OGE Energy (OGE) risk factors, FY2024 10-K

REGULATORY RISKS

1. 01The Registrants' profitability depends to a large extent on the ability of OG&E to fully recover its costs, including its cost of capital, from its customers in a timely manner, and there may be changes in the regulatory environment that impair its ability to recover costs from its customers
2. 02are being met. OG&E cannot assure that the OCC, APSC and the FERC will grant rate increases in the future or in the amounts requested, and they could instead lower OG&E's rates
3. 03OG&E is a vertically integrated electric company. Most of its revenue results from the sale of electricity to retail customers subject to bundled rates that are approved by the applicable state regulatory commission
4. 04Costs of compliance with environmental and other laws and regulations are significant, and the cost of compliance with future environmental and other laws and regulations may adversely affect our results of operations, financial position or liquidity
5. 05In addition, we may be required to make significant expenditures in connection with the investigation and remediation of alleged or actual spills, personal injury or property damage claims, and the repair, upgrade or expansion of our facilities to meet future requirements and obligations under environmental laws
6. 06We are subject to financial risks associated with climate change and the transition to a lower carbon economy
7. 07We may not be able to recover the costs of our substantial investments in capital improvements and additions
8. 08The regional power market in which OG&E operates has changing transmission regulatory structures, which may affect the transmission assets and related revenues and expenses
9. 09Increased competition resulting from efforts to restructure utility and energy markets or deregulation could have a significant financial and load growth impact on us and consequently impact our revenue and affordability of services
10. 10We are subject to substantial regulation by governmental agencies. Compliance with current and future regulatory requirements and procurement of necessary approvals, permits and certifications may result in significant costs to us

OPERATIONAL RISKS

1. 11Our results of operations may be impacted by disruptions to fuel supply or the electric grid that are beyond our control
2. 12OG&E's electric generation, transmission and distribution assets are subject to operational risks that could result in unscheduled plant outages, unanticipated operation and maintenance expenses, increased purchased power costs, accidents and third-party liability
3. 13catastrophic events such as fires, explosions, tornadoes, floods, earthquakes or other similar occurrences
4. 14Changes in technology, regulatory policies and customer electricity consumption may cause our assets to be less competitive and impact our results of operations
5. 15Weather conditions such as tornadoes, thunderstorms, ice storms, windstorms, flooding, earthquakes, prolonged droughts and the occurrence of wildfires, as well as seasonal temperature variations may adversely affect our financial position, results of operations and cash flows

FINANCIAL RISKS

1. 16Market performance, increased retirements, changes in retirement plan regulations and increasing costs associated with our Pension Plan, health care plans and other employee-related benefits may adversely affect our financial position, results of operations or cash flows
2. 17OGE Energy is a holding company with its primary asset being its subsidiary, OG&E

GENERAL RISKS

1. 18Governmental and market reactions to events involving other public companies or other energy companies that are beyond our control may have negative impacts on our business, financial position, results of operations, cash flows and access to capital
2. 19Economic conditions, including inflationary pressures and supply chain disruptions, could negatively impact our business and our results of operations
3. 20lead to increased bad debt. If such circumstances occur, we expect that commercial and industrial customers would be impacted first, with residential customers following
4. 21We are subject to cybersecurity risks and increased reliance on processes dependent on technology
5. 22The failure of our technology infrastructure, or the failure to enhance existing technology infrastructure and implement new technology, including potential generative artificial intelligence, could adversely affect our business
6. 23In addition to maintaining our current technology infrastructure, we believe the digital transformation of our business, including potential generative artificial intelligence, is key to driving internal efficiencies as well as providing additional capabilities to customers
7. 24Terrorist attacks, and the threat of terrorist attacks, have resulted in increased costs to our business and could impact our ability to operate critical infrastructure. Continued hostilities or sustained military campaigns may adversely impact our financial position, results of operations and cash flows
8. 25Health epidemics and other outbreaks could adversely impact economic activity and conditions worldwide, which could have a material adverse effect on our results of operations and financial condition
9. 26We face certain human resource risks associated with the availability of trained and qualified labor to meet our future staffing requirements
10. 27We may be able to incur substantially more indebtedness, which may increase the risks created by our indebtedness
11. 28Any reductions in our credit ratings or changes in benchmark interest rates could increase our financing costs and the cost of maintaining certain contractual relationships or limit our ability to obtain financing on favorable terms
12. 29Our debt levels may limit our flexibility in obtaining additional financing and in pursuing other business opportunities
13. 30We are exposed to the credit risk of our key customers and counterparties, and any material nonpayment or nonperformance by our key customers and counterparties could adversely affect our financial position, results of operations and cash flows