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Derivative Instruments and Hedging Activities
 3 Months Ended
Mar. 31, 2013
Derivative Instruments and Hedging Activities Disclosure [Abstract]  
Derivative Instruments and Hedging Activities
Derivative Instruments and Hedging Activities
 
OG&E 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. OG&E is also exposed to credit risk in its business operations.
 
Commodity Price Risk
 
OG&E occasionally uses commodity price swap contracts to manage OG&E's commodity price risk exposures.  Natural gas swaps are used to manage OG&E's natural gas exposure associated with a wholesale power sales contract.
 
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 for 50,000 MMBtu per month from August 2009 to December 2013.
 
Normal purchases and normal sales contracts are not recorded in PRM Assets or Liabilities in the Condensed Balance Sheets and earnings are recognized in the period in which physical delivery of the commodity occurs.  Management applies normal purchases and normal sales treatment to: (i) electric power contracts and (ii) fuel procurement.

OG&E recognizes its non-exchange traded derivative instruments as PRM Assets or Liabilities in the Condensed Balance Sheets at fair value with such amounts classified as current or long-term based on their anticipated settlement.

Interest Rate Risk
 
OG&E's exposure to changes in interest rates primarily relates to short-term variable-rate debt and commercial paper.  OG&E manages its interest rate exposure by monitoring and limiting the effects of market changes in interest rates. OG&E 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
 
OG&E is exposed to certain credit risks relating to its ongoing business operations. Credit risk includes the risk that counterparties that owe OG&E money or energy will breach their obligations. If the counterparties to these arrangements fail to perform, OG&E may be forced to enter into alternative arrangements. In that event, OG&E's financial results could be adversely affected and OG&E 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 (Loss) 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. OG&E 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.
 
At March 31, 2013 and December 31, 2012, the only derivative instruments that were designated as cash flow hedges were the related party natural gas swaps with Enogex discussed above.
 
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.  OG&E includes the gain or loss on the hedged items in Operating Revenues as the offsetting loss or gain on the related hedging derivative.
 
At March 31, 2013 and December 31, 2012, OG&E had no derivative instruments that were designated as fair value hedges.

Derivatives Not Designated as Hedging Instruments
 
For derivative instruments not designated as hedging instruments, the gain or loss on the derivative is recognized currently in earnings.

At March 31, 2013 and December 31, 2012, OG&E had no material derivative instruments that were not designated as hedging instruments.
Credit-Risk Related Contingent Features in Derivative Instruments
 
At March 31, 2013, OG&E had no derivative instruments that contain credit-risk related contingent features.