OG&E 2010 Annual Report Download - page 17

be acquired through additional RFPs in early to mid-2011, along with monthly and daily purchases, all of which are expected to be
made at market prices.
The Company utilizes a natural gas storage facility for storage services that allows the Company to maximize the value of its
generation assets. Storage services are provided by Enogex as part of Enogex’s gas transportation and storage contract with the
Company. At December 31, 2010, the Company had 1.4 million MMBtu’s in natural gas storage valued at $5.6 million.
Wind
The Company’s current wind power portfolio includes: (i) the Centennial wind farm, (ii) the OU Spirit wind farm, (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 and (iv) access to up to 150 MWs of electricity generated at a wind farm in
Woodward County, Oklahoma from a 20-year contract the Company entered into with CPV Keenan that expires in 2030. During the
second quarter of 2011, the Company also is expected to have access to a 130 MW facility being built by Edison Mission Energy in
Dewey County near Taloga. The Company’s agreement with Edison Mission energy is a 20-year power purchase agreement.
Additionally, on July 29, 2010, the OCC approved a settlement that would allow the Company to build, own and operate 227.5 MWs
of wind turbine generators for Crossroads, which is expected to be in service by the end of 2011.
On January 5, 2010, the Company received an order from the OCC approving the CPV Keenan and Edison Mission Energy
power purchase agreements and authorizing the Company to recover the costs of the power purchase agreements through the
Company’s fuel adjustment clause. The Company will continue to evaluate renewable opportunities to add to its power-generation
portfolio in the future.
Safety and Health Regulation
The Company is subject to a number of Federal and state laws and regulations, including OSHA and comparable state
statutes, whose purpose is to protect the safety and health of workers. In addition, the OSHA hazard communication standard, the EPA
community right-to-know regulations under Title III of the Federal Superfund Amendment and Reauthorization Act and comparable
state statutes require that information be maintained concerning hazardous materials used or produced in the Company’s operations
and that this information be provided to employees, state and local government authorities and citizens. The Company believes that it
is in material compliance with all applicable laws and regulations relating to worker safety and health.
ENVIRONMENTAL MATTERS
General
The activities of the Company are subject to stringent and complex Federal, state and local laws and regulations governing
environmental matters. 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 mitigate harm to threatened
or endangered species and requiring the installation and operation of pollution control equipment. 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. The Company believes that its operations are in substantial compliance with
applicable environmental laws and regulations.
The trend in environmental regulation, however, is to place more restrictions and limitations on activities that may affect the
environment. The Company cannot assure that future events, such as changes in existing laws, the promulgation of new laws or
regulations, or the development or discovery of new facts or conditions will not cause it to incur significant costs. Management
continues to evaluate its compliance with existing and proposed environmental legislation and regulations and implement appropriate
environmental programs in a competitive market.
Of the Company’s capital expenditures budgeted for 2011 and 2012, $7.1 million and $4.9 million, respectively, are to
comply with environmental laws and regulations. It is estimated that the Company’s total expenditures for capital, operating,
maintenance and other costs associated with environmental quality will be $28.8 million in 2011 as compared to $22.8 million in
2010.
Air Emissions
The Company’s operations are subject to the Federal Clean Air Act, as amended, and comparable state laws and regulations.
These laws and regulations regulate emissions of air pollutants from various industrial sources, including electric generating units, and
also impose various monitoring and reporting requirements. Such laws and regulations may require that the Company obtain pre-
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