OG&E 2009 Annual Report Download - page 100

Water
The Company filed an Oklahoma Pollutant Discharge Elimination (“OPDES”) permit renewal application with the state of
Oklahoma on August 4, 2008 for its Seminole generating station and received a draft permit for review on January 9, 2009 and
December 4, 2009. The Company provided comments on the initial draft permit and will provide additional comments on the final
draft permit during the public comment period. In addition, the Company filed OPDES permit renewal applications for its Muskogee,
Mustang and Horseshoe Lake generating stations on March 4, 2009, April 3, 2009 and October 29, 2009, respectively.
Other
In the normal course of business, the Company is confronted with issues or events that may result in a contingent
liability. These generally relate to lawsuits, claims made by third parties, environmental actions or the action of various regulatory
agencies. When appropriate, management consults with legal counsel and other appropriate experts to assess the claim. If in
management’s opinion, the Company has incurred a probable loss as set forth by accounting principles generally accepted in the
United States, an estimate is made of the loss and the appropriate accounting entries are reflected in the Company’s Financial
Statements. Except as otherwise stated above, in Note 13 below and in Item 3 of this Form 10-K, management, after consultation with
legal counsel, does not currently anticipate that liabilities arising out of these pending or threatened lawsuits, claims and contingencies
will have a material adverse effect on the Company’s financial position, results of operations or cash flows.
13. Rate Matters and Regulation
Regulation and Rates
The Company’s retail electric tariffs are regulated by the OCC in Oklahoma and by the APSC in Arkansas. The issuance of
certain securities by the Company is also regulated by the OCC and the APSC. The Company’s wholesale electric tariffs,
transmission activities, short-term borrowing authorization and accounting practices are subject to the jurisdiction of the FERC. The
Secretary of the U.S. Department of Energy (“DOE”) has jurisdiction over some of the Company’s facilities and operations. For the
year ended December 31, 2009, approximately 89 percent of the Company’s electric revenue was subject to the jurisdiction of the
OCC, eight percent to the APSC and three percent to the FERC.
The OCC issued an order in 1996 authorizing the Company to reorganize into a subsidiary of OGE Energy. The order
required that, among other things, (i) OGE Energy permit the OCC access to the books and records of OGE Energy and its affiliates
relating to transactions with the Company, (ii) OGE Energy employ accounting and other procedures and controls to protect against
subsidization of non-utility activities by the Company’s customers and (iii) OGE Energy refrain from pledging Company assets or
income for affiliate transactions. In addition, the Energy Policy Act of 2005 enacted the Public Utility Holding Company Act of 2005,
which in turn granted to the FERC access to the books and records of OGE Energy and its affiliates as the FERC deems relevant to
costs incurred by the Company or necessary or appropriate for the protection of utility customers with respect to the FERC
jurisdictional rates.
Completed Regulatory Matters
Arkansas Rate Case Filing
On August 29, 2008, the Company filed with the APSC an application for an annual rate increase of approximately $26.4
million to recover, among other things, costs for investments in the Redbud Facility and improvements in its system of power lines,
substations and related equipment to ensure that the Company can reliably meet growing customer demand for electricity. On March
18, 2009, the Company, the APSC Staff and the Arkansas Attorney General filed a settlement agreement in this matter calling for a
general rate increase of approximately $13.6 million. This settlement agreement also allows implementation of the Company’s “time-
of-use” tariff which allows participating customers to save on their electricity bills by shifting some of the electricity consumption to
times when demand for electricity is lowest. On May 20, 2009, the APSC approved a general rate increase of approximately $13.3
million, which excludes approximately $0.3 million in storm costs discussed below. The Company implemented the new electric rates
effective June 1, 2009.
2008 Arkansas Storm Cost Filing
On October 30, 2008, the Company filed an application with the APSC requesting authority to defer its 2008 storm costs that
exceed the amount recovered in base rates. The application also requested the APSC to provide for recovery of the deferred 2008
storm costs in the Company’s pending rate case. On December 19, 2008, the APSC issued an order authorizing
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