OG&E 2011 Annual Report Download - page 58

OGE Energy Consolidated
The Company’s property, plant and equipment and related accumulated
depreciation are divided into the following major classes at:
Total Property, Net Property,
Plant and Accumulated Plant and
(In millions, December 31) Equipment Depreciation Equipment
2011
OGE Energy (holding company)
Property, plant and equipment $÷÷«124.6 $÷÷«90.6 $÷÷«34.0
OGE Energy property,
plant and equipment 124.6 90.6 34.0
OG&E
Distribution assets 2,981.3 920.3 2,061.0
Electric generation assets 3,360.6 1,215.8 2,144.8
Transmission assets 1,464.2 339.6 1,124.6
Intangible plant 43.2 20.3 22.9
Other property and equipment 293.9 96.3 197.6
OG&E property,
plant and equipment 8,143.2 2,592.3 5,550.9
Enogex
Transportation and storage assets 956.9 271.0 685.9
Gathering and processing assets 1,580.1 381.0 1,199.1
Marketing assets 10.1 6.0 4.1
Enogex property,
plant and equipment 2,547.1 658.0 1,889.1
Total property,
plant and equipment $10,814.9 $3,340.9 $7,474.0
2010
OGE Energy (holding company)
Property, plant and equipment $÷÷«111.1 $÷÷«77.5 $÷÷«33.6
OGE Energy property,
plant and equipment 111.1 77.5 33.6
OG&E
Distribution assets 2,833.4 897.4 1,936.0
Electric generation assets 3,047.1 1,164.6 1,882.5
Transmission assets 1,221.3 325.6 895.7
Intangible plant 26.5 20.7 5.8
Other property and equipment 243.4 86.1 157.3
OG&E property,
plant and equipment 7,371.7 2,494.4 4,877.3
Enogex
Transportation and storage assets 924.7 250.0 674.7
Gathering and processing assets 1,230.8 354.6 876.2
Marketing assets 9.7 7.1 2.6
Enogex property,
plant and equipment 2,165.2 611.7 1,553.5
Total property,
plant and equipment $÷9,648.0 $3,183.6 $6,464.4
Depreciation and Amortization
OG&E
The provision for depreciation, which was 2.9 percent and 3.0 percent,
respectively, of the average depreciable utility plant for 2011 and 2010,
is provided on a straight-line method over the estimated service life of
the utility assets. Depreciation is provided at the unit level for production
plant and at the account or sub-account level for all other plant, and
is based on the average life group method. In 2012, the provision for
depreciation is projected to be 2.9 percent of the average depreciable
utility plant. Amortization of intangible assets is computed using the
straight-line method. Of the remaining amortizable intangible plant balance
at December 31, 2011, 48.3 percent will be amortized over three years
with 51.7 percent of the remaining amortizable intangible plant balance
at December 31, 2011 being amortized over their respective lives rang-
ing from four to 25 years. Amortization of plant acquisition adjustments
is provided on a straight-line basis over the estimated remaining service
life of the acquired asset. Plant acquisition adjustments include $148.3 mil-
lion for the Redbud Plant, which are being amortized over a 27-year life
and $3.3 million for certain substation facilities in OG&E’s service territory,
which are being amortized over a 26 to 59-year period.
Enogex
For Enogex, depreciation is computed principally on the straight-line
method using estimated useful lives of three to 83 years for transporta-
tion and storage assets, three to 30 years for gathering and processing
assets and three to 10 years for general plant assets. Amortization of
intangible assets other than debt costs is computed using the straight-
line method over the respective lives of the intangible assets ranging
up to 20 years.
The computation of depreciation expense requires judgment regarding
the estimated useful lives and salvage value of assets at the time the
assets are placed in service. As circumstances warrant, useful lives are
adjusted when changes in planned use, changes in estimated produc-
tion lives of affiliated natural gas basins or other factors indicate that a
different life would be more appropriate. Such changes could materially
impact future depreciation expense. Changes in useful lives that do
not result in the impairment of an asset are recognized prospectively.
The computation of amortization expense on intangible assets requires
judgment regarding the amortization method used. The intangible asset
should be amortized over its useful life using a method of amortization
that reflects the pattern in which the economic benefits of the intangible
asset are consumed.
56 OGE Energy Corp.