OG&E 2009 Annual Report Download - page 55

Allowance for Uncollectible Accounts Receivable
Customer balances are generally written off if not collected within six months after the final billing date. The allowance for
uncollectible accounts receivable is calculated by multiplying the last six months of electric revenue by the provision rate. The
provision rate is based on a 12-month historical average of actual balances written off. To the extent the historical collection rates are
not representative of future collections, there could be an effect on the amount of uncollectible expense recognized. Beginning in
August 2009 and going forward, there was a change in the provision calculation as a result of the Oklahoma rate case whereby the
portion of the uncollectible provision related to fuel will be recovered through the fuel adjustment clause. At December 31, 2009, if
the provision rate were to increase or decrease by 10 percent, this would cause a change in the uncollectible expense recognized of
approximately $0.2 million. The allowance for uncollectible accounts receivable is a reduction to Accounts Receivable on the
Balance Sheets and is included in Other Operation and Maintenance Expense on the Statements of Income. The allowance for
uncollectible accounts receivable was approximately $1.7 million and $2.3 million at December 31, 2009 and 2008, respectively.
Accounting Pronouncements
See Notes to Financial Statements for a discussion of accounting principles that are applicable to the Company.
Commitments and Contingencies
Except as disclosed otherwise in this Form 10-K, management, after consultation with legal counsel, does not currently
anticipate that liabilities arising out of these pending or threatened lawsuits, claims and contingencies will have a material adverse
effect on the Company’s financial position, results of operations or cash flows. See Notes 12 and 13 of Notes to Financial Statements
and Item 3 of Part I in this Form 10-K for a discussion of the Company’s commitments and contingencies.
Environmental Laws and Regulations
The activities of the Company are subject to stringent and complex Federal, state and local laws and regulations governing
environmental protection including the discharge of materials into the environment. These laws and regulations can restrict or impact
the Company’s business activities in many ways, such as restricting the way it can handle or dispose of its wastes, requiring remedial
action to mitigate pollution conditions that may be caused by its operations or that are attributable to former operators, regulating
future construction activities to avoid endangered species or enjoining some or all of the operations of facilities deemed in
noncompliance with permits issued pursuant to such environmental laws and regulations. In most instances, the applicable regulatory
requirements relate to water and air pollution control or solid waste management measures. Failure to comply with these laws and
regulations may result in the assessment of administrative, civil and criminal penalties, the imposition of remedial requirements, and
the issuance of orders enjoining future operations. Certain environmental statutes can impose burdensome liability for costs required
to clean up and restore sites where substances or wastes have been disposed or otherwise released into the environment. Moreover, it
is not uncommon for neighboring landowners and other third parties to file claims for personal injury and property damage allegedly
caused by the release of substances or wastes into the environment. The Company handles some materials subject to the requirements
of the Federal Resource Conservation and Recovery Act and the Federal Water Pollution Control Act of 1972, as amended (“Federal
Clean Water Act”) and comparable state statutes, prepares and files reports and documents pursuant to the Toxic Substance Control
Act and the Emergency Planning and Community Right to Know Act and obtains permits pursuant to the Federal Clean Air Act and
comparable state air statutes.
Environmental regulation can increase the cost of planning, design, initial installation and operation of the Company’s
facilities. Historically, the Company’s total expenditures for environmental control facilities and for remediation have not been
significant in relation to its financial position or results of operations. The Company believes, however, that it is reasonably likely that
the trend in environmental legislation and regulations will continue towards more restrictive standards. Compliance with these
standards may increase the cost of conducting business.
Approximately $1.9 million and $2.3 million, respectively of the Company’s capital expenditures budgeted for 2010 and
2011 are to comply with environmental laws and regulations. The Company’s management believes that all of its operations are in
substantial compliance with present Federal, state and local environmental standards. It is estimated that the Company’s total
expenditures for capital, operating, maintenance and other costs associated with environmental quality will be approximately $20.9
million during 2010 as compared to approximately $19.9 million in 2009. The Company
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