OG&E 2009 Annual Report Download - page 95

120 MWs with PowerSmith Cogeneration Project, L.P. (“PowerSmith”) in which the Company purchases 100 percent of electricity
generated by PowerSmith.
In 2009, 2008 and 2007, the Company made total payments to cogenerators of approximately $139.8 million, $152.8 million
and $156.8 million, respectively, of which approximately $83.1 million, $84.4 million and $88.9 million, respectively, represented
capacity payments. All payments for purchased power, including cogeneration, are included in the Statements of Income as Cost of
Goods Sold. The future minimum capacity payments under the contracts are approximately: 2010 – $86.1 million, 2011 – $83.1
million, 2012 – $81.1 million, 2013 – $79.0 million and 2014 – $76.7 million.
Fuel Minimum Purchase Commitments
The Company purchased necessary fuel supplies of coal and natural gas for its generating units of approximately $358.8
million, $257.6 million and $232.8 million for the years ended December 31, 2009, 2008 and 2007, respectively. The Company has
entered into future purchase commitments of necessary fuel supplies of approximately: 2010 – $340.0 million, 2011 – $63.1 million,
2012 – $21.1 million and 2013 – $1.8 million. The Company also has a coal contract for purchases from January 2011 through
December 2015. As the coal purchases in this contract for years 2013 through 2015 are valued based on an index price to be
determined in the future, these amounts are not disclosed.
Wind Power Purchase Commitments
The Company’s current wind power portfolio includes: (i) the 120 MW Centennial wind farm, (ii) the 101 MW OU Spirit
wind farm placed in service in November and December 2009 and (iii) access to up to 50 MWs of electricity generated at a wind farm
near Woodward, Oklahoma from a 15-year contract the Company entered into with FPL Energy that expires in 2018.
The Company also received approval on January 5, 2010 from the OCC for two wind power purchase agreements with two
wind developers who are to build two new wind farms, totaling 280 MWs, in northwestern Oklahoma. The Company intends to add
this capability to its power-generation portfolio by the end of 2010. Under the terms of the agreements, CPV Keenan is to build a 150
MW wind farm in Woodward County and Edison Mission Energy is to build a 130 MW facility in Dewey County near Taloga. The
agreements are both 20-year power purchase agreements, under which the developers are to build, own and operate the wind
generating facilities and the Company will purchase their electric output. See Note 13 for a further discussion.
The Company purchased wind power from FPL Energy of approximately $4.0 million, $4.4 million and $3.8 million for the
years ended December 31, 2009, 2008 and 2007, respectively. The Company has entered into future wind purchase commitments of
approximately: 2010 – $10.2 million, 2011 – $51.3 million, 2012 – $52.0 million, 2013 – $52.2 million, 2014 – $52.6 million and
2015 and beyond – $730.6 million.
Long-Term Service Agreements
In July 2004, the Company acquired a 77 percent interest in the McClain Plant. As part of that acquisition, the Company
became subject to an existing long-term parts and service maintenance contract for the upkeep of the natural gas-fired combined cycle
generation facility. The contract was initiated in December 1999, and runs for the earlier of 96,000 factored-fired hours or 4,800
factored-fired starts. Based on historical usage and current expectations for future usage, this contract is expected to run until 2015.
The contract requires payments based on both a fixed and variable cost component, depending on how much the McClain Plant is
used. The Company’s share of the estimated obligation under the contract, based on the projected future use of the McClain Plant, is
approximately: 2010 – $1.4 million, 2011 – $15.8 million, 2012 – $1.5 million, 2013 – $1.5 million, 2014 – $17.1 million and 2015
and beyond – $1.2 million.
In September 2008, the Company acquired a 51 percent interest in the Redbud Facility. As part of that acquisition, the
Company became subject to an existing long-term parts and service maintenance contract for the upkeep of the natural gas-fired
combined cycle generation facility. The contract was initiated in January 2001, and runs for the earlier of 120,000 factored-fired
hours or 4,500 factored-fired starts. Based on historical usage and current expectations for future usage, this contract is expected to
run until 2025. The contract requires payments based on both a fixed and variable cost component, depending on how much the
Redbud Facility is used. The Company’s share of the estimated obligation under the contract, based on the projected future use of the
Redbud Facility, is approximately: 2010 – $2.3 million, 2011 – $0.6 million, 2012 – $10.5 million, 2013 – $11.9 million, 2014 – $7.4
million and 2015 and beyond – $70.1 million.
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