OGE Energy - Earnings Call - Q4 2024

Executive Summary

• OGE delivered a solid quarter and beat its full‑year plan: FY24 diluted EPS was $2.19, above guidance, with Q4 diluted EPS of $0.50 (vs $0.24 LY) driven by the Oklahoma rate settlement recognition, exceptional load growth, and lower O&M; partial offsets were higher taxes and interest expense.
• 2025 guidance set at $2.21–$2.33 (midpoint $2.27), a 7% rebase vs last year’s original midpoint, and long‑term EPS growth of 5%–7% now anchored to the higher 2025 base.
• Load momentum remains the core story: weather‑normalized load grew 7.6% in 2024, and management expects ~8.5% weather‑normalized growth in 2025, supported by 1.2% customer growth and broad‑based C&I strength.
• Potential upside catalysts include large‑load wins (data centers): management referenced a pipeline of roughly half a dozen opportunities, each ~250–500 MW, with intent to own generation and file mid‑year for resource additions; SPP ITP transmission NTCs are also pending and not in the current plan.

What Went Well and What Went Wrong

What Went Well

• Load and customer growth were exceptional: 2024 weather‑normalized load +7.6% with customer count +1.2%, driving stronger‑than‑planned results and enabling a higher 2025 EPS base.
• Regulatory progress supported Q4: interim rate order recognition in Oklahoma plus strong load and lower O&M drove Q4 OG&E net income up sharply YoY (EPS $0.55 vs $0.24).
• Financial posture remains strong: management targets FFO/debt of ~17% through the plan with no external equity beyond DRIP, and sees capacity to issue up to ~$350m of long‑term debt at OG&E in 1H25.

Selected quotes:

• “We reported consolidated earnings exceeding the top end of our guidance… establishing a higher base for growth going forward.” — CEO Sean Trauschke.
• “We are setting the 2025 midpoint 7% higher than ‘24’s original midpoint… and extending [5%–7%] through ‘29.” — CFO Chuck Walworth.

What Went Wrong

• Cost headwinds: higher depreciation and interest on a growing asset base, and higher income taxes pressured results (Q4 and FY) despite revenue strength.
• Holding company drag: “Other operations” loss widened on higher interest expense (Q4 loss $8.5m vs $0.4m LY; FY24 loss $28.4m vs $9.6m).
• Input cost backdrop: total fuel and purchased power cost per kWh rose QoQ into Q4 (3.751¢ vs 3.448¢ in Q3), and analysts probed turbine/generation supply tightness for future additions.

Transcript

Operator (participant)

Good day, and thank you for standing by. Welcome to the OGE Energy Corp 2024 Fourth Quarter Earnings and Business Update call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question-and-answer session. To ask a question during the session, you will need to press star 11 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 11 again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Jason Bailey, Director of Investor Relations. Please go ahead.

Jason Bailey (Head of Investor Relations)

Thank you, DeeDee, and good morning, everyone, and welcome to our call. With me today, I have Sean Trauschke, Chairman, President, and CEO, and Chuck Walworth, CFO and Treasurer. In terms of the call today, we will first hear from Sean, followed by an explanation from Chuck of our financial results, and finally, as always, we will answer your questions. I'd like to remind you that this conference is being webcast, and you may follow along 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'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.

Sean Trauschke (Chairman, President and CEO)

Thank you, Jason. Good morning, everyone. Thank you for joining us today. It's certainly great to be with you. 2024 was an outstanding year for the company, for our customers, for our employees, and for you, our shareholders. I'm excited about our message to you this morning as our consolidated earnings results for 2024 were above guidance. The momentum we've built continues to accelerate, establishing a higher base for growth going forward. Some of our top accomplishments for the year include adding more than 10,000 customers, continuing to see a drop in our SAIDI numbers as our grid strengthening efforts deliver value for our customers, replacing one of our largest substations ahead of schedule, relieving congestion in one of the SPP's most congested areas. We have nearly 450 megawatts under construction at Horseshoe Lake, which incidentally also celebrated its centennial this year, as did Muskogee.

We have another 100 megawatts under construction for Tinker Air Force Base, coming online next year to coincide with the base expansion in 2028. We've continued to enhance self-service tools like our mobile app and website so customers can do business with us 24/7. We continue to use automation and AI to gain efficiencies and reduce costs, further improving that customer's experience, and finally, another incredibly strong safety year. Our safety culture underpins our entire organization, and I couldn't be more proud of our team for putting safety first. Turning to 2024's financial performance, this morning we reported consolidated earnings exceeding the top end of our guidance of $2.19 per share for the year, including $2.33 per share for the electric company and a loss of the holding company of $0.14.

Our sustainable business model continues to provide opportunities to drive load growth while simultaneously strengthening the grid for many years to come in ways that smooth the customer impact and deliver consistent financial returns. We're laser-focused on reliability, growth, and affordability, and I know sometimes I sound like a broken record, but history proves that we do what we say we'll do. The investments we make deliver results, build these communities, and present a deep and diverse set of opportunities for us to pursue. Chuck will detail our financial plan going forward as we build on our strong financial base and credit metrics and the momentum of our excellent load and customer growth to deliver the safe, reliable, resilient electric service that our customers expect. On the regulatory front, our constructive regulatory environment enables us to support growth, serve customers, and achieve results.

By mid-year in Oklahoma, we will file for both recovery of our plans to meet generation needs and a general rate review. At year-end in Arkansas, we'll file for a general rate review and a formula rate plan as we have in the past. The advantage of our low rates, combined with the overall economic strength of the communities we serve, led to the exceptional load growth of 7.6% for 2024. Today, Oklahoma City and Fort Smith unemployment rates beat the national average, and our hometown, Oklahoma City's unemployment rate of 2.8% clocks in as the sixth best for large metropolitan areas. The strength of these communities drove our 1.2% increase in customer growth. On the commercial side, load growth is diversified among a number of industries, including multi-unit housing, defense, manufacturing, and tourism.

I can't overstate these projects are the result of our multi-year effort to drive economic growth in both Oklahoma and Arkansas, partnering with communities to land new business relocations and expansions. Alongside the commercial growth comes the people who support those businesses, and our residential load grew by 2.4% in 2024. I understand there's a lot of excitement about data centers, and rightly so. We are very excited about this opportunity, but I want to be clear that our load growth in 2024 and forecasted for 2025 is without any data centers. While we remain optimistic about these opportunities, and we're still in discussion with a number of potential projects, and we'll certainly update you when we can. We remain committed to growth for our communities and for our customers. In the case, for OGE Energy Jason, I'm certainly bullish on our future.

We're leveraging the economic development engine we built that's driving this load growth. Our excellent operational execution is driven by fully engaged set of employees who are determined to reach that north star of delivering safe, reliable, safe, affordable electricity for our customers. And we operate in constructive regulatory jurisdictions. We've created a competitive and credible financial plan backed by a balance sheet that's one of the strongest, and all of which leads to a long-term plan where we address system growth and customer needs. And today, we're setting a guidance midpoint for 2025 that is 7% higher than a year ago because of the proven and anticipated load growth. We expect to continue to grow 5%-7% annually from this new midpoint.

And next week, OG&E will celebrate its 123rd birthday, and we'll celebrate by investing in the grid and generation in ways that allow us to meet customer demand for electricity, grounded in improving reliability and maintaining those low rates as we achieve our commitments to you. Thank you, and I'll now turn the call over to Chuck. Chuck.

Chuck Walworth (CFO and Treasurer)

Thank you, Sean, and thank you, Jason, and good morning, everyone. I'm pleased to review our outstanding 2024 financial results with you, introduce our 2025 financial outlook, and discuss our long-term earnings growth guidance. Let's start on slide six and discuss full year 2024 results. Consolidated 2024 net income was $442 million, or $2.19 per diluted share, compared to $417 million, or $2.07 per share in 2023. 2024 was yet another year of great execution by our dedicated members and a reflection of the health of our growing communities and the constructiveness of our regulatory jurisdictions. We began the year expecting consolidated earnings of $2.12 per share. Throughout the year, we experienced stronger than forecasted load growth, as well as warmer than normal summer. We updated our expectations by pointing to the top of 2024's EPS guidance range.

We exceeded expectations and closed the year $0.07 above our original midpoint. In our core business, the electric company achieved net income of $470 million, or $2.33 per share, compared to $426 million, or $2.12 per share in 2023. The main drivers of the year-over-year increase in net income were exceptional load growth and higher operating revenues driven by the recovery of capital investments. The holding company reported a loss of $28 million, or $0.14 per diluted share in 2024, compared to a loss of $10 million, or $0.05 in 2023. The increase in net loss was primarily due to higher interest expense and lower net other income. You can find fourth-quarter results in the appendix. Now let's review our 2024 load results by turning to slide seven. Customer growth was strong, finishing at 1.2% as we continue to attract new business to our service area.

Our weather-normalized load growth was truly exceptional at 7.6%, the largest annual weather-normalized load growth in my almost 25 years at the company. The strength was across all customer classes, with commercial leading the way with an extraordinary 21.4% annual growth. I'm especially excited to see the 2.4% growth in the residential class as it follows and reinforces all the growth we are experiencing across our system. As you will see, we expect our total load to continue this trend into 2025. Stepping back for a moment, our performance in 2024 isn't new, and we expect it to continue. We charted a path years ago when we focused on growing the electric company by growing our load with attractive lower rates and higher quality service, building an economic development engine, and focusing on our cost structure. Since then, we've built a track record of performance.

If you look where we plan to be at the end of 2025 compared to the past 10 years, we will have managed to keep O&M per customer growth at less than 1%, rates at some of the lowest levels in the nation, load growth at a compound annual 2.2%, all while investing more. Our five-year capital plan is more than doubled. Our balance sheet is strong. Our dividend has grown at a compound annual rate of 5%, and our consolidated earnings per share, excluding midstream results, has grown at a compound annual rate of approximately 6%. These are real results. Let's turn our attention to the details of our 2025 plan on slide eight. Building on the load growth tailwinds in 2024, we have developed a financial plan that sets consolidated earnings at $2.27 per share with a guidance range of $2.21 to $2.33.

We are setting the 2025 midpoint 7% higher than 2024's original midpoint. In addition, we are now basing our long-term annual EPS growth rate of 5% to 7% off of this higher 2025 midpoint and extending it through 2029. We are pleased to be able to deliver results for our customers and base future earnings expectations off a higher level. Looking at load quarter to quarter or near-term forecasting can be challenging, especially when dealing with larger loads that may accelerate or delay coming online. That being said, we expect 2025 to be another year of exceptional weather-normalized growth of 8.5% by year-end, adding to the last four years of historically strong load growth. We believe 2025 sets up well, and we can achieve our goals based on the operational execution of each one of our members.

Our financial plan objectives include maintaining our competitive low-rate advantage by focusing on our cost structure, managing the regulatory process by minimizing the time between investments and the return and recovery of the investments, and growing OGE by maintaining a highly credible total return proposition for our shareholders. Turning to slide nine, the strength of our balance sheet, which is one of the strongest in the industry, remains a competitive advantage for us. We continue to forecast FFO to debt of approximately 17% throughout the forecast period, with no need for external equity issuances other than a modest annual DRIP. We have no fixed-rate maturities until 2027. We anticipate a long-term debt issuance at the electric company of up to $350 million in the first half of the year. We rolled forward our five-year investment plan to 2029, increasing the plan by $250 million.

Sean spoke to the important items we will work on in 2025, including generation capacity associated with the 2024 IRP and system projects. We will communicate our plans, including financing, with you after we receive the appropriate approvals. In my closing remarks today, I would like to leave you by expressing my confidence in our financial plan. We believe we have built a credible 2025 financial plan that exceeds the expectations set out just a year ago when we introduced our first pure-play consolidated growth rate guidance. Our confidence in the financial plan extends beyond 2025, and that is reflected in basing our 5% to 7% expected annual growth rate off of a higher 2025 EPS midpoint. The strength of our plan this year allows us to continue to focus on the future and address the investments required to meet the electric demand of our growing communities.

Our confidence remains based on the belief in the dedication of our employees and their ability to get the job done. That concludes our prepared remarks, and we'll now open the line for your questions.

Operator (participant)

Thank you. As a reminder, to ask a question, please press star 11 on your telephone and wait for your name to be announced. To withdraw your question, please press star 11 again. Please stand by while we compile the Q&A roster. And our first question comes from Durgesh Chopra of Evercore ISI. Your line is open.

Durgesh Chopra (Analyst)

Hey, good morning, team. I'm impressed. I got the first question.

Charles Walworth (CFO and Treasurer)

Hey.

Durgesh Chopra (Analyst)

Okay.

Charles Walworth (CFO and Treasurer)

Good morning.

Durgesh Chopra (Analyst)

Good morning, Sean. Chuck, congrats. This is your first earnings call as officially appointed as CFO. Look forward to working with you.

Charles Walworth (CFO and Treasurer)

Thank you.

Durgesh Chopra (Analyst)

Two questions for me. First, Sean, great update today. There's a lot of debate in the market on what this data center opportunity might mean for you. We've certainly tried to put our kind of megawatts that we think might come out of this. Maybe can you address that? Just any color you can share around the megawatts needed. I understand it's going to be over a long period of time, but what you're seeing in the pipeline, just high level, and then in particular, talk to the Stillwater opportunity and what could that mean and just what to look for there. Thank you.

Charles Walworth (CFO and Treasurer)

Yeah. Very good. Thank you for the questions there, Durgesh. So a couple of things. Unfortunately, we are prohibited from talking specifics about the Stillwater opportunity, and so that has not changed. So I need to pass on that one. As we think about the data center set, we've characterized it as probably opportunities in the 250-500 megawatts range across half a dozen or so opportunities that we're in discussions around.

Durgesh Chopra (Analyst)

Awesome. And just to be clear, that's 250 to 500 megawatts each opportunity, right? And your context is half a dozen of.

Charles Walworth (CFO and Treasurer)

Yeah, I think that's what we've said previously, and recognize that that's not a forecast. We can't guarantee we're going to get all those, but we might get more, so.

Durgesh Chopra (Analyst)

That's certainly a great place to be.

Charles Walworth (CFO and Treasurer)

That's what we're dealing with right now.

Durgesh Chopra (Analyst)

Excellent. Just one housekeeping question. You didn't address the dividend. I'm sorry if I missed it, but just how should we think about dividend growth in the context of your EPS growth? If you could just talk to that, and I apologize if I missed it and you did.

Charles Walworth (CFO and Treasurer)

Yeah. So really no change in messaging there on the dividend. We've been pretty consistent in terms of the growth that we've addressed with that over the past couple of years. And again, just I'll point you to the language in our 10-K around dividend payout. So that remains our goal to be in that 65%-70% payout area.

Durgesh Chopra (Analyst)

Excellent. Thank you again. Appreciate the time.

Charles Walworth (CFO and Treasurer)

Thanks. Have a great day.

Operator (participant)

Thank you. Our next question comes from Shar Pourreza of Guggenheim Partners. Your line is open.

Constantine Lednev (Analyst)

Hi. Good morning, team. It's actually Constantine here for Shar again. Congrats on [crosstalk] great 2024.

Charles Walworth (CFO and Treasurer)

Hey. Thank you, Constantine. Good morning. Hope you're well. And please pass along to Shar that DD nailed his name.

Constantine Lednev (Analyst)

Will do. Will do. Just maybe starting off on the 2025 expectations and guidance. You noted the 7.5%-9.5% load growth, which is a step up versus kind of the prior long-term assumptions that you had of greater than 1%. So that would point to some level of accretion. But maybe can you refresh us on the EPS sensitivity versus load growth and maybe any other offsets that you're embedding in 2025, like regulatory lag or any other?

Charles Walworth (CFO and Treasurer)

Sure. Chuck, you want to do that one?

Chuck Walworth (CFO and Treasurer)

Yeah. Constantine, we really are hesitant to give out sensitivity on load growth at EPS just given the wide composition of rates within that. But that being said, if you look at slide eight on the deck that we put out today, you can see how much that we're attributing to load growth across all classes. And so then you can kind of do the math between that and the 7.5%-9.5%. So that kind of should give you an idea. But again, I feel only appropriate to put a little caveat on that. Oh, and then your other question on regulatory lag, I believe it was. So we do plan on going in for a rate case, as Sean said, by mid-year of this year. And obviously, this load growth is doing a lot to help mitigate any lag in between cases.

Constantine Lednev (Analyst)

Okay. Perfect. Understood. And kind of just more broadly, with the second tier of high single-digit load growth, how does that compare versus the IRP assumptions? And does the load growth require any interim solutions from an energy and resource adequacy standpoint and any urgency in 2025 as we see kind of the reserve margins start seeing some pressure?

Charles Walworth (CFO and Treasurer)

Yeah. Great question, and we're in pretty good shape, but certainly, we're continuing to, as we're negotiating the results of the RFP process and working through that process, we're updating that for current results, and so we'll certainly consider that, but nothing of concern right now.

Constantine Lednev (Analyst)

Okay. And any cadence of updates there beyond the RFP timeframe that you put out in terms of putting any kind of numbers behind the.

Charles Walworth (CFO and Treasurer)

Yeah. So we're.

Constantine Lednev (Analyst)

CAPEX?

Charles Walworth (CFO and Treasurer)

Yeah. We're going to file what we said. We're going to file mid-year for recovery of that for our generation plans. And under Oklahoma, the statute allows for a 240-day period of time. So when we get the requisite approvals there, we will layer that in in terms of the capital expenditures and our financing plan, how we will finance that. Just to kind of reiterate what we've said previously, it is our intent to own these assets. We may have to bridge a little bit of it for a year or two just to kind of get through as we're constructing these, but it is our intent to own the majority of these assets. And I'll tell you, walking into this call, it's one degree Fahrenheit here in Oklahoma City with a minus-18 wind chill, and schools are closed.

There's ice and snow all over the roads, but the lights are on. And I have a lot of confidence in the men and women at our company to kind of do that. And that drives a lot of our thinking around owning these assets, so.

Constantine Lednev (Analyst)

Perfect. That's a great message. Thanks for taking the questions.

Charles Walworth (CFO and Treasurer)

Thanks, Constantine. Have a great day.

Operator (participant)

Thank you. Our next question comes from Nicholas Campanella of Barclays. Your line is open.

Nicholas Campanella (Senior Equity Research Analyst)

Hey, good morning. Sounds like you got some northeast weather down there, so hope you're staying warm.

Charles Walworth (CFO and Treasurer)

Yeah. We're.

Nicholas Campanella (Senior Equity Research Analyst)

Yeah. We're.

Charles Walworth (CFO and Treasurer)

Yeah. We got to get tougher here about this winter weather.

Nicholas Campanella (Senior Equity Research Analyst)

Hey, I appreciate the time. Just wanted to ask, when you think about serving these potential data center customers, the capital requirements that are going to come from that, and the potential to invest in new generation, how are you kind of thinking about your position within the supply chain? It just seems like there's been just general tightness across turbines and general availability there. So just wanted to see if do you have visibility to be able to kind of deliver on a generation solution for new customers that are outside of the plan within this decade?

Charles Walworth (CFO and Treasurer)

I think that's certainly what we're looking at. We were fortunate to have this RFP process underway, so we've got a good visual of what is available in certain timings. So we feel pretty good about that. And what we see today, we feel pretty good about. If we were fortunate to get a lot more, we'd have to take another look at that. But what we see in front of us and what we're anticipating, we feel pretty good about.

Nicholas Campanella (Senior Equity Research Analyst)

Okay. And then just putting just a finer kind of timeline on when we can expect the next updates, just when do you think we would expect to hear about whether or not you'd win one of these new data center customer contracts? Is it just going to be a one-off press release? Are you trying to deliver something by the back half of this year? How would you kind of frame the timeline?

Charles Walworth (CFO and Treasurer)

Yeah. Great question. And my expectation is this may not be our press release. This may be somebody else's. And obviously, we would communicate about that then. And then we're not trying to time anything, if that was your question. And then the second point is, obviously, we would have some sort of capacity to satisfy that new load, and you should expect us to kind of make the requisite filings with the commissions and get that cleared up. And then Chuck will explain exactly how we're going to finance all those as well.

Nicholas Campanella (Senior Equity Research Analyst)

Okay. And that's something that you think happens in the first half of this year, or you're just not putting a timeline on it at this point?

Charles Walworth (CFO and Treasurer)

We are going to do two comments or two pieces of this. We're going to file the results of our generation RFP that are out there. We're going to do that by mid-year. We would certainly like it if we had something if there was going to be a data center inclusion in that, that we had that in there too. If it doesn't work out, we've got to move forward with these RFP results. We'll file that. We may have to come back later and do a subsequent filing for a data center. Does that help?

Nicholas Campanella (Senior Equity Research Analyst)

That's very clear. Thank you very much.

Charles Walworth (CFO and Treasurer)

Okay.

Nicholas Campanella (Senior Equity Research Analyst)

All right.

Operator (participant)

Thank you. Our next question comes from Julien Dumoulin-Smith of Jefferies. Your line is open.

Julien Dumoulin-Smith (Research Analyst)

Hey, team. Thank you again for the time. Stay warm, guys. Stay warm. And maybe just to pick it up from where Nick left it off there, frankly, can you speak a little bit to what you're seeing in terms of the total quantum of RFP activity there? I mean, if you were to pick up incremental megawatts out of that RFP, whether in sort of coincident with the initial RFP update or in the back half at some point, how do you frame sort of the total scope of what that RFP was able to procure? I know when you launched this whole process, you weren't anticipating that you have this quantum of data center. And/or other load. Can you speak to what a max size on the RFP could be realistically or kind of any framing of sensitivities there?

Charles Walworth (CFO and Treasurer)

Yeah. Julien, are you looking for the kind of the high end there? Are you contemplating this data center?

Julien Dumoulin-Smith (Research Analyst)

Well, look, I'm trying to understand. Obviously, the load growth itself is dynamic. I understand that you can't necessarily get everything at the same time. I understand that when you launched this IRP/RFP, you didn't necessarily contemplate this. So just obviously, you can scale up the quantum of the RFP, but I imagine there's going to be some realistic frictions of what is palatable for you guys to procure.

Charles Walworth (CFO and Treasurer)

Yeah. And.

Julien Dumoulin-Smith (Research Analyst)

Fair enough.

Charles Walworth (CFO and Treasurer)

Yeah. I think fair point, and I get it. Also recognize we're kind of in the middle of negotiating those, so I don't really want to tip my hand in any way, shape, or form. What I would say, though, is we've been able and we anticipated this load growth. We've been able to kind of manage this within our current capacity constructs. I'd also mentioned to you on previous calls where we had doubled down on our energy efficiency and demand response programs. That has created a significant benefit. I also mentioned that some of the crypto load that we have, they do not really have a net addition to our capacity needs because they're on direct load control. So we have that benefit.

And then the last point is we're also continuing to evaluate and do upgrades to our existing facilities where we're squeezing 100 megawatts or so of additional capacity there. So we're attacking this on all fronts to make sure that when we do finalize the RFP, Julien, we're getting the very best deal. But I want to be really careful there because we are in the middle of negotiating those agreements, and I don't want to jeopardize that.

Julien Dumoulin-Smith (Research Analyst)

Yeah. I understand it's a very dynamic situation. I got to try at least to ask. Maybe just to speak on the other side of that. I'm just.

Nicholas Campanella (Senior Equity Research Analyst)

Ask another question.

Julien Dumoulin-Smith (Research Analyst)

About the timing of it all. We're always going to try, right?

Nicholas Campanella (Senior Equity Research Analyst)

Yeah.

Julien Dumoulin-Smith (Research Analyst)

Maybe on a timing perspective, right? Because would you have to go back and issue another RFP because, again, the scope of this RFP just didn't contemplate the total megawatts ultimately? How do you think about a subsequent RFP filing? How do you think that what that would lead to to reconcile with some of the timelines? I mean, I'll note, for instance, this Stillwater dynamic, for instance, could be kind of a 2027 timeframe, from what I can tell. Could you swiftly issue another RFP? Are you guys getting ready for that here, potentially?

Charles Walworth (CFO and Treasurer)

Yeah. I mean, I think we've got to be prepared to do that. I think that's a very real situation there as things develop, and you used the word dynamic. It's dynamic, and to the extent that we have significant changes in how we see the future, we would do a new IRP, and I think we should be prepared to do that.

Julien Dumoulin-Smith (Research Analyst)

Got it. And then lastly, just quickly, the legislative front, given how dynamic the situation is and given the scope of what would be contemplated here, how about any conversations this year in terms of formula rates or otherwise? If you can speak to that a little bit.

Charles Walworth (CFO and Treasurer)

Yeah. I think.

Julien Dumoulin-Smith (Research Analyst)

We'll let you play the road.

Charles Walworth (CFO and Treasurer)

Yeah. So on the legislative side, in terms of formula rates or performance-based rate-making or something like that, we achieved our objective there in terms of education. I think everyone's fully aware and educated now. We always recognize that all roads lead through the commission. And so we've got a heavy agenda this year, but we're going to find the opportunity to make a filing there for formula rates at the commission.

Julien Dumoulin-Smith (Research Analyst)

All right. Excellent, guys. I'll leave it there. Best of luck, all right? Nice to be done.

Charles Walworth (CFO and Treasurer)

Thanks, Julien. Take care.

Operator (participant)

Thank you. Our next question comes from Anthony Crowdell of Mizuho. Your line is open.

Anthony Crowdell (Senior Analyst of US Energy for Electric Utilities)

Hey. Good morning, Sean. Good morning, Chuck. Again, congrats, Chuck, on, I guess, your first, I guess, I don't know if it's full-time or non-interim call.

Charles Walworth (CFO and Treasurer)

Thanks, Anthony.

Chuck Walworth (CFO and Treasurer)

Good morning, Anthony.

Anthony Crowdell (Senior Analyst of US Energy for Electric Utilities)

Good morning. Hopefully, a little easier than Julien's question. I didn't know where that was headed, but I guess I could ask about the 24% commercial load growth that you're calling for. I'm wondering if you give any clarity or indication of just what percentage of your gross margin, if I think of it in 2025 or if you want to pick another year, what percent of your gross margin will come from commercial load?

Charles Walworth (CFO and Treasurer)

Chuck, you want to tackle that one?

Yeah. Sure. Maybe just take a step back and look at the results of 2024, where we really saw strong results across all categories, and really, I can't overemphasize how important that is to me that we're seeing growth across all those categories really showing the underlying strength of our service area. Within commercial, that is a lot of crypto load, as Sean spoke to before, that is really beneficial in that it doesn't require much incremental investment for us. On the generation side, that's all on direct load control, where we've got the proverbial button, so to speak, so really beneficial for our customers as a whole to have that low cost to serve kilowatt hours in there.

Anthony Crowdell (Senior Analyst of US Energy for Electric Utilities)

Great. And then just one follow-up, and I apologize if I didn't hear correctly, but I believe that you're forecasting filing an Oklahoma rate case later this year.

Chuck Walworth (CFO and Treasurer)

Yes.

Anthony Crowdell (Senior Analyst of US Energy for Electric Utilities)

With the strong load growth, obviously, the load growth should help spread out the cost per kilowatt hour. Just if you could indicate or directionally point to type of percentage increase. I mean, I guess with this great load growth you have, my guess would be that the amount of increase would be a lot lower. And should the load not be here?

Charles Walworth (CFO and Treasurer)

I think what you said is absolutely correct. You should expect the load growth to mitigate this, and that's what we're trying to do, is we're trying to keep these impacts small and not do anything that disrupts the overall load growth or viability of the economy, and so depending on when we make the filing and what is in that test year, but so I don't have an exact percentage for you today, but safe to say you are exactly right that the load growth is going to mitigate the impact to customers.

Anthony Crowdell (Senior Analyst of US Energy for Electric Utilities)

Great. Love the slides. A lot of detail there. Appreciate you taking my questions.

Charles Walworth (CFO and Treasurer)

Hey. Thanks, Anthony. Have a great day.

Operator (participant)

Thank you, and our next question comes from Aditya Gandhi of Wolfe Research. Your line is open.

Aditya Gandhi (Senior Associate of Equity Research)

Hi. Good morning, Sean, Chuck, and Jason. Hope you're doing well. Thanks for taking my questions.

Charles Walworth (CFO and Treasurer)

Good morning.

Aditya Gandhi (Senior Associate of Equity Research)

Just to start off, maybe on load growth, can you just remind us what you're baking in for long-term load growth beyond 2025? Is it still at least 2%? And relatedly, on data centers, Sean, I appreciate you said you can't comment on Stillwater, but any color you can give us on the Core Scientific data center near Muskogee at this point?

Operator (participant)

So I'll start off on the long-term load growth. I mean, again, we mentioned last year was the fourth year of historic load growth that we've had. And we're essentially rolling that forward into this year with really our strongest load growth guidance ever. So that's really super exciting. Going forward, though, we don't expect really a change in the backdrop, the fundamentals that are leading to where we are today. So I think we're comfortable continuing to say that we're in that 2%, 2% plus on a long-range area. But to the extent that we have events that move us upward from that, that kind of gets to some of those press releases that Sean spoke about earlier. And we can give more color and flavor at that time.

But I think for now, you should take away a very positive message around the fundamentals of where we have been for many years now.

Aditya Gandhi (Senior Associate of Equity Research)

Again, that's helpful.

Charles Walworth (CFO and Treasurer)

And Aditya, just to be clear, there's really not anything to add around the opportunity set in Muskogee in terms of data centers. That's an active dialogue. And when we have something to communicate, we're certainly going to communicate that.

Aditya Gandhi (Senior Associate of Equity Research)

Okay. That's clear. Maybe a lot of questions on the RFP, but I wanted to ask on another potential CapEx upside that you all mentioned last quarter regarding SPP ITP transmission. Could you just clarify whether that's included in the revised CapEx plan or not? And if not, when we can sort of expect to see movement around that CapEx?

Charles Walworth (CFO and Treasurer)

Yeah. That is not in there. That'll be included when we finalize the Notice to Construct later this year.

Aditya Gandhi (Senior Associate of Equity Research)

Okay. And one last question from me. Appreciate all your comments around rebasing higher off of 2025 guidance. Sean, you also mentioned that you want to be consistent in how you grow. But do you, at this point, feel comfortable sort of guiding within your 5%-7% growth rate just given the exceptional load growth that you're seeing?

Charles Walworth (CFO and Treasurer)

Yeah. Aditya, I'm not sure I got all of that. Could you restate the question?

Aditya Gandhi (Senior Associate of Equity Research)

Sorry. Yes. I appreciate all the color around the updated 5%-7% growth rate that you all rebased higher off 2025 guidance. Just given the exceptional load growth, at this point, do you feel comfortable sort of commenting on where you see the company tracking within that 5%-7%?

Charles Walworth (CFO and Treasurer)

Yeah. Look, I think we're very comfortable through the five-year forecast period to grow at 5%-7%. And I'm really focused on that five years and then years beyond that continuing to grow at this clip. I don't want to get into kind of pointing to one end or the other end for any particular year. I think what you're going to see from us is a consistent achievement of 5%-7% over a number of years. And so we're going to continue to run the business, Aditya. And this thing's been rolling for a number of years, and we want to keep going.

Aditya Gandhi (Senior Associate of Equity Research)

Great. That's helpful. Thanks for taking all my questions.

Charles Walworth (CFO and Treasurer)

Have a great day, Aditya. Take care.

Operator (participant)

Thank you. And as a reminder, if you have a question, please press star 11. And I'm showing no further questions. I'd like to turn it back to Sean Trauschke for closing remarks.

Sean Trauschke (Chairman, President and CEO)

Thank you, DeeDee. And well done today, DeeDee. You did a great job with everyone's names. So thank you for that. And for everyone on the call today, thank you. Thank you for your interest and your time this morning. And take care of yourselves and be safe out there.

Operator (participant)

This concludes today's conference call. Thank you for participating, and you may now disconnect.