OGE Energy Corp.
Q4 2014 Earnings Call Transcript

Published: 26 Feb 2015

[Operator:]

Good day ladies and gentlemen and welcome to the Fourth Quarter 2014 OGE Energy Earnings Conference Call. My name is Katrina and I’ll be your coordinator for today. At this time, all participants are in listen-only mode. Later, we will facilitate a question-and-answer session. [Operator Instructions] As a remainder, this conference is being recorded for replay purposes. I would now like to turn the presentation over to your host for today’s call, Mr. Todd Tidwell. Please proceed.

[Todd Tidwell:]

Thank you and good morning everyone, and welcome to OGE Energy Corp's fourth quarter 2014 earnings call. I'm Todd Tidwell, Director of Investor Relations and with me today I have Pete Delaney, Chairman and CEO of OGE Energy Corp; Sean Trauschke, President of OGE Energy Corp; and Steve Merrill, CFO of OGE Energy Corp. In terms of the call today, we will first hear from Pete, followed by a regulatory update from Sean and an explanation from Steve of year-end and fourth quarter results, and finally, as always, we will answer your questions. I would like to remind you that this conference is being web cast and you may follow along at our web site at oge.com. In addition, the conference call and accompanying slides will be archived following the call on that same web site. Before we begin the presentation, I would 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 would also like to remind you that there is Regulation G reconciliation for gross margin in the Appendix, along with projected capital expenditures and more detailed assumptions around 2015 guidance. I will now turn the call over to Pete Delaney for his opening comments. Pete?

[Peter Delaney:]

Thank you, Todd. Good morning everyone and thank you for joining us on today’s call. Earlier this morning, we reported 2014 consolidated earnings of $1.98 per share compared with $1.94 in 2013. And for the fourth quarter EPS was $0.29 in line with the fourth quarter of 2013. The Utility reported earnings of $1.46 per share with mild summer weather that we discussed in the last call impacting our earnings by about $0.07. Looking back, 2014 was the end of a productive five-year period for OG Energy marked by the IPO of Enable Midstream Partners and OG&E’s successful completion of major infrastructure investments, while significantly improving key operational metrics that position the company to be successful as move forward. Commodity prices have been receiving a lot of attention recently with good reason. As we know oil and gas sector is subject to inevitable commodity cycles in the recent down draft as - they are more precipitous than most and energy companies have responded in kind. Some energy companies here in Oklahoma have announced layoffs that will be expected to increase our unemployment rate, which I will remind you the latest economic statistics still put at below 4% for Oklahoma City and near 4% for the State. So, we have continued to experience strong economic growth here in Oklahoma. Fortunately, as we’ve compared to some of the past cycles the State and local economies here are more diverse than they have been. We are experiencing job growth across industries outside the energy sector that point to Tinker air force base, which employs more than 26,000 civilian and military employees, continues to grow with a recent 500 million expansion soon to be underway to serve, that’s really to serve the new Pegasus [ph] supertanker maintenance repair contract that was awarded to Tanker and that will have the major economic impact on the State for years to come. More than 6,500 new jobs were added in the Oklahoma City Metro region in 2014. These new additions were from a diverse set of businesses from aerospace, insurance, research and development, and retail. Bottom line, we still anticipate customer growth near our historical rate of 1% per year. As I mentioned in the beginning of my remarks, 2014 marks the end of a period of some important initiatives. One of those is our five year $1.5 billion transmission expansion program. Of course part of this transmission expansion was support wind production. As we reached our initial goal during this period of 780 megawatts of wind in our system with our last project complete in 2013. Another important initiative for OG&E enabled by infrastructure investment is our goal of deferring the need for additional jittering capacity until after the year 2020. We are on track to accomplish that goal due in large part to the demand reduction realizes with our smart grid deployment. That three-year deployment was complete in December 2012, not only on budget, but with also key functional capabilities in place such remote billing, remote turn off and on, and providing near real time hourly energy consumption information. Our voluntary smart hours program, which utilizes that smart grid platform now engages over 130,000 customers and that provides a majority of our generation deferral allowing us to accomplish our 2020 objective. In addition to cost reduction over long term through an improved capacity factor of the system this program reduces our customers currently monthly bill as they shift consumption from the peak hours. And that provides headroom for future environmental cost. This level of customer engagement from smart hours has improved customer satisfaction and we believe this has been a factor in our number one J.D. Power Residential Customer Satisfaction ratings for couple of years running now. This initiative has been a win for our customers on several accounts. As we look forward, the smart grid platform lies at the center of our efforts to improve the value of service to customers. With much greater transparency of our distribution system operations with information from smart meters and the growing number of other embedded communicating sensor and control devises we expect to be able to restore power faster, reduce the frequency and duration of outages and prove information flow to the customer among other things all our low cost than previously thought. But our future is more than providing about the same service at greater value, it also entails providing new products and services using the smart grid infrastructure as our platform. We will be taking steps to evolve our distribution systems and to a platform for integration and optimization of devices on our system regardless of their ownership. Looking forward to the next five years, we will be ramping up some new infrastructure investments as we continue to leverage the build out of our smart grid platform. Our generation plans have been on hold as we chose to litigate with the APA as opposed to complying with their federal implementation plan in the state. Our plan to position the generation fleet for the future is now underway however. In a tail to fleet more responsive to intermittent power by adding new CTs in place of our obsolete 65 year old Mustang plant, secure additional renewables and we’ve already started adding solar to our portfolio, converting coal plants to burn natural gas and scrubbing coal plants to maintain field diversity. Of course the largest investment is the scrubbers, much work has progressed and equipment has been secured and the environmental filing occurred last year with hearing scheduled for next month and Sean will give us an update in a minute. On the last call I discussed changes to our approach to determine the appropriate dividend growth rate going forward. And with the structural change associated with the Enable MLP IPO, our recommendations are based on utility EPS and enables cash flow distribution growth rates, not consolidate earnings as in the past. Our financial guidance for the next five years reflects this change and with the 3.25% [ph] utility earnings growth rate, which is unchanged from our previous five year guidance provided in 2009 and a 10% dividend growth rate. We reiterated our 10% dividend growth rate early this month concurrent with the news that Enable will be likely lowering their distribution growth rate for 2015. Enable cash distributions were a $144 million to OG Energy in 2014, and we expect growth of 6% to 8% off of MQD in 2015. Our value proposition remains, we believe to be a first quartile total return of 13% to 15% through 2009. Over the last five years for comparison, our total return was 13.3%, which was at the 80% tail of our peer group. I believe we’ve been consistent in our managing to the long term, which has provided us with a financial flexibility continue to execute our business and capital plans through various investment and commodity cycles. As a result we’ve been able to deliver consistently on our long term dividend growth and earnings growth targets. Now I would like to turn the call over to Sean.

[Sean Trauschke:]

Thanks, Pete, and good morning. First I want to convey that we are on plan with regard to the schedule to being compliance with our environmental ruling. As Pete mentioned the hearings on our environmental compliance plan begin next week and we hope to receive an order shortly thereafter. In addition, we will file for recovery with the Arkansas commission and begin recovering the low NOx burners, which are already in service in April. I am going to provide you with an update on our progress and you will recall that our plan is for Regional Haze and the utility MATS compliance. Regarding the ACI Systems for MATS compliance, we expect to finalize installation contracts in the second quarter of 2015 and the construction will commence in the second half of this year to meet the April 16 compliance deadline. Turning to Regional Haze compliance plan, we have completed the installation of three of the seven low NOx burners, the fourth will be completed this spring and we are in the permitting process for the remaining three units at seminal to be completed each over the next three years. The equipment and installation vendors for the two dry scrubbers at Sooner have been selected and the schedules and budgets are on plan. Engineering studies for the conversion to two gas plants at Muskogee from coal are ongoing and expected to be complete by the middle of this year with permit applications submitted to the Oklahoma department of environmental quality in the second half of 2017. Recall, our plan is to continue to run these coal units as long as possible to maximize the benefits for our customers. Bids for the Mustang plant turbines have been received and we are in selection process. The turbine selection is important because it is needed for the air permit application we plan to file in June. And we are really excited about the opportunity to utilize the existing site with access to transmission and as well as water and gas supply and should be noted that we also have a great inspired operating team already on the ground there. I wanted to remind you that once we receive an order from the Oklahoma Corporation Commission on our environmental plan, we will follow up with a general rate case in Oklahoma for several important reasons. There is a requirement under House Bill 1910 to file a rate case within 24 months as an order for the environmental plant. And we plan to satisfy that requirement with this rate case. We also need to recover the costs associated with the termination in June of a 300 megawatt wholesale contract we’ve discussed previously. And lastly we need to recover the Oklahoma retail portion for the remaining five SPP transmission lines and additional plant placed in the service. In fact, we placed over 800 million of plant into service in 2014. This has resulted in a projected depreciation expense increase of approximately $27 million in 2015. Approximately half of that increase is due this base capital expenditures and the other half resulting from the additional transmission placed in the service. With that I’ll turn the call over to Steve, who will discuss 2014 results and the 2015 outlook. Steve?

[Stephen Merrill:]

Thank you, Sean. For the fourth quarter, earnings were comparable to 2013 with net income of $58 million or $0.29 per share for both periods. The contribution by business units on a comparative basis is listed on the slide. And for the full year of 2014, we reported net income of $396 million or $1.98 per share as compared to net income of $388 million or $1.94 per share in 2013. As you recall, the loss at the holding company in 2013 was primarily due to the cost associated with a formation of Enable Midstream. At OG&E, net income for the quarter was $37 million or $0.19 per share as compared to net income of $29 million or $0.15 per share in 2013. For the quarter, gross margin came in stronger as we saw an increase of approximately $13 million or 5% primarily due to transmission revenues, higher average prices and new customer growth partially offset by mild weather. Heating degree days were 14% below last year and 3% below normal. Now looking at other key drivers, O&M improved a $11 million driven in part by the timing of ongoing maintenance at the power plants. You will recall on the third quarter call, O&M expenditures were above the prior period due to this timing issue. What’s important to note is that the company remained on plan for the entire year. Depreciation increased $10 million primarily due to four large transmission lines that were added in 2014. Income tax expense increased $5 million due to higher pretax net income. Now, turning to the full year, at OG&E net income for the year was $292 million or $1.46 per share as compared to net income of $293 million or $1.47 per share in 2013. Gross margin for 2014 came in stronger as we saw an increase of $50 million or 4% which I’ll discuss on the next slide. Looking at some of the key drivers for 2014, our O&M cost increased $14 million or 3% for the year. We experienced lower storm activity in 2014 as compared to 2013 in labor cost associated with storm restoration are mostly capitalized. Depreciation was $22 million higher this year primarily due to the addition of four transmission lines. And finally, interest rate expense increased $12 million or 9% primarily related to the $250 million debt issuances that occurred in March and December of 2014. Utility margins were up for 2014. There were three primary drivers impacting gross margin. First, our SPP transmission projects increased gross margin by $44 million. Second, growth from new customers added an additional $14 million to gross margin. We added over 8,000 new customers to the system compared to 2013. All of this growth was partially offset by milder weather compared to 2013. On a weather normalized basis, megawatt hour sales grew consistent with our guidance at 1.5%. Looking closer at weather, the impact from the mild summer as compared to 2013 translated into $15 million of lower gross margin. Compared to normal weather, margin was reduced by $21 million in 2014. Overall, Utility margins were up for 2014 despite a weather impact that was significantly lower than 2013. In 2014, Enable Midstream made cash distributions of approximately $144 million to OGE and contributed earnings of $102 million or $0.51 per share compared to $100 million or $0.50 per share in 2013. The key take away from this slide is that cash distributions per unit have been growing since the IPO and are projected to continue growing even in this low commodity price environment. Turning to 2015 guidance at the Utility and assuming normal weather, we are projecting earnings per share to be between $1.41 to $1.49 per share and for the Midstream business, we are projecting to receive approximately $140 million in cash from distributions and for Enable to contribute $0.35 to $0.40 per share to consolidated earnings. We are projecting consolidated earnings between $1.76 and $1.89 per share. Before moving on to projected cash flows, I did want to mention a couple of key points. Our 2015 outlook includes the exploration of a wholesale contract in June of 2015 that both Pete and Sean have mentioned, and also the unrecovered investment of the retail portion of the SPP transmission lines that were placed into service in 2014. This is why we are following a general rate case required in Oklahoma after we receive the environmental order and we don’t anticipate recovery of these items until the end of 2015. The second point is that distributable cash flow is projected to grow at 6% to 8% compound annual growth rate in 2015 from the initial MQD even though our earnings from Enable are projected to dip due to the drop in commodity prices. I’d like to provide more detail in regard to our cash flow. This slide shows our strong cash position for 2015. As we’ve mentioned many times before, Enable has transitioned from a user of cash to provider of cash. Projected sources of cash for 2015 are approximately $860 million while uses are just under $750 million. I want to point out that while our cash flow projection for 2015 is positive, our excess cash will be utilized going forward to fund increasing capital expenditures and for cash taxes. We expect to be a full cash tax payer about 2018 as our net operating losses associated with bonus depreciation are utilized. This strong cash flow position us key to our value proposition which is growing Utility earnings per share and utilizing our cash flow received from Enable to fund our capital expenditures and grow our dividend at 10% annually. This concludes our prepared remarks. We will now answer your questions.

[Operator:]

Thank you. [Operator Instructions] Your first question comes from the line of Neil Mitra. Please proceed.

[Unidentified Analyst:]

Hi, good morning.

[Peter Delaney:]

Good morning, Neil.

[Unidentified Analyst:]

I had a question on the O&M outlook for 2015. It looks quite a bit higher than 2014 and correspondingly the Utility earnings seem to decrease year-over-year. Could you may be talk about the drivers behind the Utility earnings in 2015?

[Peter Delaney:]

Sure. The key drivers really O&M is only up modestly from 2014. The real key driver that’s impacting results for 2015 are a few things. Its increased depreciation associated with new plant and service, that’s about $0.07 to 2015. We’ve got that expiring wholesale contract in Arkansas, that’s about $0.03 lag on 2015. And then that retail portion of the transmission that we need to recover in associated depreciation and property taxes with that about $0.04.

[Unidentified Analyst:]

Got it. So when you file for the rate case, do you expect all of this to be trued up?

[Peter Delaney:]

We do. Yes, at the end of 2015.

[Unidentified Analyst:]

And to be clear, the rate case is going to be filed with this year or next year or you haven’t decided yet?

[Sean Trauschke:]

Neil, we’ll file that as soon as the writer is in place for the environmental compliance plant and we expect to file that this summer.

[Unidentified Analyst:]

Okay. And then for the rate case, what test year is going to be used, is it 2015?

[Stephen Merrill:]

Well, we have – we will use the 2014 year end test year and we have the opportunity to utilize six month look forward. I will tell you if the writer goes in place later in the year, in the summer, we will look to update that with the most current quarter. So we could actually move that up and include to Q1 of 2015.

[Unidentified Analyst:]

Okay. So just to be clear or so kind of 2014 since you outlined as a drag between 2014 and 2015, can all of that be recovered if you use 2014 as a test year or how would you plan to recover?

[Stephen Merrill:]

No, it will all get picked up. It will all get picked up regardless of the test year we use.

[Unidentified Analyst:]

And then, sorry, go ahead.

[Stephen Merrill:]

Go ahead.

[Unidentified Analyst:]

I think in the past you guys have guided towards Utility growth rate kind of around 5%, have you updated that or is earnings backend loaded versus frontend loaded, can you just comment on that?

[Stephen Merrill:]

Yeah. So historically, we had a consolidated growth rate of 5% to 7% and that included our Enogex since we – as Pete was talking about in his comments since we moved Enogex to Enable and it’s become a standalone MLP, we are really communicating 3% to 5% growth rate at the Utility. That’s actually consistent with what it was previously. Where we were previously is we had a 3% to 5% growth rate to Utility and then in Enogex was the really growth engine that got us to a consolidated 5% to 7%. As we look forward to this 3% to 5% growth rate, you can look at our CapEx table. We have a large percentage of the capital expenditures related to the environmental plan are towards the back end of this period, and that was done intentionally, Neil, to really mitigate the impact of customers.

[Unidentified Analyst:]

Got it. Okay, great. Thank you.

[Operator:]

Your next question comes from the line of Matt Tucker. Please proceed.

[Unidentified Analyst:]

Hi guys, good morning.

[Stephen Merrill:]

Good morning.

[Peter Delaney:]

Good morning.

[Unidentified Analyst:]

Just first question on the dividend K you target, it seems like Enable is kind of [indiscernible] suspended their longer term guidance. So I am just curious what gives you confidence in maintaining that target and are you willing to up your Utility payout ratio if you needed to support that.

[Peter Delaney:]

Matt, it’s Pete. When we - actually couple of others on the last call and the work that we went through when we established our guidance of – what we did our 11% increase in September of last year and we gave our 10% dividend growth rate. Of course we looked at a Marryat of financial scenarios and looked at our financial flexibility. We recognize and the voice recognize that we have cycles in Western cycles and commodity cycles, Western cycles in the Utility business and commodity cycles in the other business and the Enable business. And when we gave our guidance of 10% per year on a dividend growth rate, we did that with a high level of confidence at our ability to meet those objectives. And so as I think I mentioned in my remarks when they lower their guidance for 2015 on cash distributions, we came out quickly and reiterated that that is not going to change our plans to grow our dividend at a 10% annual rate for the next five years. Our current plans are to continue to recommend that to the Board of Directors. We seem to, from our standpoint, the financial flexibility to continue to do that and still invest in our utility. We talked about the generation portfolio, what we are doing there. We plan to be able to accomplish that, continue to build out our smart grid platform and not have to go the equity market. So yes, we do continue to plan on that 10% dividend growth rate.

[Unidentified Analyst:]

Okay, great. That was helpful. And then just in the recent past on past calls you’ve talked about SPP, per quarter 1,000 transmission opportunities, I believe they came out with a long-term plan around year-end. Could you just talk about what opportunities you still see there and how that compares to what you were thinking previously?

[Peter Delaney:]

Sean?

[Sean Trauschke:]

Sure. So, Matt, this is Sean. When the SPP came out with their recent plan, there were not a lot of new projects out there. There certainly were not many what we would consider competitive projects. To be honest with you, that’s what we expected. We expected with the significant amount of transmission has been built over the previous five years. A lot of that was built by us. We thought that there was a bit of digestion that was going to go on in the SPP and that’s what occurring. We do have some notices construct for two lines that occur beginning in ’17, ’18. We will build those and we are active in continuing to evaluate opportunities, but at this time there is nothing on the horizon that’s not been previously disclosed.

[Unidentified Analyst:]

Okay, thanks and apologize if you just said, this I missed it. But with the Utility growth target, should we be thinking about 2014 as a base year, 2015, could you just comment on that please?

[Peter Delaney:]

Yes, you can use either one.

[Unidentified Analyst:]

I guess I am just thinking if you are using 2014 and 2015 ends up flattish like you are guiding to, that implies a stronger may be towards the high end of the growth rate thereafter to catch up, is that how we should be thinking about it?

[Peter Delaney:]

I think just for the sake of simplicity, you can use 2014.

[Unidentified Analyst:]

Okay, thanks guys. I’ll jump back in the queue.

[Peter Delaney:]

Okay.

[Operator:]

Your next question comes from the line of Arshad Khan. Please proceed.

[Unidentified Analyst:]

Good morning. I guess my question was, I was trying to find out what should be the base line for the growth of the utility so I guess we can use 2014 as that base line right?

[Peter Delaney:]

Sure.

[Unidentified Analyst:]

Thank you.

[Operator:]

Your next question comes from the line of Anthony Coldwell. Please proceed.

[Unidentified Analyst:]

Hi, good morning. It’s Anthony from Coldwell Bankers. Just…

[Peter Delaney:]

Hey, good morning, Anthony.

[Unidentified Analyst:]

Good morning. Tough market right now with this weather, not many home buyers. Just some quick housekeeping first, what’s a good tax rate to use at the corporate level here when I think if the distribution is coming in OG&E earnings, what’s reasonable tax rate to use at the corporate level?

[Stephen Merrill:]

Yeah, corporate level about 30% effective rate.

[Unidentified Analyst:]

Okay. And you may have said this earlier in your remarks and I missed it, just - you’ve given a growth rate at the Utility, I know with Enable, have you given a growth rate at a consolidated company or thoughts on giving a growth rate?

[Stephen Merrill:]

We have and we’re really trying to move away from that because what’s important is articulated on the call is the cash that’s coming in from Enable. So we will put a growth rate around that but we are really just moving towards a Utility growth rate and then the increasing cash that’s coming in from Enable.

[Unidentified Analyst:]

Okay. And then I guess lastly, I guess it was new from may be the third quarter call or even at EEI, I guess the extension bonus of depreciation, I think you said you’re not going to be a cash tax payer I guess until if I heard correctly 2018. And I guess that’s new from previously I think you were not going to be a cash tax payer either end of ’15 or may be ’16 it was.

[Stephen Merrill:]

That’s correct. I mean the bonus depreciation really had a significant impact on us, that’s about $140 million worth of cash to us, so that really pushed our full cash tax payer status out.

[Unidentified Analyst:]

So, it doesn’t look like CapEx is really changing, your CapEx plan has stated the same and you’re now just having extra $140 million of cash. Any plans you have for the $140 million?

[Stephen Merrill:]

It’s going to be to fund – our CapEx while it doesn’t ramp up significantly till the tail end, we do have significant CapEx for next year and then we’ll also be funding our dividend growth. So I think I went over the cash flow slide for ’15, we have about $115 million of excess cash that’s available in 2015. We will start paying some cash taxes. We just aren’t full payer until 2018, but it does ramp up.

[Unidentified Analyst:]

But I guess I am looking at it slightly differently that at third quarter call in EEI you were funding all those great CapEx with no equity. You went out to dividend, I believe the dividend growth was announced prior to the extension of bonus depreciation and I may be wrong on that, so I am thinking that this $40 million [ph] is incremental to funding a dividend and CapEx, is that fair?

[Stephen Merrill:]

It is, that’s primarily what it is. The cash taxes, while it will change a little bit what it really does is just smooth out our cash needs over that period of time. It would push out a little bit of financing needs that we would have in lighter years.

[Unidentified Analyst:]

Great. Thanks for taking my question guys.

[Stephen Merrill:]

Thanks, Anthony.

[Peter Delaney:]

Thanks.

[Operator:]

Your next question comes from the line of Brian Russo. Please proceed.

[Unidentified Analyst:]

Hi, good morning.

[Sean Trauschke:]

Good morning.

[Peter Delaney:]

Good morning, Brian.

[Unidentified Analyst:]

Just on the 3% to 5% EPS CAGR at the Utility, should we use weather normalized 2014 as a base?

[Stephen Merrill:]

Yeah.

[Unidentified Analyst:]

Okay. And just to kind of reiterate what you said earlier, it looks like you are experiencing some regulatory lag in 2015, which would be captured in this upcoming rate case, when would you expect new rates to go into effect?

[Stephen Merrill:]

Early in ’16.

[Unidentified Analyst:]

Okay. And is that a statutory deadline because if I recall in the past you’ve experienced delays in final outcomes in your rate cases?

[Stephen Merrill:]

Right. Now there is - we do have the opportunity to begin implementing rates within 180 days, but depending on when we file the case and that’s why we said beginning at ’16 end of ’15, but that’s what our expectation is, I don’t think we will have a long projected process.

[Unidentified Analyst:]

Got it. And any thoughts on what your kind of earned ROE is at the mid-point of your utilities 2015 guidance?

[Stephen Merrill:]

So let me answer it this way Brian, if we thought about year-end ’14 we were probably earning around 10% in Oklahoma, obviously Arkansas is much lower than that and the FERC transmission we are in our allowed 11.1.

[Unidentified Analyst:]

Okay. Alright and…

[Stephen Merrill:]

And so to your point with the lag going down you will see the earned ROE in Oklahoma decline from what year end 2014 was.

[Unidentified Analyst:]

Okay great and how confident are you in the continuation of your 1% customer growth. It’s hard to believe that you won’t experience some impact of the layoffs in the energy sector and the ancillary services in your service territory, so just if you kind of elaborate a little bit more as to what you are seeing today and what you expect to see kind of a year or two from now?

[Stephen Merrill:]

Brian, so yeah we are seeing some of the - of course service companies throughout Oklahoma close some offices, some of the - there has been some decline in employment in some of the companies based here - oil and gas companies based here not the big ones for say, but some of the smaller ones. We continue to and I mentioned Tinker, you know we’ve got GE who has moved building worldwide oil and gas research here and that’s ramping up. Boeing continues to move people research here. Tinker has got this large mission that’s going to go on through next fourth, fifty years out there. And so we do see away from the oil and gas sector areas of growth in Oklahoma. We see - we have a lot of construction still in - funded in Oklahoma City by the math is a $800 million tax that was put in for - it was like seven or eight years and so there is a lot of store construction here. So, we see - and again we still see and as you know from probably Enable’s call and some other calls we still see growth in production in Oklahoma, however it is not at the same rate it was. In parts of Oklahoma and there is still lot of CapEx being spent here. So, it is always hard to predict, so it’s a mixed bag because we got pluses and minuses. Of course it’s not going to be as strong as it was looking at ‘15, Of course we will see where commodity prices go, that’s anybody’s guess at this point in time, but we do have other areas that - in Oklahoma City is attracting a lot of new businesses. So, it’s - we see no reason at this point to everything that we see going on in the Community instance that we would back off for 1%. That seems to be very consistent. I think for the last ten years or so, I mean we showed a 0.9% to 1%, it’s been very consistent. So, we are not, I think we are still from a planning perspective expecting that at this point.

[Unidentified Analyst:]

Alright, so you are at the mid-point of your ’15 guidance that kind of encompasses kind of that 1% to 1.4% with a normalized load growth?

[Stephen Merrill:]

1%.

[Unidentified Analyst:]

Okay, alright great. Thank you very much.

[Stephen Merrill:]

You’re welcome.

[Operator:]

With no further questions at this time, I would now like to turn the call back to Mr. Pete Delaney for any closing remarks.

[Peter Delaney:]

As always I would like to recognize our members whose hard work and commitment have driven our results and I believe deliver these results and again I want to thank all of you for your continued interest in OG Energy, have a great day.

[Operator:]

Thank you. Ladies and gentlemen, thank you for your participation in today’s conference. This concludes the presentation. You may now disconnect. Good day.