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Investment in Unconsolidated Affiliates | 3 Months Ended
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Mar. 31, 2017
Related Party Transactions [Abstract] |
Equity Method Investments and Joint Ventures Disclosure [Text Block] | Investment in Unconsolidated Affiliate The Company'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, the Company 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, therefore, the Company accounts for its 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 as adjusted for basis differences. The Company's maximum exposure to loss related to Enable is limited to the Company's equity investment in Enable as presented on the Company's Condensed Consolidated Balance Sheet at March 31, 2017. 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 Enable, which do not exceed cumulative equity in earnings subsequent to the date of investment, to be a return on investment and are classified as operating activities in the Condensed Consolidated Statements of Cash Flows. The Company considers distributions received from Enable in excess of cumulative equity in earnings subsequent to the date of investment to be a return of investment and are classified as investing activities in the Condensed Consolidated Statements of Cash Flows. Investment in Unconsolidated Affiliate and Related Party Transactions On March 14, 2013, the Company entered into a Master Formation Agreement with the ArcLight group and CenterPoint pursuant to which the Company, the ArcLight group and CenterPoint agreed to form Enable to own and operate the midstream businesses of the Company and CenterPoint that was initially structured as a private limited partnership. This transaction closed on May 1, 2013. Pursuant to the Master Formation Agreement, the Company and the ArcLight group indirectly contributed 100 percent of the equity interests in Enogex LLC to 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. Enable completed an initial public offering resulting in Enable becoming a publicly traded Master Limited Partnership in April 2014. At March 31, 2017, the Company owned 111.0 million common units, or 25.7 percent of Enable's outstanding common units. Of the Company's 111.0 million common units, 68.2 million units were subordinated. The subordination period began on the closing date of Enable's initial public offering and will extend until the first business day following the distributions of available cash from operating surplus on each of the outstanding common units and subordinated units equal to or exceeding $1.15 per unit (the annualized minimum quarterly distribution) for each of the three consecutive, non-overlapping four-quarter periods immediately preceding June 30, 2017. The Company anticipates that the subordination period will expire in August 2017 and will not impact future distributions that the Company receives from Enable. On May 2, 2017, Enable announced a quarterly dividend distribution of $0.31800 per unit on its outstanding common and subordinated units, which is unchanged from the previous quarter. If cash distributions to Enable’s unitholders exceed $0.330625 per unit in any quarter, the general partner will receive increasing percentages, up to 50 percent, of the cash Enable distributes in excess of that amount. The Company is entitled to 60 percent of those "incentive distributions." In certain circumstances, the general partner has the right to reset the minimum quarterly distribution and the target distribution levels at which the incentive distributions receive increasing percentages to higher levels based on Enable’s cash distributions at the time of the exercise of this reset election. Distributions received from Enable were $35.3 million during the three months ended March 31, 2017 and 2016. On January 16, 2017, CenterPoint and its wholly owned subsidiary, CenterPoint Energy Resources Corp., provided a second notice to the Company of CenterPoint's solicitation of offers from unrelated third parties to acquire all or any portion of the common units and subordinated units of Enable owned by CenterPoint Energy Resources Corp. and all of the membership interests of the general partner of Enable owned by CenterPoint Energy Resources Corp. On February 15, 2017, under the terms of right of first offer, the Company submitted to CenterPoint another proposal to acquire, in conjunction with a third party, all of CenterPoint's membership interests in Enable GP and all of the common units and subordinated units of Enable owned by CenterPoint. The Company did not receive a reply from CenterPoint within the required timeframe. In accordance with the provisions of the partnership agreement, CenterPoint has until July 15, 2017 to solicit additional offers in excess of the Company's offer. If the Company's proposal had been accepted by CenterPoint, and if the transaction contemplated by the proposal was in fact consummated, the Company anticipated that the third party would, as a result of such transaction, become the owner of all or substantially all of the securities subject to the right of first offer. The Company's ownership interest in Enable would not have materially changed as a result of such transaction, and therefore the Company would not have been required to consolidate the financial results of Enable with the financial results of the Company. The Company cannot predict what future actions CenterPoint will take, if any, associated with their ownership interest in Enable. Related Party Transactions Operating costs charged and related party transactions between the Company and its affiliate, Enable, are discussed below. In connection with the formation of Enable, the Company and Enable entered into a Services Agreement, an Employee Transition Agreement, and other agreements whereby the Company agreed to provide certain support services to Enable such as accounting, legal, risk management and treasury functions for an initial term ending on April 30, 2016. As of December 31, 2015, Enable terminated all support services except certain information technology, payroll and benefits administration. The remaining services automatically extended for another year on May 1, 2017. Under these agreements, the Company charged operating costs to Enable of $0.8 million and $1.3 million for the three months ended March 31, 2017 and 2016, respectively. The Company charges operating costs to OG&E and Enable based on several factors. Operating costs directly related to OG&E and/or Enable are assigned as such. Operating costs incurred for the benefit of OG&E are allocated either as overhead based primarily on labor costs or using the "Distrigas" method. The Company agreed to provide seconded employees to Enable to support its operations for an initial term ending on December 31, 2014. In October 2014, the Company, CenterPoint and Enable agreed to continue the secondment to Enable of 192 employees that participate in the Company's defined benefit and retirement plans beyond December 31, 2014. The Company billed Enable for reimbursement of $10.0 million and $8.3 million during the three months ended March 31, 2017 and 2016, respectively, under the Transitional Seconding Agreement for employment costs. If the seconding agreement was terminated, and those employees were no longer employed by the Company, and lump sum payments were made to those employees, the Company would recognize a settlement or curtailment of the pension/retiree health care charges, which would increase expense at the Company by approximately $20.9 million. Settlement and curtailment charges associated with the Enable seconded employees are not reimbursable to the Company by Enable. The seconding agreement can be terminated by mutual agreement of the Company and Enable or solely by the Company upon 120 day notice. The Company had accounts receivable from Enable for amounts billed for transitional services, including the cost of seconded employees, of $5.9 million as of March 31, 2017 and $2.7 million as of December 31, 2016, respectively. Enable provides gas transportation services to OG&E pursuant to an agreement that expires in April 2019. This transportation agreement grants Enable the responsibility of delivering natural gas to OG&E’s generating facilities and performing an imbalance service. With this imbalance service, in accordance with the cash-out provision of the contract, OG&E purchases gas from Enable when Enable’s deliveries exceed OG&E’s pipeline receipts. Enable purchases gas from OG&E when OG&E’s pipeline receipts exceed Enable’s deliveries. The following table summarizes related party transactions between OG&E and Enable during the three months ended March 31, 2017 and 2016.
| Three Months Ended
| March 31,
(In millions) | 2017 | 2016
Operating Revenues: |  |
Electricity to power electric compression assets | $ | 2.2 |  | $ | 2.3 |
Cost of Sales: |  |
Natural gas transportation services | $ | 8.8 |  | $ | 8.8 |
Natural gas purchases/(sales) | (0.4 | ) | 1.5 |
Summarized Financial Information of Enable Summarized unaudited financial information for 100 percent of Enable is presented below at March 31, 2017 and December 31, 2016 and for the three months ended March 31, 2017 and 2016.
| March 31, | December 31,
Balance Sheet | 2017 | 2016
(In millions) |
Current assets | $ | 375 |  | $ | 396 |
Non-current assets | 10,786 |  | 10,816 |
Current liabilities | 279 |  | 362 |
Non-current liabilities | 3,111 |  | 3,056 |
| Three Months Ended
| March 31,
Income Statement | 2017 | 2016
(In millions) |
Operating revenues | $ | 666 |  | $ | 509 |
Cost of natural gas and natural gas liquids | 308 |  | 195 |
Operating income | 140 |  | 103 |
Net income | 111 |  | 86 |
The formation of Enable was considered a business combination and CenterPoint was the acquirer of Enogex Holdings for accounting purposes. Under this method, the fair value of the consideration paid by CenterPoint for Enogex Holdings is allocated to the assets acquired and liabilities assumed on May 1, 2013 based on their fair value. Enogex Holdings' assets, liabilities and equity have accordingly been adjusted to estimated fair value as of May 1, 2013, resulting in an increase to equity of $2.2 billion. Due to the contribution of Enogex LLC to Enable, meeting the requirements of being in substance real estate and thus recording the initial investment at historical cost, the effects of the amortization and depreciation expense associated with the fair value adjustments on Enable's results of operations have been eliminated in the Company's recording of its equity in earnings of Enable. The Company recorded equity in earnings of unconsolidated affiliates of $35.6 million and $28.3 million for the three months ended March 31, 2017 and 2016, respectively. Equity in earnings of unconsolidated affiliates includes the Company's share of Enable's earnings adjusted for the amortization of the basis difference of the Company's original investment in Enogex and its underlying equity in the net assets of Enable. The basis difference is being amortized over approximately 30 years, the average life of the assets to which the basis difference is attributed, beginning in May 2013. Equity in earnings of unconsolidated affiliates is also adjusted for the elimination of the Enogex Holdings fair value adjustments, as described below. The following table reconciles the Company's equity in earnings of its unconsolidated affiliates for the three months ended March 31, 2017 and 2016.
| Three Months Ended
| March 31,
Reconciliation of Equity in Earnings of Unconsolidated Affiliates | 2017 | 2016
(In millions) |
Enable net income | $ | 110.8 |  | $ | 86.0 |
Differences due to timing of OGE Energy and Enable accounting close | — |  | (11.7 | )
Enable net income used to calculate OGE Energy's equity in earnings | $ | 110.8 |  | $ | 74.3 |
OGE Energy’s percent ownership at period end | 25.7 | % | 26.3 | %
OGE Energy’s portion of Enable net income | $ | 28.5 |  | $ | 19.5 |
Impairments recognized by Enable associated with OGE Energy’s basis differences | — |  | 1.8 |
OGE Energy's share of Enable net income | $ | 28.5 |  | $ | 21.3 |
Amortization of basis difference | 2.8 |  | 2.9 |
Elimination of Enable fair value step up | 4.3 |  | 4.1 |
Equity in earnings of unconsolidated affiliates | $ | 35.6 |  | $ | 28.3 |
The difference between the OGE Energy's investment in Enable and its underlying equity in the net assets of Enable was $736.6 million as of March 31, 2017. The following table reconciles the basis difference in Enable from December 31, 2016 to March 31, 2017.
(In millions) |  |
Basis difference as of December 31, 2016 |  | $ | 743.7 |
Amortization of basis difference |  | (2.8 | )
Elimination of Enable fair value step up |  | (4.3 | )
Basis difference as of March 31, 2017 |  | $ | 736.6 |

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- Definition The entire disclosure for equity method investments and joint ventures. Equity method investments are investments that give the investor the ability to exercise significant influence over the operating and financial policies of an investee. Joint ventures are entities owned and operated by a small group of businesses as a separate and specific business or project for the mutual benefit of the members of the group. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 323 -SubTopic 10 -Section 50 -Paragraph 3 -URI http://asc.fasb.org/extlink&oid=66011266&loc=d3e33918-111571 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 323 -SubTopic 10 -Section 35 -Paragraph 35 -URI http://asc.fasb.org/extlink&oid=64825282&loc=d3e32847-111569 Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 210 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SX 210.5-02.12) -URI http://asc.fasb.org/extlink&oid=6877327&loc=d3e13212-122682 Reference 4: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 323 -SubTopic 10 -Section 35 -Paragraph 32 -URI http://asc.fasb.org/extlink&oid=64825282&loc=d3e32787-111569 + Details
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