Summary of Significant Accounting Policies

9 Months Ended

Sep. 30, 2020

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Significant Accounting Policies [Text Block]

Summary of Significant Accounting PoliciesOG&E's significant accounting policies are detailed in "Note 1. Summary of Significant Accounting Policies" in OG&E's 2019 Form 10-K. Changes to OG&E's accounting policies as a result of adopting ASU 2016-13, "Financial Instruments - Credit Losses: Measurement of Credit Losses on Financial Information" are incorporated within "Allowance for Uncollectible Accounts Receivables" below and discussed in Note 2.

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

Organization

OG&E generates, transmits, distributes and sells electric energy in Oklahoma and western Arkansas. Its operations are 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 Fort Smith, Arkansas and the surrounding communities. 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, a holding company with investments in energy and energy services providers offering physical delivery and related services for both electricity and natural gas primarily in the south-central U.S.

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

Basis of Presentation

The Condensed Financial 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 the financial position of OG&E at September 30, 2020 and December 31, 2019, the results of its operations for the three and nine months ended September 30, 2020 and 2019 and its cash flows for the nine months ended September 30, 2020 and 2019 have been included and are of a normal, recurring nature except as otherwise disclosed. Management also has evaluated the impact of events occurring after September 30, 2020 up to the date of issuance of these Condensed Financial Statements, and these statements contain all necessary adjustments and disclosures resulting from that evaluation.

Due to seasonal fluctuations and other factors, OG&E's operating results for the three and nine months ended September 30, 2020 are not necessarily indicative of the results that may be expected for the year ending December 31, 2020 or for any future period. The Condensed Financial Statements and Notes thereto should be read in conjunction with the audited Financial Statements and Notes thereto included in OG&E's 2019 Form 10-K.

Schedule of Regulatory Assets and Liabilities [Text Block]

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 incurred 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 incurred costs and obligations as regulatory assets or liabilities if, based on regulatory orders or other available evidence, it is probable that the costs or obligations 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.

	September 30,		December 31,
(In millions)	2020		2019
REGULATORY ASSETS
Current:
SPP cost tracker under recovery (A)	$	4.6	$	—
Generation Capacity Replacement rider under recovery (A)	1.2		3.7
Fuel clause under recoveries	—		39.5
Other (A)	9.7		5.5
Total current regulatory assets	$	15.5	$	48.7
Non-current:
Benefit obligations regulatory asset	$	150.2	$	167.2
Deferred storm expenses	70.2		65.5
Sooner Dry Scrubbers	19.9		20.6
Smart Grid	13.1		18.4
Unamortized loss on reacquired debt	9.9		10.6
Arkansas deferred pension expenses	8.4		8.0
Pension tracker	8.1		2.3
COVID-19 deferred expenses	4.9		—
Other	16.9		13.4
Total non-current regulatory assets	$	301.6	$	306.0
REGULATORY LIABILITIES
Current:
Fuel clause over recoveries	$	39.6	$	4.8
Oklahoma demand program rider over recovery (B)	5.8		2.0
Reserve for tax refund and interim surcharge (B)	1.3		12.7
SPP cost tracker over recovery (B)	—		2.6
Other (B)	4.9		6.9
Total current regulatory liabilities	$	51.6	$	29.0
Non-current:
Income taxes refundable to customers, net	$	875.5	$	899.2
Accrued removal obligations, net	318.9		318.5
Other	5.0		5.8
Total non-current regulatory liabilities	$	1,199.4	$	1,223.5

(A)Included in Other Current Assets in the Condensed Balance Sheets.

(B)Included in Other Current Liabilities in the Condensed 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. If OG&E were 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 or liabilities, which could have significant financial effects.

Allowance for Credit Losses

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 generally calculated by multiplying the last six months of electric revenue by the provision rate, which is based on a 12-month historical average of actual balances written off and is adjusted for current conditions and supportable forecasts as necessary. To the extent the historical collection rates, when incorporating forecasted conditions, are not representative of future collections, there could be an effect on the amount of uncollectible expense recognized, such as in response to COVID-19 impacts. Also, a portion of the uncollectible provision related to fuel within the Oklahoma jurisdiction is being recovered through the fuel adjustment clause. The allowance for uncollectible

accounts receivable is a reduction to Accounts Receivable in the Condensed Balance Sheets and is included in the Other Operation and Maintenance in the Condensed Statements of Income.

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 an elevated risk are required to provide a security deposit that may be 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.

OG&E considered COVID-19 pandemic impacts when calculating its reserve on accounts receivable as of September 30, 2020, as further discussed in "Item 2. Management's Discussion and Analysis - Recent Developments."