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Income Taxes
 12 Months Ended
Dec. 31, 2024
Income Taxes [Abstract]  
Income Taxes

7. Income Taxes

 

Income Tax Expense (Benefit)

 

The following table presents the components of income tax expense (benefit).

 

OGE Energy

 

 

OG&E

 

Year Ended December 31 (In millions)

 

2024

 

 

2023

 

 

2022

 

 

2024

 

 

2023

 

 

2022

 

Provision (benefit) for current income taxes:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Federal

 

$

62.0

 

 

$

46.1

 

 

$

250.8

 

 

$

72.7

 

 

$

48.9

 

 

$

(141.2

)

State

 

 

0.8

 

 

 

(2.2

)

 

 

28.8

 

 

 

3.0

 

 

 

3.7

 

 

 

(0.9

)

Total provision (benefit) for current income taxes

 

 

62.8

 

 

 

43.9

 

 

 

279.6

 

 

 

75.7

 

 

 

52.6

 

 

 

(142.1

)

Provision (benefit) for deferred income taxes, net:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Federal

 

 

8.0

 

 

 

18.1

 

 

 

(110.8

)

 

 

9.0

 

 

 

18.8

 

 

 

219.9

 

State

 

 

8.3

 

 

 

(5.8

)

 

 

(45.2

)

 

 

8.5

 

 

 

(2.6

)

 

 

(1.4

)

Total provision (benefit) for deferred income taxes, net

 

 

16.3

 

 

 

12.3

 

 

 

(156.0

)

 

 

17.5

 

 

 

16.2

 

 

 

218.5

 

Total income tax expense

 

$

79.1

 

 

$

56.2

 

 

$

123.6

 

 

$

93.2

 

 

$

68.8

 

 

$

76.4

 

 

OGE Energy files consolidated income tax returns in the U.S. federal jurisdiction and various state jurisdictions. OG&E is a part of the consolidated income tax return of OGE Energy. With few exceptions, the Registrants are no longer subject to U.S. federal tax or state and local examinations by tax authorities for years prior to 2021. Income taxes are generally allocated to each company in the affiliated group, including OG&E, based on its stand-alone taxable income or loss. Federal investment tax credits previously claimed on electric utility property have been deferred and will be amortized to income over the life of the related property. Oklahoma investment tax credits are also earned on investments at electric generating facilities which further reduce OG&E's effective tax rate.

 

The following table presents a reconciliation of the statutory tax rates to the effective income tax rate.

 

OGE Energy

 

 

OG&E

 

Year Ended December 31

 

2024

 

2023

 

2022

 

 

2024

 

2023

 

2022

 

Statutory federal tax rate

 

 

21.0

%

 

21.0

%

 

21.0

%

 

 

21.0

%

 

21.0

%

 

21.0

%

State income taxes, net of federal income tax
benefit

 

 

1.3

 

 

(1.3

)

 

(1.0

)

 

 

1.5

 

 

0.3

 

 

(0.4

)

Stock-based compensation

 

 

(0.3

)

 

0.1

 

 

—

 

 

 

(0.1

)

 

—

 

 

—

 

Executive compensation limitation

 

 

0.2

 

 

0.2

 

 

0.1

 

 

 

0.1

 

 

—

 

 

—

 

Amortization of net unfunded deferred taxes

 

 

(6.3

)

 

(7.0

)

 

(3.2

)

 

 

(5.8

)

 

(6.7

)

 

(5.0

)

Remeasurement of state deferred tax liabilities

 

 

—

 

 

—

 

 

(0.6

)

 

 

—

 

 

—

 

 

—

 

401(k) dividends

 

 

(0.2

)

 

(0.3

)

 

(0.2

)

 

 

—

 

 

—

 

 

—

 

Other

 

 

(0.5

)

 

(0.8

)

 

(0.4

)

 

 

(0.1

)

 

(0.7

)

 

(0.8

)

Effective income tax rate

 

 

15.2

%

 

11.9

%

 

15.7

%

 

 

16.6

%

 

13.9

%

 

14.8

%

 

The deferred tax provisions are recognized as costs in the ratemaking process by the commissions having jurisdiction over the rates charged by OG&E. The following table presents the components of Deferred Income Taxes at December 31, 2024 and 2023.

 

OGE Energy

 

 

OG&E

 

December 31 (In millions)

 

2024

 

 

2023

 

 

2024

 

 

2023

 

Deferred income tax liabilities, net:

 

 

 

 

 

 

 

 

 

 

 

 

Accelerated depreciation and other property related differences

 

$

1,809.5

 

 

$

1,753.8

 

 

$

1,809.5

 

 

$

1,753.8

 

Regulatory assets

 

 

65.6

 

 

 

67.6

 

 

 

65.6

 

 

 

67.6

 

Pension Plan

 

 

22.0

 

 

 

21.8

 

 

 

38.6

 

 

 

37.9

 

Corporate owned life insurance

 

 

2.8

 

 

 

2.6

 

 

 

—

 

 

 

—

 

Bond redemption-unamortized costs

 

 

1.2

 

 

 

1.4

 

 

 

1.2

 

 

 

1.4

 

Income taxes recoverable from customers, net

 

 

(188.6

)

 

 

(202.7

)

 

 

(188.6

)

 

 

(202.7

)

State tax credits

 

 

(223.8

)

 

 

(228.8

)

 

 

(208.5

)

 

 

(213.5

)

Regulatory liabilities

 

 

(57.3

)

 

 

(54.4

)

 

 

(57.3

)

 

 

(54.4

)

Asset retirement obligations

 

 

(20.9

)

 

 

(19.7

)

 

 

(20.9

)

 

 

(19.7

)

Postretirement medical and life insurance benefits

 

 

(19.1

)

 

 

(20.8

)

 

 

(12.6

)

 

 

(14.0

)

Accrued liabilities

 

 

(15.7

)

 

 

(13.2

)

 

 

(9.8

)

 

 

(5.5

)

Deferred federal investment tax credits

 

 

(2.5

)

 

 

(2.7

)

 

 

(2.5

)

 

 

(2.7

)

Accrued vacation

 

 

(1.9

)

 

 

(1.4

)

 

 

(1.9

)

 

 

(1.4

)

Uncollectible accounts

 

 

(0.5

)

 

 

(0.5

)

 

 

(0.5

)

 

 

(0.4

)

Other

 

 

0.3

 

 

 

(2.2

)

 

 

(1.6

)

 

 

(5.6

)

Total deferred income tax liabilities, net

 

$

1,371.1

 

 

$

1,300.8

 

 

$

1,410.7

 

 

$

1,340.8

 

 

As of December 31, 2024, the Registrants have classified $14.7 million of unrecognized tax benefits as a reduction of deferred tax assets recorded. Management is currently unaware of any issues under review that could result in significant additional payments, accruals or other material deviation from this amount.

 

The following table presents a reconciliation of the Registrants' total gross unrecognized tax benefits as of the years ended December 31, 2024, 2023 and 2022.

(In millions)

 

2024

 

 

2023

 

 

2022

 

Balance at January 1

 

$

28.6

 

 

$

20.7

 

 

$

22.4

 

Tax positions related to current year:

 

 

 

 

 

 

 

 

 

Additions

 

 

—

 

 

 

7.9

 

 

 

—

 

Reductions

 

 

—

 

 

 

—

 

 

 

(1.7

)

Balance at December 31

 

$

28.6

 

 

$

28.6

 

 

$

20.7

 

 

 

The Registrants recognize tax benefits from an uncertain tax position only if it is more likely than not the tax position will be sustained on examination by taxing authorities based on the technical merits of the position. The tax benefits in the financial statements from such positions are then measured based on the largest benefit that has a greater than 50 percent likelihood of being realized on settlement. In 2023, the Registrants recorded a $7.9 million reserve related to a state tax position taken associated with the sale of Energy Transfer units.

 

Where applicable, the Registrants classify income tax-related interest and penalties as interest expense and other expense, respectively. With regard to uncertain tax positions, there were $0.6 million in income tax-related interest and no penalties recorded during the year ended December 31, 2024, and no interest or penalties recorded during the years ended December 31, 2023 and 2022.

 

As of December 31, 2024, 2023 and 2022, there were $22.6 million, $22.6 million and $16.4 million, respectively, of unrecognized tax benefits that, if recognized, would affect the annual effective tax rate.

 

The following table presents a summary of the Registrants' tax credits carried forward as deferred tax assets. Under current law, the Registrants expect future taxable income will be sufficient to utilize all credits before they begin to expire after 2030.

 

OGE Energy

 

 

OG&E

 

 

 

(In millions)

 

Carry Forward Amount

 

 

Deferred Tax Asset

 

 

Carry Forward Amount

 

 

Deferred Tax Asset

 

 

Earliest Expiration Date

State tax credits:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Oklahoma investment tax credits

 

$

264.3

 

 

$

208.8

 

 

$

245.0

 

 

$

193.5

 

 

N/A

Oklahoma capital investment board credits

 

$

12.8

 

 

$

12.8

 

 

$

12.8

 

 

$

12.8

 

 

N/A

Oklahoma zero emission tax credits

 

$

4.2

 

 

$

2.2

 

 

$

4.2

 

 

$

2.2

 

 

2030

N/A - not applicable