OG&E 2009 Annual Report Download - page 68

The benefit obligations regulatory asset is comprised of items which are probable of future recovery and that have not yet
been recognized as components of net periodic benefit cost including, net loss, prior service cost and net transition obligation. For
companies not subject to accounting principles for certain types of rate-regulated activities, these charges were required to be included
in Accumulated Other Comprehensive Income. However, for companies subject to accounting principles for certain types of rate-
regulated activities, these charges were allowed to be recorded as a regulatory asset if: (i) the utility had historically recovered and
currently recovers pension and postretirement benefit plan expense in its electric rates and (ii) there was no negative evidence that the
existing regulatory treatment will change. The Company met both criteria and, therefore, recorded the net loss, prior service cost and
net transition obligation as a regulatory asset as these expenses are probable of future recovery. If, in the future, the regulatory bodies
indicate a change in policy related to the recovery of pension and postretirement benefit plan expenses, this could cause the benefit
obligations regulatory asset balance to be reclassified to Accumulated Other Comprehensive Income.
The following table is a summary of the components of the benefit obligations regulatory asset at:
December 31 (In millions) 2009 2008
Defined benefit pension plan and restoration of retirement income plan:
Net loss $ 222.8 $ 259.8
Prior service cost 12.5 3.5
Defined benefit postretirement plans:
Net loss 114.9 70.4
Net transition obligation 7.6 10.2
Prior service cost --- 0.8
Total $ 357.8 $ 344.7
The following amounts in the benefit obligations regulatory asset at December 31, 2009 are expected to be recognized as
components of net periodic benefit cost in 2010:
(In millions)
Defined benefit pension plan and restoration of retirement income plan:
Net loss $ 15.9
Prior service cost 2.7
Defined benefit postretirement plans:
Net loss 9.1
Net transition obligation 2.5
Total $ 30.2
In accordance with the September 2008 OCC rate order, the Company was allowed to defer the Oklahoma storm-related
operation and maintenance expenses in excess of $2.7 million and will reserve for any Oklahoma storm-related expenses less than
$2.7 million. The Company will recover the deferred amounts over a five-year period ending in August 2013.
Income taxes recoverable from customers, which represents income tax benefits previously used to reduce the Company’s
revenues, are treated as regulatory assets and liabilities and are being amortized over the estimated remaining life of the assets to
which they relate. These amounts are being recovered in rates as the temporary differences that generated the income tax benefit turn
around. The income tax related regulatory assets and liabilities are netted on the Company’s Balance Sheets in the line item, “Income
Taxes Recoverable from Customers, Net.”
In accordance with the OCC order received by the Company in December 2005 in its Oklahoma rate case, the Company was
allowed to recover a certain amount of pension plan expenses. These deferred amounts have been recorded as a regulatory asset as the
Company received an order in July 2009 allowing it to begin recovery of approximately $16.8 million of these costs over a four-year
period. In accordance with the APSC order received by the Company in May 2009 in its Arkansas rate case, the Company was
allowed recovery of its 2006 and 2007 pension settlement costs. During the second quarter of 2009, the Company reduced its pension
expense and recorded a regulatory asset for approximately $3.2 million, which will be amortized over approximately a 10-year period,
as allowed in the Arkansas rate order. Both the Oklahoma and Arkansas pension plan expenses are reflected in Deferred Pension Plan
Expenses in the table above.
Unamortized loss on reacquired debt is comprised of unamortized debt issuance costs related to the early retirement of the
Company’s long-term debt. These amounts are being amortized over the term of the long-term debt which replaced the
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