OG&E 2009 Annual Report Download - page 23

Goods Sold in our Financial Statements. Our revenues, expenses, assets and liabilities may be adversely affected by changes in the
organization, operation and regulation by the FERC or the SPP RTO.
Increased competition resulting from restructuring efforts could have a significant financial impact on us and consequently
decrease our revenue.
We have been and will continue to be affected by competitive changes to the utility and energy industries. Significant
changes already have occurred and additional changes have been proposed to the wholesale electric market. Although retail
restructuring efforts in Oklahoma and Arkansas have been postponed for the time being, if such efforts were renewed, retail
competition and the unbundling of regulated energy service could have a significant financial impact on us due to possible
impairments of assets, a loss of retail customers, lower profit margins and/or increased costs of capital. Any such restructuring could
have a significant impact on our financial position, results of operations and cash flows. We cannot predict when we will be subject to
changes in legislation or regulation, nor can we predict the impact of these changes on our financial position, results of operations or
cash flows.
Events that are beyond our control have increased the level of public and regulatory scrutiny of our industry. Governmental and
market reactions to these events may have negative impacts on our business, financial position, cash flows and access to capital.
As a result of accounting irregularities at public companies in general, and energy companies in particular, and investigations
by governmental authorities into energy trading activities, public companies, including those in the regulated and unregulated utility
business, have been under an increased amount of public and regulatory scrutiny and suspicion. The accounting irregularities have
caused regulators and legislators to review current accounting practices, financial disclosures and relationships between companies
and their independent auditors. The capital markets and rating agencies also have increased their level of scrutiny. We believe that
we are complying with all applicable laws and accounting standards, but it is difficult or impossible to predict or control what effect
these types of events may have on our business, financial position, cash flows or access to the capital markets. It is unclear what
additional laws or regulations may develop, and we cannot predict the ultimate impact of any future changes in accounting regulations
or practices in general with respect to public companies, the energy industry or our operations specifically. Any new accounting
standards could affect the way we are required to record revenues, expenses, assets, liabilities and equity. These changes in
accounting standards could lead to negative impacts on reported earnings or decreases in assets or increases in liabilities that could, in
turn, affect our results of operations and cash flows.
We are subject to substantial utility and energy regulation by governmental agencies. Compliance with current and future utility
and energy regulatory requirements and procurement of necessary approvals, permits and certifications may result in significant
costs to us.
We are subject to substantial regulation from Federal, state and local regulatory agencies. We are required to comply with
numerous laws and regulations and to obtain numerous permits, approvals and certificates from the governmental agencies that
regulate various aspects of our businesses, including customer rates, service regulations, retail service territories, sales of securities,
asset acquisitions and sales, accounting policies and practices and the operation of generating facilities. We believe the necessary
permits, approvals and certificates have been obtained for our existing operations and that our business is conducted in accordance
with applicable laws; however, we are unable to predict the impact on our operating results from future regulatory activities of these
agencies.
The Energy Policy Act of 2005 gave the FERC authority to establish mandatory electric reliability rules enforceable with
significant monetary penalties. The FERC has approved the North American Electric Reliability Corporation (“NERC”) as the
Electric Reliability Organization for North America and delegated to it the development and enforcement of electric transmission
reliability rules. It is our intent to comply with all applicable reliability rules and expediently correct a violation should it occur. We
are subject to a NERC compliance audit every three years as well as periodic spot check audits and cannot predict the outcome of
those audits.
OPERATIONAL RISKS
Our results of operations may be impacted by disruptions beyond our control.
We are exposed to risks related to performance of contractual obligations by our suppliers. We are dependent on coal for
much of our electric generating capacity. We rely on suppliers to deliver coal in accordance with short and long-
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