OG&E 2011 Annual Report Download - page 83

December 2015. OG&E has natural gas contracts for purchases from
January 2012 through March 2012 that account for 26 percent of
OG&E’s projected 2012 natural gas requirements. Additional gas sup-
plies to fulfill OG&E’s remaining 2012 natural gas requirements will be
acquired through additional requests for proposal in early to mid-2012,
along with monthly and daily purchases, all of which are expected
to be made at market prices.
OG&E Wind Purchase Commitments
OG&E’s current wind power portfolio includes: (i) the Centennial wind
farm, (ii) the OU Spirit wind farm, (iii) the Crossroads wind farm, (iv)
access to up to 50 MWs of electricity generated at a wind farm near
Woodward, Oklahoma from a 15-year contract OG&E entered into with
FPL Energy that expires in 2018, (v) access to up to 150 MWs of elec-
tricity generated at a wind farm in Woodward County, Oklahoma from
a 20-year contract OG&E entered into with CPV Keenan that expires
in 2030 and (vi) access to up to 130 MWs of electricity generated at
a wind farm in Woodward County, Oklahoma from a 20-year contract
OG&E entered into with Edison Mission Energy that expires in 2030.
The following table summarizes OG&E’s wind power purchases for
the years ended December 31, 2011, 2010 and 2009.
(In millions, year ended December 31) 2011 2010 2009
CPV Keenan $24.5 $3.8 $÷«–
Edison Mission Energy 8.5 ––
FPL Energy 3.7 3.9 4.0
Total wind power purchased $36.7 $7.7 $4.0
OG&E Long-Term Service Agreement Commitments
In July 2004, OG&E acquired a 77 percent interest in the McClain Plant.
As part of that acquisition, OG&E 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 cur-
rent 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.
In September 2008, OG&E acquired a 51 percent interest in the
Redbud Plant. As part of that acquisition, OG&E 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 2028. The contract requires payments based
on both a fixed and variable cost component, depending on how much
the Redbud Plant is used.
OER Agreement with Cheyenne Plains Gas Pipeline Company,
L.L.C. (Cheyenne Plains)
In 2004, OER entered into a firm transportation service agreement
with Cheyenne Plains, who operates the Cheyenne Plains Pipeline that
provides firm transportation services in Wyoming, Colorado and Kansas,
for 60,000 decatherms/day of firm capacity on the pipeline. The firm
transportation service agreement was for a 10-year term beginning with
the in-service date of the Cheyenne Plains Pipeline in March 2005 with
an annual demand fee of $7.4 million. Effective March 1, 2007, OER
and Cheyenne Plains amended the firm transportation service agree-
ment to provide for OER to turn back 20,000 decatherms/day of its
capacity beginning in January 2008 for the remainder of the term.
OER Agreement with MEP
In December 2006, Enogex entered into a firm capacity lease agreement
with MEP for a primary term of 10 years (subject to possible extension)
that gives MEP and its shippers access to capacity on Enogex’s system.
The quantity of capacity subject to the MEP lease agreement is currently
272 MMcf/d, with the quantity ultimately to be leased subject to being
increased by mutual agreement pursuant to the lease agreement. In
2009, OER entered into a firm transportation service agreement with
MEP for 10,000 decatherms/day of firm capacity on the pipeline. The
firm transportation service agreement was for a five-year term begin-
ning with the in-service date of the MEP pipeline in June 2009 with an
annual demand fee of $2.1 million.
Natural Gas Measurement Cases
Will Price, et al. v. El Paso Natural Gas Co., et al. (Price I). On
September 24, 1999, various subsidiaries of OGE Energy were served
with a class action petition filed in the District Court of Stevens County,
Kansas by Quinque Operating Company and other named plaintiffs
alleging the mismeasurement of natural gas on non-Federal lands. On
April 10, 2003, the court entered an order denying class certification.
On May 12, 2003, the plaintiffs (now Will Price, Stixon Petroleum, Inc.,
Thomas F. Boles and the Cooper Clark Foundation, on behalf of
themselves and other royalty interest owners) filed a motion seeking to
file an amended class action petition, and the court granted the motion
on July 28, 2003. In its amended petition, OG&E and Enogex Inc. were
omitted from the case but two of OGE Energy’s other subsidiary entities
remained as defendants. The plaintiffs’ amended petition seeks class
certification and alleges that 60 defendants, including two of OGE
Energy’s subsidiary entities, have improperly measured the volume of
natural gas. The amended petition asserts theories of civil conspiracy,
aiding and abetting, accounting and unjust enrichment. In their briefing
on class certification, the plaintiffs seek to also allege a claim for con-
version. The plaintiffs seek unspecified actual damages, attorneys’ fees,
costs and pre-judgment and post-judgment interest. The plaintiffs also
reserved the right to seek punitive damages.
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