Good morning, ladies and gentlemen, and welcome to the Q2 2021 OGE Energy Corp. Earnings Conference Call. At this time all participants are in a listen-only mode. Later, we will conduct a question-and-answer session and instructions will follow at that time. [Operator Instructions] As a reminder this conference call is being recorded. I would now like to turn the conference over to your host, Mr. Jason Bailey, Director of Investor Relations. Please go ahead.

Thank you, Andrea, and good morning, everyone, and welcome to OGE Energy Corp's Second Quarter 2021 Earnings Call. I'm Jason Bailey, Director of Investor Relations. With me today, I have Sean Trauschke, Chairman, President and CEO of OGE Energy Corp. Bryan Buckler, our CFO, has a cold. His voice doesn't sound great. So Chuck Walworth, our Treasurer and Head of Financial Planning, will cover our second quarter financial results. Bryan will be available for Q&A at the end of our prepared remarks. I'd like to remind you that this conference is being webcast and you may follow along on our website at ogeenergy.com. In addition, the conference call and accompanying slides will be archived following the call on that same website. Before we begin the presentation, I'd like to direct your attention to the safe harbor statement regarding forward-looking statements. This is an SEC requirement for financial statements and simply states that we cannot guarantee forward-looking financial results, but this is our best estimate to date. I'll now turn the call over to Sean for his opening remarks. Sean?

Thank you, Jason. Good morning, everyone. Thank you for joining us on today's call. It's certainly great to be with you again. Earlier this morning, we reported second quarter consolidated earnings of $0.56 per share, which includes utility earnings of $0.42 per share and earnings associated with our investment in Enable of $0.16 per share, and a holding company loss of $0.02 per share. While weather was $0.03 below normal for the quarter, we remain within our previously reported guidance range. I'm proud to say we keep moving forward. I'm so proud of everyone here and we are encouraged by our exceptional utility operations and all of our employees as they focus on energizing life for our customers and our communities. Chuck will provide additional details when he discusses our financial results in just a moment. As we move ahead, I'm pleased to note that in June, OGE received its 19th EEI Emergency Response awards since 1999 for our power restoration efforts during the 2020 New Year's Eve snowstorm. We've been recognized with this highest national distinction for emergency recovery 11x for major storms affecting our system and 8x for assisting others. Additionally, for the third consecutive year, OGE has been recognized by S&P Global as having the lowest rates in the nation, demonstrating the affordability of our service. System-wide, growth in customer load is driving $75 million of increased capital investments. Investments include substation enhancements, projects at Tinker Air Force Base and upgrades of our 69 kV line to support the load of larger and growing customers. Construction on the 5-megawatt solar farm in Branch, Arkansas, and the 5-megawatt expansion of the Choctaw Nation OGE solar farm remain on track for completion by the end of the year. As we seek innovative ways to increase efficiency across the organization,…

Thank you, Sean, and good morning, everyone. Starting on Slide 9. For the second quarter of 2021, we achieved net income of $113 million or $0.56 per share as compared to $86 million or $0.43 per share in 2020. At the utility, OGE's second quarter results were $0.03 higher than 2020 despite mild weather, primarily driven by higher revenues from the recovery of our capital investments and improved load from customer growth, partially offset by higher depreciation on a growing asset base. OGE's core operations performed very well during the second quarter. Our natural gas midstream operation results were $0.16 per share in the second quarter compared to $0.10 in 2020. The increase in net income was primarily a result of higher commodity prices, improved gathering and processing volumes and a decrease in income tax expense, driven by the Oklahoma State corporate tax rate reductions impact on deferred taxes. Turning to our economic update on Slide 10. As Sean mentioned, we are seeing outstanding employment figures in our service territory. Once again, we are also pleased to see customer growth coming in strong at 1.3% year-over-year. Furthermore, our commercial and industrial customer classes are showing real momentum with year-over-year load growth of approximately 12% and 9% in the second quarter more than compensating for the lower residential volumes we are experiencing as employees begin to return to the workplace. Overall, we saw a 5.7% total load increase during the quarter, generally in line with our expectations. For the full-year, we still expect total weather normal load results to be more than 2% above 2020 levels. Let's move now to Slide 11, where I'd like to update you on our 2021 full-year EPS forecast. As discussed during our Q1 call, we began the year with a midpoint EPS target of $1.81…

[Operator Instructions] Your first question comes from the line of Shar Parisa of Guggenheim Partners.

Hi, good morning team. This is actually Constantine here for Shar. Congrats on a good quarter.

Hey good morning Constantine. And I have to tell you that was the best pronunciation of Shar's name. That was outstanding, operator. Tell Shar, Andrew got it just right. It was just perfect.

I certainly will. Can we start off with the IRP filing? And how are you thinking about the incremental kind of IRP CapEx that's – that might be rolling into the current plan? Are there any thoughts on the timing kind of gradual versus step-up? And there's been some roll in, in 2021 and just kind of thinking about the overall trajectory is that kind of setting the new recurring level?

Yes. I think directionally, the answer is yes. You're going to see a step-up and move forward. In my remarks, I mentioned we're going to probably begin layering in 100-megawatts to 150-megawatts primarily with solar initially each year, layering that in kind of growing into the ultimate retirement. We're trying to space out these retirements such that none of them occur in any single year and really focused on managing the impact to customers. But that would be – if you look at 850-megawatts and 100-megawatts to 150-megawatts a year over five or six years, you kind of fill that gap there. But the point I wanted to make there is you should not expect 850-megawatts in any single year, but more of a smoothing and gradual piece that would just be layered in each year.

Yes, that makes sense. And kind of following up on kind of the credit metric thresholds and kind of the post-Enable investment capacity. How are you thinking about the capital allocation there, again, in relation to the CapEx plan, whether it's a little bit more gradual or there's going to be a bit of a more of a step-up as kind of the exit or the credit rating start getting a little bit more loose? And are you thinking about kind of just organic reinvestment or any kind of return of capital dividend policy reworks, et cetera?

Yes. So I'll let Bryan take a swing and get his voice ready. But we look at earnings growth and dividend policy is both part of our total shareholder proposition. The way we're thinking about your reference to the exit of the midstream business and proceeds there, we've said repeatedly, our first preference is to reinvest in our business and grow our company. And so that's first preference. We're committed to growing the dividend as well. But that's probably the primary focus area. Bryan, do you want to add anything to that?

Yes, absolutely. Good morning Constantine, you mentioned the exit from Enable, and that's important because it certainly improves our business mix as a company we'll be a pure play electric utility, that will help our credit metrics have the best, we'll call it excellent business mix. And as you're aware, that's going to allow us to have even more headroom under our credit metrics. So you put that aside and what we focus on that utility is outstanding customer service. And as you see here in 2021, we've increased our capital plan to deliver on the great investments needed to support customer growth. And that's a trend I think you should expect going into the out years as well. And Sean's discussed our capital investment needs coming out of the IRP. So you look at those in combination, and this company has set itself up really well with a strong balance sheet, constructive regulatory regimes and a capital plan that really works for our customers. So it's an exciting time and it really dovetails nicely with our exit from midstream.

So kind of, I guess, the growing into the investment capacity that you would have from the expanded credit metrics is gradual kind of in line with the CapEx plan?

I think that's fair.

Excellent. Thanks. Will jump back on queue. Thanks for taking the question.

Have a great day Constantine.

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

Hey, Sean. Hey, Bryan.

Hi, Brandon.

Andrew, thanks. I think that's a very great pronunciation of my name too.

We're on a roll. Andrew is doing great. With a last name like mine, I notice these things. Well, good morning Brandon.

Good morning, I just had a couple of questions. What's the remaining book value on all the coal plants? And if you accelerate the – do you have plans to accelerate the retirement? And how do you plan to get recovery if you think?

Yes. So good question. So our coal plants have a pretty sizable useful life in regulatory terms. But the way we look at this, we look at – we're looking at all of our assets all the time. But the principal driver of the IRP is really the next five-year action plan. And so it's really focused on these prompt years, and we're always looking at an economic conditions change, but we've made no decisions about future generation. All of those will be, under current plans will be retired well before 2050. But you'll always look at economic conditions and operating performance and things like that. But where we're focused on right now are the next five years as it relates to the three units at Horseshoe Lake and the units at Tinker Air Force Base.

Okay. So how much coal will you have post 2027 after Tinker and Horseshoe are retired?

Yes. We'll still have the three units. We'll still have the three units.

Okay. Great. Thanks.

All right. Thanks, Brandon. Have a great day.

You too.

[Operator Instructions] And at this time, there are no audio questions. I'd like to turn it back over to Mr. Trauschke for any closing remarks.

Thank you, Andrew, and thank you all for your interest in OGE Energy Corp. I appreciate you all being with us today. All of you have a great day, and please take care of yourselves and those around you and I look forward to seeing you all very, very soon. All the best.

Thank you for your participation. This concludes today's call. You may now disconnect.