OG&E 2013 Annual Report Download - page 28

22 OGE Energy Corp.
Contractual Obligations
The following table summarizes the Company’s contractual obligations
at December 31, 2013. See the Company’s Consolidated Statements of
Capitalization and Note 15 of Notes to Consolidated Financial Statements
for additional information.
OG&E also has 440 MWs of QF contracts to meet its current and
future expected customer needs. OG&E 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.
The actual cost of fuel used in electric generation (which includes
the operating lease obligations for OG&E’s railcar leases shown above)
and certain purchased power costs are passed through to OG&E’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 OG&E 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.
(In millions) 2014 2015–2016 2017–2018 After 2018 Total
Maturities of long-term debt(A) $«100.2 $÷««110.4 $«÷375.2 $1,819.9 $«2,405.7
Operating lease obligations
Railcars 3.8 30.4 – – 34.2
Wind farm land leases 2.1 4.2 4.8 48.8 59.9
OGE Energy noncancellable operating lease 0.8 1.6 1.5 – 3.9
Total operating lease obligations 6.7 36.2 6.3 48.8 98.0
Other purchase obligations and commitments
Cogeneration capacity and fixed operation and maintenance payments 85.1 164.6 156.6 235.2 641.5
Expected cogeneration energy payments 61.1 136.6 168.9 352.5 719.1
Minimum fuel purchase commitments 451.8 820.3 385.1 – 1,657.2
Expected wind purchase commitments 58.0 118.7 120.3 368.9 665.9
Long-term service agreement commitments 70.5 5.3 21.7 187.9 285.4
Total other purchase obligations and commitments 726.5 1,245.5 852.6 1,144.5 3,969.1
Total contractual obligations 833.4 1,392.1 1,234.1 3,013.2 6,472.8
Amounts recoverable through fuel adjustment clause(B) (574.7) (1,106.0) (674.3) (721.4) (3,076.4)
Total contractual obligations, net $«258.7 $÷««286.1 $«÷559.8 $2,291.8 $«3,396.4
(A) Maturities of the Company’s long-term debt during the next five years consist of $100.2 million, $0.2 million, $110.2 million, $125.1 million and $250.1 million in years 2014, 2015, 2016, 2017 and 2018, respectively.
(B) Includes expected recoveries of costs incurred for OG&E’s railcar operating lease obligations, OG&E’s expected cogeneration energy payments, OG&E’s minimum fuel purchase commitments and
OG&E’s expected wind purchase commitments.
Pension and Postretirement Benefit Plans
At December 31, 2013, 40.6 percent of the Pension Plan investments
were in listed common stocks with the balance primarily invested in U.S
Government securities, bonds, debentures and notes, a commingled
fund and a common collective trust as presented in Note 13 of Notes
to Consolidated Financial Statements. In 2013, asset returns on the
Pension Plan were 12.5 percent due to the gains in fixed income and
equity investments. During the same time, corporate bond yields, which
are used in determining the discount rate for future pension obligations,
increased. During both 2013 and 2012, OGE Energy made contributions
to its Pension Plan of $35 million 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 2014, OGE
Energy expects to contribute up to $26 million to its Pension Plan. 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.