OGE Energy saw earnings rise despite costs of winter storm

OGE Energy, the parent of Oklahoma Gas and Electric Co., detailed how the February winter storm impacted its bottom line with first quarter earnings it released before markets opened Thursday.

The company, which also holds a 25.5% limited partner interest and 50% general partner interest in Enable Midstream Partners, reported a net income of $52.7 million for the period (26 cents per share), compared to a net loss of $491.8 million (- $2.46 per share) in the first quarter of the previous year.

Unquestionably, exceedingly high demand from consumers for electricity during February’s winter storm played a role in how OGE’s earnings shook out this year.

Data published as part of the earnings report provided additional information about how the event impacted the company and its customers.

Power costs shock

The data shows big contrasts in ex

penses incurred to keep electricity flowing to customers during the storm.

It reports OG&E spent nearly $1.35 billion to either generate or acquire power from the open market to distribute to its 871,494 customers during the first quarter, compared to just $135 million for the first three months of 2020.

The average per kilowatt hour cost for electricity the utility delivered to its customers during the first quarter of this year was about 18.4 cents, compared to about 1.89 cents a year ago.

Its revenue for the period (including a set-aside amount it already has designated it will seek to recover from customers through future bills using the bonding mechanism created this year by legislatures in Oklahoma and Arkansas) was about $1.63 billion.

In the first quarter of 2020, it collected about $431.3 million in revenues from its customers in Oklahoma and Arkansas. Residential sales for the first quarter of 2021 came in at 2.5 million Megawatt hours, compared to 2.2 million in the first quarter of 2021.First quarter sales to commercial, oilfield, industrial and institutional customers all were either unchanged or slightly lower, year over year.

Bottom line difference

The biggest reason OGE swung from a first-quarter loss to a profit year-over-year was that OGE took a massive impairment (about $590 million, after taxes) on the value of its investment in Enable Midstream Partners in 2020.

The company’s natural gas midstream operations through Enable contributed earnings of 19 cents per share (about $38 million) toward the company’s first quarter 2021 net income, while its utility operation through OG&E contributed 6 cents per share ($11 million).

Officials attributed a drop in income from the utility in part to Oklahoma customers’ use of a guaranteed flat billing option, where enrolled consumers pay the same monthly costs for electricity on their bills, provided their power usage doesn’t exceed an annual capped amount. The utility’s operational expenses related to the winter storm were the other factor.

OGE Energy’s holding company contributed 1 cent per share to its firstquarter 2021 earnings.

JACK MONEY/THE OKLAHOMAN FILE A high efficiency natural gas unit operates at Oklahoma Gas and Electric Co.'s Mustang Energy Center in west Oklahoma City.