OG&E 2010 Annual Report Download - page 52

2011, with the first annual report due on March 31, 2012. The Company already reports quarterly its carbon dioxide emissions from
generating units subject to the Federal Acid Rain Program and is continuing to evaluate various options for reducing, avoiding,
offsetting or sequestering its carbon dioxide emissions.
On June 3, 2010, the EPA issued a final rule that makes certain sources subject to permitting requirements for greenhouse
gas emissions. The permitting requirements will become effective in 2011. Significant new sources and existing sources undergoing
significant modifications may have to install and operate “best available control technology” to control greenhouse gas emissions.
Also, in December 2010, the EPA entered into an agreement to settle litigation brought by states and environmental groups whereby
the EPA agreed to issue New Source Performance Standards for greenhouse gas emissions from certain new and modified electric
generating units and emissions guidelines for existing units over the next two years. Pursuant to this settlement agreement, the EPA
agreed to issue proposed rules by July 2011 and final rules by May 2012.
Another impetus for addressing climate change is litigation relating to greenhouse gas emissions and pressure for
greenhouse gas emission reductions from investor organizations and the international community. In at least three Federal court cases,
nuisance-type claims have been asserted against emitters of carbon dioxide, including several utility companies, alleging that such
emissions contribute to global warming. The Supreme Court has agreed to hear one of these cases. Although the Company is not a
defendant in any of these proceedings, additional litigation in Federal and state courts over these issues is possible.
The Company is continuing to evaluate various options for reducing, avoiding, offsetting or sequestering its carbon dioxide
emissions. The Company is a partner in the EPA Sulfur Hexafluoride Voluntary Reduction Program, and Enogex is a partner in the
EPA Natural Gas STAR Program, a voluntary program to reduce methane emissions.
If legislation or regulations are passed at the Federal or state levels in the future requiring mandatory reductions of carbon
dioxide and other greenhouse gases on facilities to address climate change, this could result in significant additional compliance costs
that would affect the Company’s future financial position, results of operations and cash flows if such costs are not recovered through
regulated rates.
Interstate Transport
On April 25, 2005, the EPA published a finding that all 50 states failed to submit the interstate pollution transport plans
required by the Federal Clean Air Act as a result of the adoption of the revised ambient ozone and fine particle NAAQS. Oklahoma
submitted a demonstration to the EPA that the state does not affect air quality in downwind states. Air quality modeling conducted by
the EPA indicated that the state’s demonstration was not sufficient for NOX emissions. On July 6, 2010, the EPA proposed a rule that
would require thirty one states and the District of Columbia to reduce power plant emissions that contribute to ozone and fine
particulate pollution in neighboring states. Pursuant to this proposed rule, Oklahoma is required to reduce NOX emissions from
sources within the state during ozone season (May through September). The EPA is currently considering alternative approaches for
achieving the reductions set forth in the proposed rule, including methods on how to allocate emissions allowances. The Company
commented on the proposed rule and is monitoring its status. Until final rules are issued, the impact of these proposals on the
Company cannot be determined.
Endangered Species
Certain federal laws, including the Bald and Golden Eagle Protection Act, the Migratory Bird Treaty Act and the
Endangered Species Act, provide special protection to certain designated species. These laws and any state equivalents provide for
significant civil and criminal penalties for unpermitted activities that result in harm to or harassment of certain protected animals and
plants, including damage to their habitats. If such species are located in an area in which the Company conducts operations, or if
additional species in those areas, such as the lesser prairie chicken, become subject to protection, the Company’s operations and
development projects, particularly transmission projects or wind projects, could be restricted or delayed, or the Company could be
required to implement expensive mitigation measures.
For additional information regarding contingencies relating to environmental laws and regulations, see Note 12 of Notes to
Financial Statements.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk.
Market risks are, in most cases, risks that are actively traded in a marketplace and have been well studied in regards to
quantification. Market risks include, but are not limited to, changes in interest rates and commodity prices. The Company’s exposure
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