Summary of Significant Accounting Policies

6 Months Ended

Jun. 30, 2012

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Organization, Consolidation and Presentation of Financial Statements Disclosure [Text Block]

Summary of Significant Accounting Policies

Organization

OG&Egenerates, transmits, distributes and sells electric energy in Oklahoma and western Arkansas.  Its operations 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.OG&E is a wholly-owned subsidiary of OGE Energy, 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.

Basis of Presentation

The CondensedFinancial Statements included herein have been prepared by OG&E, 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, OG&E 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 thefinancial position of OG&E 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, OG&E'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 CondensedFinancial Statements and Notes thereto should be read in conjunction with the auditedFinancial Statements and Notes thereto included in OG&E'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 theCondensedBalance Sheets.

(B) Included in Other Current Liabilities on theCondensedBalance 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.

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 Loss

The balance of Accumulated Other Comprehensive Loss was $2.0 million and $2.5 million at June 30, 2012 and December 31, 2011, respectively, related to deferred commodity contracts hedging activity.

Related Party Transactions

Related Party Transactions

OGE Energy charged operating costs to OG&E of $27.5 million and $33.4 million during the threemonths endedJune 30, 2012 and 2011, respectively, and $60.2 million and $64.4 million during the sixmonths endedJune 30, 2012 and 2011, respectively. OGE Energy charges operating costs to its subsidiaries based on several factors. Operating costs directly related to specific subsidiaries are assigned to those subsidiaries.  Where more than one subsidiary benefits from certain expenditures, the costs are shared between those subsidiaries receiving the benefits.  Operating costs incurred for the benefit of all subsidiaries are allocated among the subsidiaries, either as overhead based primarily on labor costs or using the "Distrigas" method.  The Distrigas method is a three-factor formula that uses an equal weighting of payroll, net operating revenues and gross property, plant and equipment.  OGE Energy adopted the Distrigas method in January 1996 as a result of a recommendation by the OCC Staff.  OGE Energy believes this method provides a reasonable basis for allocating common expenses.

During each of the threemonths endedJune 30, 2012 and 2011, OG&E recorded an expense from its affiliate, Enogex, of $8.7 millionfor transporting gas to OG&E's natural gas-fired generating facilities. During each of the sixmonths endedJune 30, 2012 and 2011, OG&E recorded an expense from Enogex of $17.4 millionfor transporting gas to OG&E's natural gas-fired generating facilities. During each of the threemonths endedJune 30, 2012 and 2011, OG&E recorded an expense from Enogex of$3.2 millionfor natural gas storage services. During each of the sixmonths endedJune 30, 2012 and 2011, OG&E recorded an expense from Enogex of$6.4 millionfor natural gas storage services. During the threemonths endedJune 30, 2012 and 2011, OG&E also recorded natural gas purchases from Enogex, through its subsidiary, OER, of$6.0 million and $8.9 million, respectively. During the sixmonths endedJune 30, 2012 and 2011, OG&E also recorded natural gas purchases from Enogex, through its subsidiary, OER, of$9.6 million and $21.4 million, respectively. There are $1.9 million and $1.7 million of natural gas purchases recorded at June 30, 2012 and December 31, 2011, respectively, which are included in Accounts Payable – Affiliates in the Balance Sheets for these activities.

In June 2011, OGE Energy made a capital contribution to the Company for $50.0 million

On July 1, 2009, OG&E, Enogex and OER entered into hedging transactions to offset natural gas long positions at Enogex with short natural gas exposures at OG&E resulting from the cost of generationassociated with a wholesale power sales contractwith the Oklahoma Municipal Power Authority. Enogex sold physical natural gas to OER, and OG&E entered into an offsetting natural gas swap with OER. These transactions are for50,000MMBtu per month from August 2009 to December 2013 (see Note 3).