Leases

12 Months Ended

Dec. 31, 2023

Based on their evaluation of all contracts under ASC 842, as described in Note 1, the Registrants concluded they have operating lease obligations as described below.

OG&E Railcar Lease Agreement

Effective February 1, 2024, OG&E renewed its February 1, 2019 railcar lease agreement for 770 rotary gondola railcars to transport coal from Wyoming to OG&E's coal-fired generation units. Rental payments are charged to fuel expense and are recoverable through OG&E's fuel adjustment clauses. On February 1, 2029, 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, it would be responsible for the difference between the actual fair value of the railcars and the stipulated fair market value, up to a maximum of $3.2 million.

OG&E holds an additional railcar lease agreement for 135 rotary gondola railcars to transport coal with a term of October 1, 2022 to December 31, 2025.

OG&E Wind Farm Land Lease Agreements

OG&E has operating leases related to land for OG&E's Centennial, OU Spirit and Crossroads wind farms with terms of nine to 13 years remaining, depending on the lease. The Centennial lease has rent escalations which increase annually based on the Consumer Price Index. While lease liabilities are not remeasured as a result of changes to the Consumer Price Index, changes to the Consumer Price Index are treated as variable lease payments and recognized in the period in which the obligation for those payments was incurred. The OU Spirit and Crossroads leases each have rent escalations which increase after five and 10 years. Although the leases are cancellable, OG&E is required to make annual lease payments as long as the wind turbines are located on the land. OG&E does not expect to terminate the leases until the wind turbines reach the end of their useful life.

Financial Statement Information and Maturity Analysis of Lease Liabilities

The following tables present amounts recognized for operating leases in the Registrants' statements of income, statements of cash flows and balance sheets and supplemental information related to those amounts recognized.


	OGE Energy						OG&E
	Year Ended December 31,						Year Ended December 31,
(In millions)	2023		2022		2021		2023		2022		2021
Operating lease cost	$	6.4	$	5.9	$	6.3	$	6.4	$	5.9	$	5.7
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows for operating leases	$	5.2	$	5.3	$	6.3	$	5.2	$	5.3	$	5.7
Right-of-use assets obtained in exchange for new operating lease liabilities	$	—	$	1.5	$	—	$	—	$	1.5	$	—


	OGE Energy						OG&E
(Dollars in millions)	December 31, 2023			December 31, 2022			December 31, 2023			December 31, 2022
Right-of-use assets at period end (A)	$	25.9		$	30.2		$	25.9		$	30.2
Operating lease liabilities at period end (B)	$	30.5		$	34.8		$	30.5		$	34.8
Operating lease weighted-average remaining lease term (in years)		11.4			11.6			11.4			11.6
Operating lease weighted-average discount rate		4.0	%		4.0	%		4.0	%		4.0	%

(A)

Included in Property, Plant and Equipment in the Registrants' balance sheets.

(B)

Included in Other Deferred Credits and Other Liabilities in the Registrants' balance sheets.

The following table presents a maturity analysis of the Registrants' operating lease liabilities.


Future minimum operating lease payments as of December 31:	OGE Energy		OG&E
(In millions)
2024	$	3.7	$	3.7
2025		3.5		3.5
2026		3.0		3.0
2027		3.0		3.0
2028		3.1		3.1
Thereafter		22.6		22.6
Total future minimum lease payments		38.9		38.9
Less: Imputed interest		8.4		8.4
Present value of net minimum lease payments	$	30.5	$	30.5