OG&E 2009 Annual Report Download - page 29

At December 31, 2009, the Company’s transmission system included: (i) 48 substations with a total capacity of
approximately 9.9 million kilo Volt-Amps (“kVA”) and approximately 4,064 structure miles of lines in Oklahoma and (ii) seven
substations with a total capacity of approximately 2.5 million kVA and approximately 271 structure miles of lines in Arkansas. The
Company’s distribution system included: (i) 348 substations with a total capacity of approximately 8.9 million kVA, 26,316 structure
miles of overhead lines, 1,729 miles of underground conduit and 8,806 miles of underground conductors in Oklahoma and (ii) 38
substations with a total capacity of approximately 1.1 million kVA, 2,239 structure miles of overhead lines, 187 miles of underground
conduit and 567 miles of underground conductors in Arkansas.
The Company owns 140,133 square feet of office space at its executive offices at 321 North Harvey, Oklahoma City,
Oklahoma 73101. In addition to its executive offices, the Company owns numerous facilities throughout its service territory that
support its operations. These facilities include, but are not limited to, district offices, fleet and equipment service facilities, operation
support and other properties.
During the three years ended December 31, 2009, the Company’s gross property, plant and equipment (excluding
construction work in progress) additions were approximately $1.8 billion and gross retirements were approximately $132.8
million. These additions were provided by cash generated from operations, short-term borrowings (through a combination of bank
borrowings, commercial paper and borrowings from OGE Energy), long-term borrowings and permanent financings. The additions
during this three-year period amounted to approximately 28.0 percent of gross property, plant and equipment (excluding construction
work in progress) at December 31, 2009.
Item 3. Legal Proceedings.
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. 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 set forth
below and in Notes 12 and 13 of Notes to Financial Statements, 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.
1. United States of America ex rel., Jack J. Grynberg v. Enogex Inc., Enogex Services Corporation and the
Company. (U.S. District Court for the Western District of Oklahoma, Case No. CIV-97-1010-L.) United States of America ex rel.,
Jack J. Grynberg v. Transok Inc. et al. (U.S. District Court for the Eastern District of Louisiana, Case No. 97-2089; U.S. District
Court for the Western District of Oklahoma, Case No. 97-1009M.). On June 15, 1999, the Company was served with the plaintiff’s
complaint, which was a qui tam action under the False Claims Act. Plaintiff Jack J. Grynberg, as individual relator on behalf of the
Federal government, alleged: (a) each of the named defendants had improperly or intentionally mismeasured gas (both volume and
British thermal unit content) purchased from Federal and Indian lands which resulted in the under reporting and underpayment of gas
royalties owed to the Federal government; (b) certain provisions generally found in gas purchase contracts were improper;
(c) transactions by affiliated companies were not arms-length; (d) excess processing cost deduction; and (e) failure to account for
production separated out as a result of gas processing. Grynberg sought the following damages: (a) additional royalties which he
claimed should have been paid to the Federal government, some percentage of which Grynberg, as relator, may be entitled to recover;
(b) treble damages; (c) civil penalties; (d) an order requiring defendants to measure the way Grynberg contends is the better way to do
so; and (e) interest, costs and attorneys’ fees. Various appeals and hearings were held in this matter from 2006 to late 2009. In
October 2009, this matter concluded with the dismissal of all complaints against the Company. The Company now considers this case
closed.
2. Will Price, et al. v. El Paso Natural Gas Co., et al. (Price I). On September 24, 1999, various subsidiaries of OGE
Energy were served with a class action petition filed in the District Court of Stevens County, Kansas by Quinque Operating Company
and other named plaintiffs alleging the mismeasurement of natural gas on non-Federal lands. On April 10, 2003, the court entered an
order denying class certification. On May 12, 2003, the plaintiffs (now Will Price, Stixon Petroleum, Inc., Thomas F. Boles and the
Cooper Clark Foundation, on behalf of themselves and other royalty interest owners) filed a motion seeking to file an amended class
action petition, and the court granted the motion on July 28, 2003. In its amended petition (the “Fourth Amended Petition”), the
Company and Enogex Inc. were omitted from the case but two of OGE Energy’s other subsidiary entities remained as
defendants. The plaintiffs’ Fourth Amended Petition seeks
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