OG&E 2010 Annual Report Download - page 44

(In millions) 2011 2012-2013 2014-2015 After 2015 Total
Maturities of long-term debt (A) $ --- $ --- $ --- $ 1,795.4 $ 1,795.4
Operating lease obligations
Railcars 3.2 6.1 5.9 28.8 44.0
Other purchase obligations and commitments
Cogeneration capacity and fixed operation and
maintenance payments 92.5 178.0 168.1 462.1 900.7
Expected cogeneration energy payments 61.9 120.7 144.7 515.7 843.0
Minimum fuel purchase commitments 290.6 274.7 --- --- 565.3
Expected wind purchase commitments 41.6 102.5 104.2 793.4 1,041.7
Long-term service agreements 15.7 10.5 33.7 73.3 133.2
Total other purchase obligations and
commitments 502.3 686.4 450.7 1,844.5 3,483.9
Total contractual obligations 505.5 692.5 456.6 3,668.7 5,323.3
Amounts recoverable through fuel adjustment
clause (B) (397.3) (504.0) (254.8) (1,337.9) (2,494.0)
Total contractual obligations, net $ 108.2 $ 188.5 $ 201.8 $ 2,330.8 $ 2,829.3
(A) There are no maturities of the Company’s long-term debt during the next five years.
(
B
)
Includes expected recoveries of costs incurred for the Company’s railcar operating lease obligations, the Company’s cogeneration
expected energy payments, the Company’s minimum fuel purchase commitments and the Company’s expected wind purchase
commitments.
The Company also has 720 MWs of QF contracts to meet its current and future expected customer needs. The Company
will continue reviewing all of the supply alternatives to these QF contracts that minimize the total cost of generation to its customers,
including exercising its options (if applicable) to extend these QF contracts at pre-determined rates.
Variances in the actual cost of fuel used in electric generation (which includes the operating lease obligations for the
Company’s railcar leases shown above) and certain purchased power costs, as compared to the fuel component included in the cost-of-
service for ratemaking, are passed through to the Company’s customers through fuel adjustment clauses. Accordingly, while the cost
of fuel related to operating leases and the vast majority of minimum fuel purchase commitments of the Company noted above may
increase capital requirements, such costs are recoverable through fuel adjustment clauses and have little, if any, impact on net capital
requirements and future contractual obligations. The fuel adjustment clauses are subject to periodic review by the OCC, the APSC
and the FERC.
Pension and Postretirement Benefit Plans
At December 31, 2010, 45.0 percent of the Pension Plan investments were in listed common stocks with the balance
primarily invested in bonds, debentures and notes, U.S. Government securities, a commingled fund and a common collective trust as
presented in Note 11 of Notes to Financial Statements. In 2010, asset returns on the Pension Plan were 12.2 percent due to the
continued improvement in the equity market in 2010. During the same time, corporate bond yields, which are used in determining the
discount rate for future pension obligations, have continued to decline. During each of 2010 and 2009, OGE Energy made
contributions to its Pension Plan of $50 million, of which $47 million in each of 2010 and 2009 was the Company’s portion, to help
ensure that the Pension Plan maintains an adequate funded status. The level of funding is dependent on returns on plan assets and
future discount rates. During 2011, OGE Energy may contribute up to $50 million to its Pension Plan, of which $47 million is
expected to be the Company’s portion. OGE Energy could be required to make additional contributions if the value of its pension trust
and postretirement benefit plan trust assets are adversely impacted by a major market disruption in the future.
The following table presents the status of the Company’s portion of OGE Energy’s Pension Plan, the Restoration of
Retirement Income Plan and the postretirement benefit plans at December 31, 2010 and 2009. These amounts have been recorded in
Accrued Benefit Obligations with the offset recorded as a regulatory asset in the Company’s Balance Sheet as discussed in Note 1 of
Notes to Financial Statements. The amount recorded as a regulatory asset represents a net periodic benefit cost to be recognized in the
Statements of Income in future periods.
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