Chris Hark

Chris Hark of Mizuho asked for clarification on Avista's long-term EPS CAGR, questioning if the 4%-6% range is still expected given the 2025 results. He also inquired about the assumed Return on Equity (ROE) used for the midpoint of 2026 guidance and whether upside CapEx was included in the rate-based CAGR.

Answer

Kevin Christie, SVP, CFO, Treasurer, and Regulatory Affairs Officer, affirmed the expectation to achieve 4%-6% growth over the next 3-5 years. He stated that for 2026, the utility ROE is expected to be in the low to mid 8s, impacted by the ERM, structural lag, and customer loss, while the long-run expected ROE is 9% excluding ERM. Mr. Christie clarified that the incremental $350 million upside CapEx for large load is not included in the base CAGR but represents potential additional investment opportunities.

Chris Hark sought more insight into the customer class breakdown for the 4-6% load growth, specifically how much is driven by 'Customer X' and the retail class. He also asked for thoughts on the upcoming commission turnover and elections in OGE's jurisdictions.

Answer

CFO Charles Walworth clarified that 'Customer X' is not driving the 4-6% load growth for the current year, and the residential class remains steady. Charles Walworth also discussed engagement with candidates for the governor, attorney general, and corporation commissioner races, expecting outcomes to be largely determined in the June primary.

Chris Hark sought more insight into the customer class breakdown for the 4-6% weather-normalized load growth forecast, specifically how much is driven by Customer X and the retail class. He also asked about the company's thoughts on the upcoming elections and potential turnover in the commission in their jurisdictions.

Answer

CFO Charles Walworth clarified that Customer X is not driving the 4-6% load growth for the current year as it comes online later, and residential load is expected to be steady. Charles Walworth stated that the company has engaged with all candidates for the governor's, attorney general's, and corporation commissioner races, finding them constructive, and expects outcomes to be largely determined in the June primary.

Chris Hark asked if the dividend growth rate should be expected to align with the EPS CAGR. He also questioned the cadence of future rate filings, specifically if pushing the next Oklahoma rate review to the second half of 2026 would establish a similar timing for subsequent filings.

Answer

Chuck Walworth, CFO, explained that OGE Energy has intentionally grown the dividend at a lower rate than EPS to target a 65%-70% payout ratio, with a reassessment planned once that target is met. He clarified that while the H2 2026 rate filing shift is part of a settlement, the company's underlying philosophy for future rate filings remains unchanged.

Chris Hark asked if OGE Energy's dividend growth rate should be expected to align with its EPS CAGR. He also inquired about the cadence of future rate filings, specifically if pushing the next Oklahoma rate review to the second half of 2026 implies a similar timing for subsequent filings over the next two years.

Answer

Charles Walworth, CFO, explained that OGE Energy is intentionally targeting a 65%-70% payout ratio, with dividend growth currently lower than EPS CAGR to achieve this. He stated that capital allocation decisions would be reassessed once the target is met. Regarding rate filings, Mr. Walworth clarified that the philosophy remains consistent, with the 2H 2026 shift being a term of the settlement agreement, and future filings would continue under the same established philosophy.