OG&E 2009 Annual Report Download - page 10

approving the settlement agreement in this case, with the rider being implemented on December 4, 2009. Capital expenditures
associated with this project were approximately $270 million.
In connection with OU Spirit, in January 2008, the Company filed with the SPP for a Large Generator Interconnection
Agreement (“LGIA”) for this project. Since January 2008, the SPP has been studying this requested interconnection to determine the
feasibility of the request, the impact of the interconnection on the SPP transmission system and the facilities needed to accommodate
the interconnection. Given the backlog of interconnection requests at the SPP, there has been significant delay in completing the study
process and in the Company receiving a final LGIA. On May 29, 2009, the Company executed an interim LGIA, allowing OU Spirit
to interconnect to the transmission grid, subject to certain conditions. In connection with the interim LGIA, the Company posted a
letter of credit with the SPP of approximately $10.9 million, which was later reduced to approximately $9.9 million in October 2009
and further reduced to approximately $9.2 million in February 2010, related to the costs of upgrades required for the Company to
obtain transmission service from its new OU Spirit wind farm. The SPP filed the interim LGIA with the FERC on June 29, 2009. On
August 27, 2009, the FERC issued an order accepting the interim LGIA, subject to certain conditions, which enables OU Spirit to
interconnect into the transmission grid until the final LGIA can be put in place, which is expected by mid-2010.
In connection with OU Spirit and to support the continued development of Oklahoma’s wind resources, on April 1, 2009, the
Company announced a $3.75 million project with the Oklahoma Department of Wildlife Conservation to help provide a habitat for the
lesser prairie chicken, which ranks as one of Oklahoma’s more imperiled species. Through its efforts, the Company hopes to help
offset the effect of wind farm development on the lesser prairie chicken and help ensure that the bird does not reach endangered status,
which could significantly limit the ability to develop Oklahoma’s wind potential.
Renewable Energy Filing. The Company announced in October 2007 its goal to increase its wind power generation over
the following four years from its then current 170 MWs to 770 MWs and, as part of this plan, on December 8, 2008, the Company
issued a request for proposal (“RFP”) to wind developers for construction of up to 300 MWs of new capability, which the Company
intends to add to its power-generation portfolio by the end of 2010. In June 2009, the Company announced that it had selected a short
list of bidders for a total of 430 MWs and that it was considering acquiring more than the approximately 300 MWs of wind energy
originally contemplated in the initial RFP. On September 29, 2009, the Company announced that, from its short list, it had reached
agreements with two developers who are to build two new wind farms, totaling 280 MWs, in northwestern Oklahoma. Under the
terms of the agreements, CPV Keenan is to build a 150 MW wind farm in Woodward County and Edison Mission Energy is to build a
130 MW facility in Dewey County near Taloga. The agreements are both 20-year power purchase agreements, under which the
developers are to build, own and operate the wind generating facilities and the Company will purchase their electric output. On
October 30, 2009, the Company filed separate applications with the OCC seeking pre-approval for the recovery of the costs associated
with purchasing power from these projects. On December 9, 2009, all parties to these cases signed settlement agreements whereby the
stipulating parties requested that the OCC issue orders: (i) finding that the execution of the power purchase agreements complied with
the OCC competitive bidding rules, are prudent and are in the public’s interest, (ii) approving the power purchase agreements and (iii)
authorizing the Company to recover the costs of the power purchase agreements through the Company’s fuel adjustment clause. On
January 5, 2010, the Company received an order from the OCC approving the power purchase agreements and authorizing the
Company to recover the costs of the power purchase agreements through the Company’s fuel adjustment clause. The two wind farms
are expected to be in service by the end of 2010. Negotiations with the third bidder on the Company’s short list announced in June,
for an additional 150 MWs of wind energy from Texas County were terminated in early October. The Company will continue to
evaluate renewable opportunities to add to its power-generation portfolio in the future.
Windspeed Transmission Line Project. The Company filed an application on May 19, 2008 with the OCC requesting pre-
approval to recover from Oklahoma customers the cost to construct the Windspeed transmission line at a construction cost of
approximately $211 million, plus approximately $7 million in allowance for funds used during construction (“AFUDC”), for a total of
approximately $218 million. This transmission line is a critical first step to increased wind development in western Oklahoma. In the
application, the Company also requested authorization to implement a recovery rider to be effective when the transmission line is
completed and in service, which is expected during April 2010. Finally, the application requested the OCC to approve new renewable
tariff offerings to the Company’s Oklahoma customers. A settlement agreement was signed by all parties in the matter on July 31,
2008. Under the terms of the settlement agreement, the parties agreed that the Company will: (i) receive pre-approval for construction
of the Windspeed transmission line and a conclusion that the construction costs of the transmission line are prudent, (ii) receive a
recovery rider for the revenue requirement of the $218 million in construction costs and AFUDC when the transmission line
6