OG&E 2013 Annual Report Download - page 54

2. Accounting Pronouncements
In July 2013, the Emerging Issues Task Force issued “Presentation of
an Unrecognized Tax Benefit When a Net Operating Loss Carryforward
or Tax Credit Carryforward Exists.” The new standard requires entities
to present an unrecognized tax benefit, or a portion of an unrecognized
tax benefit, in the statement of financial position as a reduction to a
deferred tax asset for a net operating loss carryforward or a tax credit
carryforward, except as follows: to the extent that a net operating loss
carryforward or tax credit carryforward at the reporting date is not
available under the tax law of the applicable jurisdiction to settle any
additional income taxes that would result from the disallowance of a tax
position, the unrecognized tax benefit would be presented in the state-
ment of financial position as a liability. The new standard is applicable
for all entities that have unrecognized tax benefits when a net operating
loss carryforward or a tax credit carryforward exists. The new standard
is effective for interim and annual reporting periods beginning after
December 15, 2013 and does not require any new financial statement
disclosures. This new standard may be applied retrospectively or
prospectively with early adoption permitted. The Company retrospec-
tively adopted this new standard effective January 1, 2013.
In December 2011, the Financial Accounting Standards Board
issued “Balance Sheet: Disclosures about Offsetting Assets and
Liabilities.” The new standard requires entities to disclose information
about financial instruments and derivative instruments that are either
offset on the balance sheet or are subject to a master netting arrange-
ment, including providing both gross information and net information
for recognized assets and liabilities, the net amounts presented on an
entity’s balance sheet and a description of the rights of setoff associ-
ated with these assets and liabilities. The new standard is applicable
for all entities that have financial instruments and derivative instruments
shown using a net presentation on an entity’s balance sheet or are
subject to a master netting arrangement. On January 31, 2013, the
Financial Accounting Standards Board issued an update to this stan-
dard clarifying that the scope includes derivatives, including bifurcated
embedded derivatives, repurchase agreements and reverse repurchase
agreements, and securities borrowing and securities lending transactions
that are either offset or are subject to a master netting arrangement or
similar agreement. The new standard is effective for interim and annual
reporting periods for fiscal years beginning on or after January 1, 2013
and is required to be applied retrospectively for all periods presented.
The Company adopted this new standard effective January 1, 2013.
In February 2013, the Financial Accounting Standards Board issued
“Comprehensive Income: Reporting of Amounts Reclassified Out of
Accumulated Other Comprehensive Income.” The new standard requires
an entity to provide information about the amounts reclassified out of
accumulated other comprehensive income by component. In addition,
the new standard requires an entity to present, either on the face of the
statement where net income is presented or in the notes, significant
amounts reclassified out of accumulated other comprehensive income
by the respective line items in net income but only if the amount
reclassified is required under U.S. GAAP to be reclassified to net
income in its entirety in the same reporting period. For other amounts
that are not required under U.S. GAAP to be reclassified in their entirety
to net income, an entity is required to cross-reference to other disclo-
sures required under U.S. GAAP that provide additional detail about
those amounts. The new standard is applicable for all entities that issue
financial statements that are presented in conformity with U.S. GAAP
and that report items of other comprehensive income. The new stan-
dard is effective for interim and annual reporting periods for fiscal
years beginning after December 15, 2012 and is required to be applied
prospectively. The Company adopted this new standard effective
January 1, 2013.
3. Investment in Unconsolidated Affiliates and
Related Party Transactions
On March 14, 2013, OGE Energy entered into a Master Formation
Agreement with the ArcLight group and CenterPoint Energy, Inc.,
pursuant to which OGE Energy, the ArcLight Group and CenterPoint
Energy, Inc., agreed to form Enable Midstream Partners to own and
operate the midstream businesses of OGE Energy and CenterPoint that
will initially be structured as a private limited partnership. This transac-
tion closed on May 1, 2013.
Pursuant to the Master Formation Agreement, OGE Energy and the
ArcLight group indirectly contributed 100 percent of the equity interests
in Enogex LLC to Enable. The Company determined that its contribution
of Enogex LLC to Enable met the requirements of being in substance
real estate and was recorded at historical cost. Enogex LLC is a provider
of integrated natural gas midstream services. Enogex LLC is engaged
in the business of gathering, processing, transporting and storing
natural gas. Most of Enogex LLC’s natural gas gathering, processing,
transportation and storage assets are strategically located in the
Arkoma and Anadarko basins of Oklahoma and the Texas Panhandle.
CenterPoint Energy Field Services, LLC, a Delaware limited liability
company and, prior to the closing of the transaction on May 1, 2013,
a wholly owned subsidiary of CenterPoint, that provides natural gas
gathering and processing services for certain natural gas fields in
the Mid-continent region of the United States, was converted into a
Delaware limited partnership that became Enable Midstream Partners,
LP. CenterPoint contributed to Enable its equity interests in each of
(i) CenterPoint Energy Gas Transmission Company, LLC, a Delaware
limited liability company that is an interstate pipeline that provides
natural gas transportation, storage and pipeline services to customers
principally in Arkansas, Louisiana, Oklahoma and Texas, (ii) MRT, a
Delaware limited liability company that is an interstate pipeline that
provides natural gas transportation, storage and pipeline services
to customers principally in Arkansas, Illinois and Missouri and (iii)
certain of its other midstream subsidiaries and caused its subsidiary
CenterPoint Energy Southeastern Pipelines Holding, LLC to contribute
48 OGE Energy Corp.