Oklahoma | 73-1481638 | |
(State or other jurisdiction of | (I.R.S. Employer | |
incorporation or organization) | Identification No.) |
Large accelerated filer R | Accelerated filer £ |
Non-accelerated filer £ (Do not check if a smaller reporting company) | Smaller reporting company £ |
Page | |
Item 1. Financial Statements (Unaudited) | |
Condensed Consolidated Statements of Income | |
Condensed Consolidated Statements of Comprehensive Income | |
Condensed Consolidated Statements of Cash Flows | |
Condensed Consolidated Balance Sheets | |
Condensed Consolidated Statements of Changes in Stockholders' Equity | |
Notes to Condensed Consolidated Financial Statements | |
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations | |
Item 3. Quantitative and Qualitative Disclosures About Market Risk | |
Item 4. Controls and Procedures | |
Item 1. Legal Proceedings | |
Item 1A. Risk Factors | |
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds | |
Item 6. Exhibits | |
Abbreviation | Definition |
2010 Form 10-K | Annual Report on Form 10-K for the year ended December 31, 2010 |
APSC | Arkansas Public Service Commission |
ArcLight group | Bronco Midstream Holdings, LLC, Bronco Midstream Holdings II, LLC, collectively |
Atoka | Atoka Midstream LLC joint venture |
BART | Best Available Retrofit Technology |
Company | OGE Energy, collectively with its subsidiaries |
Cordillera | Cordillera Energy Partners III, LLC |
Crossroads | OG&E's Crossroads wind project in Dewey County, Oklahoma |
Dry Scrubbers | Dry flue gas desulfurization units with Spray Dryer Absorber |
Enogex | OGE Holdings, collectively with its subsidiaries |
Enogex LLC | Enogex LLC, collectively with its subsidiaries |
Enogex Holdings | Enogex Holdings LLC, the parent company of Enogex LLC and a majority-owned subsidiary of OGE Holdings |
EPA | U.S. Environmental Protection Agency |
FERC | Federal Energy Regulatory Commission |
GAAP | Accounting principles generally accepted in the United States |
MEP | Midcontinent Express Pipeline, LLC |
MMcf/d | Million cubic feet per day |
NAAQS | National Ambient Air Quality Standards |
NGLs | Natural gas liquids |
NOX | Nitrogen oxide |
NYMEX | New York Mercantile Exchange |
OCC | Oklahoma Corporation Commission |
ODEQ | Oklahoma Department of Environmental Quality |
OER | OGE Energy Resources LLC, wholly-owned subsidiary of Enogex LLC |
Off-system sales | Sales to other utilities and power marketers |
OG&E | Oklahoma Gas and Electric Company |
OGE Holdings | OGE Enogex Holdings, LLC, wholly-owned subsidiary of OGE Energy and parent company of Enogex Holdings |
Oxbow | Oxbow Midstream, LLC |
Pension Plan | Qualified defined benefit retirement plan |
PRM | Price risk management |
Products | Enogex Products LLC, wholly-owned subsidiary of Enogex LLC |
SIP | State implementation plan |
SO2 | Sulfur dioxide |
SPP | Southwest Power Pool |
System sales | Sales to OG&E's customers |
Windspeed | OG&E's transmission line from Oklahoma City, Oklahoma to Woodward, Oklahoma |
• | general economic conditions, including the availability of credit, access to existing lines of credit, access to the commercial paper markets, actions of rating agencies and their impact on capital expenditures; |
• | the ability of the Company and its subsidiaries to access the capital markets and obtain financing on favorable terms; |
• | prices and availability of electricity, coal, natural gas and NGLs, each on a stand-alone basis and in relation to each other as well as the processing contract mix between percent-of-liquids, percent-of-proceeds, keep-whole and fixed-fee; |
• | business conditions in the energy and natural gas midstream industries; |
• | competitive factors including the extent and timing of the entry of additional competition in the markets served by the Company; |
• | unusual weather; |
• | availability and prices of raw materials for current and future construction projects; |
• | Federal or state legislation and regulatory decisions and initiatives that affect cost and investment recovery, have an impact on rate structures or affect the speed and degree to which competition enters the Company's markets; |
• | environmental laws and regulations that may impact the Company's operations; |
• | changes in accounting standards, rules or guidelines; |
• | the discontinuance of accounting principles for certain types of rate-regulated activities; |
• | whether OG&E can successfully implement its Smart Grid program to install meters for its customers and integrate the Smart Grid meters with its customer billing and other computer information systems; |
• | advances in technology; |
• | creditworthiness of suppliers, customers and other contractual parties; |
• | the higher degree of risk associated with the Company's nonregulated business compared with the Company's regulated utility business; and |
• | other risk factors listed in the reports filed by the Company with the Securities and Exchange Commission including those listed in "Item 1A. Risk Factors" and in Exhibit 99.01 to the Company's 2010 Form 10-K. |
Three Months Ended | Nine Months Ended | ||||||||||||||
September 30, | September 30, | ||||||||||||||
(In millions, except per share data) | 2011 | 2010 | 2011 | 2010 | |||||||||||
OPERATING REVENUES | |||||||||||||||
Electric Utility operating revenues | $ | 774.8 | $ | 723.0 | $ | 1,765.6 | $ | 1,679.8 | |||||||
Natural Gas Midstream Operations operating revenues | 437.3 | 402.4 | 1,265.1 | 1,208.6 | |||||||||||
Total operating revenues | 1,212.1 | 1,125.4 | 3,030.7 | 2,888.4 | |||||||||||
COST OF GOODS SOLD (exclusive of depreciation and amortization shown below) | |||||||||||||||
Electric Utility cost of goods sold | 322.7 | 299.4 | 772.7 | 757.2 | |||||||||||
Natural Gas Midstream Operations cost of goods sold | 335.8 | 313.2 | 969.1 | 932.0 | |||||||||||
Total cost of goods sold | 658.5 | 612.6 | 1,741.8 | 1,689.2 | |||||||||||
Gross margin on revenues | 553.6 | 512.8 | 1,288.9 | 1,199.2 | |||||||||||
OPERATING EXPENSES | |||||||||||||||
Other operation and maintenance | 147.4 | 142.4 | 432.3 | 401.0 | |||||||||||
Depreciation and amortization | 77.1 | 73.7 | 225.8 | 215.2 | |||||||||||
Impairment of assets | 5.0 | — | 5.0 | — | |||||||||||
Taxes other than income | 24.4 | 22.5 | 76.0 | 70.5 | |||||||||||
Total operating expenses | 253.9 | 238.6 | 739.1 | 686.7 | |||||||||||
OPERATING INCOME | 299.7 | 274.2 | 549.8 | 512.5 | |||||||||||
OTHER INCOME (EXPENSE) | |||||||||||||||
Interest income | 0.2 | — | 0.4 | — | |||||||||||
Allowance for equity funds used during construction | 5.9 | 2.6 | 16.1 | 7.2 | |||||||||||
Other income | (2.2 | ) | 0.6 | 11.1 | 5.8 | ||||||||||
Other expense | (6.4 | ) | (2.7 | ) | (12.2 | ) | (8.8 | ) | |||||||
Net other income (expense) | (2.5 | ) | 0.5 | 15.4 | 4.2 | ||||||||||
INTEREST EXPENSE | |||||||||||||||
Interest on long-term debt | 37.4 | 36.3 | 108.6 | 103.3 | |||||||||||
Allowance for borrowed funds used during construction | (2.9 | ) | (1.3 | ) | (8.1 | ) | (3.5 | ) | |||||||
Interest on short-term debt and other interest charges | 1.0 | 1.4 | 3.6 | 4.7 | |||||||||||
Interest expense | 35.5 | 36.4 | 104.1 | 104.5 | |||||||||||
INCOME BEFORE TAXES | 261.7 | 238.3 | 461.1 | 412.2 | |||||||||||
INCOME TAX EXPENSE | 80.3 | 74.8 | 140.7 | 145.6 | |||||||||||
NET INCOME | 181.4 | 163.5 | 320.4 | 266.6 | |||||||||||
Less: Net income attributable to noncontrolling interests | 2.7 | 0.4 | 13.9 | 2.0 | |||||||||||
NET INCOME ATTRIBUTABLE TO OGE ENERGY | $ | 178.7 | $ | 163.1 | $ | 306.5 | $ | 264.6 | |||||||
BASIC AVERAGE COMMON SHARES OUTSTANDING | 98.0 | 97.4 | 97.9 | 97.3 | |||||||||||
DILUTED AVERAGE COMMON SHARES OUTSTANDING | 99.3 | 99.0 | 99.2 | 98.8 | |||||||||||
BASIC EARNINGS PER AVERAGE COMMON SHARE | |||||||||||||||
ATTRIBUTABLE TO OGE ENERGY COMMON SHAREHOLDERS | $ | 1.82 | $ | 1.67 | $ | 3.13 | $ | 2.72 | |||||||
DILUTED EARNINGS PER AVERAGE COMMON SHARE | |||||||||||||||
ATTRIBUTABLE TO OGE ENERGY COMMON SHAREHOLDERS | $ | 1.80 | $ | 1.65 | $ | 3.09 | $ | 2.68 | |||||||
DIVIDENDS DECLARED PER COMMON SHARE | $ | 0.3750 | $ | 0.3625 | $ | 1.1250 | $ | 1.0875 |
Three Months Ended | Nine Months Ended | ||||||||||||||
September 30, | September 30, | ||||||||||||||
(In millions) | 2011 | 2010 | 2011 | 2010 | |||||||||||
Net income | $ | 181.4 | $ | 163.5 | $ | 320.4 | $ | 266.6 | |||||||
Other comprehensive income (loss), net of tax | |||||||||||||||
Pension Plan and Restoration of Retirement Income Plan: | |||||||||||||||
Amortization of deferred net loss, net of tax of $0.3 million, $0.4 | |||||||||||||||
million, $1.2 million and $1.4 million, respectively | 0.7 | 0.6 | 1.7 | 1.6 | |||||||||||
Amortization of prior service cost, net of tax of $0, $0.1 million, $0 | |||||||||||||||
and $0.1 million, respectively | 0.1 | 0.1 | 0.3 | 0.2 | |||||||||||
Postretirement plans: | |||||||||||||||
Amortization of deferred net loss, net of tax of $0.2 million, $0.2 | |||||||||||||||
million, $0.8 million and $0.2 million, respectively | 0.5 | 0.3 | 1.3 | 1.2 | |||||||||||
Amortization of deferred net transition obligation, net of tax of $0, $0, | |||||||||||||||
$0 and $0.1 million, respectively | — | — | 0.1 | 0.3 | |||||||||||
Amortization of prior service cost, net of tax of ($0.2) million, $0, | |||||||||||||||
($0.8) million and ($0.1) million, respectively | (0.5 | ) | — | (1.4 | ) | (0.2 | ) | ||||||||
Prior service cost arising during the period, net of tax of $0, $0, $6.2 | |||||||||||||||
million and $0, respectively | — | — | 10.7 | — | |||||||||||
Deferred commodity contracts hedging losses reclassified in net income, | |||||||||||||||
net of tax of $3.4 million, $2.1 million, $10.3 million and $7.3 million, | |||||||||||||||
respectively | 6.7 | 3.4 | 20.2 | 11.6 | |||||||||||
Deferred commodity contracts hedging gains (losses), net of tax of $0.1 | |||||||||||||||
million, ($6.6) million, ($2.7) million and ($5.6) million, respectively | 0.2 | (10.4 | ) | (6.3 | ) | (9.0 | ) | ||||||||
Deferred interest rate swaps hedging gains, net of tax of $0, $0, $0.2 | |||||||||||||||
million and $0.1 million, respectively | — | — | 0.2 | 0.1 | |||||||||||
Other comprehensive income (loss), net of tax | 7.7 | (6.0 | ) | 26.8 | 5.8 | ||||||||||
Comprehensive income (loss) | 189.1 | 157.5 | 347.2 | 272.4 | |||||||||||
Less: Comprehensive income attributable to noncontrolling interest | |||||||||||||||
for sale of equity investment | — | — | (1.7 | ) | — | ||||||||||
Less: Comprehensive income attributable to noncontrolling interests | 4.2 | 0.4 | 17.7 | 2.0 | |||||||||||
Total comprehensive income (loss) attributable to OGE Energy | $ | 184.9 | $ | 157.1 | $ | 331.2 | $ | 270.4 |
Nine Months Ended | |||||||
September 30, | |||||||
(In millions) | 2011 | 2010 | |||||
CASH FLOWS FROM OPERATING ACTIVITIES | |||||||
Net income | $ | 320.4 | $ | 266.6 | |||
Adjustments to reconcile net income to net cash provided from operating activities | |||||||
Depreciation and amortization | 225.8 | 215.2 | |||||
Impairment of assets | 5.0 | — | |||||
Deferred income taxes and investment tax credits, net | 146.1 | 146.8 | |||||
Allowance for equity funds used during construction | (16.1 | ) | (7.2 | ) | |||
(Gain) loss on disposition and abandonment of assets | (2.8 | ) | 0.9 | ||||
Stock-based compensation expense | 3.4 | 4.9 | |||||
Excess tax benefit on stock-based compensation | — | (0.7 | ) | ||||
Price risk management assets | 0.1 | 2.3 | |||||
Price risk management liabilities | 12.0 | 6.2 | |||||
Regulatory assets | 9.6 | 15.4 | |||||
Regulatory liabilities | 0.6 | (10.3 | ) | ||||
Other assets | (5.4 | ) | 5.4 | ||||
Other liabilities | (41.3 | ) | (10.9 | ) | |||
Change in certain current assets and liabilities | |||||||
Accounts receivable, net | (118.5 | ) | (48.0 | ) | |||
Accrued unbilled revenues | (9.8 | ) | (11.2 | ) | |||
Income taxes receivable | (3.6 | ) | 141.2 | ||||
Fuel, materials and supplies inventories | 61.5 | (12.3 | ) | ||||
Gas imbalance assets | (0.1 | ) | — | ||||
Fuel clause under recoveries | (32.2 | ) | (0.6 | ) | |||
Other current assets | 7.1 | 7.8 | |||||
Accounts payable | (40.9 | ) | (13.7 | ) | |||
Gas imbalance liabilities | (1.1 | ) | (1.0 | ) | |||
Fuel clause over recoveries | (21.4 | ) | (119.5 | ) | |||
Other current liabilities | 30.3 | 9.6 | |||||
Net Cash Provided from Operating Activities | 528.7 | 586.9 | |||||
CASH FLOWS FROM INVESTING ACTIVITIES | |||||||
Capital expenditures (less allowance for equity funds used during construction) | (907.3 | ) | (612.5 | ) | |||
Reimbursement of capital expenditures | 37.2 | 24.5 | |||||
Proceeds from sale of assets | 17.8 | 1.9 | |||||
Other investing activities | — | 0.1 | |||||
Net Cash Used in Investing Activities | (852.3 | ) | (586.0 | ) | |||
CASH FLOWS FROM FINANCING ACTIVITIES | |||||||
Proceeds from long-term debt | 246.3 | 246.2 | |||||
Increase in short-term debt | 144.0 | 49.0 | |||||
Contributions from noncontrolling interest partners | 73.5 | — | |||||
Issuance of common stock | 11.0 | 13.5 | |||||
Proceeds from line of credit | — | 115.0 | |||||
Excess tax benefit on stock-based compensation | — | 0.7 | |||||
Retirement of long-term debt | — | (289.2 | ) | ||||
Distributions to noncontrolling interest partners | (12.8 | ) | — | ||||
Repayment of line of credit | (25.0 | ) | (80.0 | ) | |||
Dividends paid on common stock | (110.1 | ) | (105.7 | ) | |||
Net Cash Provided from (Used in) Financing Activities | 326.9 | (50.5 | ) | ||||
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS | 3.3 | (49.6 | ) | ||||
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD | 2.3 | 58.1 | |||||
CASH AND CASH EQUIVALENTS AT END OF PERIOD | $ | 5.6 | $ | 8.5 |
September 30, | December 31, | ||||||
2011 | 2010 | ||||||
(In millions) | (Unaudited) | ||||||
ASSETS | |||||||
CURRENT ASSETS | |||||||
Cash and cash equivalents | $ | 5.6 | $ | 2.3 | |||
Accounts receivable, less reserve of $2.4 and $1.9, respectively | 396.4 | 277.9 | |||||
Accrued unbilled revenues | 66.6 | 56.8 | |||||
Income taxes receivable | 8.3 | 4.7 | |||||
Fuel inventories | 91.0 | 158.8 | |||||
Materials and supplies, at average cost | 89.6 | 83.3 | |||||
Price risk management | 1.8 | 1.4 | |||||
Gas imbalances | 2.6 | 2.5 | |||||
Deferred income taxes | 13.8 | 18.7 | |||||
Fuel clause under recoveries | 33.2 | 1.0 | |||||
Other | 17.6 | 24.7 | |||||
Total current assets | 726.5 | 632.1 | |||||
OTHER PROPERTY AND INVESTMENTS, at cost | 45.4 | 44.9 | |||||
PROPERTY, PLANT AND EQUIPMENT | |||||||
In service | 9,569.3 | 9,188.0 | |||||
Construction work in progress | 874.7 | 460.0 | |||||
Total property, plant and equipment | 10,444.0 | 9,648.0 | |||||
Less accumulated depreciation | 3,295.2 | 3,183.6 | |||||
Net property, plant and equipment | 7,148.8 | 6,464.4 | |||||
DEFERRED CHARGES AND OTHER ASSETS | |||||||
Regulatory assets | 415.3 | 489.4 | |||||
Price risk management | 0.3 | 0.8 | |||||
Other | 42.5 | 37.5 | |||||
Total deferred charges and other assets | 458.1 | 527.7 | |||||
TOTAL ASSETS | $ | 8,378.8 | $ | 7,669.1 |
September 30, | December 31, | ||||||
2011 | 2010 | ||||||
(In millions) | (Unaudited) | ||||||
LIABILITIES AND STOCKHOLDERS' EQUITY | |||||||
CURRENT LIABILITIES | |||||||
Short-term debt | $ | 289.0 | $ | 145.0 | |||
Accounts payable | 297.4 | 321.7 | |||||
Dividends payable | 36.8 | 36.6 | |||||
Customer deposits | 68.0 | 67.0 | |||||
Accrued taxes | 61.6 | 39.3 | |||||
Accrued interest | 35.1 | 53.1 | |||||
Accrued compensation | 54.0 | 43.3 | |||||
Price risk management | 6.9 | 16.8 | |||||
Gas imbalances | 5.6 | 6.7 | |||||
Fuel clause over recoveries | 8.5 | 29.9 | |||||
Other | 71.3 | 55.1 | |||||
Total current liabilities | 934.2 | 814.5 | |||||
LONG-TERM DEBT | 2,586.9 | 2,362.9 | |||||
DEFERRED CREDITS AND OTHER LIABILITIES | |||||||
Accrued benefit obligations | 241.5 | 372.4 | |||||
Deferred income taxes | 1,599.8 | 1,434.8 | |||||
Deferred investment tax credits | 6.9 | 9.4 | |||||
Regulatory liabilities | 223.2 | 193.1 | |||||
Price risk management | 0.1 | — | |||||
Deferred revenues | 39.1 | 36.7 | |||||
Other | 48.2 | 45.3 | |||||
Total deferred credits and other liabilities | 2,158.8 | 2,091.7 | |||||
Total liabilities | 5,679.9 | 5,269.1 | |||||
COMMITMENTS AND CONTINGENCIES (NOTE 15) | |||||||
STOCKHOLDERS' EQUITY | |||||||
Common stockholders' equity | 999.6 | 969.2 | |||||
Retained earnings | 1,576.8 | 1,380.6 | |||||
Accumulated other comprehensive loss, net of tax | (35.5 | ) | (60.2 | ) | |||
Total OGE Energy stockholders' equity | 2,540.9 | 2,289.6 | |||||
Noncontrolling interests | 158.0 | 110.4 | |||||
Total stockholders' equity | 2,698.9 | 2,400.0 | |||||
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY | $ | 8,378.8 | $ | 7,669.1 |
Premium | Accumulated | ||||||||||||||||||||||
on | Other | ||||||||||||||||||||||
Common | Common | Retained | Comprehensive | Noncontrolling | |||||||||||||||||||
(In millions) | Stock | Stock | Earnings | Income (Loss) | Interest | Total | |||||||||||||||||
Balance at December 31, 2010 | $ | 1.0 | $ | 968.2 | $ | 1,380.6 | $ | (60.2 | ) | $ | 110.4 | $ | 2,400.0 | ||||||||||
Comprehensive income (loss) | |||||||||||||||||||||||
Net income | — | — | 306.5 | — | 13.9 | 320.4 | |||||||||||||||||
Other comprehensive | |||||||||||||||||||||||
income (loss), net of tax | — | — | — | 24.7 | 2.1 | 26.8 | |||||||||||||||||
Comprehensive income (loss) | — | — | 306.5 | 24.7 | 16.0 | 347.2 | |||||||||||||||||
Dividends declared on | |||||||||||||||||||||||
common stock | — | — | (110.3 | ) | — | — | (110.3 | ) | |||||||||||||||
Issuance of common stock | — | 11.0 | — | — | — | 11.0 | |||||||||||||||||
Stock-based compensation | — | 1.5 | — | — | — | 1.5 | |||||||||||||||||
Contributions from | |||||||||||||||||||||||
noncontrolling interest | |||||||||||||||||||||||
partners | — | 29.1 | — | — | 44.4 | 73.5 | |||||||||||||||||
Distributions to noncontrolling | |||||||||||||||||||||||
interest partners | — | — | — | — | (12.8 | ) | (12.8 | ) | |||||||||||||||
Deferred income taxes | |||||||||||||||||||||||
attributable to contributions | |||||||||||||||||||||||
from noncontrolling interest | |||||||||||||||||||||||
partners | — | (11.2 | ) | — | — | — | (11.2 | ) | |||||||||||||||
Balance at September 30, 2011 | $ | 1.0 | $ | 998.6 | $ | 1,576.8 | $ | (35.5 | ) | $ | 158.0 | $ | 2,698.9 | ||||||||||
Balance at December 31, 2009 | $ | 1.0 | $ | 886.7 | $ | 1,227.8 | $ | (74.7 | ) | $ | 20.0 | $ | 2,060.8 | ||||||||||
Comprehensive income (loss) | |||||||||||||||||||||||
Net income | — | — | 264.6 | — | 2.0 | 266.6 | |||||||||||||||||
Other comprehensive | |||||||||||||||||||||||
income (loss), net of tax | — | — | — | 5.8 | — | 5.8 | |||||||||||||||||
Comprehensive income (loss) | — | — | 264.6 | 5.8 | 2.0 | 272.4 | |||||||||||||||||
Dividends declared on | |||||||||||||||||||||||
common stock | — | — | (105.9 | ) | — | — | (105.9 | ) | |||||||||||||||
Issuance of common stock | — | 13.5 | — | — | — | 13.5 | |||||||||||||||||
Stock-based compensation | — | 7.5 | — | — | — | 7.5 | |||||||||||||||||
Balance at September 30, 2010 | $ | 1.0 | $ | 907.7 | $ | 1,386.5 | $ | (68.9 | ) | $ | 22.0 | $ | 2,248.3 |
1. | Summary of Significant Accounting Policies |
September 30, | December 31, | ||||||
(In millions) | 2011 | 2010 | |||||
Regulatory Assets | |||||||
Current | |||||||
Fuel clause under recoveries | $ | 33.2 | $ | 1.0 | |||
Other (A) | 8.7 | 4.9 | |||||
Total Current Regulatory Assets | $ | 41.9 | $ | 5.9 | |||
Non-Current | |||||||
Benefit obligations regulatory asset | $ | 274.0 | $ | 365.5 | |||
Income taxes recoverable from customers, net | 51.8 | 43.3 | |||||
Smart Grid | 29.4 | 14.2 | |||||
Deferred storm expenses | 25.5 | 28.6 | |||||
Unamortized loss on reacquired debt | 14.5 | 15.3 | |||||
Deferred Pension expenses | 10.2 | 13.5 | |||||
Red Rock deferred expenses | 6.9 | 7.2 | |||||
Other | 3.0 | 1.8 | |||||
Total Non-Current Regulatory Assets | $ | 415.3 | $ | 489.4 | |||
Regulatory Liabilities | |||||||
Current | |||||||
Smart Grid rider over collections (B) | $ | 23.5 | $ | 10.4 | |||
Fuel clause over recoveries | 8.5 | 29.9 | |||||
Other (B) | 15.7 | 10.5 | |||||
Total Current Regulatory Liabilities | $ | 47.7 | $ | 50.8 | |||
Non-Current | |||||||
Accrued removal obligations, net | $ | 204.5 | $ | 184.9 | |||
Pension tracker | 18.7 | 8.2 | |||||
Total Non-Current Regulatory Liabilities | $ | 223.2 | $ | 193.1 |
(A) | Included in Other Current Assets on the Condensed Consolidated Balance Sheets. |
(B) | Included in Other Current Liabilities on the Condensed Consolidated Balance Sheets. |
2. | Accounting Pronouncement |
3. | Noncontrolling Interest Owner |
(In millions) | |||
Net income attributable to OGE Energy | $ | 306.5 | |
Transfers (to) from the noncontrolling interest | |||
Increase in paid-in capital for sale of 100,000 units of Enogex Holdings | 0.9 | ||
Increase in paid-in capital for issuance of 4,303,007 units of Enogex Holdings | 28.2 | ||
Decrease in paid-in capital for deferred income taxes attributable to the sale and issuance of units | |||
of Enogex Holdings | (11.2 | ) | |
Net transfers from the noncontrolling interest | 17.9 | ||
Change from net income attributable to OGE Energy and transfers from noncontrolling interest | $ | 324.4 |
(In millions) | OGE Holdings | ArcLight group | Total | |||
Balance at December 31, 2010 (units) | 90.1 | 9.9 | 100.0 | |||
Ownership percentage at December 31, 2010 | 90.1 | % | 9.9 | % | 100.0 | % |
Sale of 100,000 units of Enogex Holdings (A) | (0.1 | ) | 0.1 | — | ||
Issuance of 4,303,007 units of Enogex Holdings (B) | 0.4 | 3.9 | 4.3 | |||
Balance at September 30, 2011 (units) | 90.4 | 13.9 | 104.3 | |||
Ownership percentage at September 30, 2011 | 86.7 | % | 13.3 | % | 100.0 | % |
Issuance of 5,405,406 units of Enogex Holdings (C) | 0.5 | 4.9 | 5.4 | |||
Issuance of 5,725,190 units of Enogex Holdings (D) | 2.9 | 2.8 | 5.7 | |||
Balance at November 1, 2011 (units) | 93.8 | 21.6 | 115.4 | |||
Ownership percentage at November 1, 2011 | 81.3 | % | 18.7 | % | 100.0 | % |
OGE Holdings | ArcLight group's | ||||||||
(In millions) | Portion | Portion | Total Distribution | ||||||
First quarter 2011 | $ | 7.5 | $ | 0.8 | $ | 8.3 | |||
Second quarter 2011 | 34.3 | 5.3 | 39.6 | ||||||
Third quarter 2011 | 43.4 | 6.6 | 50.0 | ||||||
Total | $ | 85.2 | $ | 12.7 | $ | 97.9 |
4. | Impairment of Assets |
5. | Fair Value Measurements |
September 30, 2011 | |||||||||||||||
(In millions) | Commodity Contracts | Gas Imbalances (A) | |||||||||||||
Assets | Liabilities | Assets | Liabilities (B) | ||||||||||||
Quoted market prices in active market for identical assets (Level 1) | $ | 35.1 | $ | 31.3 | $ | — | $ | — | |||||||
Significant other observable inputs (Level 2) | 2.8 | 9.4 | 2.6 | 2.6 | |||||||||||
Significant unobservable inputs (Level 3) | 1.5 | — | — | — | |||||||||||
Total fair value | 39.4 | 40.7 | 2.6 | 2.6 | |||||||||||
Netting adjustments | (37.3 | ) | (33.7 | ) | — | — | |||||||||
Total | $ | 2.1 | $ | 7.0 | $ | 2.6 | $ | 2.6 | |||||||
December 31, 2010 | |||||||||||||||
(In millions) | Commodity Contracts | Gas Imbalances (A) | |||||||||||||
Assets | Liabilities | Assets | Liabilities (B) | ||||||||||||
Quoted market prices in active market for identical assets (Level 1) | $ | 20.6 | $ | 20.2 | $ | — | $ | — | |||||||
Significant other observable inputs (Level 2) | 2.7 | 30.7 | 2.5 | 2.8 | |||||||||||
Significant unobservable inputs (Level 3) | 13.3 | — | — | — | |||||||||||
Total fair value | 36.6 | 50.9 | 2.5 | 2.8 | |||||||||||
Netting adjustments | (34.4 | ) | (34.1 | ) | — | — | |||||||||
Total | $ | 2.2 | $ | 16.8 | $ | 2.5 | $ | 2.8 |
(A) | The Company uses the market approach to fair value its gas imbalance assets and liabilities, using an average of the Inside FERC Gas Market Report for Panhandle Eastern Pipe Line Co. (Texas, Oklahoma Mainline), ONEOK (Oklahoma) and ANR Pipeline (Oklahoma) indices. |
(B) | Gas imbalance liabilities exclude fuel reserves for over retained fuel due to shippers of $3.0 million and $3.9 million at September 30, 2011 and December 31, 2010, respectively, which fuel reserves are based on the value of natural gas at the time the imbalance was created and which are not subject to revaluation at fair market value. |
Commodity Contracts | |||||||||||||||
Assets | Liabilities | ||||||||||||||
(In millions) | 2011 | 2010 | 2011 | 2010 | |||||||||||
Balance at January 1 | $ | 13.3 | $ | 49.0 | $ | — | $ | 14.7 | |||||||
Total gains or losses | |||||||||||||||
Included in other comprehensive income | (4.8 | ) | (3.9 | ) | — | (5.1 | ) | ||||||||
Settlements | (3.3 | ) | (4.1 | ) | — | (1.4 | ) | ||||||||
Balance at March 31 | 5.2 | 41.0 | — | 8.2 | |||||||||||
Total gains or losses | |||||||||||||||
Included in other comprehensive income | (1.0 | ) | 7.2 | — | (3.7 | ) | |||||||||
Settlements | (1.7 | ) | (6.1 | ) | — | (2.7 | ) | ||||||||
Balance at June 30 | 2.5 | 42.1 | — | 1.8 | |||||||||||
Total gains or losses | |||||||||||||||
Included in other comprehensive income | 0.4 | (8.5 | ) | — | 2.3 | ||||||||||
Settlements | (1.4 | ) | (6.7 | ) | — | (0.9 | ) | ||||||||
Balance at September 30 | $ | 1.5 | $ | 26.9 | $ | — | $ | 3.2 |
September 30, 2011 | December 31, 2010 | ||||||||||||||
Carrying | Fair | Carrying | Fair | ||||||||||||
(In millions) | Amount | Value | Amount | Value | |||||||||||
Price Risk Management Assets | |||||||||||||||
Energy Derivative Contracts | $ | 2.1 | $ | 2.1 | $ | 2.2 | $ | 2.2 | |||||||
Price Risk Management Liabilities | |||||||||||||||
Energy Derivative Contracts | $ | 7.0 | $ | 7.0 | $ | 16.8 | $ | 16.8 | |||||||
Long-Term Debt | |||||||||||||||
OG&E Senior Notes | $ | 1,903.8 | $ | 2,362.8 | $ | 1,655.0 | $ | 1,831.5 | |||||||
OGE Energy Senior Notes | 99.6 | 109.7 | 99.7 | 106.4 | |||||||||||
OG&E Industrial Authority Bonds | 135.4 | 135.4 | 135.4 | 135.4 | |||||||||||
Enogex LLC Senior Notes | 448.1 | 502.7 | 447.8 | 480.7 | |||||||||||
Enogex LLC Revolving Credit Agreement | — | — | 25.0 | 25.0 |
6. | Derivative Instruments and Hedging Activities |
• | NGLs put options and NGLs swaps are used to manage Enogex's NGLs exposure associated with its processing agreements; |
• | natural gas swaps are used to manage Enogex's keep-whole natural gas exposure associated with its processing operations and Enogex's natural gas exposure associated with operating its gathering, transportation and storage assets; |
• | natural gas futures and swaps and natural gas commodity purchases and sales are used to manage OER's natural gas exposure associated with its storage and transportation contracts; and |
• | natural gas futures and swaps, natural gas options and natural gas commodity purchases and sales are used to manage OER's marketing and trading activities. |
2011 Gross Notional | |
(In millions) | Volume (A) |
Enogex processing hedges | |
NGLs sales | 0.3 |
Natural gas purchases | 1.3 |
Enogex marketing hedges | |
Natural gas sales | 1.9 |
(A) | Natural gas in million British thermal units; NGLs in barrels. |
(In millions) | Gross Notional Volume (A) | ||
Purchases | Sales | ||
Natural gas (B) | |||
Physical (C)(D) | 16.5 | 58.0 | |
Fixed Swaps/Futures | 48.6 | 47.3 | |
Options | 19.2 | 13.0 | |
Basis Swaps | 7.7 | 8.1 |
(A) | Natural gas in million British thermal units. |
(B) | 85.5 percent of the natural gas contracts have durations of one year or less, 6.5 percent have durations of more than one year and less than two years and 8.0 percent have durations of more than two years. |
(C) | Of the natural gas physical purchases and sales volumes not designated as hedges, the majority are priced based on a monthly or daily index and the fair value is subject to little or no market price risk. |
(D) | Natural gas physical sales volumes exceed natural gas physical purchase volumes due to the marketing of natural gas volumes purchased via Enogex's processing contracts, which are not derivative instruments and are excluded from the table above. |
Fair Value | ||||||||
Balance Sheet | ||||||||
Instrument | Location | Assets | Liabilities | |||||
(In millions) | ||||||||
Derivatives Designated as Hedging Instruments | ||||||||
NGLs | ||||||||
Financial Options | Current PRM | $ | 1.5 | $ | — | |||
Natural Gas | ||||||||
Financial Futures/Swaps | Current PRM | — | 8.0 | |||||
Other Current Assets | 1.9 | 0.2 | ||||||
Total | $ | 3.4 | $ | 8.2 | ||||
Derivatives Not Designated as Hedging Instruments | ||||||||
Natural Gas | ||||||||
Financial Futures/Swaps | Current PRM | $ | 0.1 | $ | 0.1 | |||
Other Current Assets | 33.5 | 31.7 | ||||||
Physical Purchases/Sales | Current PRM | 1.8 | 0.4 | |||||
Non-Current PRM | 0.3 | 0.1 | ||||||
Financial Options | Other Current Assets | 0.3 | 0.2 | |||||
Total | $ | 36.0 | $ | 32.5 | ||||
Total Gross Derivatives (A) | $ | 39.4 | $ | 40.7 |
(A) | See Note 5 for a reconciliation of the Company's total derivatives fair value to the Company's Condensed Consolidated Balance Sheet at September 30, 2011. |
Fair Value | ||||||||
Balance Sheet | ||||||||
Instrument | Location | Assets | Liabilities | |||||
(In millions) | ||||||||
Derivatives Designated as Hedging Instruments | ||||||||
NGLs | ||||||||
Financial Options | Current PRM | $ | 13.3 | $ | — | |||
Natural Gas | ||||||||
Financial Futures/Swaps | Current PRM | — | 28.8 | |||||
Other Current Assets | 0.6 | 0.3 | ||||||
Total | $ | 13.9 | $ | 29.1 | ||||
Derivatives Not Designated as Hedging Instruments | ||||||||
Natural Gas | ||||||||
Financial Futures/Swaps | Current PRM | $ | — | $ | 0.1 | |||
Other Current Assets | 20.0 | 19.8 | ||||||
Physical Purchases/Sales | Current PRM | 1.4 | 1.2 | |||||
Non-Current PRM | 0.8 | — | ||||||
Financial Options | Other Current Assets | 0.5 | 0.7 | |||||
Total | $ | 22.7 | $ | 21.8 | ||||
Total Gross Derivatives (A) | $ | 36.6 | $ | 50.9 |
(A) | See Note 5 for a reconciliation of the Company's total derivatives fair value to the Company's Condensed Consolidated Balance Sheet at December 31, 2010. |
Amount Reclassified | |||||||||||
Amount Recognized | from Accumulated Other | Amount | |||||||||
in Other | Comprehensive Income | Recognized in | |||||||||
(In millions) | Comprehensive Income (A) | into Income | Income | ||||||||
NGLs Financial Options | $ | 0.2 | $ | (2.6 | ) | $ | — | ||||
Natural Gas Financial Futures/Swaps | 0.2 | (7.5 | ) | — | |||||||
Total | $ | 0.4 | $ | (10.1 | ) | $ | — |
(A) | The estimated net amount of gains or losses included in Accumulated Other Comprehensive Income at September 30, 2011 that is expected to be reclassified into income within the next 12 months is a loss of $8.4 million. |
Amount | |||
Recognized in | |||
(In millions) | Income | ||
Natural Gas Physical Purchases/Sales | $ | (2.2 | ) |
Natural Gas Financial Futures/Swaps | 0.2 | ||
Total | $ | (2.0 | ) |
Amount Reclassified | |||||||||||
Amount Recognized | from Accumulated Other | Amount | |||||||||
in Other | Comprehensive Income | Recognized in | |||||||||
(In millions) | Comprehensive Income | into Income | Income | ||||||||
NGLs Financial Options | $ | (12.2 | ) | $ | 1.5 | $ | — | ||||
NGLs Financial Futures/Swaps | (1.2 | ) | (0.3 | ) | — | ||||||
Natural Gas Financial Futures/Swaps | (5.5 | ) | (6.7 | ) | — | ||||||
Total | $ | (18.9 | ) | $ | (5.5 | ) | $ | — |
Amount | |||
Recognized in | |||
(In millions) | Income | ||
Natural Gas Physical Purchases/Sales | $ | (2.3 | ) |
Natural Gas Financial Futures/Swaps | 0.6 | ||
Total | $ | (1.7 | ) |
Amount Reclassified | |||||||||||
Amount Recognized | from Accumulated Other | Amount | |||||||||
in Other | Comprehensive Income | Recognized in | |||||||||
(In millions) | Comprehensive Income (A) | into Income | Income | ||||||||
NGLs Financial Options | $ | (9.0 | ) | $ | (8.3 | ) | $ | — | |||
Natural Gas Financial Futures/Swaps | — | (22.2 | ) | — | |||||||
Total | $ | (9.0 | ) | $ | (30.5 | ) | $ | — |
(A) | The estimated net amount of gains or losses included in Accumulated Other Comprehensive Income at September 30, 2011 that is expected to be reclassified into income within the next 12 months is a loss of $8.4 million. |
Amount | |||
Recognized in | |||
(In millions) | Income | ||
Natural Gas Physical Purchases/Sales | $ | (7.1 | ) |
Natural Gas Financial Futures/Swaps | (0.2 | ) | |
Total | $ | (7.3 | ) |
Amount Reclassified | |||||||||||
Amount Recognized | from Accumulated Other | Amount | |||||||||
in Other | Comprehensive Income | Recognized in | |||||||||
(In millions) | Comprehensive Income | into Income | Income | ||||||||
NGLs Financial Options | $ | (1.2 | ) | $ | 2.0 | $ | — | ||||
NGLs Financial Futures/Swaps | 2.1 | (2.2 | ) | — | |||||||
Natural Gas Financial Futures/Swaps | (15.4 | ) | (18.7 | ) | 0.1 | ||||||
Total | $ | (14.5 | ) | $ | (18.9 | ) | $ | 0.1 |
Amount | |||
Recognized in | |||
(In millions) | Income | ||
Natural Gas Physical Purchases/Sales | $ | (6.4 | ) |
Natural Gas Financial Futures/Swaps | 0.8 | ||
Total | $ | (5.6 | ) |
7. | Stock-Based Compensation |
Three Months Ended | Nine Months Ended | ||||||||||||
September 30, | September 30, | ||||||||||||
(In millions) | 2011 | 2010 | 2011 | 2010 | |||||||||
Performance units | |||||||||||||
Total shareholder return | $ | 1.9 | $ | 1.5 | $ | 5.6 | $ | 4.7 | |||||
Earnings per share | 0.8 | 1.0 | 3.7 | 1.8 | |||||||||
Total performance units | 2.7 | 2.5 | 9.3 | 6.5 | |||||||||
Restricted stock | 0.2 | 0.3 | 0.7 | 0.7 | |||||||||
Total compensation expense | $ | 2.9 | $ | 2.8 | $ | 10.0 | $ | 7.2 | |||||
Income tax benefit | $ | 1.1 | $ | 1.1 | $ | 3.9 | $ | 2.8 |
Shares | Fair Value | ||
Grants | |||
Restricted stock | 14,218 | $49.24 |
8. | Accumulated Other Comprehensive Income (Loss) |
September 30, | December 31, | ||||||
(In millions) | 2011 | 2010 | |||||
Pension Plan and Restoration of Retirement Income Plan: | |||||||
Net loss | $ | (29.4 | ) | $ | (31.1 | ) | |
Prior service cost | (0.2 | ) | (0.5 | ) | |||
Postretirement plans: | |||||||
Net loss | (12.3 | ) | (13.6 | ) | |||
Prior service cost | 9.3 | — | |||||
Net transition obligation | (0.2 | ) | (0.3 | ) | |||
Deferred commodity contracts hedging losses | (5.6 | ) | (19.5 | ) | |||
Deferred interest rate swaps hedging losses | (0.8 | ) | (1.0 | ) | |||
Total accumulated other comprehensive loss | (39.2 | ) | (66.0 | ) | |||
Less: Accumulated other comprehensive loss attributable to noncontrolling interests | (3.7 | ) | (5.8 | ) | |||
Accumulated other comprehensive loss, net of tax | $ | (35.5 | ) | $ | (60.2 | ) |
9. | Income Taxes |
10. | Common Equity |
Three Months Ended | Nine Months Ended | ||||||||||||||
September 30, | September 30, | ||||||||||||||
(In millions) | 2011 | 2010 | 2011 | 2010 | |||||||||||
Net Income Attributable to OGE Energy | $ | 178.7 | $ | 163.1 | $ | 306.5 | $ | 264.6 | |||||||
Average Common Shares Outstanding | |||||||||||||||
Basic average common shares outstanding | 98.0 | 97.4 | 97.9 | 97.3 | |||||||||||
Effect of dilutive securities: | |||||||||||||||
Contingently issuable shares (performance units) | 1.3 | 1.6 | 1.3 | 1.5 | |||||||||||
Diluted average common shares outstanding | 99.3 | 99.0 | 99.2 | 98.8 | |||||||||||
Basic Earnings Per Average Common Share | |||||||||||||||
Attributable to OGE Energy Common Shareholders | $ | 1.82 | $ | 1.67 | $ | 3.13 | $ | 2.72 | |||||||
Diluted Earnings Per Average Common Share | |||||||||||||||
Attributable to OGE Energy Common Shareholders | $ | 1.80 | $ | 1.65 | $ | 3.09 | $ | 2.68 | |||||||
Anti-dilutive shares excluded from earnings per share calculation | — | — | — | — |
11. | Long-Term Debt |
SERIES | DATE DUE | AMOUNT | ||
(In millions) | ||||
0.22% - 0.44% | Garfield Industrial Authority, January 1, 2025 | $ | 47.0 | |
0.20% - 0.44% | Muskogee Industrial Authority, January 1, 2025 | 32.4 | ||
0.29% - 0.50% | Muskogee Industrial Authority, June 1, 2027 | 56.0 | ||
Total (redeemable during next 12 months) | $ | 135.4 |
12. | Short-Term Debt and Credit Facilities |
Revolving Credit Agreements and Available Cash | |||||||||||||
Aggregate | Amount | Weighted-Average | |||||||||||
Entity | Commitment | Outstanding (A) | Interest Rate | Maturity | |||||||||
(In millions) | |||||||||||||
OGE Energy (B) | $ | 596.0 | $ | 289.0 | 0.36 | % | (D) | December 6, 2012 | |||||
OG&E (C) | 389.0 | 2.2 | 0.14 | % | (D) | December 6, 2012 | |||||||
Enogex LLC (E) | 250.0 | — | — | % | (D) | March 31, 2013 | |||||||
1,235.0 | 291.2 | 0.35 | % | ||||||||||
Cash | 5.6 | N/A | N/A | N/A | |||||||||
Total | $ | 1,240.6 | $ | 291.2 | 0.35 | % |
(A) | Includes direct borrowings under the revolving credit agreements, commercial paper borrowings and letters of credit at September 30, 2011. |
(B) | This bank facility is available to back up OGE Energy's commercial paper borrowings and to provide revolving credit borrowings. This bank facility can also be used as a letter of credit facility. At September 30, 2011, there was $289.0 million in outstanding commercial paper borrowings. |
(C) | This bank facility is available to back up OG&E's commercial paper borrowings and to provide revolving credit borrowings. This bank facility can also be used as a letter of credit facility. At September 30, 2011, there was $2.2 million supporting letters of credit. |
(D) | Represents the weighted-average interest rate for the outstanding borrowings under the revolving credit agreements, commercial paper borrowings and letters of credit. |
(E) | This bank facility is available to provide revolving credit borrowings for Enogex LLC. As Enogex LLC's credit agreement matures on March 31, 2013, along with its intent in utilizing its credit agreement, borrowings thereunder are classified as long-term debt in the Company's Condensed Consolidated Balance Sheets. |
13. | Retirement Plans and Postretirement Benefit Plans |
Pension Plan | |||||||||||||||
Three Months Ended | Nine Months Ended | ||||||||||||||
September 30, | September 30, | ||||||||||||||
(In millions) | 2011 (A) | 2010 (A) | 2011 (B) | 2010 (B) | |||||||||||
Service cost | $ | 4.4 | $ | 4.1 | $ | 13.2 | $ | 12.5 | |||||||
Interest cost | 8.4 | 8.0 | 25.0 | 23.9 | |||||||||||
Expected return on plan assets | (11.4 | ) | (10.6 | ) | (34.1 | ) | (31.8 | ) | |||||||
Amortization of net loss | 4.8 | 5.3 | 14.4 | 15.9 | |||||||||||
Amortization of unrecognized prior service cost | 0.6 | 0.6 | 1.8 | 1.8 | |||||||||||
Net periodic benefit cost | $ | 6.8 | $ | 7.4 | $ | 20.3 | $ | 22.3 |
Restoration of Retirement Income Plan | |||||||||||||||
Three Months Ended | Nine Months Ended | ||||||||||||||
September 30, | September 30, | ||||||||||||||
(In millions) | 2011 (A) | 2010 (A) | 2011 (B) | 2010 (B) | |||||||||||
Service cost | $ | 0.3 | $ | 0.3 | $ | 0.8 | $ | 0.7 | |||||||
Interest cost | 0.1 | 0.2 | 0.4 | 0.4 | |||||||||||
Amortization of net loss | 0.1 | — | 0.3 | 0.2 | |||||||||||
Amortization of unrecognized prior service cost | 0.1 | 0.1 | 0.5 | 0.5 | |||||||||||
Net periodic benefit cost | $ | 0.6 | $ | 0.6 | $ | 2.0 | $ | 1.8 |
(A) | In addition to the $7.4 million and $8.0 million of net periodic benefit cost recognized during the three months ended September 30, 2011 and 2010, respectively, OG&E recognized an increase in pension expense during the three months ended September 30, 2011 and 2010 of $2.7 million and $2.3 million, respectively, to maintain the allowable amount to be recovered for pension expense in the Oklahoma jurisdiction which are included in the Pension tracker regulatory liability (see Note 1). |
(B) | In addition to the $22.3 million and $24.1 million of net periodic benefit cost recognized during the nine months ended September 30, 2011 and 2010, respectively, OG&E recognized an increase in pension expense during the nine months ended September 30, 2011 and 2010 of $8.0 million and $5.8 million, respectively, to maintain the allowable amount to be recovered for pension expense in the Oklahoma jurisdiction which are included in the Pension tracker regulatory liability (see Note 1). |
Postretirement Benefit Plans | |||||||||||||||
Three Months Ended | Nine Months Ended | ||||||||||||||
September 30, | September 30, | ||||||||||||||
(In millions) | 2011 (C) | 2010 | 2011 (C) | 2010 | |||||||||||
Service cost | $ | 0.8 | $ | 1.1 | $ | 2.6 | $ | 3.2 | |||||||
Interest cost | 3.2 | 4.2 | 9.4 | 12.7 | |||||||||||
Expected return on plan assets | (1.2 | ) | (1.7 | ) | (3.8 | ) | (5.2 | ) | |||||||
Amortization of transition obligation | 0.7 | 0.7 | 2.1 | 2.1 | |||||||||||
Amortization of net loss | 4.6 | 3.0 | 13.7 | 9.1 | |||||||||||
Amortization of unrecognized prior service cost | (4.2 | ) | — | (12.4 | ) | — | |||||||||
Net periodic benefit cost | $ | 3.9 | $ | 7.3 | $ | 11.6 | $ | 21.9 |
14. | Report of Business Segments |
Transportation | Gathering | ||||||||||||||||||||
Three Months Ended | Electric | and | and | Other | |||||||||||||||||
September 30, 2011 | Utility | Storage | Processing | Marketing | Operations | Eliminations | Total | ||||||||||||||
(In millions) | |||||||||||||||||||||
Operating revenues | $ | 774.8 | $ | 103.7 | $ | 304.9 | $ | 160.0 | $ | — | $ | (131.3 | ) | $ | 1,212.1 | ||||||
Cost of goods sold | 334.7 | 58.6 | 233.2 | 163.1 | — | (131.1 | ) | 658.5 | |||||||||||||
Gross margin on revenues | 440.1 | 45.1 | 71.7 | (3.1 | ) | — | (0.2 | ) | 553.6 | ||||||||||||
Other operation and maintenance | 108.3 | 13.7 | 28.8 | 1.8 | (4.4 | ) | (0.8 | ) | 147.4 | ||||||||||||
Depreciation and amortization | 54.9 | 5.2 | 13.4 | — | 3.6 | — | 77.1 | ||||||||||||||
Impairment of assets | — | — | 5.0 | — | — | — | 5.0 | ||||||||||||||
Taxes other than income | 18.2 | 3.5 | 1.8 | 0.1 | 0.8 | — | 24.4 | ||||||||||||||
Operating income (loss) | $ | 258.7 | $ | 22.7 | $ | 22.7 | $ | (5.0 | ) | $ | — | $ | 0.6 | $ | 299.7 | ||||||
Total assets | $ | 6,451.8 | $ | 2,474.1 | $ | 1,189.1 | $ | 67.7 | $ | 3,149.8 | $ | (4,953.7 | ) | $ | 8,378.8 |
Transportation | Gathering | ||||||||||||||||||||
Three Months Ended | Electric | and | and | Other | |||||||||||||||||
September 30, 2010 | Utility | Storage | Processing | Marketing | Operations | Eliminations | Total | ||||||||||||||
(In millions) | |||||||||||||||||||||
Operating revenues | $ | 723.0 | $ | 103.5 | $ | 243.1 | $ | 206.5 | $ | — | $ | (150.7 | ) | $ | 1,125.4 | ||||||
Cost of goods sold | 311.2 | 64.8 | 178.9 | 207.6 | — | (149.9 | ) | 612.6 | |||||||||||||
Gross margin on revenues | 411.8 | 38.7 | 64.2 | (1.1 | ) | — | (0.8 | ) | 512.8 | ||||||||||||
Other operation and maintenance | 110.8 | 11.6 | 22.0 | 1.8 | (3.2 | ) | (0.6 | ) | 142.4 | ||||||||||||
Depreciation and amortization | 53.1 | 5.2 | 12.6 | — | 2.8 | — | 73.7 | ||||||||||||||
Taxes other than income | 16.9 | 3.3 | 1.4 | 0.1 | 0.8 | — | 22.5 | ||||||||||||||
Operating income (loss) | $ | 231.0 | $ | 18.6 | $ | 28.2 | $ | (3.0 | ) | $ | (0.4 | ) | $ | (0.2 | ) | $ | 274.2 | ||||
Total assets | $ | 5,882.7 | $ | 1,670.0 | $ | 941.1 | $ | 105.4 | $ | 2,834.4 | $ | (3,906.2 | ) | $ | 7,527.4 |
Transportation | Gathering | ||||||||||||||||||||
Nine Months Ended | Electric | and | and | Other | |||||||||||||||||
September 30, 2011 | Utility | Storage | Processing | Marketing | Operations | Eliminations | Total | ||||||||||||||
(In millions) | |||||||||||||||||||||
Operating revenues | $ | 1,765.6 | $ | 311.9 | $ | 860.7 | $ | 526.4 | $ | — | $ | (433.9 | ) | $ | 3,030.7 | ||||||
Cost of goods sold | 808.4 | 192.1 | 640.4 | 532.8 | — | (431.9 | ) | 1,741.8 | |||||||||||||
Gross margin on revenues | 957.2 | 119.8 | 220.3 | (6.4 | ) | — | (2.0 | ) | 1,288.9 | ||||||||||||
Other operation and maintenance | 324.3 | 35.8 | 81.9 | 5.9 | (13.3 | ) | (2.3 | ) | 432.3 | ||||||||||||
Depreciation and amortization | 158.8 | 16.4 | 40.4 | — | 10.2 | — | 225.8 | ||||||||||||||
Impairment of assets | — | — | 5.0 | — | — | — | 5.0 | ||||||||||||||
Taxes other than income | 56.1 | 11.1 | 5.3 | 0.3 | 3.2 | — | 76.0 | ||||||||||||||
Operating income (loss) | $ | 418.0 | $ | 56.5 | $ | 87.7 | $ | (12.6 | ) | $ | (0.1 | ) | $ | 0.3 | $ | 549.8 | |||||
Total assets | $ | 6,451.8 | $ | 2,474.1 | $ | 1,189.1 | $ | 67.7 | $ | 3,149.8 | $ | (4,953.7 | ) | $ | 8,378.8 |
Transportation | Gathering | ||||||||||||||||||||
Nine Months Ended | Electric | and | and | Other | |||||||||||||||||
September 30, 2010 | Utility | Storage | Processing | Marketing | Operations | Eliminations | Total | ||||||||||||||
(In millions) | |||||||||||||||||||||
Operating revenues | $ | 1,679.8 | $ | 311.7 | $ | 726.4 | $ | 641.2 | $ | — | $ | (470.7 | ) | $ | 2,888.4 | ||||||
Cost of goods sold | 792.8 | 191.9 | 527.5 | 644.8 | — | (467.8 | ) | 1,689.2 | |||||||||||||
Gross margin on revenues | 887.0 | 119.8 | 198.9 | (3.6 | ) | — | (2.9 | ) | 1,199.2 | ||||||||||||
Other operation and maintenance | 305.9 | 35.2 | 66.8 | 6.6 | (10.8 | ) | (2.7 | ) | 401.0 | ||||||||||||
Depreciation and amortization | 153.4 | 16.0 | 37.5 | — | 8.3 | — | 215.2 | ||||||||||||||
Taxes other than income | 51.8 | 10.6 | 4.9 | 0.3 | 2.9 | — | 70.5 | ||||||||||||||
Operating income (loss) | $ | 375.9 | $ | 58.0 | $ | 89.7 | $ | (10.5 | ) | $ | (0.4 | ) | $ | (0.2 | ) | $ | 512.5 | ||||
Total assets | $ | 5,882.7 | $ | 1,670.0 | $ | 941.1 | $ | 105.4 | $ | 2,834.4 | $ | (3,906.2 | ) | $ | 7,527.4 |
15. | Commitments and Contingencies |
16. | Rate Matters and Regulation |
17. | Subsequent Event |
• | an increase in net income at OG&E of $16.5 million, or 11.6 percent, or $0.17 per diluted share of the Company's |
• | a decrease in net income at Enogex of $3.5 million, or 15.4 percent, or $0.04 per diluted share of the Company's common stock, primarily due to higher operation and maintenance expense and the equity sale of a membership interest in Enogex Holdings to the ArcLight group partially offset by a higher gross margin primarily from increased gathered volumes associated with ongoing expansion projects, higher NGLs prices and higher average natural gas prices; and |
• | an increase in net income at OGE Energy of $2.6 million, or $0.02 per diluted share of the Company's common stock, primarily due to a higher income tax benefit. |
• | an increase in net income at OG&E of $40.3 million, or 19.8 percent, or $0.40 per diluted share of the Company's common stock, primarily due to a higher gross margin primarily from warmer weather in OG&E's service territory partially offset by higher other operation and maintenance expense and higher income tax expense. Income tax expense was higher due to higher pre-tax income which more than offset the effects of the Medicare Part D subsidy discussed above; |
• | a decrease in net income at Enogex of $5.7 million, or 8.3 percent, or $0.06 per diluted share of the Company's common stock, primarily due to higher operation and maintenance expense and the equity sale of a membership interest in Enogex Holdings to the ArcLight group partially offset by a higher gross margin primarily from increased gathered volumes associated with ongoing expansion projects and higher NGLs prices, the recognition of a gain related to the sale of the Harrah processing plant and the associated Wellston and Davenport gathering assets, lower interest expense and lower income tax expense related to lower pre-tax income and the Medicare Part D subsidy discussed above; and |
• | an increase in net income at OGE Energy of $7.3 million, or 97.3 percent, or $0.07 per diluted share of the Company's common stock, primarily due to a higher income tax benefit related to the Medicare Part D subsidy discussed above. |
Earnings Guidance per 2010 | Revised Earnings Guidance per | |||
Form 10-K | Q3 2011 Form 10-Q | |||
(In millions, except per share data) | Dollars | Diluted EPS | Dollars | Diluted EPS |
OG&E | $209 - $219 | $2.10 - $2.20 | $249 - $254 | $2.50 - $2.55 |
Enogex | $90 - $104 | $0.90 - $1.05 | $90 - $95 | $0.90 - $0.95 |
Holding Company | ($4) - ($2) | ($0.04) - ($0.02) | ($4) - ($2) | ($0.04) - ($0.02) |
Consolidated | $299 - $318 | $3.00 - $3.20 | $338 - $343 | $3.40 - $3.45 |
• | Normal weather patterns are experienced for the remainder of the year; |
• | Gross margin on revenues of $1.180 billion to $1.185 billion, which represents an increase from $1.105 billion to $1.115 billion that was assumed in the previous guidance. The increase in the gross margin projection is primarily due to the following: |
• | Higher than normal weather experienced year-to-date has increased the expected gross margin, net of the impact of the guaranteed flat bill program, $49 million; and |
• | Higher expected transmission revenues primarily attributed to recovery of construction work in progress, which is expected to increase gross margin by $12 million. |
• | Total Enogex anticipated gross margin of between $450 million to $465 million compared to previous guidance of $435 million to $460 million. The gross margin assumption includes: |
• | Transportation and storage gross margin contribution of between $155 million to $165 million compared to previous guidance of between $145 million to $155 million of which 80 percent is attributable to the transportation business. This increase in estimated gross margin is primarily due to higher demand revenues and new customer contracts on the transportation system; |
• | Gathering and processing gross margin contribution of between $305 million to $310 million compared to previous guidance of between $290 million to $305 million of which 60 percent is attributable to the processing business. The increase in expected gross margin is due to higher than previously estimated NGLs prices partially offset by lower than previously estimated processing volumes and changes in the contract mix to reduce the percentage of processing volumes on a keep-whole basis; |
• | Offsetting the higher gross margins is a projected increase in operating expenses resulting from the delay of the insurance proceeds from the Cox City plant outage; and |
• | ArcLight group will own 19 percent of Enogex Holdings by the end of 2011 compared to previous guidance of 17 percent of Enogex Holdings by the end of 2011. |
Three Months Ended | Nine Months Ended | |||||||||||||
September 30, | September 30, | |||||||||||||
(In millions, except per share data) | 2011 | 2010 | 2011 | 2010 | ||||||||||
Operating income | $ | 299.7 | $ | 274.2 | $ | 549.8 | $ | 512.5 | ||||||
Net income attributable to OGE Energy | $ | 178.7 | $ | 163.1 | $ | 306.5 | $ | 264.6 | ||||||
Basic average common shares outstanding | 98.0 | 97.4 | 97.9 | 97.3 | ||||||||||
Diluted average common shares outstanding | 99.3 | 99.0 | 99.2 | 98.8 | ||||||||||
Basic earnings per average common share attributable to | ||||||||||||||
OGE Energy common shareholders | $ | 1.82 | $ | 1.67 | $ | 3.13 | $ | 2.72 | ||||||
Diluted earnings per average common share attributable to | ||||||||||||||
OGE Energy common shareholders | $ | 1.80 | $ | 1.65 | $ | 3.09 | $ | 2.68 | ||||||
Dividends declared per common share | $ | 0.3750 | $ | 0.3625 | $ | 1.1250 | $ | 1.0875 |
Three Months Ended | Nine Months Ended | |||||||||||||
September 30, | September 30, | |||||||||||||
(In millions) | 2011 | 2010 | 2011 | 2010 | ||||||||||
OG&E (Electric Utility) | $ | 258.7 | $ | 231.0 | $ | 418.0 | $ | 375.9 | ||||||
Enogex (Natural Gas Midstream Operations) | ||||||||||||||
Transportation and storage | 22.7 | 18.6 | 56.5 | 58.0 | ||||||||||
Gathering and processing | 22.7 | 28.2 | 87.7 | 89.7 | ||||||||||
Marketing (A) | (5.0 | ) | (3.0 | ) | (12.6 | ) | (10.5 | ) | ||||||
Other Operations (B) | 0.6 | (0.6 | ) | 0.2 | (0.6 | ) | ||||||||
Consolidated operating income | $ | 299.7 | $ | 274.2 | $ | 549.8 | $ | 512.5 |
(A) | On November 1, 2010, OGE Energy distributed the equity interests in OER to Enogex LLC. Accordingly, the results of OER are included in Enogex's results for all periods presented. |
(B) | Other Operations primarily includes the operations of the holding company and consolidating eliminations. |
Three Months Ended | Nine Months Ended | |||||||||||||
September 30, | September 30, | |||||||||||||
(Dollars in millions) | 2011 | 2010 | 2011 | 2010 | ||||||||||
Operating revenues | $ | 774.8 | $ | 723.0 | $ | 1,765.6 | $ | 1,679.8 | ||||||
Cost of goods sold | 334.7 | 311.2 | 808.4 | 792.8 | ||||||||||
Gross margin on revenues | 440.1 | 411.8 | 957.2 | 887.0 | ||||||||||
Other operation and maintenance | 108.3 | 110.8 | 324.3 | 305.9 | ||||||||||
Depreciation and amortization | 54.9 | 53.1 | 158.8 | 153.4 | ||||||||||
Taxes other than income | 18.2 | 16.9 | 56.1 | 51.8 | ||||||||||
Operating income | 258.7 | 231.0 | 418.0 | 375.9 | ||||||||||
Interest income | 0.2 | 0.1 | 0.4 | 0.1 | ||||||||||
Allowance for equity funds used during construction | 5.9 | 2.6 | 16.1 | 7.2 | ||||||||||
Other income (loss) | (3.1 | ) | (1.1 | ) | 3.2 | 2.2 | ||||||||
Other expense | 3.4 | 0.4 | 4.9 | 1.4 | ||||||||||
Interest expense | 28.8 | 27.4 | 82.2 | 76.8 | ||||||||||
Income tax expense | 70.9 | 62.7 | 107.0 | 103.9 | ||||||||||
Net income | $ | 158.6 | $ | 142.1 | $ | 243.6 | $ | 203.3 | ||||||
Operating revenues by classification | ||||||||||||||
Residential | $ | 360.0 | $ | 330.9 | $ | 771.2 | $ | 729.8 | ||||||
Commercial | 177.5 | 176.5 | 417.6 | 409.5 | ||||||||||
Industrial | 68.2 | 66.2 | 168.2 | 164.5 | ||||||||||
Oilfield | 49.8 | 49.6 | 127.4 | 125.6 | ||||||||||
Public authorities and street light | 69.2 | 67.8 | 162.5 | 157.8 | ||||||||||
Sales for resale | 22.8 | 19.3 | 50.9 | 50.5 | ||||||||||
Provision for rate refund | — | (0.4 | ) | — | (0.4 | ) | ||||||||
System sales revenues | 747.5 | 709.9 | 1,697.8 | 1,637.3 | ||||||||||
Off-system sales revenues | 13.6 | 5.8 | 35.5 | 19.7 | ||||||||||
Other | 13.7 | 7.3 | 32.3 | 22.8 | ||||||||||
Total operating revenues | $ | 774.8 | $ | 723.0 | $ | 1,765.6 | $ | 1,679.8 | ||||||
MWH (A) sales by classification (In millions) | ||||||||||||||
Residential | 3.5 | 3.2 | 8.0 | 7.6 | ||||||||||
Commercial | 2.0 | 1.9 | 5.3 | 5.1 | ||||||||||
Industrial | 1.0 | 1.0 | 2.9 | 2.9 | ||||||||||
Oilfield | 0.8 | 0.8 | 2.4 | 2.3 | ||||||||||
Public authorities and street light | 0.9 | 0.9 | 2.4 | 2.3 | ||||||||||
Sales for resale | 0.4 | 0.4 | 1.1 | 1.1 | ||||||||||
System sales | 8.6 | 8.2 | 22.1 | 21.3 | ||||||||||
Off-system sales | 0.4 | 0.2 | 1.0 | 0.5 | ||||||||||
Total sales | 9.0 | 8.4 | 23.1 | 21.8 | ||||||||||
Number of customers | 788,998 | 782,174 | 788,998 | 782,174 | ||||||||||
Average cost of energy per KWH (B) - cents | ||||||||||||||
Natural gas | 4.319 | 4.546 | 4.388 | 4.838 | ||||||||||
Coal | 2.077 | 1.951 | 2.048 | 1.891 | ||||||||||
Total fuel | 3.155 | 3.084 | 2.963 | 3.063 | ||||||||||
Total fuel and purchased power | 3.443 | 3.407 | 3.268 | 3.361 | ||||||||||
Degree days (C) | ||||||||||||||
Heating - Actual | 17 | 7 | 2,095 | 2,305 | ||||||||||
Heating - Normal | 29 | 29 | 2,228 | 2,228 | ||||||||||
Cooling - Actual | 1,761 | 1,541 | 2,687 | 2,286 | ||||||||||
Cooling - Normal | 1,295 | 1,295 | 1,850 | 1,850 |
(A) | Megawatt-hour |
(B) | Kilowatt-hour |
(C) | Degree days are calculated as follows: The high and low degrees of a particular day are added together and then averaged. If the calculated average is above 65 degrees, then the difference between the calculated average and 65 is expressed as cooling degree days, with each degree of difference equaling one cooling degree day. If the calculated average is below 65 degrees, then the difference between the calculated average and 65 is expressed as heating degree days, with each degree of difference equaling one heating degree day. The daily calculations are then totaled for the particular reporting period. |
• | warmer weather in OG&E's service territory, which increased the gross margin by $10.2 million; |
• | higher transmission revenue primarily due to the inclusion of construction work in progress in transmission rates for specific FERC approved projects that previously accrued allowance for funds used during construction, which increased the gross margin by $6.7 million; |
• | new customer growth in OG&E's service territory, which increased the gross margin by $5.7 million; |
• | revenues from the Arkansas rate increase, which increased the gross margin by $3.6 million; |
• | higher demand and related revenues by non-residential customers in OG&E's service territory, which increased the gross margin by $2.1 million; and |
• | higher revenues related to the renewal of the Arkansas Valley Electric Cooperative contract (see Note 16 of Notes to Condensed Consolidated Financial Statements), which increased the gross margin by $1.4 million. |
• | a decrease of $3.5 million in employee benefits expense primarily due to a decrease in postretirement benefits expense related to amendments to the Company's retiree medical plan adopted in January 2011 (as previously reported in the Company's Form 10-Q for the quarter ended March 31, 2011) partially offset by a modification to OG&E's pension tracker and a decrease in worker's compensation accruals during the three months ended September 30, 2011; |
• | a decrease of $2.9 million in injuries and damages expense primarily due to higher reserves on claims during the three months ended September 30, 2010; |
• | a decrease of $2.6 million related to more work being capitalized during the three months ended September 30, 2011; |
• | a decrease of $1.9 million related to decreased spending on vegetation management related to system hardening, which expenses are being recovered through a rider; and |
• | a decrease of $1.7 million in contract technical and construction services expense primarily attributable to |
• | an increase of $5.7 million in salaries and wages expense primarily due to salary increases in 2011, increased incentive compensation expense and increased overtime expense primarily due to storms in August 2011; |
• | an increase of $3.2 million in payroll and benefits expense and contract professional services allocated from the holding company; and |
• | a decrease of $1.0 million related to an adjustment during the three months ended September 30, 2011 to reclassify a portion of Smart Grid costs for the Arkansas jurisdiction to a regulatory asset. |
• | warmer weather in OG&E's service territory, which increased the gross margin by $24.9 million; |
• | increased price variance, which included revenues from various rate riders, including the Windspeed transmission line rider, the Oklahoma demand program rider, the Smart Grid rider, the system hardening rider, the Oklahoma storm recovery rider and the OU Spirit rider, and higher revenues from sales and customer mix, which increased the gross margin by $19.5 million; |
• | new customer growth in OG&E's service territory, which increased the gross margin by $10.7 million; |
• | higher transmission revenue primarily due to the inclusion of construction work in progress in transmission rates for specific FERC approved projects that previously accrued allowance for funds used during construction, which increased the gross margin by $9.7 million; |
• | higher demand and related revenues by non-residential customers in OG&E's service territory, which increased the gross margin by $4.7 million; |
• | revenues from the Arkansas rate increase, which increased the gross margin by $4.3 million; and |
• | higher revenues related to the renewal of the Arkansas Valley Electric Cooperative contract (see Note 16 of Notes to Condensed Consolidated Financial Statements), which increased the gross margin by $2.2 million. |
• | an increase of $13.0 million in payroll and benefits expense and contract professional services allocated from the holding company; |
• | an increase of $9.3 million in salaries and wages expense primarily due to salary increases in 2011, increased incentive compensation expense and increased overtime expense primarily due to storms in April and August 2011; |
• | an increase of $6.0 million in other marketing and sales expense related to demand-side management initiatives, which expenses are being recovered through a rider; |
• | an increase of $1.8 million related to less work being capitalized during the nine months ended September 30, 2011; |
• | an increase of $1.6 million in uncollectible expense; |
• | an increase of $1.3 million in fleet transportation expense primarily due to higher fuel costs during the nine months ended September 30, 2011; |
• | an increase of $1.2 million in materials and supplies expense primarily attributable to increased spending for ongoing maintenance at some of OG&E's power plants; and |
• | an increase of $1.1 million in SPP administration fees. |
• | a decrease of $6.9 million in employee benefits expense primarily due to a decrease in postretirement benefits expense related to amendments to the Company's retiree medical plan adopted in January 2011 (as previously reported in the Company's Form 10-Q for the quarter ended March 31, 2011) partially offset by a modification to OG&E's pension tracker and a decrease in worker's compensation accruals during the nine months ended September 30, 2011; |
• | an increase of $4.7 million in injuries and damages expense primarily due to higher reserves on claims during the nine months ended September 30, 2010; |
• | a decrease of $2.5 million related to decreased spending on vegetation management, related to system hardening, which expenses are being recovered through a rider; and |
• | a decrease of $1.0 million related to an adjustment during the nine months ended September 30, 2011 to reclassify a portion of Smart Grid costs for the Arkansas jurisdiction to a regulatory asset. |
• | a $4.6 million decrease in interest expense due to a higher allowance for borrowed funds used during construction primarily due to construction costs for Crossroads partially offset by the completion of the Windspeed transmission line on March 31, 2010; and |
• | a $1.3 million decrease in interest expense during the nine months ended September 30, 2011 due to interest to customers related to the fuel over recovery balance. |
• | the one-time, non-cash charge during the three months ended March 31, 2010 for the elimination of the tax deduction for the Medicare Part D subsidy; |
• | the write-off of previously recognized Oklahoma investment tax credits during the nine months ended September 30, 2010 primarily due to expenditures no longer eligible for the Oklahoma investment tax credit related to the change in the tax method of accounting for capitalization of repair expenditures; and |
• | higher Oklahoma investment tax credits during the nine months ended September 30, 2011 as compared to the same period in 2010. |
Transportation | Gathering | ||||||||||||||
Three Months Ended | and | and | |||||||||||||
September 30, 2011 | Storage | Processing | Marketing | Eliminations | Total | ||||||||||
(In millions) | |||||||||||||||
Operating revenues | $ | 103.7 | $ | 304.9 | $ | 160.0 | $ | (109.3 | ) | $ | 459.3 | ||||
Cost of goods sold | 58.6 | 233.2 | 163.1 | (109.2 | ) | 345.7 | |||||||||
Gross margin on revenues | 45.1 | 71.7 | (3.1 | ) | (0.1 | ) | 113.6 | ||||||||
Other operation and maintenance | 13.7 | 28.8 | 1.8 | (0.8 | ) | 43.5 | |||||||||
Depreciation and amortization | 5.2 | 13.4 | — | — | 18.6 | ||||||||||
Impairment of assets | — | 5.0 | — | — | 5.0 | ||||||||||
Taxes other than income | 3.5 | 1.8 | 0.1 | — | 5.4 | ||||||||||
Operating income (loss) | $ | 22.7 | $ | 22.7 | $ | (5.0 | ) | $ | 0.7 | $ | 41.1 |
Transportation | Gathering | ||||||||||||||
Three Months Ended | and | and | |||||||||||||
September 30, 2010 | Storage | Processing | Marketing | Eliminations | Total | ||||||||||
(In millions) | |||||||||||||||
Operating revenues | $ | 103.5 | $ | 243.1 | $ | 206.5 | $ | (121.1 | ) | $ | 432.0 | ||||
Cost of goods sold | 64.8 | 178.9 | 207.6 | (121.5 | ) | 329.8 | |||||||||
Gross margin on revenues | 38.7 | 64.2 | (1.1 | ) | 0.4 | 102.2 | |||||||||
Other operation and maintenance | 11.6 | 22.0 | 1.8 | (0.6 | ) | 34.8 | |||||||||
Depreciation and amortization | 5.2 | 12.6 | — | — | 17.8 | ||||||||||
Taxes other than income | 3.3 | 1.4 | 0.1 | — | 4.8 | ||||||||||
Operating income (loss) | $ | 18.6 | $ | 28.2 | $ | (3.0 | ) | $ | 1.0 | $ | 44.8 |
Transportation | Gathering | ||||||||||||||
Nine Months Ended | and | and | |||||||||||||
September 30, 2011 | Storage | Processing | Marketing | Eliminations | Total | ||||||||||
(In millions) | |||||||||||||||
Operating revenues | $ | 311.9 | $ | 860.7 | $ | 526.4 | $ | (367.2 | ) | $ | 1,331.8 | ||||
Cost of goods sold | 192.1 | 640.4 | 532.8 | (364.9 | ) | 1,000.4 | |||||||||
Gross margin on revenues | 119.8 | 220.3 | (6.4 | ) | (2.3 | ) | 331.4 | ||||||||
Other operation and maintenance | 35.8 | 81.9 | 5.9 | (2.3 | ) | 121.3 | |||||||||
Depreciation and amortization | 16.4 | 40.4 | — | — | 56.8 | ||||||||||
Impairment of assets | — | 5.0 | — | — | 5.0 | ||||||||||
Taxes other than income | 11.1 | 5.3 | 0.3 | — | 16.7 | ||||||||||
Operating income (loss) | $ | 56.5 | $ | 87.7 | $ | (12.6 | ) | $ | — | $ | 131.6 |
Transportation | Gathering | ||||||||||||||
Nine Months Ended | and | and | |||||||||||||
September 30, 2010 | Storage | Processing | Marketing | Eliminations | Total | ||||||||||
(In millions) | |||||||||||||||
Operating revenues | $ | 311.7 | $ | 726.4 | $ | 641.2 | $ | (389.7 | ) | $ | 1,289.6 | ||||
Cost of goods sold | 191.9 | 527.5 | 644.8 | (390.1 | ) | 974.1 | |||||||||
Gross margin on revenues | 119.8 | 198.9 | (3.6 | ) | 0.4 | 315.5 | |||||||||
Other operation and maintenance | 35.2 | 66.8 | 6.6 | (2.7 | ) | 105.9 | |||||||||
Depreciation and amortization | 16.0 | 37.5 | — | — | 53.5 | ||||||||||
Taxes other than income | 10.6 | 4.9 | 0.3 | — | 15.8 | ||||||||||
Operating income (loss) | $ | 58.0 | $ | 89.7 | $ | (10.5 | ) | $ | 3.1 | $ | 140.3 |
Three Months Ended | Nine Months Ended | |||||||||||||
September 30, | September 30, | |||||||||||||
2011 | 2010 | 2011 | 2010 | |||||||||||
Gathered volumes – TBtu/d (A) | 1.43 | 1.34 | 1.36 | 1.32 | ||||||||||
Incremental transportation volumes – TBtu/d (B) | 0.67 | 0.46 | 0.57 | 0.44 | ||||||||||
Total throughput volumes – TBtu/d | 2.10 | 1.80 | 1.93 | 1.76 | ||||||||||
Natural gas processed – TBtu/d | 0.79 | 0.86 | 0.77 | 0.81 | ||||||||||
NGLs sold (keep-whole) – million gallons | 48 | 44 | 132 | 137 | ||||||||||
NGLs sold (purchased for resale) – million gallons | 114 | 119 | 338 | 339 | ||||||||||
NGLs sold (percent-of-liquids) – million gallons | 6 | 7 | 18 | 18 | ||||||||||
NGLs sold (percent-of-proceeds) – million gallons | 1 | 1 | 3 | 4 | ||||||||||
Total NGLs sold – million gallons | 169 | 171 | 491 | 498 | ||||||||||
Average NGLs sales price per gallon | $ | 1.24 | $ | 0.92 | $ | 1.19 | $ | 0.94 | ||||||
Average natural gas sales price per million British thermal unit | $ | 4.30 | $ | 4.13 | $ | 4.26 | $ | 4.46 |
(A) | Trillion British thermal units per day. |
(B) | Incremental transportation volumes consist of natural gas moved only on the transportation pipeline. |
• | higher capacity lease services under the MEP and Gulf Crossing capacity leases during the three months ended September 30, 2011 as a result of pipeline integrity work on an Enogex pipeline in 2010, which increased the gross margin by $3.6 million; |
• | higher realized margin on sales of physical natural gas long positions associated with transportation operations during the three months ended September 30, 2011, which increased the gross margin by $1.8 million, net of imbalance and fuel tracker obligations; and |
• | higher firm 311 services due to new contracts with more favorable rates during the three months ended September 30, 2011, which increased the gross margin by $1.7 million. |
• | an increase in gathering fees associated with ongoing expansion projects, which increased the gross margin by $3.8 million, of which $1.3 million is associated with the contract conversion discussed above; and |
• | an increase in condensate revenues associated with higher condensate prices and volumes, which increased the gross margin by $2.1 million. |
• | lower volumes and realized margin on sales of physical natural gas long positions associated with gathering operations during the three months ended September 30, 2011, which decreased the gross margin by $1.7 million, net of imbalance and fuel tracker obligations; and |
• | an increase in the utilization of third-party processing as a result of the reduced capacity related to the Cox City processing plant being out of service during the nine months ended September 30, 2011, which decreased the gross margin by $1.4 million. |
• | lower realized margin on sale of natural gas inventory from storage due to reduced withdrawal activity, which decreased the gross margin by $3.5 million; and |
• | a lower of cost or market adjustment on the natural gas storage inventory reflective of higher inventory volumes in 2011, which decreased the gross margin by $1.0 million. |
• | higher capacity lease services under the MEP and Gulf Crossing capacity leases during the nine months ended September 30, 2011 as a result of pipeline integrity work on an Enogex pipeline in 2010, which increased the gross margin by $4.7 million; |
• | higher firm 311 services due to new contracts with more favorable rates during the nine months ended September 30, 2011, which increased the gross margin by $3.3 million; |
• | higher interruptible transportation fees due to new contracts with more favorable rates during the nine months ended September 30, 2011, which increased the gross margin by $1.4 million; |
• | lower volumes and realized margin on sales of physical natural gas long positions associated with transportation operations during the nine months ended September 30, 2011. Gross margin during the nine months ended September 30, 2011 included the under recovery of fuel positions as compared to the nine months ended September 30, 2010 that included the recovery of prior year's under-recovered fuel positions, which reduced the gross margin in 2011 by $6.0 million, net of imbalance and fuel tracker obligations; and |
• | lower crosshaul revenues during the nine months ended September 30, 2011 as shippers utilized firm 311 services while during the same period in 2010, crosshaul revenues were higher as a result of pipeline integrity work on an Enogex pipeline in 2010 which resulted in shippers utilizing crosshaul services to move gas to other delivery points. The lower crosshaul revenues during the nine months ended September 30, 2011 as compared to the same period in 2010 decreased the gross margin by $1.0 million. |
• | an increase in condensate revenues associated with higher condensate prices and volumes, which increased the gross margin by $9.7 million; and |
• | an increase in gathering fees associated with ongoing expansion projects, which increased the gross margin by |
• | lower volumes and realized margin on sales of physical natural gas long positions associated with gathering operations, which decreased the gross margin in 2011 by $5.7 million, net of imbalance and fuel tracker obligations; and |
• | an increase in the utilization of third-party processing as a result of the reduced capacity related to the Cox City processing plant being out of service during the nine months ended September 30, 2011, which decreased the gross margin by $1.6 million. |
• | lower realized margin on sale of natural gas inventory from storage due to a reduction in the realized natural gas market spreads, which decreased the gross margin by $1.1 million; and |
• | a lower of cost or market adjustment on the natural gas storage inventory reflective of higher inventory volumes in 2011, which decreased the gross margin by $1.0 million. |
• | an increase of $4.5 million in capitalized interest related to increased construction activity during the nine months ended September 30, 2011; and |
• | a decrease of $1.0 million in interest expense during the nine months ended September 30, 2011 due to the retirement of long-term debt in January 2010. |
• | lower pre-tax income during the nine months ended September 30, 2011 as compared to the same period in 2010; and |
• | the one-time, non-cash charge during the three months ended March 31, 2010 for the elimination of the tax deduction for the Medicare Part-D subsidy. |
Nine Months Ended | |||||||
September 30, | |||||||
(In millions) | 2011 | 2010 | |||||
Net cash provided from operating activities | $ | 528.7 | $ | 586.9 | |||
Net cash used in investing activities | (852.3 | ) | (586.0 | ) | |||
Net cash provided from (used in) financing activities | 326.9 | (50.5 | ) |
• | repayment of the remaining balance of Enogex LLC's $400 million 8.125% senior notes which matured on January 15, 2010; |
• | an increase in short-term debt borrowings during the nine months ended September 30, 2011 as compared to the same period in 2010; |
• | contributions from the noncontrolling interest partners during the nine months ended September 30, 2011; and |
• | a decrease in repayments of borrowings under Enogex LLC's revolving credit agreement during the nine months ended September 30, 2011 as compared to the same period in 2010. |
(In millions) | 2011 | 2012 | 2013 | 2014 | 2015 | 2016 | ||||||||||||
OG&E Base Transmission | $ | 50 | $ | 80 | $ | 50 | $ | 50 | $ | 50 | $ | 50 | ||||||
OG&E Base Distribution | 195 | 195 | 200 | 200 | 200 | 200 | ||||||||||||
OG&E Base Generation | 100 | 110 | 80 | 80 | 80 | 80 | ||||||||||||
OG&E Other | 30 | 30 | 30 | 30 | 30 | 30 | ||||||||||||
Total OG&E Base Transmission, Distribution, | ||||||||||||||||||
Generation and Other | 375 | 415 | 360 | 360 | 360 | 360 | ||||||||||||
OG&E Known and Committed Projects: | ||||||||||||||||||
Transmission Projects: | ||||||||||||||||||
Sunnyside-Hugo (345 kilovolt) | 100 | 20 | — | — | — | — | ||||||||||||
Sooner-Rose Hill (345 kilovolt) | 30 | — | — | — | — | — | ||||||||||||
Balanced Portfolio 3E Projects | 45 | 110 | 190 | 45 | — | — | ||||||||||||
SPP Priority Projects | 5 | 20 | 200 | 110 | — | — | ||||||||||||
Total Transmission Projects | 180 | 150 | 390 | 155 | — | — | ||||||||||||
Other Projects: | ||||||||||||||||||
Smart Grid Program (A) | 60 | 90 | 35 | 40 | 20 | 20 | ||||||||||||
Crossroads | 235 | 40 | — | — | — | — | ||||||||||||
System Hardening | 15 | 15 | — | — | — | — | ||||||||||||
Total Other Projects | 310 | 145 | 35 | 40 | 20 | 20 | ||||||||||||
Total OG&E Known and Committed Projects | 490 | 295 | 425 | 195 | 20 | 20 | ||||||||||||
Total OG&E (B) | 865 | 710 | 785 | 555 | 380 | 380 | ||||||||||||
Enogex LLC Base Maintenance | 70 | 55 | 60 | 60 | 65 | 70 | ||||||||||||
Enogex LLC Known and Committed Projects: | ||||||||||||||||||
Western Oklahoma / Texas Panhandle | ||||||||||||||||||
Gathering Expansion | 505 | 345 | 130 | 25 | 15 | 10 | ||||||||||||
Other Gathering Expansion | 20 | 65 | 30 | 25 | 25 | 25 | ||||||||||||
Total Enogex LLC Known and Committed | ||||||||||||||||||
Projects | 525 | 410 | 160 | 50 | 40 | 35 | ||||||||||||
Total Enogex LLC (C) | 595 | 465 | 220 | 110 | 105 | 105 | ||||||||||||
OGE Energy | 15 | 20 | 20 | 20 | 20 | 20 | ||||||||||||
Total capital expenditures | $ | 1,475 | $ | 1,195 | $ | 1,025 | $ | 685 | $ | 505 | $ | 505 |
(A) | These capital expenditures are net of the $130 million Smart Grid grant approved by the U.S. Department of Energy. |
(B) | The capital expenditures above exclude any environmental expenditures associated with BART requirements due to the uncertainty regarding BART costs. As discussed in "– Environmental Laws and Regulations" below, pursuant to the Oklahoma SIP and the proposed Federal implementation plan, OG&E would be expected to install low NOX burners and related equipment at the three affected generating stations. Preliminary estimates indicate the cost will be between $70 million and $130 million. The proposed Federal implementation plan rejects portions of the Oklahoma SIP with respect to SO2 emissions and, if adopted as proposed, could result in a significant increase in capital expenditures to reduce SO2 emissions. For further information, see "– Environmental Laws and Regulations" below. |
(C) | These capital expenditures represent 100 percent of Enogex LLC's capital expenditures, of which a portion will be funded by the ArcLight group. Until the ArcLight group owns 50 percent of the equity of Enogex Holdings, the ArcLight group will fund capital contributions in an amount higher than its proportionate interest. Specifically, the ArcLight group will fund between 50 percent and 90 percent of required capital contributions during that period. The remainder of the required capital contributions (i.e., between 10 percent and 50 percent) will be funded by OGE Holdings. |
Total Number of Shares | Approximate Dollar Value of | |||
Total Number of | Average Price Paid | Purchased as Part of | Shares that May Yet Be | |
Period | Shares Purchased | per Share | Publicly Announced Plan | Purchased Under the Plan |
7/1/11 – 7/31/11 | 48,500 | $51.23 | N/A | N/A |
8/1/11 – 8/31/11 | 39,500 | $45.71 | N/A | N/A |
9/1/11 – 9/30/11 | 77,900 | $47.73 | N/A | N/A |
Exhibit No. | Description |
31.01 | Certifications Pursuant to Rule 13a-14(a)/15d-14(a) As Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. |
32.01 | Certification Pursuant to 18 U.S.C. Section 1350 As Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. |
101.INS | XBRL Instance Document. |
101.SCH | XBRL Taxonomy Schema Document. |
101.PRE | XBRL Taxonomy Presentation Linkbase Document. |
101.LAB | XBRL Taxonomy Label Linkbase Document. |
101.CAL | XBRL Taxonomy Calculation Linkbase Document. |
101.DEF | XBRL Definition Linkbase Document. |
OGE ENERGY CORP. | |
(Registrant) | |
By: | /s/ Scott Forbes |
Scott Forbes | |
Controller and Chief Accounting Officer | |
(On behalf of the Registrant and in his capacity as Chief Accounting Officer) |
1. | I have reviewed this quarterly report on Form 10-Q of OGE Energy Corp; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
a) | designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b) | designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
c) | evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
d) | disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and |
5. | The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): |
a) | all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and |
b) | any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. |
/s/ Peter B. Delaney | |
Peter B. Delaney | |
Chairman of the Board and | |
Chief Executive Officer |
1. | I have reviewed this quarterly report on Form 10-Q of OGE Energy Corp; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
a) | designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b) | designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
c) | evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
d) | disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and |
5. | The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): |
a) | all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and |
b) | any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. |
/s/ Sean Trauschke | |
Sean Trauschke | |
Vice President and Chief Financial Officer |
1) | The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
2) | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
/s/ | Peter B. Delaney | |
Peter B. Delaney | ||
Chairman of the Board | ||
and Chief Executive Officer |
/s/ | Sean Trauschke | |
Sean Trauschke | ||
Vice President | ||
and Chief Financial Officer |
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED) PARENTHETICAL (USD $) In Millions | 3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2011 | Sep. 30, 2010 | Sep. 30, 2011 | Sep. 30, 2010 | |
Pension Plan and Restoration of Retirement Income Plan: | ||||
Amortization of deferred net loss, net of tax | $ 0.3 | $ 0.4 | $ 1.2 | $ 1.4 |
Amortization of prior service cost, net of tax | 0 | 0.1 | 0 | 0.1 |
Postretirement plans: | ||||
Amortization of deferred net loss, net of tax | 0.2 | 0.2 | 0.8 | 0.2 |
Amortization of deferred net transition obligation, net of tax | 0 | 0 | 0 | 0.1 |
Amortization of prior service cost, net of tax | (0.2) | 0 | (0.8) | (0.1) |
Prior service cost arising during the period, net of tax | 0 | 0 | 6.2 | 0 |
Deferred commodity contract hedging losses reclassified in net income, net of tax | 3.4 | 2.1 | 10.3 | 7.3 |
Deferred commodity contracts hedging gains (losses), net of tax | 0.1 | (6.6) | (2.7) | (5.6) |
Deferred interest rate swaps hedging gains, net of tax | $ 0 | $ 0 | $ 0.2 | $ 0.1 |
Long-Term Debt (Details) (USD $) In Millions, unless otherwise specified | 9 Months Ended | |
---|---|---|
Sep. 30, 2011 | Sep. 30, 2010 | |
Debt Instrument [Line Items] | ||
Percent of Principal Amount Subject to Optional Tender | 100.00% | |
Proceeds from long-term debt | $ 246.3 | $ 246.2 |
Redeemable during the next 12 months | ||
Debt Instrument [Line Items] | ||
AMOUNT | 135.4 | |
Redeemable during the next 12 months | Garfield Industrial Authority Bond [Member] | ||
Debt Instrument [Line Items] | ||
SERIES, minimum | 0.22% | |
SERIES, maximum | 0.44% | |
AMOUNT | 47.0 | |
Redeemable during the next 12 months | Muskogee Industrial Authority Bond Due 2025 [Member] | ||
Debt Instrument [Line Items] | ||
SERIES, minimum | 0.20% | |
SERIES, maximum | 0.44% | |
AMOUNT | 32.4 | |
Redeemable during the next 12 months | Muskogee Industrial Authority Bond Due 2027 [Member] | ||
Debt Instrument [Line Items] | ||
SERIES, minimum | 0.29% | |
SERIES, maximum | 0.50% | |
AMOUNT | $ 56.0 | |
Garfield Industrial Authority Bond [Member] | ||
Debt Instrument [Line Items] | ||
DATE DUE | Jan. 01, 2025 | |
Muskogee Industrial Authority Bond Due 2025 [Member] | ||
Debt Instrument [Line Items] | ||
DATE DUE | Jan. 01, 2025 | |
Muskogee Industrial Authority Bond Due 2027 [Member] | ||
Debt Instrument [Line Items] | ||
DATE DUE | Jun. 01, 2027 |
Commitments and Contingencies | 9 Months Ended |
---|---|
Sep. 30, 2011 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Commitments and Contingencies Except as set forth below and in Note 16, the circumstances set forth in Notes 14 and 15 to the Company's Consolidated Financial Statements included in the Company's 2010 Form 10-K appropriately represent, in all material respects, the current status of the Company's material commitments and contingent liabilities. Operating Lease Obligations Enogex currently occupies 116,184 square feet of office space at its executive offices under a lease that expires March 31, 2012. On June 30, 2011, Enogex executed a five-year lease agreement for its executive offices that expires March 31, 2017. The lease payments are $9.9 million over the lease term which begins April 1, 2012. OG&E Railcar Lease Agreement OG&E has a noncancellable operating lease with purchase options, covering 1,392 coal hopper railcars to transport coal from Wyoming to OG&E's coal-fired generation units. Rental payments are charged to Fuel Expense and are recovered through OG&E's tariffs and fuel adjustment clauses. On December 15, 2010, OG&E renewed the lease agreement effective February 1, 2011. At the end of the new lease term, which is February 1, 2016, OG&E has the option to either purchase the railcars at a stipulated fair market value or renew the lease. If OG&E chooses not to purchase the railcars or renew the lease agreement and the actual fair value of the railcars is less than the stipulated fair market value, OG&E would be responsible for the difference in those values up to a maximum of $22.8 million. On February 10, 2009, OG&E executed a short-term lease agreement for 270 railcars in accordance with new coal transportation contracts with BNSF Railway and Union Pacific. These railcars were needed to replace railcars that have been taken out of service or destroyed. The lease agreement expired with respect to 135 railcars on November 2, 2009 and was not replaced. The lease agreement with respect to the remaining 135 railcars expired on March 5, 2010 and was subsequently terminated. OG&E is also required to maintain all of the railcars it has under lease to transport coal from Wyoming and has entered into agreements with Progress Rail Services and WATCO, both of which are non-affiliated companies, to furnish this maintenance. OG&E Wind Power Purchase Commitment As previously disclosed, OG&E received approval on January 5, 2010 from the OCC for a wind power purchase agreement with a wind developer who was to build a new 130 megawatt wind farm in Dewey County near Taloga in northwestern Oklahoma. This wind farm went in service during July 2011. The agreement is a 20-year power purchase agreement, under which the developer will own and operate the wind generating facility and OG&E will purchase its electric output. Farris Buser Litigation On July 22, 2005, Enogex, along with certain other unaffiliated co-defendants, was served with a purported class action which had been filed on February 7, 2005 by Farris Buser and other named plaintiffs in the District Court of Canadian County, Oklahoma. The plaintiffs own royalty interests in certain oil and gas producing properties and allege they have been under-compensated by the named defendants, including Enogex and its subsidiaries, relating to the sale of liquid hydrocarbons recovered during the transportation of natural gas from the plaintiffs' wells. The plaintiffs assert breach of contract, implied covenants, obligation, fiduciary duty, unjust enrichment, conspiracy and fraud causes of action and claim actual damages, plus attorneys' fees and costs, and punitive damages. Enogex and its subsidiaries filed a motion to dismiss which was granted on November 18, 2005, subject to the plaintiffs' right to conduct discovery and the possible re-filing of their allegations in the petition against the Enogex companies. On September 19, 2005, the co-defendants, BP America, Inc. and BP America Production Company filed a cross claim against Products seeking indemnification and/or contribution from Products based upon the 1997 sale of a third-party interest in one of Products natural gas processing plants. On May 17, 2006, the plaintiffs filed an amended petition against Enogex and its subsidiaries. Enogex and its subsidiaries filed a motion to dismiss the amended petition on August 2, 2006. The hearing on the dismissal motion was held on November 20, 2006 and the court denied Enogex's motion. Enogex filed an answer to the amended petition and BP America, Inc. and BP America Production Company's cross claim on January 16, 2007. On October 14, 2011, this case was dismissed without prejudice. While this lawsuit could be re-filed, Enogex considers the claims and cross claim associated with this lawsuit to be without merit, based upon Enogex's investigation to date. Enogex now considers this case closed. Other In the normal course of business, the Company is confronted with issues or events that may result in a contingent liability. These generally relate to lawsuits, claims made by third parties, environmental actions or the action of various regulatory agencies. When appropriate, management consults with legal counsel and other appropriate experts to assess the claim. If in management's opinion, the Company has incurred a probable loss as set forth by GAAP, an estimate is made of the loss and the appropriate accounting entries are reflected in the Company's Condensed Consolidated Financial Statements. Except as otherwise stated above, in Note 16 below, in Item 1 of Part II of this Form 10-Q, in Notes 14 and 15 of Notes to Consolidated Financial Statements and Item 3 of Part I of the Company's 2010 Form 10-K, management, after consultation with legal counsel, does not currently anticipate that liabilities arising out of these pending or threatened lawsuits, claims and contingencies will have a material adverse effect on the Company's consolidated financial position, results of operations or cash flows |
DOCUMENT AND ENTITY INFORMATION | 9 Months Ended |
---|---|
Sep. 30, 2011 | |
Document and Entity Information [Abstract] | |
Entity Registrant Name | OGE ENERGY CORP. |
Entity Central Index Key | 0001021635 |
Current Fiscal Year End Date | --12-31 |
Entity Filer Category | Large Accelerated Filer |
Document Type | 10-Q |
Document Period End Date | Sep. 30, 2011 |
Document Fiscal Year Focus | 2011 |
Document Fiscal Period Focus | Q3 |
Amendment Flag | false |
Entity Common Stock, Shares Outstanding | 98,056,722 |
Derivative Instruments and Hedging Activities, Income Statement Presentation Related to Derivative Instruments (Details) (Enogex [Member], USD $) In Millions | 3 Months Ended | 9 Months Ended | ||||||
---|---|---|---|---|---|---|---|---|
Sep. 30, 2011 | Sep. 30, 2010 | Sep. 30, 2011 | Sep. 30, 2010 | |||||
Derivative Instruments, Gain (Loss) [Line Items] | ||||||||
Cash Flow Hedge Gain (Loss) to be Reclassified within Twelve Months | $ 8.4 | |||||||
Additional Collateral, Aggregate Fair Value | 6.1 | 6.1 | ||||||
Natural Gas Liquids [Member] | Fixed Swaps/Futures [Member] | Operating Revenues [Member] | Cash Flow Hedging Instrument [Member] | ||||||||
Derivative Instruments, Gain (Loss) [Line Items] | ||||||||
Amount Reclassifed from Accumulated OCI into Income | (0.3) | (2.2) | ||||||
Amount Recognized in Income | 0 | 0 | ||||||
Natural Gas Liquids [Member] | Fixed Swaps/Futures [Member] | Cash Flow Hedging Instrument [Member] | ||||||||
Derivative Instruments, Gain (Loss) [Line Items] | ||||||||
Amount Recognized in OCI | (1.2) | 2.1 | ||||||
Natural Gas Liquids [Member] | Options [Member] | Operating Revenues [Member] | Cash Flow Hedging Instrument [Member] | ||||||||
Derivative Instruments, Gain (Loss) [Line Items] | ||||||||
Amount Reclassifed from Accumulated OCI into Income | (2.6) | 1.5 | (8.3) | 2.0 | ||||
Amount Recognized in Income | 0 | 0 | 0 | 0 | ||||
Natural Gas Liquids [Member] | Options [Member] | Cash Flow Hedging Instrument [Member] | ||||||||
Derivative Instruments, Gain (Loss) [Line Items] | ||||||||
Amount Recognized in OCI | 0.2 | [1] | (12.2) | (9.0) | [1] | (1.2) | ||
Natural gas [Member] | Physical [Member] | Operating Revenues [Member] | Not Designated as Hedging Instrument [Member] | ||||||||
Derivative Instruments, Gain (Loss) [Line Items] | ||||||||
Amount Recognized in Income | (2.2) | (2.3) | (7.1) | (6.4) | ||||
Natural gas [Member] | Fixed Swaps/Futures [Member] | Operating Revenues [Member] | Cash Flow Hedging Instrument [Member] | ||||||||
Derivative Instruments, Gain (Loss) [Line Items] | ||||||||
Amount Reclassifed from Accumulated OCI into Income | (7.5) | (6.7) | (22.2) | (18.7) | ||||
Amount Recognized in Income | 0 | 0 | 0 | 0.1 | ||||
Natural gas [Member] | Fixed Swaps/Futures [Member] | Operating Revenues [Member] | Not Designated as Hedging Instrument [Member] | ||||||||
Derivative Instruments, Gain (Loss) [Line Items] | ||||||||
Amount Recognized in Income | 0.2 | 0.6 | (0.2) | 0.8 | ||||
Natural gas [Member] | Fixed Swaps/Futures [Member] | Cash Flow Hedging Instrument [Member] | ||||||||
Derivative Instruments, Gain (Loss) [Line Items] | ||||||||
Amount Recognized in OCI | 0.2 | [1] | (5.5) | 0 | [1] | (15.4) | ||
Operating Revenues [Member] | Cash Flow Hedging Instrument [Member] | ||||||||
Derivative Instruments, Gain (Loss) [Line Items] | ||||||||
Amount Reclassifed from Accumulated OCI into Income | (10.1) | (5.5) | (30.5) | (18.9) | ||||
Amount Recognized in Income | 0 | 0 | 0 | 0.1 | ||||
Operating Revenues [Member] | Not Designated as Hedging Instrument [Member] | ||||||||
Derivative Instruments, Gain (Loss) [Line Items] | ||||||||
Amount Recognized in Income | (2.0) | (1.7) | (7.3) | (5.6) | ||||
Cash Flow Hedging Instrument [Member] | ||||||||
Derivative Instruments, Gain (Loss) [Line Items] | ||||||||
Amount Recognized in OCI | $ 0.4 | [1] | $ (18.9) | $ (9.0) | [1] | $ (14.5) | ||
|
Summary of Significant Accounting Policies (Policies) | 9 Months Ended |
---|---|
Sep. 30, 2011 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Consolidation, Policy [Policy Text Block] | Organization The Company is an energy and energy services provider offering physical delivery and related services for both electricity and natural gas primarily in the south central United States. The Company conducts these activities through four business segments: (i) electric utility, (ii) natural gas transportation and storage, (iii) natural gas gathering and processing and (iv) natural gas marketing. All significant intercompany transactions have been eliminated in consolidation. The electric utility segment generates, transmits, distributes and sells electric energy in Oklahoma and western Arkansas. Its operations are conducted through OG&E and are subject to regulation by the OCC, the APSC and the FERC. OG&E was incorporated in 1902 under the laws of the Oklahoma Territory. OG&E is the largest electric utility in Oklahoma and its franchised service territory includes the Fort Smith, Arkansas area. OG&E sold its retail natural gas business in 1928 and is no longer engaged in the natural gas distribution business. Enogex is a provider of integrated natural gas midstream services. Enogex is engaged in the business of gathering, processing, transporting, storing and marketing natural gas. Most of Enogex's natural gas gathering, processing, transportation and storage assets are strategically located in the Arkoma and Anadarko basins of Oklahoma and the Texas Panhandle. Enogex's operations are organized into three business segments: (i) natural gas transportation and storage, (ii) natural gas gathering and processing and (iii) natural gas marketing. At September 30, 2011, the Company indirectly owns an 86.7 percent membership interest in Enogex Holdings, which in turn owns all of the membership interests in Enogex LLC, a Delaware single-member limited liability company (see Note 3). The Company continues to consolidate Enogex Holdings in its consolidated financial statements as OGE Energy has a controlling financial interest over the operations of Enogex Holdings. Prior to November 1, 2010, OER, whose primary operations are in natural gas marketing, was directly owned by OGE Energy. On November 1, 2010, OGE Energy distributed the equity interests in OER to Enogex LLC. Accordingly, the discussion that follows includes the results of OER in Enogex's results for all periods presented. Also, Enogex LLC holds a 50 percent ownership interest in Atoka. The Company has consolidated Atoka in its consolidated financial statements as Enogex acts as the managing member of Atoka and has control over the operations of Atoka. |
Basis of Accounting [Text Block] | Basis of Presentation The Condensed Consolidated Financial Statements included herein have been prepared by the Company, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to such rules and regulations; however, the Company believes that the disclosures are adequate to prevent the information presented from being misleading. In the opinion of management, all adjustments necessary to fairly present the consolidated financial position of the Company at September 30, 2011 and December 31, 2010, the results of its operations for the three and nine months ended September 30, 2011 and 2010 and the results of its cash flows for the nine months ended September 30, 2011 and 2010, have been included and are of a normal recurring nature except as otherwise disclosed. Due to seasonal fluctuations and other factors, the operating results for the three and nine months ended September 30, 2011 are not necessarily indicative of the results that may be expected for the year ending December 31, 2011 or for any future period. The Condensed Consolidated Financial Statements and Notes thereto should be read in conjunction with the audited Consolidated Financial Statements and Notes thereto included in the Company's 2010 Form 10-K. |
Public Utilities, Policy [Policy Text Block] | Accounting Records The accounting records of OG&E are maintained in accordance with the Uniform System of Accounts prescribed by the FERC and adopted by the OCC and the APSC. Additionally, OG&E, as a regulated utility, is subject to accounting principles for certain types of rate-regulated activities, which provide that certain actual or anticipated costs that would otherwise be charged to expense can be deferred as regulatory assets, based on the expected recovery from customers in future rates. Likewise, certain actual or anticipated credits that would otherwise reduce expense can be deferred as regulatory liabilities, based on the expected flowback to customers in future rates. Management's expected recovery of deferred costs and flowback of deferred credits generally results from specific decisions by regulators granting such ratemaking treatment. OG&E records certain actual or anticipated costs and obligations as regulatory assets or liabilities if it is probable, based on regulatory orders or other available evidence, that the cost or obligation will be included in amounts allowable for recovery or refund in future rates. Management continuously monitors the future recoverability of regulatory assets. When in management's judgment future recovery becomes impaired, the amount of the regulatory asset is adjusted, as appropriate. If the Company were required to discontinue the application of accounting principles for certain types of rate-regulated activities for some or all of its operations, it could result in writing off the related regulatory assets, of which the financial effects could be significant. |
Fair Value of Financial Instruments, Policy [Policy Text Block] | The classification of the Company's fair value measurements requires judgment regarding the degree to which market data are observable or corroborated by observable market data. GAAP establishes a fair value hierarchy that prioritizes the inputs used to measure fair value based on observable and unobservable data. The hierarchy categorizes the inputs into three levels, with the highest priority given to quoted prices in active markets for identical unrestricted assets or liabilities (Level 1) and the lowest priority given to unobservable inputs (Level 3). Financial assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement. The three levels defined in the fair value hierarchy and examples of each are as follows: Level 1 inputs are quoted prices in active markets for identical unrestricted assets or liabilities that are accessible at the measurement date. Instruments classified as Level 1 include natural gas futures, swaps and option transactions for contracts traded on the NYMEX and settled through a NYMEX clearing broker. Level 2 inputs are inputs other than quoted prices in active markets included within Level 1 that are either directly or indirectly observable at the reporting date for the asset or liability for substantially the full term of the asset or liability. Level 2 inputs include quoted prices for similar assets or liabilities in active markets and quoted prices for identical or similar assets or liabilities in markets that are not active. Instruments classified as Level 2 include over-the-counter NYMEX natural gas swaps, natural gas basis swaps and natural gas purchase and sales transactions in markets such that the pricing is closely related to the NYMEX pricing. Level 3 inputs are prices or valuation techniques for the asset or liability that require inputs that are both significant to the fair value measurement and unobservable (i.e., supported by little or no market activity). Unobservable inputs reflect the reporting entity's own assumptions about the assumptions that market participants would use in pricing the asset or liability (including assumptions about risk). Instruments classified as Level 3 include NGLs options and the revaluation of the Atoka plant assets (see Note 4). The Company utilizes the market approach in determining the fair value of its derivative positions by using either NYMEX published market prices, independent broker pricing data or broker/dealer valuations. The valuations of derivatives with pricing based on NYMEX published market prices may be considered Level 1 if they are settled through a NYMEX clearing broker account with daily margining. Over-the-counter derivatives with NYMEX based prices are considered Level 2 due to the impact of counterparty credit risk. Valuations based on independent broker pricing or broker/dealer valuations may be classified as Level 2 only to the extent they may be validated by an additional source of independent market data for an identical or closely related active market. In certain less liquid markets or for longer-term contracts, forward prices are not as readily available. In these circumstances, NGLs options contracts are valued using internally developed methodologies that consider historical relationships among various commodities that result in management's best estimate of fair value. These contracts are classified as Level 3. The impact to the fair value of derivatives due to credit risk is calculated using the probability of default based on Standard & Poor's Ratings Services and/or internally generated ratings. The fair value of derivative assets is adjusted for credit risk. The fair value of derivative liabilities is adjusted for credit risk only if the impact is deemed material. The carrying value of the financial instruments on the Condensed Consolidated Balance Sheets not otherwise discussed above approximates fair value except for long-term debt which is valued at the carrying amount. The valuation of the Company's energy derivative contracts was determined generally based on quoted market prices. However, in certain instances where market quotes are not available, other valuation techniques or models are used to estimate market values. The valuation of instruments also considers the credit risk of the counterparties. The fair value of the Company's long-term debt is based on quoted market prices and estimates of current rates available for similar issues with similar maturities |
Derivatives, Offsetting Fair Value Amounts, Policy [Policy Text Block] | Fair value amounts recognized for forward, interest rate swap, option and other conditional or exchange contracts executed with the same counterparty under a master netting arrangement may be offset. The reporting entity's choice to offset or not must be applied consistently. A master netting arrangement exists if the reporting entity has multiple contracts, whether for the same type of conditional or exchange contract or for different types of contracts, with a single counterparty that are subject to a contractual agreement that provides for the net settlement of all contracts through a single payment in a single currency in the event of default on or termination of any one contract. Offsetting the fair values recognized for forward, interest rate swap, option and other conditional or exchange contracts outstanding with a single counterparty results in the net fair value of the transactions being reported as an asset or a liability in the Condensed Consolidated Balance Sheets. The Company has presented the fair values of its derivative contracts under master netting agreements using a net fair value presentation. |
Derivatives, Policy [Policy Text Block] | Normal purchases and normal sales contracts are not recorded in PRM Assets or Liabilities in the Condensed Consolidated Balance Sheets and earnings recognition is recorded in the period in which physical delivery of the commodity occurs. Management applies normal purchases and normal sales treatment to: (i) commodity contracts for the purchase and sale of natural gas used in or produced by its operations, (ii) commodity contracts for the sale of NGLs produced by Enogex's gathering and processing business, (iii) electric power contracts by OG&E and (iv) fuel procurement by OG&E. The Company recognizes its non-exchange traded derivative instruments as PRM Assets or Liabilities in the Condensed Consolidated Balance Sheets at fair value with such amounts classified as current or long-term based on their anticipated settlement. Exchange traded transactions are settled on a net basis daily through margin accounts with a clearing broker and, therefore, are recorded at fair value on a net basis in Other Current Assets in the Condensed Consolidated Balance Sheets. Cash Flow Hedges For derivatives that are designated and qualify as a cash flow hedge, the effective portion of the change in fair value of the derivative instrument is reported as a component of Accumulated Other Comprehensive Income and recognized into earnings in the same period during which the hedged transaction affects earnings. The ineffective portion of a derivative's change in fair value or hedge components excluded from the assessment of effectiveness is recognized currently in earnings. The Company measures the ineffectiveness of commodity cash flow hedges using the change in fair value method whereby the change in the expected future cash flows designated as the hedge transaction are compared to the change in fair value of the hedging instrument. Forecasted transactions, which are designated as the hedged transaction in a cash flow hedge, are regularly evaluated to assess whether they continue to be probable of occurring. If the forecasted transactions are no longer probable of occurring, hedge accounting will cease on a prospective basis and all future changes in the fair value of the derivative will be recognized directly in earnings. The Company designates as cash flow hedges derivatives used to manage commodity price risk exposure for Enogex's NGLs volumes and corresponding keep-whole natural gas resulting from its natural gas processing contracts (processing hedges) and natural gas positions resulting from its natural gas gathering and processing, pipeline and storage operations (operational gas hedges). The Company also designates as cash flow hedges certain derivatives used to manage natural gas commodity exposure for certain natural gas storage inventory positions. Derivatives Not Designated As Hedging Instruments Derivative instruments not designated as hedging instruments are utilized in OER's asset management, marketing and trading activities. For derivative instruments not designated as hedging instruments, the gain or loss on the derivative is recognized currently in earnings. Fair Value Hedges For derivative instruments that are designated and qualify as a fair value hedge, the gain or loss on the derivative as well as the offsetting loss or gain on the hedged item attributable to the hedge risk are recognized currently in earnings. The Company includes the gain or loss on the hedged items in Operating Revenues as the offsetting loss or gain on the related hedging derivative. |
Income Tax, Policy [Policy Text Block] | The Company files consolidated income tax returns in the U.S. Federal jurisdiction and various state jurisdictions. With few exceptions, the Company is no longer subject to U.S. Federal tax examinations by tax authorities for years prior to 2007 or state and local tax examinations by tax authorities for years prior to 2002. Income taxes are generally allocated to each company in the affiliated group based on its stand-alone taxable income or loss. Federal investment tax credits previously claimed on electric utility property have been deferred and are being amortized to income over the life of the related property. The Company continues to amortize its Federal investment tax credits on a ratable basis throughout the year. OG&E earns both Federal and Oklahoma state tax credits associated with the production from its wind farms. In addition, OG&E and Enogex earn Oklahoma state tax credits associated with their investments in electric generating and natural gas processing facilities which further reduce the Company's effective tax rate. |
Earnings Per Share, Policy [Policy Text Block] | Earnings Per Share Basic earnings per share is calculated by dividing net income attributable to OGE Energy by the weighted average number of the Company's common shares outstanding during the period. In the calculation of diluted earnings per share, weighted average shares outstanding are increased for additional shares that would be outstanding if potentially dilutive securities were converted to common stock. Potentially dilutive securities for the Company consist of performance units. |
Derivative Instruments and Hedging Activities, Balance Sheet Presentation Related to Derivative Instruments (Details) (Enogex [Member], USD $) In Millions | Sep. 30, 2011 | Dec. 31, 2010 | ||||||
---|---|---|---|---|---|---|---|---|
Derivatives, Fair Value [Line Items] | ||||||||
Assets | $ 39.4 | [1] | $ 36.6 | [2] | ||||
Liabilities | 40.7 | [1] | 50.9 | [2] | ||||
Designated as Hedging Instrument [Member] | ||||||||
Derivatives, Fair Value [Line Items] | ||||||||
Assets | 3.4 | 13.9 | ||||||
Liabilities | 8.2 | 29.1 | ||||||
Designated as Hedging Instrument [Member] | NGL [Member] | Options [Member] | Current PRM [Member] | ||||||||
Derivatives, Fair Value [Line Items] | ||||||||
Assets | 1.5 | 13.3 | ||||||
Liabilities | 0 | 0 | ||||||
Designated as Hedging Instrument [Member] | Natural gas [Member] | Fixed Swaps/Futures [Member] | Current PRM [Member] | ||||||||
Derivatives, Fair Value [Line Items] | ||||||||
Assets | 0 | 0 | ||||||
Liabilities | 8.0 | 28.8 | ||||||
Designated as Hedging Instrument [Member] | Natural gas [Member] | Fixed Swaps/Futures [Member] | Other Current Assets [Member] | ||||||||
Derivatives, Fair Value [Line Items] | ||||||||
Assets | 1.9 | 0.6 | ||||||
Liabilities | 0.2 | 0.3 | ||||||
Not Designated as Hedging Instrument [Member] | ||||||||
Derivatives, Fair Value [Line Items] | ||||||||
Assets | 36.0 | 22.7 | ||||||
Liabilities | 32.5 | 21.8 | ||||||
Not Designated as Hedging Instrument [Member] | Natural gas [Member] | Physical [Member] | Current PRM [Member] | ||||||||
Derivatives, Fair Value [Line Items] | ||||||||
Assets | 1.8 | 1.4 | ||||||
Liabilities | 0.4 | 1.2 | ||||||
Not Designated as Hedging Instrument [Member] | Natural gas [Member] | Physical [Member] | Noncurrent PRM [Member] | ||||||||
Derivatives, Fair Value [Line Items] | ||||||||
Assets | 0.3 | 0.8 | ||||||
Liabilities | 0.1 | 0 | ||||||
Not Designated as Hedging Instrument [Member] | Natural gas [Member] | Fixed Swaps/Futures [Member] | Current PRM [Member] | ||||||||
Derivatives, Fair Value [Line Items] | ||||||||
Assets | 0.1 | 0 | ||||||
Liabilities | 0.1 | 0.1 | ||||||
Not Designated as Hedging Instrument [Member] | Natural gas [Member] | Fixed Swaps/Futures [Member] | Other Current Assets [Member] | ||||||||
Derivatives, Fair Value [Line Items] | ||||||||
Assets | 33.5 | 20.0 | ||||||
Liabilities | 31.7 | 19.8 | ||||||
Not Designated as Hedging Instrument [Member] | Natural gas [Member] | Options [Member] | Other Current Assets [Member] | ||||||||
Derivatives, Fair Value [Line Items] | ||||||||
Assets | 0.3 | 0.5 | ||||||
Liabilities | $ 0.2 | $ 0.7 | ||||||
|
"+ text.join( "
\n" ) +"
" + text[p] + "
\n"; } } }else{ formatted = '' + raw + '
'; } html = ''+ "\n"+''+ "\n"+''+ "\n"+' formatted: '+ ( this.Default == 'raw' ? 'as Filed' : 'with Text Wrapped' ) +''+ "\n"+' | '+ "\n"+'
'+ "\n"+' | '+ "\n"+' '+ "\n"+'
'+ "\n"+' | '+ "\n"+' '+ "\n"+'
Impairment of Assets | 3 Months Ended |
---|---|
Sep. 30, 2011 | |
Impairment of Assets [Abstract] | |
Asset Impairment Charges [Text Block] | Impairment of Assets Atoka operates a 20 MMcf/d refrigeration processing plant which processes gas gathered in the Atoka area. The processing plant is leased on a month-to-month basis. In August 2011, management made a decision to use third-party processing exclusively for gathered volumes dedicated to the Atoka plant and, therefore, to take the processing plant out of service and return it to the lessor in accordance with the rental agreement. As a result, in August 2011 Enogex recorded a pre-tax impairment loss of $5.0 million in the Gathering and Processing segment associated with the cost it had capitalized in connection with the installation of the leased plant as it will not be able to recover the remaining value of the assets through future cash flows. The Atoka plant assets were measured at fair value on a nonrecurring basis and are considered level 3 in the fair value hierarchy (see Note 5). The noncontrolling interest portion of the pre-tax impairment loss is $2.5 million which is included in Net Income Attributable to Noncontrolling Interests in the Company's Condensed Consolidated Statement of Income. |
Summary of Significant Accounting Policies (Tables) | 9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2011 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Regulatory Assets and Liabilities [Table Text Block] | The following table is a summary of OG&E's regulatory assets and liabilities at:
|
Fair Value Measurements, Fair Value Hierarchy (Details) (USD $) In Millions | Sep. 30, 2011 | Dec. 31, 2010 | ||||||
---|---|---|---|---|---|---|---|---|
Portion Not Subject to Revaluation at Fair Market Value [Member] | ||||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||||||
Fuel Reserves For Over Retained Fuel Due To Shippers | $ 3.0 | $ 3.9 | ||||||
Commodity Contract [Member] | Fair Value, Measurements, Recurring [Member] | ||||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||||||
Commodity Contract Assets | 2.1 | 2.2 | ||||||
Commodity Contracts Liabilities | 7.0 | 16.8 | ||||||
Commodity Contract [Member] | Fair Value, Measurements, Recurring [Member] | Estimate of Fair Value, Fair Value Disclosure [Member] | ||||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||||||
Commodity Contract Assets | 39.4 | 36.6 | ||||||
Commodity Contracts Liabilities | 40.7 | 50.9 | ||||||
Commodity Contract [Member] | Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 1 [Member] | ||||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||||||
Commodity Contract Assets | 35.1 | 20.6 | ||||||
Commodity Contracts Liabilities | 31.3 | 20.2 | ||||||
Commodity Contract [Member] | Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 2 [Member] | ||||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||||||
Commodity Contract Assets | 2.8 | 2.7 | ||||||
Commodity Contracts Liabilities | 9.4 | 30.7 | ||||||
Commodity Contract [Member] | Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 3 [Member] | ||||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||||||
Commodity Contract Assets | 1.5 | 13.3 | ||||||
Commodity Contracts Liabilities | 0 | 0 | ||||||
Commodity Contract [Member] | Fair Value, Measurements, Recurring [Member] | Netting and Collateral [Member] | ||||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||||||
Commodity Contract Assets | 37.3 | 34.4 | ||||||
Commodity Contracts Liabilities | 33.7 | 34.1 | ||||||
Fair Value, Measurements, Recurring [Member] | ||||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||||||
Gas Imbalance Asset Fair Value Disclosure | 2.6 | [1] | 2.5 | [1] | ||||
Gas Imbalance Liability Fair Value Disclosure | 2.6 | [1],[2] | 2.8 | [1],[2] | ||||
Fair Value, Measurements, Recurring [Member] | Estimate of Fair Value, Fair Value Disclosure [Member] | ||||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||||||
Gas Imbalance Asset Fair Value Disclosure | 2.6 | [1] | 2.5 | [1] | ||||
Gas Imbalance Liability Fair Value Disclosure | 2.6 | [1],[2] | 2.8 | [1],[2] | ||||
Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 1 [Member] | ||||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||||||
Gas Imbalance Asset Fair Value Disclosure | 0 | [1] | 0 | [1] | ||||
Gas Imbalance Liability Fair Value Disclosure | 0 | [1],[2] | 0 | [1],[2] | ||||
Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 2 [Member] | ||||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||||||
Gas Imbalance Asset Fair Value Disclosure | 2.6 | [1] | 2.5 | [1] | ||||
Gas Imbalance Liability Fair Value Disclosure | 2.6 | [1],[2] | 2.8 | [1],[2] | ||||
Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 3 [Member] | ||||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||||||
Gas Imbalance Asset Fair Value Disclosure | 0 | [1] | 0 | [1] | ||||
Gas Imbalance Liability Fair Value Disclosure | 0 | [1],[2] | 0 | [1],[2] | ||||
Fair Value, Measurements, Recurring [Member] | Netting and Collateral [Member] | ||||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||||||
Gas Imbalance Asset Fair Value Disclosure | 0 | [1] | 0 | [1] | ||||
Gas Imbalance Liability Fair Value Disclosure | $ 0 | [1],[2] | $ 0 | [1],[2] | ||||
|
Summary of Significant Accounting Policies, Equity Ownership (Details) | Sep. 30, 2011 |
---|---|
Enogex Holdings [Member] | |
Noncontrolling Interest [Line Items] | |
Noncontrolling Interest, Ownership Percentage by Parent | 86.70% |
Atoka [Member] | |
Noncontrolling Interest [Line Items] | |
Noncontrolling Interest, Ownership Percentage by Parent | 50.00% |
Subsequent Event | 3 Months Ended |
---|---|
Sep. 30, 2011 | |
Subsequent Event [Abstract] | |
Subsequent Events [Text Block] | Subsequent Event On September 23, 2011, Enogex entered into the following agreements: an agreement with Cordillera, Oxbow and West Canadian Midstream pursuant to which Enogex agreed to acquire 100 percent of the membership interest in Roger Mills Gas Gathering, LLC, an Oklahoma limited liability company that owns an approximately 60-mile natural gas gathering system located in Roger Mills County and Ellis County, Oklahoma; an agreement with Cordillera and Oxbow pursuant to which Enogex agreed to acquire an approximately 30-mile natural gas gathering system located in Roger Mills County, Oklahoma; and an agreement with Cordillera pursuant to which Cordillera agreed to provide Enogex with long-term acreage dedication in the area served by the gathering systems encompassing approximately 100,000 net acres. The gathering systems are located in the Granite Wash area. The aggregate purchase price for these transactions was $200 million which was paid in cash primarily from contributions from OGE Energy and the ArcLight group (as discussed in Note 3) as well as cash generated from operations and bank borrowings. The transactions closed on November 1, 2011. The Company has not completed the appraisal and purchase price allocation for this transaction but expects to record a significant amount of goodwill and intangible assets as part of this transaction in the Gathering and Processing segment. All of the goodwill is expected to be deductible for tax purposes. Certain of the required accounting disclosures related to this transaction have been excluded from this Form 10-Q because it is impracticable to provide such disclosures when certain information is not yet available. |
Income Taxes | 9 Months Ended |
---|---|
Sep. 30, 2011 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income Taxes The Company files consolidated income tax returns in the U.S. Federal jurisdiction and various state jurisdictions. With few exceptions, the Company is no longer subject to U.S. Federal tax examinations by tax authorities for years prior to 2007 or state and local tax examinations by tax authorities for years prior to 2002. Income taxes are generally allocated to each company in the affiliated group based on its stand-alone taxable income or loss. Federal investment tax credits previously claimed on electric utility property have been deferred and are being amortized to income over the life of the related property. The Company continues to amortize its Federal investment tax credits on a ratable basis throughout the year. OG&E earns both Federal and Oklahoma state tax credits associated with the production from its wind farms. In addition, OG&E and Enogex earn Oklahoma state tax credits associated with their investments in electric generating and natural gas processing facilities which further reduce the Company's effective tax rate. |
Short-Term Debt and Credit Facilities (Tables) | 9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2011 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Short-term Debt [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Line of Credit Facilities [Table Text Block] | The following table provides information regarding the Company's revolving credit agreements and available cash at September 30, 2011.
|
Derivative Instruments and Hedging Activities | 9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2011 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Derivative Instruments and Hedging Activities | Derivative Instruments and Hedging Activities The Company is exposed to certain risks relating to its ongoing business operations. The primary risks managed using derivatives instruments are commodity price risk and interest rate risk. The Company is also exposed to credit risk in its business operations. Commodity Price Risk The Company primarily uses forward physical contracts, commodity price swap contracts and commodity price option features to manage the Company's commodity price risk exposures. Commodity derivative instruments used by the Company are as follows:
Normal purchases and normal sales contracts are not recorded in PRM Assets or Liabilities in the Condensed Consolidated Balance Sheets and earnings recognition is recorded in the period in which physical delivery of the commodity occurs. Management applies normal purchases and normal sales treatment to: (i) commodity contracts for the purchase and sale of natural gas used in or produced by its operations, (ii) commodity contracts for the sale of NGLs produced by Enogex's gathering and processing business, (iii) electric power contracts by OG&E and (iv) fuel procurement by OG&E. The Company recognizes its non-exchange traded derivative instruments as PRM Assets or Liabilities in the Condensed Consolidated Balance Sheets at fair value with such amounts classified as current or long-term based on their anticipated settlement. Exchange traded transactions are settled on a net basis daily through margin accounts with a clearing broker and, therefore, are recorded at fair value on a net basis in Other Current Assets in the Condensed Consolidated Balance Sheets. Interest Rate Risk The Company's exposure to changes in interest rates primarily relates to short-term variable-rate debt and commercial paper. The Company manages its interest rate exposure by monitoring and limiting the effects of market changes in interest rates. The Company utilizes interest rate derivatives to alter interest rate exposure in an attempt to reduce the effects of these changes. Interest rate derivatives are used solely to modify interest rate exposure and not to modify the overall leverage of the debt portfolio. Credit Risk The Company is exposed to certain credit risks relating to its ongoing business operations. Credit risk includes the risk that counterparties that owe the Company money or energy will breach their obligations. If the counterparties to these arrangements fail to perform, the Company may be forced to enter into alternative arrangements. In that event, the Company's financial results could be adversely affected and the Company could incur losses. Cash Flow Hedges For derivatives that are designated and qualify as a cash flow hedge, the effective portion of the change in fair value of the derivative instrument is reported as a component of Accumulated Other Comprehensive Income and recognized into earnings in the same period during which the hedged transaction affects earnings. The ineffective portion of a derivative's change in fair value or hedge components excluded from the assessment of effectiveness is recognized currently in earnings. The Company measures the ineffectiveness of commodity cash flow hedges using the change in fair value method whereby the change in the expected future cash flows designated as the hedge transaction are compared to the change in fair value of the hedging instrument. Forecasted transactions, which are designated as the hedged transaction in a cash flow hedge, are regularly evaluated to assess whether they continue to be probable of occurring. If the forecasted transactions are no longer probable of occurring, hedge accounting will cease on a prospective basis and all future changes in the fair value of the derivative will be recognized directly in earnings. The Company designates as cash flow hedges derivatives used to manage commodity price risk exposure for Enogex's NGLs volumes and corresponding keep-whole natural gas resulting from its natural gas processing contracts (processing hedges) and natural gas positions resulting from its natural gas gathering and processing, pipeline and storage operations (operational gas hedges). The Company also designates as cash flow hedges certain derivatives used to manage natural gas commodity exposure for certain natural gas storage inventory positions. Enogex's cash flow hedges at September 30, 2011 mature by the end of the first quarter of 2012. Fair Value Hedges For derivative instruments that are designated and qualify as a fair value hedge, the gain or loss on the derivative as well as the offsetting loss or gain on the hedged item attributable to the hedge risk are recognized currently in earnings. The Company includes the gain or loss on the hedged items in Operating Revenues as the offsetting loss or gain on the related hedging derivative. At September 30, 2011 and December 31, 2010, the Company had no derivative instruments that were designated as fair value hedges. Derivatives Not Designated As Hedging Instruments Derivative instruments not designated as hedging instruments are utilized in OER's asset management, marketing and trading activities. For derivative instruments not designated as hedging instruments, the gain or loss on the derivative is recognized currently in earnings. Quantitative Disclosures Related to Derivative Instruments At September 30, 2011, the Company had the following derivative instruments that were designated as cash flow hedges.
At September 30, 2011, the Company had the following derivative instruments that were not designated as hedging instruments.
Balance Sheet Presentation Related to Derivative Instruments The fair value of the derivative instruments that are presented in the Company's Condensed Consolidated Balance Sheet at September 30, 2011 are as follows:
The fair value of the derivative instruments that are presented in the Company's Condensed Consolidated Balance Sheet at December 31, 2010 are as follows:
Income Statement Presentation Related to Derivative Instruments The following tables present the effect of derivative instruments on the Company's Condensed Consolidated Statement of Income for the three months ended September 30, 2011. Derivatives in Cash Flow Hedging Relationships
Derivatives Not Designated as Hedging Instruments
The following tables present the effect of derivative instruments on the Company's Condensed Consolidated Statement of Income for the three months ended September 30, 2010. Derivatives in Cash Flow Hedging Relationships
Derivatives Not Designated as Hedging Instruments
The following tables present the effect of derivative instruments on the Company's Condensed Consolidated Statement of Income for the nine months ended September 30, 2011. Derivatives in Cash Flow Hedging Relationships
Derivatives Not Designated as Hedging Instruments
The following tables present the effect of derivative instruments on the Company's Condensed Consolidated Statement of Income for the nine months ended September 30, 2010. Derivatives in Cash Flow Hedging Relationships
Derivatives Not Designated as Hedging Instruments
For derivatives designated as cash flow hedges in the tables above, amounts reclassified from Accumulated Other Comprehensive Income into income (effective portion) and amounts recognized in income (ineffective portion) for the three and nine months ended September 30, 2011 and 2010, if any, are reported in Operating Revenues. For derivatives not designated as hedges in the tables above, amounts recognized in income for the three and nine months ended September 30, 2011 and 2010, if any, are reported in Operating Revenues. Credit-Risk Related Contingent Features in Derivative Instruments In the event Moody's Investors Services or Standard & Poor's Ratings Services were to lower the Company's senior unsecured debt rating to a below investment grade rating, at September 30, 2011, the Company would have been required to post $6.1 million of cash collateral to satisfy its obligation under its financial and physical contracts relating to derivative instruments that are in a net liability position at September 30, 2011. In addition, the Company could be required to provide additional credit assurances in future dealings with third parties, which could include letters of credit or cash collateral. |
Long-Term Debt | 9 Months Ended | ||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2011 | |||||||||||||||||||||||||||||||||||||||||
Long-term Debt, Unclassified [Abstract] | |||||||||||||||||||||||||||||||||||||||||
Long-Term Debt | Long-Term Debt At September 30, 2011, the Company was in compliance with all of its debt agreements. OG&E has tax-exempt pollution control bonds with optional redemption provisions that allow the holders to request repayment of the bonds at various dates prior to the maturity. The bonds, which can be tendered at the option of the holder during the next 12 months, are as follows:
All of these bonds are subject to an optional tender at the request of the holders, at 100 percent of the principal amount, together with accrued and unpaid interest to the date of purchase. The bond holders, on any business day, can request repayment of the bond by delivering an irrevocable notice to the tender agent stating the principal amount of the bond, payment instructions for the purchase price and the business day the bond is to be purchased. The repayment option may only be exercised by the holder of a bond for the principal amount. When a tender notice has been received by the trustee, a third party remarketing agent for the bonds will attempt to remarket any bonds tendered for purchase. This process occurs once per week. Since the original issuance of these series of bonds in 1995 and 1997, the remarketing agent has successfully remarketed all tendered bonds. If the remarketing agent is unable to remarket any such bonds, OG&E is obligated to repurchase such unremarketed bonds. As OG&E has both the intent and ability to refinance the bonds on a long-term basis and such ability is supported by an ability to consummate the refinancing, the bonds are classified as long-term debt in the Company's Condensed Consolidated Financial Statements. OG&E believes that it has sufficient liquidity to meet these obligations. |
Stock-Based Compensation | 9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2011 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stock-Based Compensation | Stock-Based Compensation The following table summarizes the Company's pre-tax compensation expense and related income tax benefit for the three and nine months ended September 30, 2011 and 2010 related to the Company's performance units and restricted stock.
The following table summarizes the activity of the Company's stock-based compensation during the three months ended September 30, 2011.
The Company has issued new shares to satisfy stock option exercises, restricted stock grants and payouts of earned performance units. During the three and nine months ended September 30, 2011, there were 14,718 shares and 284,423 shares, respectively, of new common stock issued pursuant to the Company's stock incentive plans related to exercised stock options, restricted stock grants and payouts of earned performance units. During the three and nine months ended September 30, 2011, there were 1,150 shares and 3,810 shares, respectively, of restricted stock returned to the Company to satisfy tax liabilities. The Company received less than $0.1 million and $0.8 million, respectively, during the three and nine months ended September 30, 2011 related to exercised stock options. The Company did not realize an income tax benefit for the tax deductions from the exercised stock options during the three and nine months ended September 30, 2011 due to the Company being in a tax net operating loss position in 2011. |