Summary of Significant Accounting Policies

6 Months Ended

Jun. 30, 2012

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Summary of Significant Accounting Policies

Summary of Significant Accounting Policies

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 segmentgenerates, transmits, distributes and sells electric energy in Oklahoma and western Arkansas.  Its operations areconducted through OG&E and aresubject 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.AtJune 30, 2012, the Company indirectly owns an81.3 percentmembership interest in Enogex Holdings, which in turn owns all of the membership interests in Enogex LLC, a Delaware single-member limited liability company.  The Company consolidates Enogex Holdings in its Condensed Consolidated Financial Statements as OGE Energy has a controlling financial interest over the operations of Enogex Holdings.  Also, Enogex LLC holds a 50 percent ownership interest in Atoka.  The Company consolidates Atoka in its Condensed Consolidated Financial Statements as Enogex acts as the managing member of Atoka and has control over the operations of Atoka.

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 atJune 30, 2012andDecember 31, 2011, the results of its operations for the three andsixmonths endedJune 30, 2012and2011and the results of its cash flows for thesixmonths endedJune 30, 2012and2011, have been included and are of a normal recurring nature except as otherwise disclosed.

Due to seasonal fluctuations and other factors, the Company's operating results for the three andsixmonths endedJune 30, 2012are not necessarily indicative of the results that may be expected for the year endingDecember 31, 2012or 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 2011Form 10-K.

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.

The following table is a summary of OG&E's regulatory assets and liabilities at:

(In millions)	June 30, 2012		December 31, 2011
Regulatory Assets
Current
Oklahoma demand program rider under recovery (A)	$	12.3	$	8.1
Crossroads rider under recovery (A)	10.6		2.5
Fuel clause under recoveries	0.7		1.8
Other (A)	11.3		3.6
Total Current Regulatory Assets	$	34.9	$	16.0
Non-Current
Benefit obligations regulatory asset	$	345.1	$	359.2
Income taxes recoverable from customers, net	54.7		54.0
Smart Grid	42.3		37.2
Deferred storm expenses	18.9		23.8
Unamortized loss on reacquired debt	13.6		14.2
Deferred pension expenses	6.8		9.1
Other	12.7		10.4
Total Non-Current Regulatory Assets	$	494.1	$	507.9
Regulatory Liabilities
Current
Fuel clause over recoveries	$	65.4	$	7.7
Smart Grid rider over recovery (B)	25.9		24.3
Other (B)	15.4		13.7
Total Current Regulatory Liabilities	$	106.7	$	45.7
Non-Current
Accrued removal obligations, net	$	213.6	$	208.2
Pension tracker	28.9		22.5
Total Non-Current Regulatory Liabilities	$	242.5	$	230.7

(A) Included in Other Current Assets on theCondensed Consolidated Balance Sheets.

(B) Included in Other Current Liabilities on theCondensed Consolidated Balance Sheets.

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.IfOG&Ewere 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, which could have significant financial effects.

Property, Plant and Equipment

Enogex Cox City Plant Fire

On December 8, 2010, a fire occurred at Enogex's Cox City natural gas processing plant destroying major components of one of the four processing trains, representing 120 MMcf/d of the total 180 MMcf/d of capacity, at that facility. The damaged train was replaced and the facility was returned to full service in September 2011. The total cost necessary to return the facility back to full service was $29.6 million. In the fourth quarter of 2011, Enogex received a partial insurance reimbursement of $7.4 million and recognized a gain of $3.0 million on insurance proceeds. In March 2012, Enogex reached a settlement agreement with its insurers in this matter. As a result of the settlement agreement, Enogex received additional reimbursements of $7.6 million during the sixmonths endedJune 30, 2012. Enogex recognized a gain of $7.5 million on insurance proceeds during the sixmonths endedJune 30, 2012.

Asset Retirement Obligation

The following table summarizes changes to OG&E's asset retirement obligations related to its wind farms due to a change in the assumption related to the timing of removal used in the valuation of the asset retirement obligations.

(In millions)
Balance at January 1, 2012	$	24.8
Accretion expense	0.9
Revisions in estimated cash flows	26.7
Balance at June 30, 2012	$	52.4

Accumulated Other Comprehensive Income (Loss)

The following table summarizes the components of accumulated other comprehensive loss at June 30, 2012 and December 31, 2011 attributable to OGE Energy. At both June 30, 2012 and December 31, 2011, there was no accumulated other comprehensive loss related to Enogex's noncontrolling interest in Atoka.

(In millions)	June 30, 2012			December 31, 2011
Pension Plan and Restoration of Retirement Income Plan:
Net loss	$	(40.6	)	$	(42.1	)
Prior service cost	—			(0.1		)
Postretirement plans:
Net loss	(14.4		)	(15.4		)
Prior service cost	8.1			9.0
Net transition obligation	(0.1		)	(0.1		)
Deferred commodity contracts hedging gains (losses)	(0.3		)	3.3
Deferred interest rate swaps hedging losses	(0.6		)	(0.7		)
Total accumulated other comprehensive loss	(47.9		)	(46.1		)
Less:  Accumulated other comprehensive loss attributable to noncontrolling interests	(6.4		)	(5.5		)
Accumulated other comprehensive loss, net of tax	$	(41.5	)	$	(40.6	)