OG&E 2010 Annual Report Download - page 64

Fuel Inventories
Fuel inventories for the generation of electricity consist of coal, natural gas and oil. The Company uses the weighted-
average cost method of accounting for inventory that is physically added to or withdrawn from storage or stockpiles. The amount of
fuel inventory was $134.9 million and $101.0 million at December 31, 2010 and 2009, respectively.
Property, Plant and Equipment
All property, plant and equipment is recorded at cost. Newly constructed plant is added to plant balances at cost which
includes contracted services, direct labor, materials, overhead, transportation costs and the AFUDC. Replacements of units of
property are capitalized as plant. For assets that belong to a common plant account, the replaced plant is removed from plant balances
and the cost of such property is charged to Accumulated Depreciation. For assets that do not belong to a common plant account, the
replaced plant is removed from plant balances with the related accumulated depreciation and the remaining balance is recorded as a
loss in the Statements of Income as Other Expense. Repair and replacement of minor items of property are included in the Statements
of Income as Other Operation and Maintenance Expense.
The table below presents the Company’s ownership interest in the jointly-owned McClain Plant and the jointly-owned
Redbud Plant, and, as disclosed below, only the Company’s ownership interest is reflected in the property, plant and equipment and
accumulated depreciation balances in these tables. The owners of the remaining interests in the McClain Plant and the Redbud Plant
are responsible for providing their own financing of capital expenditures. Also, only the Company’s proportionate interests of any
direct expenses of the McClain Plant and the Redbud Plant such as fuel, maintenance expense and other operating expenses are
included in the applicable financial statement captions in the Statement of Income.
Total Property, Net Property,
Percentage Plant and Accumulated Plant and
December 31, 2010 (In millions) Ownership Equipment Depreciation Equipment
McClain Plant 77 $ 194.3 $ 61.9 $ 132.4
Redbud Plant 51 $ 523.1(A) $ 93.5(B) $ 429.6
(A) This amount includes a plant acquisition adjustment of $148.3 million.
(B) This amount includes accumulated amortization of the plant acquisition adjustment of $12.6 million.
The Company’s property, plant and equipment and related accumulated depreciation are divided into the following major
classes at:
Total Property, Net Property,
Plant and Accumulated Plant and
December 31, 2010 (In millions) Equipment Depreciation Equipment
Distribution assets $ 2,833.4 $ 897.4 $ 1,936.0
Electric generation assets 3,047.1 1,164.6 1,882.5
Transmission assets 1,221.3 325.6 895.7
Intangible plant 26.5 20.7 5.8
Other property and equipment 243.4 86.1 157.3
Total property, plant and equipment $ 7,371.7 $ 2,494.4 $ 4,877.3
Total Property, Net Property,
Plant and Accumulated Plant and
December 31, 2009 (In millions) Equipment Depreciation Equipment
Distribution assets $ 2,676.2 $ 861.1 $ 1,815.1
Electric generation assets 2,878.2 1,141.5 1,736.7
Transmission assets 1,071.6 310.1 761.5
Intangible plant 29.7 22.6 7.1
Other property and equipment 227.9 80.7 147.2
Total property, plant and equipment $ 6,883.6 $ 2,416.0 $ 4,467.6
Depreciation and Amortization
The provision for depreciation, which was 3.0 percent and 2.9 percent, respectively, of the average depreciable utility plant
for 2010 and 2009, is provided on a straight-line method over the estimated service life of the utility assets. Depreciation
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