Summary of Significant Accounting Policies

12 Months Ended

Dec. 31, 2012

Organization, Consolidation and Presentation of Financial Statements [Abstract]

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

Organization

OG&Egenerates, transmits, distributes and sells electric energy in Oklahoma and western Arkansas. Its operationsare 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.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

In the opinion of management, all adjustments necessary to fairly present thefinancial position of OG&E atDecember 31, 2012and2011and the results of its operations and cash flows for the years endedDecember 31, 2012, 2011and2010, have been included and are of a normal recurring nature except as otherwise disclosed.

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:

December 31 (In millions)	2012		2011
Regulatory Assets
Current
Crossroads wind farm rider under recovery (A)	$	14.9	$	2.5
Oklahoma demand program rider under recovery (A)	9.2		8.1
Fuel clause under recoveries	—		1.8
Other (A)	2.9		3.6
Total Current Regulatory Assets	$	27.0	$	16.0
Non-Current
Benefit obligations regulatory asset	$	370.6	$	359.2
Income taxes recoverable from customers, net	54.7		54.0
Smart Grid	42.8		37.2
Unamortized loss on reacquired debt	13.0		14.2
Deferred storm expenses	12.7		23.8
Deferred pension expenses	4.5		9.1
Other	12.3		10.4
Total Non-Current Regulatory Assets	$	510.6	$	507.9
Regulatory Liabilities
Current
Fuel clause over recoveries	$	109.2	$	7.7
Smart Grid rider over recovery (B)	24.1		24.3
Other (B)	7.8		13.7
Total Current Regulatory Liabilities	$	141.1	$	45.7
Non-Current
Accrued removal obligations, net	$	218.2	$	208.2
Deferred pension credits	17.7		—
Pension tracker	9.2		22.5
Total Non-Current Regulatory Liabilities	$	245.1	$	230.7

(A) Included in Other Current Assets on theBalance Sheets.

(B) Included in Other Current Liabilities on theBalance Sheets.

OG&E recovers a return on the capital expenditures along with operation and maintenance expense and depreciation expense related to the Crossroads wind farm through a rider established by the OCC. OG&E began recovery in the fourth quarter of 2011 and believes the rider will continue until new rates are implemented in OG&E's next general rate case.

OG&E recovers program costs related to the Demand and Energy Efficiency Program. An extension of the demand program rider was approved in December 2012, which allows for the recovery of demand program costs, lost revenues associated with any achieved energy, demand savings and performance based incentives and the recovery of costs associated with research and development investments through December 2015.

Fuel clause under recoveries are generated from under recoveries from OG&E's customers when OG&E's cost of fuel exceeds the amount billed to its customers.  Fuel clause over recoveries are generated from over recoveries from OG&E's customers when the amount billed to its customers exceeds OG&E's cost of fuel.OG&E's fuel recovery clauses are designed to smooth the impact of fuel price volatility on customers' bills.As a result, OG&E under recovers fuel costs in periods of rising fuel prices above the baseline charge for fuel and over recovers fuel costs when prices decline below the baseline charge for fuel. Provisions in the fuel clauses are intended to allow OG&E to amortize under and over recovery balances.

The benefit obligations regulatory asset is comprised of expenses recorded which are probable of future recovery and that have not yet been recognized as components of net periodic benefit cost, including net loss, prior service cost and net transition obligation.These expenses were allowed to be recorded as a regulatory asset as OG&E had historically recovered and currently recovers pension and postretirement benefit plan expense in its electric rates and there was no negative evidence that the existing regulatory treatment would change. If, in the future, the regulatory bodies indicate a change in policy related to the recovery of pension and postretirement benefit plan expenses, this could cause the benefit obligations regulatory asset balance to be reclassified to Accumulated Other Comprehensive Income.

The following table is a summary of the components of the benefit obligations regulatory asset at:

December 31 (In millions)	2012			2011
Pension Plan and Restoration of Retirement Income Plan:
Net loss	$	278.6		$	266.3
Prior service cost	4.5			7.0
Postretirement plans:
Net loss	134.6			144.2
Prior service cost	(47.1		)	(60.8		)
Net transition obligation	—			2.5
Total	$	370.6		$	359.2

The following amounts in the benefit obligations regulatory asset atDecember 31, 2012are expected to be recognized as components of net periodic benefit cost in2013: 

(In millions)
Pension Plan and Restoration of Retirement Income Plan:
Net loss	$	19.8
Prior service cost	2.0
Postretirement plans:
Net loss	18.1
Prior service cost	(13.7		)
Total	$	26.2

Income taxes recoverable from customers, which represents income tax benefits previously used to reduce OG&E's revenues, are treated as regulatory assets and liabilities and are being amortized over the estimated remaining life of the assets to which they relate.  These amounts are being recovered in rates as the temporary differences that generated the income tax benefit turn around.  The income tax related regulatory assets and liabilities are netted in Income Taxes Recoverable from Customers, Net in the regulatory assets and liabilities table above.

OG&E recovers the cost of system-wide deployment of smart grid technology and implementing the smart grid pilot program, the incremental costs for web portal access, education and providing home energy reports and stranded costs associated with OG&E's existing meters.The costs recoverable from Oklahoma customers for system-wide deployment of smart grid technology and implementing the smart grid pilot program were capped at$366.4 million(inclusive of the U.S. Department of Energy grant award amount) subject to an offset for any recovery of those costs from Arkansas customers and are currently being recovered through a rider which will remain in effect until the smart grid project costs are included in base rates in OG&E's next general rate case. This project was completed in late 2012 and the smart grid project costs did not exceed$366.4 million. The incremental costs for web portal access, education and home energy reports are capped at$6.9 millionand will be recovered in base rates in OG&E's next general rate case.The stranded costs associated with OG&E's existing meters, which have been replaced by smart meters, were accumulated during the smart grid deployment and recovery of the stranded costs will be included in future rate cases.OG&E began recovering the estimated capital costs of$14 millionand associated operation and maintenance costs for deployment of smart grid technology, along with incremental costs for web portal access and education of$0.8 million, through a rider beginning with the first billing cycle in January 2013 through December 2013.

OG&E defers the Oklahoma storm-related operation and maintenance expenses in excess of$2.7 millionand reserves for any Oklahoma storm-related operation and maintenance expenses less than$2.7 million. OG&E will recover the deferred amounts over afive-year period ending in August 2017.

Unamortized loss on reacquired debt is comprised of unamortized debt issuance costs related to the early retirement of OG&E's long-term debt.  These amounts are being amortized over the term of the long-term debt which replaced the previous long-term debt.  The unamortized loss on reacquired debt is not included in OG&E's rate base and does not otherwise earn a rate of return.

OG&E recovers specific amounts of pension and postretirement medical costs in rates approved in its Oklahoma rate cases. In accordance with approved orders, OG&E defers the difference between actual pension and postretirement medical expenses and the amount approved in its last Oklahoma rate case as a regulatory asset or regulatory liability. These amounts have been recorded in Pension tracker regulatory liability in the regulatory assets and liabilities table above.

In July 2009, OG&E was allowed to recover previously deferred pension costs over afour-year period ending in August 2013.  OG&E also recovers its 2006 and 2007 pension settlement costs in Arkansas, which are being amortized over a10-year period ending in January 2020.  Both the Oklahoma and Arkansas pension plan expenses are reflected in Deferred Pension expenses asset in the regulatory assets and liabilities table above.

In September 2011, OG&E was allowed to include postretirement medical expenses in its pension tracker. In August 2012, OG&E was allowed to recover pension and postretirement medical expenses over a two-year period ending July 2014 which is included in Deferred Pension credits liability in the regulatory assets and liabilities table above.

Accrued removal obligations represent asset retirement costs previously recovered from ratepayers for other than legal obligations.

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.

Use of Estimates

In preparing theFinancial Statements, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and contingent liabilities at the date of theFinancial Statements and the reported amounts of revenues and expenses during the reporting period.  Changes to these assumptions and estimates could have a material effect onOG&E'sFinancial Statements.  However,OG&Ebelieves it has taken reasonable, but conservative, positions where assumptions and estimates are used in order to minimize the negative financial impact toOG&Ethat could result if actual results vary from the assumptions and estimates.  In management's opinion, the areas ofOG&Ewhere the most significant judgment is exercisedincludes the determination of Pension Plan assumptions,impairment estimates of long-lived assets (including intangible assets), income taxes,contingency reserves, asset retirement obligations, fair value and cash flow hedges, the allowance for uncollectible accounts receivable, the valuation of regulatory assets and liabilities and unbilled revenues.

Cash and Cash Equivalents

For purposes of theFinancial Statements, OG&E considers all highly liquid debt instruments purchased with an original maturity of three months or less to be cash equivalents.  These investments are carried at cost, which approximates fair value.

Allowance for Uncollectible Accounts Receivable

Customer balances are generally written off if not collected within six months after the final billing date. The allowance for uncollectible accounts receivable for OG&E is calculated by multiplying the last six months of electric revenue by the provision rate.  The provision rate is based on a 12-month historical average of actual balances written off.  To the extent the historical collection rates are not representative of future collections, there could be an effect on the amount of uncollectible expense recognized.  Also, a portion of the uncollectible provision related to fuel is being recovered through the fuel adjustment clause.The allowance for uncollectible accounts receivable was$2.6 millionand$3.7 millionatDecember 31, 2012 and 2011, respectively.

New business customers are required to provide a security deposit in the form of cash, bond or irrevocable letter of credit that is refunded when the account is closed.  New residential customers, whose outside credit scores indicate risk, are required to provide a security deposit that is refunded based on customer protection rules defined by the OCC and the APSC.  The payment behavior of all existing customers is continuously monitored and, if the payment behavior indicates sufficient risk within the meaning of the applicable utility regulation, customers will be required to provide a security deposit.

Fuel Inventories

Fuel inventories for the generation of electricity consist of coal, natural gas and oil.  OG&E uses the weighted-average cost method of accounting for inventory that is physically added to or withdrawn from storage or stockpiles.  The amount of fuel inventory was$76.8 millionand$76.9 millionatDecember 31, 2012and2011, respectively.

Gas Imbalances

Gas imbalances occur when the actual amounts of natural gas delivered from or received byOG&Ediffer from the amounts scheduled to be delivered or received.OG&Evalues all imbalances at an average of current market indices applicable toOG&E's operations, not to exceed net realizable value.

Property, Plant and Equipment

All property, plant and equipment is recorded at cost.  Newly constructed plant is added to plant balances at cost which includes contracted services, direct labor, materials, overhead, transportation costs and the allowance for funds used during construction.  Replacements of units of property are capitalized as plant.  For assets that belong to a common plant account, the replaced plant is removed from plant balances and the cost of such property is charged to Accumulated Depreciation.  For assets that do not belong to a common plant account, the replaced plant is removed from plant balances with the related accumulated depreciation and the remaining balance net of any salvage proceeds is recorded as a loss in theStatements of Income as Other Expense.  Repair and replacement of minor items of property are included in theStatements of Income as Other Operation and Maintenance Expense.

The table below presents OG&E's ownership interest in the jointly-owned McClain Plant and the jointly-owned Redbud Plant, and, as disclosed below, only OG&E's ownership interest is reflected in the property, plant and equipment and accumulated depreciation balances in these tables.  The owners of the remaining interests in the McClain Plant and the Redbud Plant are responsible for providing their own financing of capital expenditures.  Also, only OG&E's proportionate interests of any direct expenses of the McClain Plant and the Redbud Plant such as fuel, maintenance expense and other operating expenses are included in the applicable financial statement captions in theStatement of Income.

December 31, 2012 (In millions)	Percentage Ownership		Total Property, Plant and Equipment		Accumulated Depreciation		Net Property, Plant and Equipment
McClain Plant	77	%	$	182.1	$	56.3	$	125.8
Redbud Plant (A)	51	%	$	458.5	$	69.5	$	389.0

(A) This amount includes a plant acquisition adjustment of$148.3 millionand accumulated amortization of$23.3 million.

OG&E's property, plant and equipment and related accumulated depreciation are divided into the following major classes at:

December 31, 2012 (In millions)	Total Property, Plant and Equipment		Accumulated Depreciation		Net Property, Plant and Equipment
Distribution assets	$	3,222.7	$	969.6	$	2,253.1
Electric generation assets (A)	3,446.6		1,242.4		2,204.2
Transmission assets (B)	1,712.6		359.8		1,352.8
Intangible plant	50.2		25.0		25.2
Other property and equipment	317.6		108.8		208.8
Total property, plant and equipment	$	8,749.7	$	2,705.6	$	6,044.1

(A) This amount includes a plant acquisition adjustment of$148.3 millionand accumulated amortization of$23.3 million.

(B) This amount includes a plant acquisition adjustment of$3.3 millionand accumulated amortization of$0.3 million.

December 31, 2011 (In millions)	Total Property, Plant and Equipment		Accumulated Depreciation		Net Property, Plant and Equipment
Distribution assets	$	2,981.3	$	920.3	$	2,061.0
Electric generation assets (A)	3,360.6		1,215.8		2,144.8
Transmission assets (B)	1,464.2		339.6		1,124.6
Intangible plant	43.2		20.3		22.9
Other property and equipment	293.9		96.3		197.6
Total property, plant and equipment	$	8,143.2	$	2,592.3	$	5,550.9

(A) This amount includes a plant acquisition adjustment of$148.3 millionand accumulated amortization of$17.9 million.

(B) This amount includes a plant acquisition adjustment of$3.3 millionand accumulated amortization of$0.2 million.

The unamortized computer software costs were$17.6 millionand$6.7 millionatDecember 31, 2012and2011, respectively. In2012, 2011and2010, amortization expense for computer software costs was$4.2 million, $1.8 millionand$2.6 million, respectively.

Depreciation and Amortization

The provision for depreciation, which was3.0 percentand2.9 percent, respectively, of the average depreciable utility plant for2012and2011, is provided on a straight-line method over the estimated service life of the utility assets.  Depreciation is provided at the unit level for production plant and at the account or sub-account level for all other plant, and is based on the average life group method.Amortization of intangible assets is computed using the straight-line method. Of the remaining amortizable intangible plant balance at December 31, 2012, 92.4 percentwill be amortized over9.25years with7.6 percentof the remaining amortizable intangible plant balance atDecember 31, 2012being amortized over their respective lives ranging fromthreetofiveyears.Amortization of plant acquisition adjustments is provided on a straight-line basis over the estimated remaining service life of the acquired asset.  Plant acquisition adjustments include$148.3 millionfor the Redbud Plant, which are being amortized over a27-yearlife and$3.3 millionfor certain substation facilities in OG&E's service territory, which are being amortized over a26to59-yearperiod.

Asset Retirement Obligations

OG&Ehas previously recorded asset retirement obligations that are being amortized over their respective lives ranging fromfiveto74years.

The following table summarizes changes to OG&E's asset retirement obligations during theyears endedDecember 31, 2012and2011.

(In millions)	2012		2011
Balance at January 1	$	24.8	$	11.1
Liabilities incurred (A)	—		13.0
Accretion expense	1.9		0.7
Revisions in estimated cash flows (B)	26.9		—
Balance at December 31	$	53.6	$	24.8

(A) Due toOG&E's Crossroads wind farm.

(B) Due to 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.

Allowance for Funds Used During Construction

For OG&E, allowance for funds used during construction is calculated according to the FERC pronouncements for the imputed cost of equity and borrowed funds.  Allowance for funds used during construction, a non-cash item, is reflected as an increase to net other income and a reduction to interest expense in theStatements of Income and as an increase to Construction Work in Progress in theBalance Sheets.Allowance for funds used during construction rates, compounded semi-annually, were8.93 percent, 8.71 percentand8.89 percentfor the years endedDecember 31, 2012, 2011and2010, respectively.Theincreasein the allowance for funds used during construction rates in 2012 was primarily due to an increase in commercial paper fees in 2012 which resulted in an increase in the cost of short-term debt borrowings.

Collection of Sales Tax

In the normal course of its operations, OG&E collects sales tax from its customers.  OG&E records a current liability for sales taxes when it bills its customers and eliminates this liability when the taxes are remitted to the appropriate governmental authorities.  OG&E excludes the sales tax collected from its operating revenues.

Revenue Recognition

General

OG&E reads its customers' meters and sends bills to its customers throughout each month.  As a result, there is a significant amount of customers' electricity consumption that has not been billed at the end of each month.  Unbilled revenue is presented in Accrued Unbilled Revenues on theBalance Sheets and in Operating Revenues on theStatements of Income based on estimates of usage and prices during the period.The estimates that management uses in this calculation could vary from the actual amounts to be paid by customers.

SPP Purchases and Sales

OG&E participates in the SPP energy imbalance service market in a dual role as a load serving entity and as a generation owner.  The energy imbalance service market requires cash settlements for over or under schedules of generation and load. Market participants, including OG&E, are required to submit resource plans and can submit offer curves for each resource available for dispatch.  A function of interchange accounting is to match participants' MWH entitlements (generation plus scheduled bilateral purchases) against their MWH obligations (load plus scheduled bilateral sales) during every hour of every day. If the net result during any given hour is an entitlement, the participant is credited with a spot-market sale to the SPP at the respective market price for that hour; if the net result is an obligation, the participant is charged with a spot-market purchase from the SPP at the respective market price for that hour. The SPP purchases and sales are not allocated to individual customers.  OG&E records the hourly sales to the SPP at market rates in Operating Revenues and the hourly purchases from the SPP at market rates in Cost of Goods Sold in itsFinancial Statements.

Fuel Adjustment Clauses

Variances in the actual cost of fuel used in electric generation and certain purchased power costs, as compared to the fuel component included in the cost-of-service for ratemaking, are passed through to OG&E's customers through fuel adjustment clauses. The fuel adjustment clauses are subject to periodic review by the OCC, the APSC and the FERC. The OCC, the APSC and the FERC have authority to review the appropriateness of gas transportation charges or other fees OG&E pays to Enogex.

Income Taxes

OG&E isa member of an affiliated group thatfilesconsolidated income tax returns in the U.S. Federal jurisdiction and various state jurisdictions. Income taxesaregenerally 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.  OG&E uses the asset and liability method of accounting for income taxes. Under this method, a deferred tax asset or liability is recognized for the estimated future tax effects attributable to temporary differences between the financial statement basis and the tax basis of assets and liabilities as well as tax credit carry forwards and net operating loss carry forwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the period of the change. OG&E recognizes interest related to unrecognized tax benefits in interest expense and recognizes penalties in other expense.

Accrued Vacation

OG&E accrues vacation pay monthly by establishing a liability for vacation earned. Vacation may be taken as earned and is charged against the liability. At the end of each year, the liability represents the amount of vacation earned, but not taken.

Accumulated Other Comprehensive Loss

The balance of Accumulated Other Comprehensive Loss was $1.3 million and $2.5 million at December 31, 2012 and 2011, respectively, related to deferred commodity contracts hedging activity.

Environmental Costs

Accruals for environmental costs are recognized when it is probable that a liability has been incurred and the amount of the liability can be reasonably estimated.  Costs are charged to expenseor deferred as a regulatory asset based on expected recovery from customers in future rates,if they relate to the remediation of conditions caused by past operations or if they are not expected to mitigate or prevent contamination from future operations.  Where environmental expenditures relate to facilities currently in use, such as pollution control equipment, the costs may be capitalized and depreciated over the future service periods.  Estimated remediation costs are recorded at undiscounted amounts, independent of any insuranceor raterecovery, based on prior experience, assessments and current technology.  Accrued obligations are regularly adjusted as environmental assessments and estimates are revised, and remediation efforts proceed.For sites whereOG&E has been designated as one of several potentially responsible parties, the amount accrued representsOG&E'sestimated share of the cost.  OG&E had$5.8 millionand$5.5 millioninaccrued environmental liabilities atDecember 31, 2012and2011, respectively, which are included in the summary of asset retirement obligations above.

Related Party Transactions

Related Party Transactions

OGE Energy charged operating costs to OG&E of$118.4 million, $129.7 millionand$106.9 millionin2012, 2011and2010, 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.

In each of 2012, 2011 and 2010, OG&E recorded an expense from its affiliate, Enogex, of $34.8 million for transporting gas to OG&E's natural gas-fired generating facilities.  In 2012, 2011 and 2010, OG&E recorded an expense from Enogex of $12.9 million, $12.7 million and $12.7 million, respectively, for natural gas storage services.  In 2012, 2011 and 2010, OG&E also recorded natural gas purchases from Enogex of $20.4 million, $34.7 million and $50.3 million, respectively. There are $1.0 million and $1.7 million of natural gas purchases recorded at December 31, 2012 and 2011, respectively, which are included in Accounts Payable – Affiliates in the Balance Sheets for these activities. In2012, 2011and2010, OG&E recorded revenues from Enogex of$12.4 million, $8.1 millionand$6.8 million, respectively, for electricity used at Enogex's compression sites.

On July 1, 2009, OG&E and Enogex 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 generation associated with a wholesale power sales contract with the Oklahoma Municipal Power Authority.  These transactions are for50,000MMBtu per month from August 2009 toDecember 2013(see Note 4).

In2012and2010, OG&E declared dividends to OGE Energy of$75.0 millionand$60.2 million, respectively. In2011, OG&E declarednodividends to OGE Energy.

In June 2011, OGE Energy made a capital contribution to OG&E for$50.0 million.