OG&E 2013 Annual Report Download - page 49

For OG&E, new business customers are required to provide a
security deposit in the form of cash, bond or irrevocable letter of credit
that is refunded when the account is closed. New residential customers,
whose outside credit scores indicate an elevated risk, are required to
provide a security deposit that is refunded based on customer protec-
tion rules defined by the OCC and the APSC. The payment behavior of
all existing customers is continuously monitored and, if the payment
behavior indicates sufficient risk within the meaning of the applicable
utility regulation, customers will be required to provide a security
deposit.
Fuel Inventories
Fuel inventories for the generation of electricity consist of coal, natural
gas and oil. OG&E uses the weighted-average cost method of account-
ing for inventory that is physically added to or withdrawn from storage
or stockpiles. The amount of fuel inventory was $74.4 million and
$76.8 million at December 31, 2013 and 2012, respectively.
Gas Imbalances
Gas imbalances occur when the actual amounts of natural gas delivered
from or received by OG&E differ from the amounts scheduled to be
delivered or received. OG&E values all imbalances at an average of
current market indices applicable to OG&E’s operations, not to exceed
net realizable value.
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
allowance for funds used during construction. 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 net of any salvage proceeds
is recorded as a loss in the Consolidated Statements of Income as
Other Expense. Repair and replacement of minor items of property are
included in the Consolidated Statements of Income as Other Operation
and Maintenance Expense.
The table below presents OG&E’s ownership interest in the jointly-
owned McClain Plant and the jointly-owned Redbud Plant, and, as
disclosed below, only OG&E’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 OG&E’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
Consolidated Statement of Income.
Total Property, Net Property,
Percentage Plant and Accumulated Plant and
(In millions, December 31) Ownership Equipment Depreciation Equipment
2013
McClain Plant(A) 77% $180.8 $62.1 $118.7
Redbud Plant(A)(B) 51% $498.9 $89.7 $409.2
(A) Construction work in progress was $0.1 million and $39.5 million for the McClain and
Redbud Plants, respectively.
(B) This amount includes a plant acquisition adjustment of $148.3 million and accumulated
amortization of $28.8 million.
Total Property, Net Property,
Percentage Plant and Accumulated Plant and
(In millions, December 31) Ownership Equipment Depreciation Equipment
2012
McClain Plant(A) 77% $182.1 $56.3 $125.8
Redbud Plant(A)(B) 51% $458.5 $69.5 $389.0
(A) Construction work in progress was $0.1 million and $0.3 million for the McClain and
Redbud Plants, respectively.
(B) This amount includes a plant acquisition adjustment of $148.3 million and accumulated
amortization of $23.3 million.
OGE Energy Consolidated
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
(In millions, December 31) Equipment Depreciation Equipment
2013
OGE Energy (holding company)
Property, plant and equipment $÷«152.4 $÷«114.2 $÷÷«38.2
OGE Energy property,
plant and equipment 152.4 114.2 38.2
OG&E
Distribution assets 3,403.8 1,028.2 2,375.6
Electric generation assets(A) 3,551.0 1,306.1 2,244.9
Transmission assets(B) 2,163.7 385.0 1,778.7
Intangible plant 50.5 27.1 23.4
Other property and equipment 330.2 118.2 212.0
OG&E property,
plant and equipment 9,499.2 2,864.6 6,634.6
Total property, plant
and equipment $9,651.6 $2,978.8 $6,672.8
(A) This amount includes a plant acquisition adjustment of $148.3 million and accumulated
amortization of $28.8 million.
(B) This amount includes a plant acquisition adjustment of $3.3 million and accumulated
amortization of $0.3 million.
OGE Energy Corp. 43