OG&E 2011 Annual Report Download - page 33

OGE Energy Corp. 31
Contractual Obligations
The following table summarizes the Company’s contractual obligations
at December 31, 2011. See the Company’s Consolidated Statements of
Capitalization and Note 16 of Notes to Consolidated Financial Statements
for additional information.
OG&E also has 720 MWs of qualified cogeneration facilities
(“QF”) contracts to meet its current and future expected customer
needs. OG&E will continue reviewing all of the supply alternatives
to these contracts with QFs and small power production producers
(“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 OG&E’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 OG&E’s customers through fuel adjustment clauses.
Accordingly, while the cost of fuel related to operating leases and the
vast majority of minimum fuel purchase commitments of OG&E 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 adjust-
ment clauses are subject to periodic review by the OCC, the APSC
and the FERC.
(In millions) 2012 2013–2014 2015–2016 After 2016 Total
Maturities of long-term debt(A) $÷÷÷÷– $÷«300.0 $«260.0 $«2,185.4 $«2,745.4
Operating lease obligations
OG&E railcars 2.9 5.7 30.1 – 38.7
Enogex noncancellable operating leases 3.9 5.4 4.6 0.6 14.5
Total operating lease obligations 6.8 11.1 34.7 0.6 53.2
Other purchase obligations and commitments
OG&E cogeneration capacity and fixed operation and maintenance payments 90.3 176.7 168.5 401.1 836.6
OG&E expected cogeneration energy payments 59.3 150.2 161.0 600.8 971.3
OG&E minimum fuel purchase commitments 380.2 280.3 90.4 – 750.9
OG&E expected wind purchase commitments 32.4 66.1 68.7 492.0 659.2
OG&E long-term service agreements 4.5 40.3 10.1 59.8 114.7
OER Cheyenne Plains commitments 5.3 13.0 1.6 – 19.9
OER MEP commitments 2.1 3.3 – – 5.4
OER other commitments 4.9 6.2 3.8 – 14.9
Total other purchase obligations and commitments 579.0 736.1 504.1 1,553.7 3,372.9
Total contractual obligations 585.8 1,047.2 798.8 3,739.7 6,171.5
Amounts recoverable through fuel adjustment clause(B) (474.8) (502.3) (350.2) (1,092.8) (2,420.1)
Total contractual obligations, net $«111.0 $÷«544.9 $«448.6 $«2,646.9 $«3,751.4
(A) Maturities of the Company’s long-term debt during the next five years consist of $300 million and $260 million in years 2014 and 2016, respectively. There are no maturities of the Company’s long-term
debt in years 2012, 2013 or 2015.
(B) Includes expected recoveries of costs incurred for OG&E’s railcar operating lease obligations, OG&E’s cogeneration expected energy payments, OG&E’s minimum fuel purchase commitments and
OG&E’s expected wind purchase commitments.
Pension and Postretirement Benefit Plans
At December 31, 2011, 38.6 percent of the Pension Plan investments
were in listed common stocks with the balance primarily invested in
bonds, debentures and notes, U.S. Government securities, a commin-
gled fund and a common collective trust as presented in Note 14 of
Notes to Consolidated Financial Statements. In 2011, asset returns
on the Pension Plan were 1.4 percent due to the gains in fixed income
investments partially offset by losses in equity investments in 2011.
During the same time, corporate bond yields, which are used in deter-
mining the discount rate for future pension obligations, have continued
to decline. During each of 2011 and 2010, OGE Energy made contribu-
tions to its Pension Plan of $50 million to help ensure that the Pension
Plan maintains an adequate funded status. The level of funding is
dependent on returns on plan assets and future discount rates. During
2012, OGE Energy may contribute up to $35 million to its Pension Plan.
OGE Energy could be required to make additional contributions if the
value of its pension trust and postretirement benefit plan trust assets
are adversely impacted by a major market disruption in the future.
The following table presents the status of the Company’s Pension
Plan, the Restoration of Retirement Income Plan and the postretirement
benefit plans at December 31, 2011 and 2010. These amounts have been
recorded in Accrued Benefit Obligations with the offset in Accumulated
Other Comprehensive Loss (except OG&E’s portion which is recorded
as a regulatory asset as discussed in Note 1 of Notes to Consolidated
Financial Statements) in the Company’s Consolidated Balance Sheet.