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Summary of Significant Accounting Policies | 12 Months Ended
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Dec. 31, 2013
Organization, Consolidation and Presentation of Financial Statements [Abstract] |
Summary of Significant Accounting Policies | Summary of Significant Accounting Policies Organization The Company is 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. The Company conducts these activities through two business segments: (i) electric utility and (ii) natural gas midstream operations. For a discussion of the change in the Company’s business segments due to the formation of Enable, see Note 14. For periods prior to May 1, 2013, the Company consolidated Enogex Holdings in its Condensed Consolidated Financial Statements. All significant intercompany transactions have been eliminated in consolidation. Effective May 1, 2013, OGE Energy, the ArcLight group and CenterPoint Energy, Inc., formed Enable Midstream Partners, LP to own and operate the midstream businesses of OGE Energy and CenterPoint. In the formation transaction, OGE Energy and ArcLight group contributed Enogex LLC to Enable and the Company deconsolidated its previously held investment in Enogex Holdings and acquired an equity interest in Enable. The Company determined that its contribution of Enogex LLC to Enable met the requirements of being in substance real estate and was recorded at historical cost. The general partner of Enable is equally controlled by CenterPoint and OGE Energy, who each have 50 percent of the management rights. Based on the 50/50 management ownership, with neither company having control, effective May 1, 2013, OGE Energy began accounting for its interest in Enable using the equity method of accounting. At December 31, 2013, OGE Energy, through its wholly owned subsidiary OGE Holdings, holds 28.5 percent of the limited partner interests in Enable. OGE Energy also owns a 60 percent interest in any incentive distribution rights in Enable. Incentive distribution rights are expected to entitle the holder to increasing percentages, up to a maximum of 50 percent, of the cash distributed by Enable in excess of the target quarterly distributions to be set in connection with Enable’s initial public offering. On November 26, 2013, Enable filed a registration statement on Form S-1 related to the proposed initial public offering of limited partnership interests that will have the effect of making Enable a publicly traded master limited partnership. The electric utility segment generates, transmits, distributes and sells electric energy in Oklahoma and western Arkansas. Its operations are conducted through OG&E and 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 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. The natural gas midstream operations segment consists of the Company's investment in Enable. Enable is engaged in the business of gathering, processing, transporting and storing natural gas. Enable's natural gas gathering and processing assets are strategically located in four states and serve natural gas production from shale developments in the Anadarko, Arkoma and Ark-La-Tex basins. Enable also owns an emerging crude oil gathering business in the Bakken shale formation that commenced initial operations in November 2013. Enable is continuing to construct additional crude oil gathering capacity in this area. Enable's natural gas transportation and storage assets extend from western Oklahoma and the Texas Panhandle to Alabama and from Louisiana to Illinois. As discussed below, t he Company completed a 2-for-1 stock split of the Company's common stock effective July 1, 2013. All share and per share amounts within this Form 10-K reflect the effects of the stock split. OGE Energy charges operating costs to its subsidiaries and unconsolidated affiliate based on several factors. Operating costs directly related to specific subsidiaries or unconsolidated affiliate are assigned to those subsidiaries or unconsolidated affiliate. Where more than one subsidiary or unconsolidated affiliate benefits from certain expenditures, the costs are shared between those subsidiaries and unconsolidated affiliate receiving the benefits. Operating costs incurred for the benefit of all subsidiaries and unconsolidated affiliate are allocated among the subsidiaries and unconsolidated affiliate, 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. Basis of Presentation In the opinion of management, all adjustments necessary to fairly present the consolidated financial position of the Company at December 31, 2013 and 2012 and the results of its operations and cash flows for the years ended December 31, 2013, 2012 and 2011, 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) | 2013 | 2012
Regulatory Assets |  |
Current |  |
Fuel clause under recoveries | $ | 26.2 |  | $ | — |
Oklahoma demand program rider under recovery (A) | 10.6 |  | 9.2 |
Crossroads wind farm rider under recovery (A) | 4.7 |  | 14.9 |
Other (A) | 7.3 |  | 2.9 |
Total Current Regulatory Assets | $ | 48.8 |  | $ | 27.0 |
Non-Current |  |
Benefit obligations regulatory asset | $ | 227.4 |  | $ | 370.6 |
Income taxes recoverable from customers, net | 56.5 |  | 54.7 |
Smart Grid | 44.2 |  | 42.8 |
Deferred storm expenses | 21.6 |  | 12.7 |
Unamortized loss on reacquired debt | 11.8 |  | 13.0 |
Pension tracker | 1.4 |  | — |
Other | 16.2 |  | 16.8 |
Total Non-Current Regulatory Assets | $ | 379.1 |  | $ | 510.6 |
Regulatory Liabilities |  |
Current |  |
Smart Grid rider over recovery (B) | $ | 16.7 |  | $ | 24.1 |
Fuel clause over recoveries | 0.4 |  | 109.2 |
Other (B) | 3.1 |  | 7.8 |
Total Current Regulatory Liabilities | $ | 20.2 |  | $ | 141.1 |
Non-Current |  |
Accrued removal obligations, net | $ | 227.7 |  | $ | 218.2 |
Deferred pension credits | 6.5 |  | 17.7 |
Pension tracker | — |  | 9.2 |
Total Non-Current Regulatory Liabilities | $ | 234.2 |  | $ | 245.1 |
(A) | Included in Other Current Assets on the Consolidated Balance Sheets.
(B) | Included in Other Current Liabilities on the Consolidated Balance 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 riders established by the OCC and APSC. OG&E began recovery in the fourth quarter of 2011 in Oklahoma and June of 2013 in Arkansas, and believes the rider will continue until new rates are implemented in OG&E's next general rate case in each jurisdiction. 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 certain 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 are recorded as a regulatory asset as OG&E had historically recovered and currently recovers pension and postretirement benefit plan expense in its electric rates. 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) | 2013 | 2012
Pension Plan and Restoration of Retirement Income Plan |  |
Net loss | $ | 178.4 |  | $ | 278.6 |
Prior service cost | 2.5 |  | 4.5 |
Postretirement Benefit Plans |  |
Net loss | 79.9 |  | 134.6 |
Prior service cost | (33.4 | ) | (47.1 | )
Total | $ | 227.4 |  | $ | 370.6 |
The following amounts in the benefit obligations regulatory asset at December 31, 2013 are expected to be recognized as components of net periodic benefit cost in 2014:
(In millions) |
Pension Plan and Restoration of Retirement Income Plan |
Net loss | $ | 11.4 |
Prior service cost | 2.0 |
Postretirement Benefit Plans |
Net loss | 11.0 |
Prior service cost | (13.7 | )
Total | $ | 10.7 |
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 of $130.0 million) subject to an offset for any recovery of those costs from Arkansas customers. These amounts 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. Costs not included in the rider are the incremental costs for web portal access, education and home energy reports, which are capped at $6.9 million, and the stranded costs associated with OG&E's existing meters, which have been replaced by smart meters, which were accumulated during the smart grid deployment and have been included in the Smart Grid asset in the table above. These costs are expected to be recovered in base rates in OG&E's next general rate case. OG&E defers annual Oklahoma storm-related operation and maintenance expenses in excess of $2.7 million and expenses any Oklahoma storm-related operation and maintenance expenses up to $2.7 million. OG&E will recover the deferred amounts over a five-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 recorded in interest expenses and 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 the Pension tracker 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 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. 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, which could have significant financial effects. Use of Estimates In preparing the Consolidated Financial 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 the Consolidated Financial Statements and the reported amounts of revenues and expenses during the reporting period. Changes to these assumptions and estimates could have a material effect on the Company's Consolidated Financial Statements. However, the Company believes it has taken reasonable positions where assumptions and estimates are used in order to minimize the negative financial impact to the Company that could result if actual results vary from the assumptions and estimates. In management's opinion, the areas of the Company where the most significant judgment is exercised for all Company segments includes the determination of Pension Plan assumptions, impairment estimates of long-lived assets (including intangible assets), income taxes, contingency reserves, asset retirement obligations and assets and depreciable lives of property, plant and equipment. For the electric utility segment, the most significant judgment is also exercised in the existence of regulatory assets and liabilities and unbilled revenues. Cash and Cash Equivalents For purposes of the Consolidated Financial Statements, the Company 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 For OG&E, 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 within the Oklahoma jurisdiction is being recovered through the fuel adjustment clause. The allowance for uncollectible accounts receivable was $1.9 million and $2.6 million at December 31, 2013 and 2012, respectively. For OG&E, 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 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 $74.4 million and $76.8 million at December 31, 2013 and 2012, respectively. Gas Imbalances Gas imbalances occur when the actual amounts of natural gas delivered from or received by OG&E differ from the amounts scheduled to be delivered or received. OG&E values all imbalances at an average of current market indices applicable to OG&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 the Consolidated Statements of Income as Other Expense. Repair and replacement of minor items of property are included in the Consolidated Statements 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 the Consolidated Statement of Income.
December 31, 2013 (In millions) | Percentage Ownership | Total Property, Plant and Equipment | Accumulated Depreciation | Net Property, Plant and Equipment
McClain Plant (A) | 77 | % | $ | 180.8 |  | $ | 62.1 |  | $ | 118.7 |
Redbud Plant (A)(B) | 51 | % | $ | 498.9 |  | $ | 89.7 |  | $ | 409.2 |
(A) | Construction work in progress was $0.1 million and $39.5 million for the McClain and Redbud Plants, respectively.
(B) | This amount includes a plant acquisition adjustment of $148.3 million and accumulated amortization of $28.8 million.
December 31, 2012 (In millions) | Percentage Ownership | Total Property, Plant and Equipment | Accumulated Depreciation | Net Property, Plant and Equipment
McClain Plant (A) | 77 | % | $ | 182.1 |  | $ | 56.3 |  | $ | 125.8 |
Redbud Plant (A)(B) | 51 | % | $ | 458.5 |  | $ | 69.5 |  | $ | 389.0 |
(A) | Construction work in progress was $0.1 million and $0.3 million for the McClain and Redbud Plants, respectively.
(B) | This amount includes a plant acquisition adjustment of $148.3 million and accumulated amortization of $23.3 million.
OGE Energy Consolidated The Company's property, plant and equipment and related accumulated depreciation are divided into the following major classes at:
December 31, 2013 (In millions) | Total Property, Plant and Equipment | Accumulated Depreciation | Net Property, Plant and Equipment
OGE Energy (holding company) |  |  |
Property, plant and equipment | $ | 152.4 |  | $ | 114.2 |  | $ | 38.2 |
OGE Energy property, plant and equipment | 152.4 |  | 114.2 |  | 38.2 |
OG&E |  |  |
Distribution assets | 3,403.8 |  | 1,028.2 |  | 2,375.6 |
Electric generation assets (A) | 3,551.0 |  | 1,306.1 |  | 2,244.9 |
Transmission assets (B) | 2,163.7 |  | 385.0 |  | 1,778.7 |
Intangible plant | 50.5 |  | 27.1 |  | 23.4 |
Other property and equipment | 330.2 |  | 118.2 |  | 212.0 |
OG&E property, plant and equipment | 9,499.2 |  | 2,864.6 |  | 6,634.6 |
Total property, plant and equipment | $ | 9,651.6 |  | $ | 2,978.8 |  | $ | 6,672.8 |
(A) | This amount includes a plant acquisition adjustment of $148.3 million and accumulated amortization of $28.8 million.
(B) | This amount includes a plant acquisition adjustment of $3.3 million and accumulated amortization of $0.3 million.
December 31, 2012 (In millions) | Total Property, Plant and Equipment | Accumulated Depreciation | Net Property, Plant and Equipment
OGE Energy (holding company) |  |  |
Property, plant and equipment | $ | 142.1 |  | $ | 103.2 |  | $ | 38.9 |
OGE Energy property, plant and equipment | 142.1 |  | 103.2 |  | 38.9 |
OG&E |  |  |
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 |
OG&E property, plant and equipment | 8,749.7 |  | 2,705.6 |  | 6,044.1 |
Enogex |  |  |
Natural gas transportation and storage assets | 988.6 |  | 292.7 |  | 695.9 |
Natural gas gathering and processing assets | 2,011.5 |  | 445.6 |  | 1,565.9 |
Enogex property, plant and equipment | 3,000.1 |  | 738.3 |  | 2,261.8 |
Total property, plant and equipment | $ | 11,891.9 |  | $ | 3,547.1 |  | $ | 8,344.8 |
(A) | This amount includes a plant acquisition adjustment of $148.3 million and accumulated amortization of $23.3 million.
(B) | This amount includes a plant acquisition adjustment of $3.3 million and accumulated amortization of $0.3 million.
The following table summarizes the Company's unamortized computer software costs.
December 31 (In millions) | 2013 | 2012
OGE Energy (holding company) | $ | 7.2 |  | $ | 11.6 |
OG&E | 16.8 |  | 17.6 |
Enogex | — |  | 3.9 |
Total | $ | 24.0 |  | $ | 33.1 |
The following table summarizes the Company's amortization expense for computer software costs.
Year ended December 31 (In millions) | 2013 | 2012 | 2011
OGE Energy (holding company) | $ | 6.4 |  | $ | 6.8 |  | $ | 6.4 |
OG&E | 4.0 |  | 4.2 |  | 1.8 |
Enogex | 0.8 |  | 3.1 |  | 1.0 |
Total | $ | 11.2 |  | $ | 14.1 |  | $ | 9.2 |
Intangible Assets As a result of the formation of Enable on May 1, 2013 and the Company's deconsolidation of Enogex Holdings, the Company no longer has intangible assets. OGE Holdings The following table below summarizes OGE Holdings' intangible assets and related accumulated amortization at: December 31, 2012.
(In millions) | Total Intangible Assets | Accumulated Amortization | Net Intangible Assets
Customer Contract / Acreage Dedication | $ | 141.9 |  | $ | 14.5 |  | $ | 127.4 |
In 2013, 2012 and 2011, amortization expense for intangible assets was $1.9 million, $9.6 million and $2.1 million, respectively, including amortization of certain customer-based intangible assets associated with the acquisition from Cordillera in November 2011, which is included as a reduction in revenue for financial reporting purposes. Depreciation and Amortization The provision for depreciation, which was 2.8 percent and 3.0 percent, respectively, of the average depreciable utility plant for 2013 and 2012, 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. In 2014, the provision for depreciation is projected to be 2.8 percent of the average depreciable utility plant. Amortization of intangible assets is computed using the straight-line method. Of the remaining amortizable intangible plant balance at December 31, 2013, 93.5 percent will be amortized over 9 years with 6.5 percent of the remaining amortizable intangible plant balance at December 31, 2013 being amortized over 26 years.. 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 million for the Redbud Plant, which are being amortized over a 27-year life and $3.3 million for certain substation facilities in OG&E's service territory, which are being amortized over a 26 to 59-year period. Investment in Unconsolidated Affiliate OGE Energy's investment in Enable is considered to be a variable interest entity because the owners of the equity at risk in this entity have disproportionate voting rights in relation to their obligations to absorb the entity's expected losses or to receive its expected residual returns. However, OGE Energy is not considered the primary beneficiary of Enable since it does not have the power to direct the activities of Enable that are considered most significant to the economic performance of Enable. As discussed above, OGE Energy accounts for the investment in Enable using the equity method of accounting. Under the equity method, the investment will be adjusted each period for contributions made, distributions received and the Company's share of the investee's comprehensive income. OGE Energy's maximum exposure to loss related to Enable is limited to OGE Energy's equity investment in Enable as presented on the Company's Consolidated Balance Sheet at December 31, 2013. The Company evaluates its equity method investments for impairment when events or changes in circumstances indicate there is a loss in value of the investment that is other than a temporary decline. The Company considers distributions received from its unconsolidated affiliates which do not exceed cumulative equity in earnings subsequent to the date of investment to be a return on investment which are classified as operating activities in the Consolidated Statements of Cash Flows. The Company considers distributions received from its unconsolidated affiliates in excess of cumulative equity in earnings subsequent to the date of investment to be a return of investment which are classified as investing activities in the Consolidated Statements of Cash Flows. Asset Retirement Obligations The Company has previously recorded asset retirement obligations that are being amortized over their respective lives ranging from 20 to 74 years. The following table summarizes changes to the Company's asset retirement obligations during the years ended December 31, 2013 and 2012.
(In millions) | 2013 | 2012
Balance at January 1 | $ | 54.0 |  | $ | 24.8 |
Liabilities settled (A) | (0.4 | ) | 0.4 |
Accretion expense | 2.3 |  | 1.9 |
Revisions in estimated cash flows (B) | (0.7 | ) | 26.9 |
Balance at December 31 | $ | 55.2 |  | $ | 54.0 |
(A) | As a result of the formation of Enable on May 1, 2013, the Company has no obligations at December 31, 2013 under OGE Holdings' asset retirement obligations previously disclosed in the Company's 2012 10-K.
(B) | Due to changes to OG&E's asset retirement obligations related to its wind farms as a result of changes in the assumption related to the timing of removal used in the valuation of the asset retirement obligations.
Assessing Impairment of Long-Lived Assets (Including Intangible Assets) and Goodwill As a result of the formation of Enable Midstream Partners on May 1, 2013 and the Company's deconsolidation of Enogex Holdings, the Company no longer has intangible assets or goodwill. The Company assesses its long-lived assets (inclusive of definite-lived intangible assets prior to the deconsolidation of Enogex Holdings) for impairment when there is evidence that events or changes in circumstances require an analysis of the recoverability of an asset's carrying amount. Estimates of future cash flows used to test the recoverability of long-lived assets and intangible assets shall include only the future cash flows (cash inflows less associated cash outflows) that are directly associated with and that are expected to arise as a direct result of the use and eventual disposition of the asset. The fair value of these assets is based on third-party evaluations, prices for similar assets, historical data and projected cash flows. An impairment loss is recognized when the sum of the expected future net cash flows is less than the carrying amount of the asset. The amount of any recognized impairment is based on the estimated fair value of the asset subject to impairment compared to the carrying amount of such asset. In 2011, the Company recorded a pre-tax impairment loss of $5.0 million, of which $2.5 million was the noncontrolling interest portion (see Note 4), related to the Atoka processing plant. The Company recorded no other material impairments in 2013, 2012 or 2011. 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 the Consolidated Statements of Income and as an increase to Construction Work in Progress in the Consolidated Balance Sheets. Allowance for funds used during construction rates, compounded semi-annually, were 8.33 percent, 8.93 percent and 8.71 percent for the years ended December 31, 2013, 2012 and 2011, respectively. The decrease in the allowance for funds used during construction rates in 2013 was primarily due to two factors. First, a decrease in the common equity cost rate caused the equity portion of allowance for equity funds used during construction to decrease. Second, an increase in the average daily balance of short term debt allowed the fixed commercial paper fees to be lower per dollar of short term debt, resulting in a lower short term debt rate, which caused the debt portion of allowance for funds used during construction to decrease. 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 the Consolidated Balance Sheets and in Operating Revenues on the Consolidated Statements 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 Sales in its Consolidated Financial 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 its affiliate, Enable. Income Taxes The Company file s consolidated income tax returns in the U.S. Federal jurisdiction and various state jurisdictions. Income taxes are generally 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. The Company 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. The Company recognizes interest related to unrecognized tax benefits in interest expense and recognizes penalties in other expense. Accrued Vacation The Company 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. OGE employees can carryover no more than 80 hours to be used in future years. Accumulated Other Comprehensive Income (Loss) The following table summarizes changes in the components of accumulated other comprehensive loss attributable to OGE Energy during 2013. All amounts below are presented net of tax and noncontrolling interest.
| Pension Plan and Restoration of Retirement Income Plan |  | Postretirement Benefit Plans |  |  |  |
(In millions) | Net loss | Prior service cost |  | Net loss | Prior service cost | Deferred commodity contracts hedging gains | Deferred interest rate swap hedging losses | Less: Noncontrolling interest | Total
Balance at December 31, 2012 | $ | (49.3 | ) | $ | 0.1 |  |  | $ | (15.7 | ) | $ | 7.2 |  | $ | 0.1 |  | $ | (0.5 | ) | $ | (9.0 | ) | $ | (49.1 | )
Other comprehensive income before reclassifications | 12.4 |  | — |  |  | 6.9 |  | — |  | — |  | — |  | — |  | 19.3 |
Amounts reclassified from accumulated other comprehensive income (loss) (A) | 6.7 |  | — |  |  | 2.0 |  | (1.8 | ) | 0.6 |  | 0.3 |  | 0.1 |  | 7.7 |
Deconsolidation of Enogex Holdings | 2.8 |  | — |  |  | 1.0 |  | (0.3 | ) | (0.7 | ) | — |  | 8.9 |  | (6.1 | )
Net current period other comprehensive income (loss) | 21.9 |  | — |  |  | 9.9 |  | (2.1 | ) | (0.1 | ) | 0.3 |  | 9.0 |  | 20.9 |
Balance at December 31, 2013 | $ | (27.4 | ) | $ | 0.1 |  |  | $ | (5.8 | ) | $ | 5.1 |  | $ | — |  | $ | (0.2 | ) | $ | — |  | $ | (28.2 | )
(A) | Includes $3.0 million of pension settlement charges.
The following table summarizes significant amounts reclassified out of accumulated other comprehensive loss by the respective line items in net income during the year ended December 31, 2013.
Details about Accumulated Other Comprehensive Loss Components | Amount Reclassified from Accumulated Other Comprehensive Loss | Affected Line Item in the Statement Where Net Income is Presented
| Year Ended |
(In millions) | December 31, 2013 |
Gains (losses) on cash flow hedges |  |
Commodity contracts | $ | (1.0 | ) | Cost of sales
Interest rate swap | (0.4 | ) | Interest expense
| (1.4 | ) | Total before tax
| (0.5 | ) | Tax benefit
| $ | (0.9 | ) | Net of tax
Amortization of defined benefit pension items |  |
Actuarial gains (losses) | $ | (6.1 | ) | (A)
Settlement cost | (4.9 | ) | (A)
| (11.0 | ) | Total before tax
| (4.3 | ) | Tax benefit
| (6.7 | ) | Net of tax
| (0.1 | ) | Noncontrolling interest
| $ | (6.6 | ) | Net of tax and noncontrolling interest
Amortization of postretirement benefit plan items |  |
Actuarial gains (losses) | $ | (3.3 | ) | (A)
Prior service cost | 2.9 |  | (A)
| (0.4 | ) | Total before tax
| (0.2 | ) | Tax benefit
| $ | (0.2 | ) | Net of tax
Total reclassifications for the period | $ | (7.7 | ) | Net of tax and noncontrolling interest
(A) | These accumulated other comprehensive income (loss) components are included in the computation of net periodic benefit cost (see Note 13 for additional information).
The amounts in accumulated other comprehensive loss at December 31, 2013 that are expected to be recognized into earnings in 2014 are as follows:
(In millions) |
Pension Plan and Restoration of Retirement Income Plan |
Net loss | $ | (1.7 | )
Prior service cost | (0.1 | )
Postretirement Benefit Plans |
Net loss | (0.8 | )
Prior service cost | 1.8 |
Deferred commodity contracts hedging gains | — |
Deferred interest rate swap hedging losses | (0.2 | )
Total, net of tax | $ | (1.0 | )
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 expense or 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 insurance or rate recovery, 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 where OG&E has been designated as one of several potentially responsible parties, the amount accrued represents OG&E's estimated share of the cost. The Company had $6.2 million and $5.8 million in accrued environmental liabilities at December 31, 2013 and 2012, respectively, which are included in the summary of asset retirement obligations above. Forward Stock Split On May 16, 2013, the Company's Board of Directors approved a 2-for-1 forward stock split of the Company's common stock, effective July 1, 2013, which entitled each shareholder of record to receive two shares for every one share of Company stock owned by the shareholder. In connection with the stock split, an amendment to the Company's Articles of Incorporation was approved on May 16, 2013 which increased the number of authorized shares of common stock from 225 million to 450 million. All share and per share amounts presented within this Form 10-K reflect the effects of the stock split. Reclassifications As discussed in Note 14, t he former natural gas transportation and storage segment and natural gas gathering and processing segment have been combined into the natural gas midstream operations segment and have been restated for all prior periods presented. Effective May 1, 2013, the Company deconsolidated its previously held investment in Enogex Holdings and acquired an equity interest in Enable.

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