They could do either.

And then just, the Bradley processing plant at Enable, can you just kind of talk about what be the ramp up period on the utilization, or generally speaking, how long does it take from when the plant becomes operational and how long does it take to ramp up to full capacity.

Brian, this is Sean. Just so we can be very careful here, I think our expectation is it’s going to ramp up just like the previous plants have done, like McClure has done, like the others have done. We’ve typically said it’s roughly an 18 month process from beginning to end to get it started; those it's typically the most efficient unit so they run first.

Okay so maybe, could you talk a little bit more about the McClure plant, when was construction completed and when did it become at the optimal utilization?

So it began in kind of the end of this year, beginning of 2014. So kind of December ‘13 - January ’14 and we’ve talked before as far as the processing capacity since we’ve been adding new units, those obviously are the most efficient. So those typically are full first and maybe some of our less efficient units aren’t as full.

And then lastly any commentary on the common dividend policy?

Well I think -- as I mentioned in my comments, we increased the growth rate again to 8% in December. We, as you know the environmental compliance plan is a pretty big item for us -- we would -- in terms of impacting our cash flow going forward and we are looking to get resolution, to provide some clarity. As you do know, as I've talked about, our earnings growth rate since ’10 has been about 7%. We just increased it to 8%. We do know our payout ratio is below 50% and we do have obviously financial flexibility and we’ll be taking a hard look at that after we get clarity on our environmental plan. As well as, we’d like to get this IPO done, we will get the IPO done and that’s on track and so all that’s pretty important in terms of its financial impact on us and what the forecast looks like longer term and we think it’s prudent to get that behind us and then see what we want to do from a dividend perspective.

Okay, so it seems that if all goes according to plan you’ll probably be in a position to discuss the dividend and the environmental CapEx in more detail on say your second quarter conference call?

We're particularly going to talk about our environmental compliance plan. As you know we typically use our practices through December to review those with the board and whether we would depart from our practice I can’t say at this point in time, but I think we’re going to focus really on discussing what our plans are on the compliance and we’ll hopefully -- obviously have the IPO behind us and we can talk about that but it may be premature at the same call to talk about dividend policy. So that’s sort of the time frame I guess. If you want to think about it we may stick with December and that’s obviously a board discussion, a very important one and we’ll have those discussions with the board throughout the year.

Your next question comes from the line of Andy Bischof from Morningstar. Please proceed.

I was hoping you could provide a little more clarity on the 1.2% sales growth in your 2014 guidance. How much of that is attributed to new customers versus base level growth?

Andy could you say that, did I understand….

Sure -- your 1.2% sales growth guidance, how much of that is attributed to new customers?

Most of it is.

Okay, so and then in terms of the material or the hours affecting on them, can you provide a little more clarity on that.

Yes, so kind of two things are going on here and we made two references to that in our comments. We had had said during the course of 2013 we were under running kind of our operating expense targets relative to our initial guidance, but we’ve said all along that we had some planned outages for the fourth quarter and we've proceeded with those and completed those and so that’s what was the driver for quarter-over-quarter variances. As I look forward to 2014, we have more planned work at our plants than we did in 2013 in total and so that’s what’s going on and this is just, as you go through your maintenance cycle, we have more this year than we did last year. Okay?

[Operator Instructions] Your next question comes from the line of Anthony Crowdell from Jefferies. Please proceed.

Just wanted to look at the guidance that you have for utility for 2014. What ROE are you assuming if I just take the midpoint there? What ROE are you assuming and I guess on what rate base?

Yes, so we’re assuming in Oklahoma -- we’re earning close to our live return there. Arkansas is obviously below the 9.95 we’re allowed. It’s probably closer to 7 and obviously on the FERC Jurisdictional rate base we’re earning -- it would be 11.1. As far as the rate base goes, Oklahoma’s by yearend will be roughly $4.1 billion. Arkansas, Antony is $370 million and I expect FERC will be close to about $700 million.

And Oklahoma, the allowed returns are 10 and an eight or 10.2; something like that?

Yes.

10.2, great.

There are no more questions in the queue.

Thank you, operator. I’d like once again to recognize our members for their focus on safety and for all their hard work that led to the accomplishments that I mentioned earlier in the call. I’d like to thank you for your continued interest in the company. Please have a safe day. We’re adjourned. Thank you.