Retirement Plans and Postretirement Benefit Plans

The details of net periodic benefit cost, before consideration of capitalized amounts, of OG&E's portion of OGE Energy's Pension Plan, the Restoration of Retirement Income Plan and the postretirement benefit plans included in the Condensed Financial Statements are as follows:

Net Periodic Benefit Cost



	Pension Plan												Restoration of Retirement Income Plan
	Three Months Ended						Six Months Ended						Three Months Ended					Six Months Ended
	June 30,						June 30,						June 30,					June 30,
(In millions)	2017 (A)			2016 (A)			2017 (B)			2016 (B)			2017 (A)		2016 (A)			2017 (B)		2016 (B)
Service cost	$	2.4		$	2.3		$	5.1		$	5.1		$	—	$	—		$	—	$	—
Interest cost	4.9			4.6			9.7			9.6			0.1		(0.1		)	0.1		—
Expected return on plan assets	(8.1		)	(8.2		)	(16.4		)	(16.6		)	—		—			—		—
Amortization of net loss	3.5			3.0			6.5			6.2			0.1		0.1			0.2		0.1
Settlement	—			—			—			—			—		0.4			—		0.4
Net periodic benefit cost	$	2.7		$	1.7		$	4.9		$	4.3		$	0.2	$	0.4		$	0.3	$	0.5


(A)	In addition to the $2.9 million and $2.1 million of net periodic benefit cost recognized during the three months ended June 30, 2017 and 2016, respectively, OG&E recognized the following:


•	an increase in pension expense during the three months ended June 30, 2017 and 2016 of $2.9 million and $2.6 million, respectively, to maintain the allowable amount to be recovered for pension expense in the Oklahoma jurisdiction, which are included in the pension tracker regulatory liability (See Note 1.);


•	a deferral of pension expense during the three months ended June 30, 2017 of $2.3 million related to the Arkansas jurisdictional portion of the pension settlement charge of $22.4 million in 2013;


•	a deferral of pension expense during the three months ended June 30, 2016 of $0.6 million, which includes a portion of OGE Energy's pension settlement charge, related to the pension settlement charge of $0.4 million in accordance with the Oklahoma pension tracker regulatory liability (See Note 1.); and


•	a deferral of pension expense during the three months ended June 30, 2016 of $0.1 million related to the Arkansas jurisdictional portion of the pension settlement charge of $0.4 million.


(B)	In addition to the $5.2 million and $4.8 million of net periodic benefit cost recognized during the six months ended June 30, 2017 and 2016, respectively, OG&E recognized the following:


•	an increase in pension expense during the six months ended June 30, 2017 and 2016 of $5.8 million and $4.9 million, respectively, to maintain the allowable amount to be recovered for pension expense in the Oklahoma jurisdiction, which are included in the pension tracker regulatory liability (See Note 1.);


•	a deferral of pension expense during the six months ended June 30, 2017 of $2.3 million related to the Arkansas jurisdictional portion of the pension settlement charge of $22.4 million in 2013;


•	a deferral of pension expense during the six months ended June 30, 2016 of $0.6 million, which includes a portion of OGE Energy's pension settlement charge, related to the pension settlement charge of $0.4 million, in accordance with the Oklahoma pension tracker regulatory liability (See Note 1.); and


•	a deferral of pension expense during the six months ended June 30, 2016 of $0.1 million related to the Arkansas jurisdictional portion of the pension settlement charge of $0.4 million.



	Postretirement Benefit Plans
	Three Months Ended						Six Months Ended
	June 30,						June 30,
(In millions)	2017 (B)			2016 (B)			2017 (C)			2016 (C)
Service cost	$	0.1		$	0.2		$	0.2		$	0.3
Interest cost	1.6			1.9			3.3			3.7
Expected return on plan assets	(0.5		)	(0.5		)	(1.0		)	(1.0		)
Amortization of net loss	0.2			0.8			0.8			1.3
Amortization of unrecognized prior service cost (A)	—			(1.6		)	—			(3.1		)
Net periodic benefit cost	$	1.4		$	0.8		$	3.3		$	1.2


(A)	Unamortized prior service cost is amortized on a straight-line basis over the average remaining service period to the first eligibility age of participants who are expected to receive a benefit and are active at the date of the plan amendment.

(B)

In addition to the $1.4 million and $0.8 million of net periodic benefit cost recognized during the three months ended June 30, 2017 and 2016, respectively, OG&E recognized an increase in postretirement medical expense in the three months ended June 30, 2017 and 2016 of $1.0 million and $2.0 million, respectively, to maintain the allowable amount to be recovered for postretirement medical expense in the Oklahoma jurisdiction which are included in the pension tracker regulatory liability (See Note 1.).

(C)

In addition to the $3.3 million and $1.2 million of net periodic benefit cost recognized during the six months ended June 30, 2017 and 2016, respectively, OG&E recognized an increase in postretirement medical expense in the six months ended June 30, 2017 and 2016 of $2.1 million and $4.0 million, respectively, to maintain the allowable amount to be recovered for postretirement medical expense in the Oklahoma jurisdiction which are included in the pension tracker regulatory liability (See Note 1.).



	Three Months Ended				Six Months Ended
	June 30,				June 30,
(In millions)	2017		2016		2017		2016
Capitalized portion of net periodic pension benefit cost	$	1.0	$	0.6	$	1.8	$	1.4
Capitalized portion of net periodic postretirement benefit cost	0.5		0.2		1.1		0.4

Postretirement Benefit Plans

OGE Energy provides certain medical and life insurance benefits for eligible retired members. Regular, full-time, active employees hired prior to February 1, 2000 whose age and years of credited service total or exceed 80 or have attained at least age 55 with 10 or more years of service at the time of retirement are entitled to postretirement medical benefits while employees hired on or after February 1, 2000 are not entitled to postretirement medical benefits. Eligible retirees must contribute such amount as OGE Energy specifies from time to time toward the cost of coverage for postretirement benefits. The benefits are subject to deductibles, co-payment provisions and other limitations. OG&E charges postretirement benefit costs to expense and includes an annual amount as a component of the cost-of-service in future ratemaking proceedings.

In August 2017, OGE Energy adopted an amendment to the retiree medical plan. Effective January 1, 2018, OGE Energy will reduce the amount of supplemental Medicare coverage for Medicare-eligible retirees, providing a fixed stipend based on current market analysis. OGE Energy will continue to allow those Medicare-eligible retirees to acquire coverage from a company-provided third-party administrator. The effect of these plan amendments will be reflected in OGE Energy’s September 30, 2017 Condensed Consolidated Balance Sheet as a reduction to the postretirement benefit obligation of $45.0 million.

In August 2017, OGE Energy settled the retiree life plan in its entirety and will pay 27.9 million to participants in August 2017. No gain or loss will be recognized upon settlement, and the effect of the settlement will be reflected in OGE Energy’s September 30, 2017 Condensed Consolidated Balance Sheet as a reduction in plan assets of 27.9 million with a corresponding reduction in the benefit obligation.