OG&E 2009 Annual Report Download - page 45

Ÿ an increase of approximately $6.6 million in contract technical and construction services expense and approximately
$1.5 million in materials and supplies expense primarily attributable to overhaul expenses at several of the
Company’s power plants in 2008;
Ÿ an increase of approximately $5.3 million due to increased spending on vegetation management;
Ÿ an increase of approximately $2.2 million in fleet transportation expense primarily due to higher fuel and
maintenance costs in 2008; and
Ÿ an increase of approximately $1.3 million in professional services expense primarily due to higher engineering
consulting services in 2008 as compared to 2007.
These increases in other operation and maintenance expenses were partially offset by:
Ÿ lower allocations from OGE Energy of approximately $9.0 million due to lower pension and medical expenses and
lower incentive compensation accruals;
Ÿ a decrease of approximately $4.0 million primarily due to overtime worked during the 2007 ice storm; and
Ÿ a decrease of approximately $3.0 million due to lower bad debt expense.
Depreciation and amortization expense was approximately $155.0 million in 2008 as compared to approximately $141.3
million in 2007, an increase of approximately $13.7 million or 9.7 percent, primarily due to additional assets being place into service,
including the Redbud Facility that was placed into service in September 2008, and amortization of the Arkansas storm costs that are
currently recorded as a regulatory asset.
Taxes other than income were approximately $59.7 million in 2008 as compared to approximately $56.0 million in 2007, an
increase of approximately $3.7 million, or 6.6 percent, primarily due to higher ad valorem and payroll taxes.
Additional Information
Interest Income. Interest income was approximately $4.4 million in 2008. There was less than $0.1 million of interest
income in 2007. The increase in interest income was primarily due to interest from customers related to the fuel under recovery
balance in 2008 and interest income from short-term investments.
Other Income. Other income was approximately $3.6 million in 2008 as compared to approximately $5.0 million in 2007, a
decrease of approximately $1.4 million, or 28.0 percent, primarily due to a lower gain on the guaranteed flat bill tariff due to higher
than expected usage resulting from more customers participating in this program.
Other Expense. Other expense was approximately $11.8 million in 2008 as compared to approximately $7.2 million in 2007,
an increase of approximately $4.6 million or 63.9 percent, primarily due to 2008 write-downs of approximately $7.5 million for
deferred costs associated with the cancelled Red Rock power plant and approximately $1.5 million associated with the 2007 and 2006
storm costs. These increases in other expense were partially offset by a write-off of approximately $3.1 million associated with the
cancelled Red Rock power plant for the Arkansas and the FERC jurisdictions during 2007.
Interest Expense. Interest expense was approximately $79.1 million in 2008 as compared to approximately $54.9 million in
2007, an increase of approximately $24.2 million, or 44.1 percent. The increase in interest expense was primarily due to:
Ÿ an increase of approximately $16.4 million in interest expense related to the issuances of long-term debt in 2008;
Ÿ an increase of approximately $7.2 million due to a settlement with the Internal Revenue Service (“IRS”) resulting in
a reversal of interest expense in 2007; and
Ÿ an increase of approximately $2.9 million in interest expense related to interest on short-term debt primarily due to
increased commercial paper borrowings and revolving credit borrowings to fund the purchase of the Redbud Facility
and daily operational needs of the Company.
These increases in interest expense were partially offset by a decrease of approximately $3.1 million in interest expense
associated with the interest due to customers related to the fuel over recovery balance in 2007.
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