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OGE is yet another utility that strives to balance its businesses between regulated and unregulated, between those businesses that are tied to unregulated commodity risks (and rewards) and those businesses that have greater revenue stability (but are more reliant on regulatory relationships).

OGE is representative of utilities that have benefited from the above balance in the most recent 1-2 years. The company reported earnings on May4th, 2005, and

as a result of its strong and balanced mix of businesses, was able to increase its 2005 earnings guidance from $1.50-$1.60 per share (given in February of 2005), to a current expected 2005 earnings of $1.65-$1.75 per share. How were they able to do this?

Steve Moore, the CEO of OGE, stated in the company's 1st Quarter conference call:

We have increased our earnings guidance for 2005. We had based our earlier guidance on a … conservative outlook for commodity prices, but the strong price environment continues, and our natural gas gathering and processing business is we feel well positioned to capture [that] value.

OGE Energy earned 6 cents a share in the first quarter, … highlighting the value of diversity in our assets and operations. Our electric utility, Oklahoma Gas & Electric Company, recorded a loss of 2 cents, … the Holding Company posted a loss of 1 cent, while Enogex, our natural gas pipeline, earned 9 cents per share.

At … OG&E, we continue to invest in system reliability projects and to pursue customer focused operational improvements. Enogex continues to focus on improving operations, [also], while … exploring new opportunities and new markets, and developing new products …

In all areas of our Company, we’re executing a strategy of operational excellence and thoughtful balanced growth with the right mix of regulated and unregulated assets and operation. This all requires us to be sharply focused on the complex competitive marketplace in which we operate, including the critical role of regulation in our business.

(Quotes are from the CCBN StreetEvents transcript.)

OGE's Wall Street profile has not been high, but after struggling with balance sheet and earnings issues a couple of years ago, the company has been able to restructure and change key aspects of its businesses to allow it a better opportunity to manage each business proactively for better and more predictable shareholder interests. OGE has been able to change the nature of its gas liquids contracts, creating ability to manage the downside risk of that commodity business while still reaping some benefits of the upside potential. And OGE has worked with its regulators to convert some of its purchased power contracts into lower cost rate based power plants, allowing shareholders to have a chance to earn a return on new assets, while offering customers lower cost electricity.

The 1st quarter results, and subsequent raising of OGE's earnings guidance, would appear to highlight how one utility is successfully walking that tightrope between the risks and rewards of running both regulated and unregulated businesses.

Source: OGE increase 2005 earnings targets after 1Q earnings announcement