OG&E 2009 Annual Report Download - page 49

(A) These capital expenditures are contingent upon OCC approval of the Company’s Positive Energy Smart Grid program and are net
of the Smart Grid $130 million grant approved by the DOE.
(B) The Base Capital Expenditure Plan above excludes any environmental expenditures associated with Best Available Retrofit
Technology (“BART”) requirements due to the uncertainty regarding BART costs. As discussed in “– Environmental Laws and
Regulations” below, pursuant to a proposed regional haze agreement the Company has agreed to install low nitrogen oxide (“NOX”)
burners and related equipment at the three affected generating stations. Preliminary estimates indicate the cost will be approximately
$100 million (plus or minus 30 percent). For further information, see “– Environmental Laws and Regulations” below.
(C) Includes expected recoveries of costs incurred for the Company’s railcar operating lease obligations, the Company’s
cogeneration capacity payments, the Company’s unconditional fuel purchase obligations and the Company’s wind purchase
commitments.
N/A – not available
Additional capital expenditures beyond those identified in the table above, including additional incremental growth
opportunities in transmission assets and wind generation assets, will be evaluated based upon their impact upon achieving the
Company’s financial objectives.
The Company also has approximately 720 MWs of contracts with qualified cogeneration facilities (“QF”) and small power
production producers (“QF contracts”) to meet its current and future expected customer needs. The Company will continue reviewing
all of the supply alternatives to these QF contracts that minimize the total cost of generation to its customers, including exercising its
options (if applicable) to extend these QF contracts at pre-determined rates.
Variances in the actual cost of fuel used in electric generation (which includes the operating lease obligations for the
Company’s railcar leases shown above) and certain purchased power costs, as compared to the fuel component included in the cost-of-
service for ratemaking, are passed through to the Company’s customers through fuel adjustment clauses. Accordingly, while the cost
of fuel related to operating leases and the vast majority of unconditional fuel purchase obligations of the Company noted above may
increase capital requirements, such costs are recoverable through fuel adjustment clauses and have little, if any, impact on net capital
requirements and future contractual obligations. The fuel adjustment clauses are subject to periodic review by the OCC, the APSC
and the FERC.
2009 Capital Requirements and Financing Activities
Total capital requirements, consisting of capital expenditures and maturities of long-term debt, were approximately
$600.5 million in 2009. There were no contractual obligations, net of recoveries through fuel adjustment clauses in
2009. Approximately $1.3 million of the 2009 capital requirements were to comply with environmental regulations. This compares to
net capital requirements of approximately $890.2 million in 2008. There were no contractual obligations, net of recoveries through
fuel adjustment clauses in 2008. Approximately $4.0 million of the 2008 capital requirements were to comply with environmental
regulations. During 2009, the Company’s sources of capital were cash generated from operations and proceeds from the issuance of
short-term debt. Changes in working capital reflect the seasonal nature of the Company’s business, the revenue lag between billing
and collection from customers and fuel inventories. See “Financial Condition” for a discussion of significant changes in net working
capital requirements as it pertains to operating cash flow and liquidity.
Long-Term Debt Maturities
There are no maturities of the Company’s long-term debt during the next five years.
Net Available Liquidity
At December 31, 2009, the Company had less than $0.1 million in cash and cash equivalents. At December 31, 2009, the
Company had approximately $378.8 million of net available liquidity under its revolving credit agreement.
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