OG&E 2009 Annual Report Download - page 67

OKLAHOMA GAS AND ELECTRIC COMPANY
NOTES TO FINANCIAL STATEMENTS
1. Summary of Significant Accounting Policies
Organization
Oklahoma Gas and Electric Company (the “Company”) generates, transmits, distributes and sells electric energy in
Oklahoma and western Arkansas. The Company is subject to rate regulation by the Oklahoma Corporation Commission (“OCC”), the
Arkansas Public Service Commission (“APSC”) and the Federal Energy Regulatory Commission (“FERC”). The Company is a
wholly-owned subsidiary of OGE Energy Corp. (“OGE Energy”) which is an energy and energy services provider offering physical
delivery and related services for both electricity and natural gas primarily in the south central United States. The Company was
incorporated in 1902 under the laws of the Oklahoma Territory. The Company is the largest electric utility in Oklahoma and its
franchised service territory includes the Fort Smith, Arkansas area. The Company sold its retail gas business in 1928 and is no longer
engaged in the gas distribution business.
Basis of Presentation
In the opinion of management, all adjustments necessary to fairly present the financial position of the Company at December
31, 2009 and 2008, the results of its operations and the results of its cash flows for the years ended December 31, 2009, 2008 and
2007, have been included and are of a normal recurring nature except as otherwise disclosed. Management also has evaluated the
impact of subsequent events for inclusion in the Company’s Financial Statements occurring after December 31, 2009 through
February 17, 2010, the date the Company’s financial statements were issued, and, in the opinion of management, the Company’s
Financial Statements and Notes contain all necessary adjustments and disclosures resulting from that evaluation.
Accounting Records
The accounting records of the Company are maintained in accordance with the Uniform System of Accounts prescribed by
the FERC and adopted by the OCC and the APSC. Additionally, the Company, as a regulated utility, is subject to accounting
principles for certain types of rate-regulated activities, which provide that certain actual or anticipated costs that would otherwise be
charged to expense can be deferred as regulatory assets, based on the expected recovery from customers in future rates. Likewise,
certain actual or anticipated credits that would otherwise reduce expense can be deferred as regulatory liabilities, based on the
expected flowback to customers in future rates. Management’s expected recovery of deferred costs and flowback of deferred credits
generally results from specific decisions by regulators granting such ratemaking treatment.
The Company records certain actual or anticipated costs and obligations as regulatory assets or liabilities if it is probable,
based on regulatory orders or other available evidence, that the cost or obligation will be included in amounts allowable for recovery
or refund in future rates.
The following table is a summary of the Company’s regulatory assets and liabilities at:
December 31 (In millions) 2009 2008
Regulatory Assets
Benefit obligations regulatory asset $ 357.8 $ 344.7
Deferred storm expenses 28.0 32.2
Income taxes recoverable from customers, net 19.1 14.6
Deferred pension plan expenses 18.1 14.6
Unamortized loss on reacquired debt 16.5 17.7
Red Rock deferred expenses 7.7 7.4
Fuel clause under recoveries 0.3 24.0
McClain Plant deferred expenses --- 6.2
Miscellaneous 3.9 2.9
Total Regulatory Assets $ 451.4 $ 464.3
Regulatory Liabilities
Fuel clause over recoveries $ 187.5 $ 8.6
Accrued removal obligations, net 168.2 150.9
Miscellaneous 7.3 4.9
Total Regulatory Liabilities $ 363.0 $ 164.4
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