OGE
Oge Energy CORP
NYSE
8-K: OG&E Reaches Settlement Agreement for Rate Review, Reducing Initial Request by $205.88 Million
Sentiment:
Rate Case Settlement Agreement
13 June 2024 9:28 AM
Oklahoma Gas and Electric Company (OG&E) has reached a settlement agreement with multiple parties, reducing its initial rate increase request by $205.88 million.
Better than expected
The settlement agreement resulted in a significant reduction of the initial rate increase request, from $332.54 million to $126.66 million.
Summary
- OG&E has entered into a settlement agreement regarding its general rate review filed in Oklahoma on December 29, 2023.
- The agreement, reached on June 12, 2024, involves the Oklahoma Corporation Commission (OCC) Staff, the Attorney General's Office of Oklahoma, the Oklahoma Industrial Energy Consumers, and other parties.
- The settlement reduces OG&E's initial rate increase request of $332.54 million to a total base rate increase of $126.66 million.
- This reduction is achieved through various adjustments, including a $51.13 million reduction related to return on equity and a $74.19 million reduction in depreciation expense.
- The agreement also includes a $60 annual increase to OG&E's senior citizen discount program and maintains the residential customer charge at $13.00 per month.
- The settlement is subject to OCC approval, with a hearing scheduled to begin the week of June 17, 2024.
Sentiment
Score: 7
Explanation: The settlement is a positive development as it reduces the proposed rate increase, but there are still some uncertainties and potential future adjustments. The agreement is a compromise, and the sentiment is cautiously optimistic.
Positives
- The settlement significantly reduces the proposed rate increase, benefiting customers.
- The senior citizen discount program will be enhanced with a $60 annual increase.
- The residential customer charge will remain unchanged at $13.00 per month.
- The agreement provides clarity on various expense items and their treatment in rate calculations.
- The settlement includes a mechanism for managing vegetation management expenses, which could lead to more efficient spending.
Negatives
- The settlement still results in a base rate increase of $126.66 million, which will impact customers' bills.
- The 1MW competitive load issue will be litigated separately, potentially leading to further adjustments.
- The settlement includes a 15 year amortization of the Pension Regulatory Asset balance as of March 31, 2024, which could impact future rates.
Risks
- The settlement is subject to approval by the Oklahoma Corporation Commission, and there is a risk that the OCC may not approve the agreement as is.
- The 1MW competitive load issue, which is not part of the settlement, could lead to further rate adjustments.
- Changes in vegetation management expenses could impact the regulatory asset or liability, potentially affecting future rates.
- The settlement includes a 15 year amortization of the Pension Regulatory Asset balance as of March 31, 2024, which could impact future rates.
Future Outlook
The settlement agreement is subject to approval by the Oklahoma Corporation Commission, and the 1MW competitive load issue will be litigated separately, potentially leading to further adjustments. OG&E will file testimony to support the total amount of vegetation management spend in its next general rate case, and it shall propose an amortization period for the net regulatory asset or liability.
Management Comments
- The Stipulating Parties represent to the Commission that this Joint Stipulation represents a fair, just and reasonable settlement of all issues.
- The Stipulating Parties believe the terms and conditions of the Joint Stipulation are in the public interest.
Industry Context
This settlement is part of the regulatory process for utility companies, where rate increases are reviewed and negotiated with various stakeholders. The outcome reflects a balance between the utility's need for revenue and the interests of customers and other parties.
Comparison to Industry Standards
- Rate case settlements are common in the utility industry, with negotiations often leading to reductions in initial requests.
- The 9.50% return on equity is within the range of what is typically authorized for regulated utilities.
- The specific adjustments made to various expense items are unique to this case but reflect common areas of scrutiny in rate reviews.
- The vegetation management expense and tracker is a common mechanism used by utilities to manage these costs.
Stakeholder Impact
- Shareholders will see a reduced rate increase, which may impact their returns.
- Customers will benefit from a lower rate increase than initially proposed.
- The settlement provides clarity on future rates and expenses for all stakeholders.
Next Steps
- The settlement agreement will be reviewed by the Oklahoma Corporation Commission.
- A hearing on the merits of the settlement agreement is scheduled to begin the week of June 17, 2024.
- The 1MW competitive load issue will be litigated separately.
- OG&E will submit an annual report to the Public Utility Division detailing the Company's vegetation management spending and activities.
- OG&E will file testimony to support the total amount of vegetation management spend in its next general rate case, and it shall propose an amortization period for the net regulatory asset or liability.
Key Dates
- December 29, 2023: OG&E filed a general rate review in Oklahoma.
- March 31, 2024: Date used for updating revenue requirements and plant-in-service.
- June 12, 2024: OG&E entered into the settlement agreement.
- June 17, 2024: Hearing on the merits of the settlement agreement is scheduled to begin.
Keywords
rate review, settlement agreement, Oklahoma Gas and Electric, OG&E, Oklahoma Corporation Commission, rate increase, vegetation management, return on equity, depreciation, pension, regulatory asset
OGE
Oge Energy CORP
NYSE
Sector: Utilities
Filings with Classifications
Better than expected
29 April 2025 9:42 PM
Earnings Release
- The company's earnings per share significantly increased from $0.09 to $0.31 compared to the same period last year.
- OG&E's net income nearly tripled, increasing from $25.2 million to $71.0 million year-over-year.
Better than expected
29 April 2025 9:41 PM
Quarterly Report
- Net income increased significantly due to higher operating revenues and lower operation and maintenance expenses.
Better than expected
1 April 2025 4:39 PM
Proxy Statement
- The company's consolidated earnings per share, excluding midstream results, have a compound annual growth rate of 6% over the past 10 years.
- The dividend compound annual growth rate has been 5% over the past 10 years.
- Controllable costs per customer have increased less than 1% per year over the past decade.
Capital raise
18 February 2025 6:03 PM
Annual Results
- OGE Energy expects to issue between $15 million to $25 million of common stock from its Automatic Dividend Reinvestment and Stock Purchase Plan in 2025.
- In 2025, OG&E expects to issue $300 million to $350 million in long-term debt to help fund general operating needs.
Better than expected
18 February 2025 6:03 PM
Earnings Release
- OGE Energy reported higher earnings per share for 2024 compared to 2023.
- OG&E's net income increased significantly in 2024 compared to 2023.
- The company's fourth quarter results were significantly better than the same period in the previous year.
Worse than expected
4 November 2024 5:48 PM
Quarterly Report
- The company's earnings per diluted share decreased from $1.20 in Q3 2023 to $1.09 in Q3 2024.
- OG&E's net income decreased from $246.1 million in Q3 2023 to $225.0 million in Q3 2024.
Worse than expected
4 November 2024 5:46 PM
Quarterly Report
- Net income and earnings per share were lower in Q3 2024 compared to Q3 2023 due to increased expenses.
- Net income and earnings per share were lower for the nine months ended September 30, 2024 compared to the same period in 2023 due to increased expenses.
Capital raise
15 August 2024 11:43 AM
Debt Issuance Announcement
- OG&E has raised $350 million through the issuance of senior notes.
- This is the second tranche of this series of notes, bringing the total raised to $700 million.
Better than expected
6 August 2024 5:42 PM
Quarterly Report
- The company's earnings per share and net income were higher than the same period last year, indicating better than expected results.
- The company expects to be in the top half of its 2024 earnings guidance range, suggesting a positive outlook.
Worse than expected
6 August 2024 5:41 PM
Quarterly Report
- OGE Energy's net income for the first six months of 2024 was lower than the same period in 2023, indicating a worse performance.
Capital raise
6 August 2024 5:41 PM
Quarterly Report
- OGE Energy issued $350 million of 5.45% senior notes due May 15, 2029.
- OG&E increased long-term revolver borrowings by $200 million during the second quarter of 2024.
- OG&E is expected to issue $350 million of senior notes in the third quarter of 2024.
Better than expected
13 June 2024 9:28 AM
Rate Case Settlement Agreement
- The settlement agreement resulted in a significant reduction of the initial rate increase request, from $332.54 million to $126.66 million.
Capital raise
9 May 2024 11:12 AM
Debt Issuance Announcement
- OGE Energy Corp. has raised $350 million through the issuance of senior notes.
- The funds will be used for general corporate purposes.
Worse than expected
30 April 2024 5:42 PM
Quarterly Report
- The company's earnings per diluted share decreased from $0.19 to $0.09 year-over-year, indicating worse than expected results.
- OG&E's earnings per diluted share also decreased from $0.20 to $0.12 year-over-year, indicating worse than expected results.
- The holding company's loss increased from $0.01 to $0.03 per diluted share, indicating worse than expected results.
Capital raise
30 April 2024 5:41 PM
Quarterly Report
- OGE Energy expects to issue up to $350 million of long-term debt in the second quarter of 2024.
- OG&E expects to issue $300 million to $350 million of long-term debt in the second half of 2024.
Worse than expected
30 April 2024 5:41 PM
Quarterly Report
- The company's net income decreased significantly compared to the same period last year, indicating worse than expected results.
Better than expected
1 April 2024 12:14 PM
Proxy Statement
- The company's actual OG&E Earnings Target was $2.12/share, exceeding the target of $2.04/share.
- The company's Environmental Target was achieved at a 200% payout.
- The company's Equivalent Forced Outage Rate was achieved at a 115% payout.
Worse than expected
20 February 2024 7:44 PM
Annual Results
- The company's 2023 earnings per share were lower than the previous year due to the absence of income from natural gas midstream operations and increased operating expenses.
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