Executives at OGE Energy faced questions Thursday on how it plans to deal with several environmental compliance developments at its utility division, Oklahoma Gas and Electric Co.
The questions came during a conference call with analysts to discuss the company's second-quarter earnings, which were essentially flat. OGE reported net income of $91.7 million, or 46 cents per diluted share, in the second quarter. That compared to a profit of $93.9 million, or 47 cents per diluted share, in the second quarter of 2012.
OGE recently closed a deal to combine its Enogex midstream business with the pipeline assets of Houston-based CenterPoint Energy Inc. The new company, Enable Midstream Partners LP, has combined assets of $11 billion. An initial public offering of partnership units is expected in the next year.
OGE Chairman, CEO and President Pete Delaney fielded several questions about environmental compliance costs at OG&E. A three-judge panel of the federal appeals court in Denver ruled 2-1 last month in favor of the Environmental Protection Agency's plan for dealing with regional haze. The rules cover emissions from power plants affecting visibility at federal parks and wilderness areas.
OG&E estimates the EPA's plan could cause it to spend about $1 billion for scrubbers at its coal plants in Red Rock and Muskogee. Delaney said the utility plans to ask the full 10th U.S. Circuit Court of Appeals for a rehearing by early September. If OG&E isn't successful, it will have 55 months to comply with the EPA's regional haze plan.
“As you are no doubt aware, the implication to our customers is significant when you consider adding four scrubbers to the cost of over $1 billion to rate base,” Delaney said. “As noted in the dissent of Judge (Paul J.) Kelly, that even under the EPA's own calculations, adding scrubbers will have little or no impact on visibility, but the OG&E rate payers will be left with a huge bill. We will continue to do what we can to protect our customers from this unfortunate regulatory action.”
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