OKLAHOMA GAS AND ELECTRIC COMPANY

CONDENSEDSTATEMENTS OF CASH FLOWS

(Unaudited)

Six Months Ended June 30,
(In millions) 2019 2018
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 94.1
$ 123.3
Adjustments to reconcile net income to net cash provided from operating activities:
Depreciation and amortization 166.7
159.7
Deferred income taxes and investment tax credits, net (6.2 ) 25.1
Allowance for equity funds used during construction (2.7 ) (13.3 )
Stock-based compensation expense 2.0
2.1
Regulatory assets (25.6 ) (1.6 )
Regulatory liabilities (21.1 ) 1.9
Other assets 1.5
7.9
Other liabilities (0.5 ) (3.6 )
Change in certain current assets and liabilities:
Accounts receivable and accrued unbilled revenues, net (13.8 ) (54.0 )
Fuel, materials and supplies inventories 7.2
0.1
Fuel recoveries (28.9 ) 37.0
Other current assets (1.1 ) 22.2
Accounts payable (74.1 ) (44.0 )
Income taxes payable - parent 7.7
(16.4 )
Other current liabilities (31.2 ) 51.8
Net cash provided from operating activities 74.0
298.2
CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditures (less allowance for equity funds used during construction) (314.5 ) (273.8 )
Net cash used in investing activities (314.5 ) (273.8 )
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from long-term debt 295.9
—
Payment of long-term debt (250.0 ) —
Changes in advances with parent 194.6
(24.4 )
Net cash provided from (used in) financing activities 240.5
(24.4 )
NET CHANGE IN CASH AND CASH EQUIVALENTS —
—
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD —
—
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ —
$ —


	Six Months Ended June 30,
(In millions)	2020		2019
CASH FLOWS FROM OPERATING ACTIVITIES
Net income	$	98.8	$	94.1
Adjustments to reconcile net income to net cash provided from operating activities:
Depreciation and amortization	191.7		166.7
Deferred income taxes and investment tax credits, net	6.7		(6.2)
Allowance for equity funds used during construction	(2.6)		(2.7)

Stock-based compensation expense	1.6		2.0
Regulatory assets	(6.1)		(25.6)
Regulatory liabilities	(26.7)		(21.1)
Other assets	(2.3)		1.5
Other liabilities	(7.0)		(0.5)
Change in certain current assets and liabilities:
Accounts receivable and accrued unbilled revenues, net	(34.2)		(13.8)

Fuel, materials and supplies inventories	(1.5)		7.2
Fuel recoveries	71.9		(28.9)
Other current assets	(6.8)		(1.1)
Accounts payable	(45.6)		(74.1)

Income taxes payable - parent	5.0		7.7

Other current liabilities	(19.0)		(31.2)
Net cash provided from operating activities	223.9		74.0
CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditures (less allowance for equity funds used during construction)	(280.8)		(314.5)

Net cash used in investing activities	(280.8)		(314.5)
CASH FLOWS FROM FINANCING ACTIVITIES

Proceeds from long-term debt	297.2		295.9


Payment of long-term debt	—		(250.0)
Changes in advances with parent	(172.8)		194.6

Net cash provided from financing activities	124.4		240.5
NET CHANGE IN CASH AND CASH EQUIVALENTS	67.5		—
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD	—		—
CASH AND CASH EQUIVALENTS AT END OF PERIOD	$	67.5	$	—

The accompanying Notes to CondensedFinancial Statements are an integral part hereof.

OKLAHOMA GAS AND ELECTRIC COMPANY

CONDENSEDBALANCE SHEETS

(Unaudited)

June 30, December 31,
(In millions) 2019 2018
ASSETS
CURRENT ASSETS
Accounts receivable, less reserve of $1.3 and $1.7, respectively $ 163.1
$ 172.9
Accrued unbilled revenues 86.2
62.6
Advances to parent 117.1
319.5
Fuel inventories 47.9
57.6
Materials and supplies, at average cost 86.9
126.7
Fuel clause under recoveries 30.7
2.0
Other 26.6
25.5
Total current assets 558.5
766.8
OTHER PROPERTY AND INVESTMENTS 4.9
5.0
PROPERTY, PLANT AND EQUIPMENT
In service 12,510.6
11,988.7
Construction work in progress 126.8
376.4
Total property, plant and equipment 12,637.4
12,365.1
Less: accumulated depreciation 3,766.0
3,727.4
Net property, plant and equipment 8,871.4
8,637.7
DEFERRED CHARGES AND OTHER ASSETS
Regulatory assets 290.0
285.8
Other 9.0
9.2
Total deferred charges and other assets 299.0
295.0
TOTAL ASSETS $ 9,733.8
$ 9,704.5


	June 30,		December 31,
(In millions)	2020		2019
ASSETS
CURRENT ASSETS
Cash and cash equivalents	$	67.5	$	—
Accounts receivable, less reserve of $2.0 and $1.5, respectively	159.0		153.8
Accrued unbilled revenues	93.7		64.7
Advances to parent	397.6		304.8
Fuel inventories	42.7		46.3
Materials and supplies, at average cost	98.8		90.6
Fuel clause under recoveries	—		39.5
Other	26.4		19.6
Total current assets	885.7		719.3
OTHER PROPERTY AND INVESTMENTS	4.6		4.7
PROPERTY, PLANT AND EQUIPMENT
In service	12,999.4		12,765.0
Construction work in progress	124.0		141.6
Total property, plant and equipment	13,123.4		12,906.6
Less: accumulated depreciation	3,957.3		3,868.1
Net property, plant and equipment	9,166.1		9,038.5
DEFERRED CHARGES AND OTHER ASSETS
Regulatory assets	299.4		306.0
Other	11.8		8.1
Total deferred charges and other assets	311.2		314.1
TOTAL ASSETS	$	10,367.6	$	10,076.6

The accompanying Notes to CondensedFinancial Statements are an integral part hereof.

OKLAHOMA GAS AND ELECTRIC COMPANY

CONDENSEDBALANCE SHEETS (Continued)

(Unaudited)

June 30, December 31,
(In millions) 2019 2018
LIABILITIES AND STOCKHOLDER'S EQUITY
CURRENT LIABILITIES
Accounts payable $ 136.5
$ 215.0
Customer deposits 83.4
83.6
Accrued taxes 40.6
44.0
Accrued interest 35.8
44.5
Accrued compensation 24.4
33.8
Long-term debt due within one year —
250.0
Fuel clause over recoveries 0.1
0.3
Other 77.0
86.8
Total current liabilities 397.8
758.0
LONG-TERM DEBT 3,193.6
2,896.9
DEFERRED CREDITS AND OTHER LIABILITIES
Accrued benefit obligations 134.8
137.9
Deferred income taxes 902.1
892.7
Deferred investment tax credits 7.2
7.2
Regulatory liabilities 1,243.0
1,270.7
Other 155.9
137.8
Total deferred credits and other liabilities 2,443.0
2,446.3
Total liabilities 6,034.4
6,101.2
COMMITMENTS AND CONTINGENCIES (NOTE 12)

STOCKHOLDER'S EQUITY

Common stockholder's equity 1,033.8
1,031.8
Retained earnings 2,665.6
2,571.5
Total stockholder's equity 3,699.4
3,603.3
TOTAL LIABILITIES AND STOCKHOLDER'S EQUITY $ 9,733.8
$ 9,704.5


	June 30,		December 31,
(In millions)	2020		2019
LIABILITIES AND STOCKHOLDER'S EQUITY
CURRENT LIABILITIES


Accounts payable	$	130.0	$	175.0

Customer deposits	82.7		83.0
Accrued taxes	46.2		41.9
Accrued interest	40.2		37.9
Accrued compensation	28.1		29.5

Fuel clause over recoveries	37.2		4.8
Other	41.2		65.1
Total current liabilities	405.6		437.2
LONG-TERM DEBT	3,493.4		3,195.2
DEFERRED CREDITS AND OTHER LIABILITIES

Accrued benefit obligations	127.4		133.3
Deferred income taxes	974.9		951.4
Deferred investment tax credits	7.1		7.1
Regulatory liabilities	1,206.2		1,223.5

Other	169.3		170.6
Total deferred credits and other liabilities	2,484.9		2,485.9
Total liabilities	6,383.9		6,118.3
COMMITMENTS AND CONTINGENCIES (NOTE 11)
STOCKHOLDER'S EQUITY
Common stockholder's equity	1,038.2		1,036.6
Retained earnings	2,945.5		2,921.7

Total stockholder's equity	3,983.7		3,958.3
TOTAL LIABILITIES AND STOCKHOLDER'S EQUITY	$	10,367.6	$	10,076.6

The accompanying Notes to CondensedFinancial Statements are an integral part hereof.

OKLAHOMA GAS AND ELECTRIC COMPANY

CONDENSEDSTATEMENTS OF CHANGES IN STOCKHOLDER'S EQUITY

(Unaudited)

(In millions) Shares Outstanding Common Stock Premium on Common Stock Retained Earnings Total
Balance at December 31, 2018 40.4
$ 100.9
$ 930.9
$ 2,571.5
$ 3,603.3
Net income —
—
—
19.6
19.6
Stock-based compensation —
—
1.0
—
1.0
Balance at March 31, 2019 40.4
$ 100.9
$ 931.9
$ 2,591.1
$ 3,623.9
Net income —
—
—
74.5
74.5
Stock-based compensation —
—
1.0
—
1.0
Balance at June 30, 2019 40.4
$ 100.9
$ 932.9
$ 2,665.6
$ 3,699.4

Balance at December 31, 2017 40.4
$ 100.9
$ 926.3
$ 2,428.5
$ 3,455.7
Net income —
—
—
31.3
31.3
Stock-based compensation —
—
1.0
—
1.0
Balance at March 31, 2018 40.4
$ 100.9
$ 927.3
$ 2,459.8
$ 3,488.0
Net income —
—
—
92.0
92.0
Stock-based compensation —
—
1.1
—
1.1
Balance at June 30, 2018 40.4
$ 100.9
$ 928.4
$ 2,551.8
$ 3,581.1


(In millions)	Shares Outstanding	Common Stock		Premium on Common Stock		Retained Earnings		Total
Balance at December 31, 2019	40.4	$	100.9	$	935.7	$	2,921.7	$	3,958.3
Net income	—	—		—		19.9		19.9
Stock-based compensation	—	—		0.9		—		0.9
Balance at March 31, 2020	40.4	$	100.9	$	936.6	$	2,941.6	$	3,979.1
Net income	—	—		—		78.9		78.9

Dividends declared on common stock	—	—		—		(75.0)		(75.0)
Stock-based compensation	—	—		0.7		—		0.7
Balance at June 30, 2020	40.4	$	100.9	$	937.3	$	2,945.5	$	3,983.7






Balance at December 31, 2018	40.4	$	100.9	$	930.9	$	2,571.5	$	3,603.3
Net income	—	—		—		19.6		19.6
Stock-based compensation	—	—		1.0		—		1.0
Balance at March 31, 2019	40.4	$	100.9	$	931.9	$	2,591.1	$	3,623.9
Net income	—	—		—		74.5		74.5


Stock-based compensation	—	—		1.0		—		1.0
Balance at June 30, 2019	40.4	$	100.9	$	932.9	$	2,665.6	$	3,699.4

The accompanying Notes to CondensedFinancial Statements are an integral part hereof.

OKLAHOMA GAS AND ELECTRIC COMPANY

NOTES TO CONDENSEDFINANCIAL STATEMENTS

(Unaudited)


1.	~~Summary of Significant Accounting Policies~~

1.Summary of Significant Accounting Policies

OG&E's significant accounting policies are detailed in "Note 1. Summary of Significant Accounting Policies" in OG&E's ~~2018~~2019 Form 10-K. Changes to OG&E's accounting policies as a result of adopting ASU ~~2016-02, "Leases (Topic 842),"~~2016-13, "Financial Instruments - Credit Losses: Measurement of Credit Losses on Financial Information" are incorporated within "Allowance for Uncollectible Accounts Receivables" below and ~~the related ASU 2018-01 and ASU 2018-11 are~~ discussed in ~~Notes 2 and 4 in this Form 10-Q.~~Note 2.

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~~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.

Basis of Presentation

The CondensedFinancial 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 thefinancial position of OG&E at June 30, ~~2019~~ 2020 and December 31, ~~2018,~~2019, the results of its operations for the three and six months ended June 30, 2020 and 2019~~and~~ ~~2018~~ and its cash flows for the six months ended June 30, 2020 and 2019 ~~and 2018~~ have been included and are of a normal, recurring nature except as otherwise disclosed. Management also has evaluated the impact of events occurring after June 30, ~~2019~~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 six months ended June 30, ~~2019~~2020 are not necessarily indicative of the results that may be expected for the year endingDecember 31, ~~2019~~2020 or for any future period.The CondensedFinancial Statements and Notes thereto should be read in conjunction with the auditedFinancial Statements and Notes thereto included in OG&E's ~~2018~~2019 Form 10-K.

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.


	June 30,		December 31,
(In millions)	2020		2019
REGULATORY ASSETS
Current:
SPP cost tracker under recovery (A)	$	5.8	$	—
Generation Capacity Replacement rider under recovery (A)	4.1		3.7
Fuel clause under recoveries	—		39.5
Other (A)	6.8		5.5
Total current regulatory assets	$	16.7	$	48.7
Non-current:
Benefit obligations regulatory asset	$	163.0	$	167.2
Deferred storm expenses	63.8		65.5
Sooner Dry Scrubbers	20.2		20.6
Smart Grid	14.8		18.4
Unamortized loss on reacquired debt	10.2		10.6
Arkansas deferred pension expenses	7.6		8.0
COVID-19 deferred expenses	3.8		—
Pension tracker	—		2.3
Other	16.0		13.4
Total non-current regulatory assets	$	299.4	$	306.0
REGULATORY LIABILITIES
Current:
Fuel clause over recoveries	$	37.2	$	4.8
Reserve for tax refund and interim surcharge (B)	5.9		12.7
Oklahoma demand program rider over recovery (B)	3.6		2.0
SPP cost tracker over recovery (B)	—		2.6

Other (B)	5.7		6.9
Total current regulatory liabilities	$	52.4	$	29.0
Non-current:
Income taxes refundable to customers, net	$	882.6	$	899.2
Accrued removal obligations, net	317.9		318.5
Pension tracker	0.4		—
Other	5.3		5.8
Total non-current regulatory liabilities	$	1,206.2	$	1,223.5

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

June 30, December 31,
(In millions) 2019 2018
REGULATORY ASSETS
Current:
Fuel clause under recoveries $ 30.7
$ 2.0
Cogeneration credit rider over credit (A) 8.2
—
Production tax credit rider over credit (A) 4.1
6.9
Oklahoma demand program rider under recovery (A) —
6.4
Other (A) 5.1
3.2
Total current regulatory assets $ 48.1
$ 18.5
Non-current:

Benefit obligations regulatory asset $ 172.3
$ 188.2
Deferred storm expenses 43.6
36.5
Smart Grid 22.1
25.6
Sooner Dry Scrubbers 21.0
4.5
Unamortized loss on reacquired debt 11.0
11.4
Arkansas deferred pension expenses 7.7
6.8
Other 12.3
12.8
Total non-current regulatory assets $ 290.0
$ 285.8
REGULATORY LIABILITIES

Current:

Reserve for tax refund and interim surcharge (B) $ 17.7
$ 15.4
SPP cost tracker over recovery (B) 8.0
16.8
Oklahoma demand program rider over recovery (B) 6.2
—
Transmission cost recovery rider over recovery (B) 1.1
2.7
Fuel clause over recoveries 0.1
0.3
Other (B) 3.2
1.4
Total current regulatory liabilities $ 36.3
$ 36.6
Non-current:

Income taxes refundable to customers, net $ 921.6
$ 937.1
Accrued removal obligations, net 312.9
308.1
Pension tracker 2.2
18.7
Other 6.3
6.8
Total non-current regulatory liabilities $ 1,243.0
$ 1,270.7


~~(A)~~	~~Included in Other Current Assets in theCondensed~~(B)Included in Other Current Liabilities in the Condensed Balance Sheets.


~~(B)~~	~~Included in Other Current Liabilities in theCondensedBalance Sheets.~~

In response to the COVID-19 pandemic, the OCC and APSC issued orders allowing OG&E to defer certain expenses related to its COVID-19 response. For additional information about these orders, see Note 12 and "Item 2. Management's Discussion and Analysis - Recent Developments."

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 Uncollectible Accounts Receivable

~~Reclassifications~~

~~Certain prior year amounts have been reclassified to conform to~~Customer balances are generally written off if not collected within six months after the ~~current year presentation.~~


2.	~~Accounting Pronouncements~~

~~Recently Adopted Accounting Standards~~

~~Leases.~~ ~~In February 2016,~~final billing date. The allowance for uncollectible accounts receivable for OG&E is calculated by multiplying the ~~FASB issued ASU 2016-02, "Leases (Topic 842)." The main difference between prior lease accounting and Topic 842 is~~last six months of electric revenue by the recognition of right-of-use assets and lease liabilities by lessees for those leases classified as operating leases under current accounting guidance. Lessees, such as OG&E, recognize a right-of-use asset and a lease liability for virtually all of their leases, other than leases that meet the definition of a short-term lease. The liability is equal to the present value of lease payments. The assetprovision 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 ~~liability, subject~~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. 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 ~~items such as initial direct costs. For income statement purposes, Topic 842 retains~~uncollectible accounts receivable is a ~~dual model, requiring leases~~reduction to be classified as either operating or finance. Operating leases result in straight-line expense, while finance leases result in a front-loaded expense pattern, similar to prior capital leases. Classification of operating and finance leases is based on criteria that are largely similar to those applied in prior lease guidance but without the explicit thresholds. OG&E adopted this standard in the first quarter of 2019 utilizing the modified retrospective transition method.

~~Various practical expedients for the application of Topic 842 were approved, and OG&E elected to apply the below:~~


•	a package of practical expedients allowing entities to not reassess (i) whether any expired or existing contracts are or contain leases, (ii) the lease classification for any expired or existing leases and (iii) initial direct costs for any existing leases;


•	an option that permits an entity to elect a transitional practical expedient, to be applied consistently, to not evaluate under Topic 842 land easements that exist or expired before the entity's adoption of Topic 842 and that were not previously accounted for as leases under ASC 840, "Leases"; and

•

an option that permits an entity to elect to initially apply ASU 2016-02 at the adoption date and recognize a cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption, provided that if an entity elects this additional (and optional) transition method, the entity will provide the required Topic 840 disclosures for all periods that continue to be reported under Topic 840.

OG&E evaluated its current lease contracts and, at January 1, 2019, recognized $32.3 million and $36.9 million of operating lease right-of-use assets and liabilities, respectively, for railcar and wind farm land leasesAccounts Receivable in the Condensed Balance ~~Sheet. The new standard did not have a material impact on OG&E's 2019 periods within~~Sheets and is included in the Other Operation and Maintenance in the Condensed Statements of Income. ~~Further, OG&E evaluated its existing processes and controls regarding lease identification, accounting and presentation and implemented changes as necessary~~

New business customers are required to provide a security deposit in ~~order to adequately address~~ the ~~requirements~~form of ~~Topic 842. Additional information regarding OG&E's adoption~~cash, bond or irrevocable letter of ~~Topic 842 can be found in OG&E's~~ ~~2018 Form 10-K~~.

~~Issued Accounting Standards Not Yet Adopted~~

~~Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract.~~ In August 2018, the FASB issued ASU 2018-15, "Intangibles - Goodwill and Other - Internal-Use Software (Subtopic 350-40): Customer's Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract." The new guidance aligns the requirements for capitalizing implementation costs incurred in a hosting arrangementcredit that is refunded when the account is closed. New residential customers whose outside credit scores indicate an elevated risk are required to provide a ~~service contract with~~security deposit that may be refunded based on customer protection rules defined by the ~~requirements for capitalizing implementation costs incurred~~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 develop or obtain internal-use software. ASU 2018-15 is effective for fiscal years beginning after December 2019 and can be applied either retrospectively or prospectively to all implementation costs incurred after the date of adoption. Early adoption is permitted.provide a security deposit.

OG&E ~~is currently evaluating the impact~~considered COVID-19 pandemic impacts when calculating its reserve on accounts receivable as of ~~this ASU~~June 30, 2020, as further discussed in "Item 2. Management's Discussion and Analysis - Recent Developments."

2.Accounting Pronouncements

Recently Adopted Accounting Standards

The following table provides an overview of recently adopted accounting pronouncements and their impacts on ~~its Condensed Financial Statements.~~OG&E.


3.ASU Number and Name	~~Revenue Recognition~~Description	Date of Adoption	Financial Statements and Disclosures Impact
ASU 2016-13, "Financial Instruments - Credit Losses: Measurement of Credit Losses on Financial Information"	This standard requires entities to measure all expected credit losses of financial assets held at a reporting date based on historical experience, current conditions and reasonable and supportable forecasts in order to record credit losses in a more timely manner.	January 1, 2020	Utilizing a modified-retrospective approach, OG&E determined its only financial instrument requiring measurement under ASU 2016-13 is trade receivables. OG&E considers both future economic conditions and historical data to measure the reserve for trade receivables under this standard and determined no adjustments to its reserve were necessary upon adoption.
ASU 2018-15, "Intangibles - Goodwill and Other - Internal-Use Software (Subtopic 350-40)"	The standard aligns requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software.	January 1, 2020	The new standard did not have a material effect on OG&E's financial statements upon adoption. Prospectively, OG&E records applicable capitalized implementation costs in Other Current Assets and related amortization expense in Other Operation and Maintenance.
ASU 2018-13, "Fair Value Measurement (Topic 820): Disclosure Framework"	The standard removes, adds or modifies disclosure requirements that impact all levels of the fair value hierarchy, as well as investments measured using the net asset value practical expedient.	January 1, 2020	OG&E applied the guidance on a retrospective or prospective basis, depending on the requirement, and did not experience a significant impact on its financial statement disclosures.
ASU 2018-14, "Compensation - Retirement Benefits - Defined Benefit Plans - General (Subtopic 715-20)"	The standard removes, adds or clarifies disclosure requirements for employers that sponsor defined benefit pension or other postretirement plans.	January 1, 2020	OG&E applied the guidance on a retrospective basis and did not experience a significant impact on its financial statement disclosures.
ASU 2020-04, "Reference Rate Reform (Topic 848)"	This standard provides optional expedients and exceptions, if certain criteria are met, for applying GAAP to contracts, hedging relationships and other transactions that reference LIBOR or another reference rate expected to be discontinued because of reference rate reform.	January 1, 2020	The guidance did not have a material impact upon adoption, nor does OG&E expect a material impact in the future, on its financial statements.

3.Revenue Recognition

The following table disaggregates OG&E's revenues from contracts with customers by customer classification. OG&E's operating revenues disaggregated by customer classification can be found in "Results of Operations" within "Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations."


	Three Months Ended						Six Months Ended
	June 30,						June 30,
(In millions)	2020		2019		2020		2019
Residential	$	202.8	$	182.3	$	369.7	$	373.5
Commercial	113.0		115.4		204.3		210.8
Industrial	44.7		52.9		86.2		105.2
Oilfield	38.4		48.9		76.6		98.3
Public authorities and street light	40.6		44.4		75.3		84.5
System sales revenues	439.5		443.9		812.1		872.3
Provision for rate refund	(1.0)		(0.5)		(1.6)		(0.6)
Integrated market	8.5		10.3		15.7		17.0
Transmission	39.8		39.8		74.0		75.9
Other	5.2		7.6		12.2		13.9
Revenues from contracts with customers	$	492.0	$	501.1	$	912.4	$	978.5

Three Months Ended Six Months Ended
June 30, June 30,
(In millions) 2019 2018 2019 2018
Residential $ 182.3
$ 217.3
$ 373.5
$ 413.5
Commercial 115.4
135.1
210.8
235.9
Industrial 52.9
57.0
105.2
107.4
Oilfield 48.9
45.7
98.3
87.8
Public authorities and street light 44.4
51.1
84.5
92.8
System sales revenues 443.9
506.2
872.3
937.4
Provision for rate refund (0.5 ) (16.5 ) (0.6 ) (19.7 )
Integrated market 10.3
13.1
17.0
21.8
Transmission 39.8
40.2
75.9
76.0
Other 7.6
4.7
13.9
10.1
Revenues from contracts with customers $ 501.1
$ 547.7
$ 978.5
$ 1,025.6


4.	~~Leases~~

OG&E evaluates all contracts under Topic 842 to determine if the contract is or contains a lease and to determine classification as an operating or finance lease. If a lease is identified, OG&E recognizes a right-of-use asset and a lease liability in its Balance Sheets. OG&E recognizes and measures a lease liability when it concludes the contract contains an identified asset that OG&E controls through having the right to obtain substantially all of the economic benefits and the right to direct the use of the identified asset. The liability is equal to the present value of lease payments, and the asset is based on the liability, subject to adjustment, such as for initial direct costs. Further, OG&E utilizes an incremental borrowing rate for purposes of measuring lease liabilities, if the discount rate is not implicit in the lease. To calculate the incremental borrowing rate, OG&E starts with a current pricing report for OG&E's senior unsecured notes, which indicates rates for periods reflective of the lease term, and adjusts for the effects of collateral to arrive at the secured incremental borrowing rate. As permitted by Topic 842, OG&E made an accounting policy election to not apply the balance sheet recognition requirements to short-term leases and to not separate lease components from nonlease components when recognizing and measuring lease liabilities. For income statement purposes, OG&E records operating lease expense on a straight-line basis.4.Related Party Transactions

~~Based on its evaluation of all contracts under Topic 842, as described above, OG&E concluded it has operating lease obligations for railcar leases and wind farm land leases.~~

~~Operating Leases~~

~~OG&E Railcar Lease Agreement~~

Effective February 1, 2019, OG&E renewed a railcar lease agreement for 780 rotary gondola railcars to transport coal from Wyoming to OG&E's coal-fired generation units. Rental payments are charged to fuel expense and are recovered through OG&E's fuel adjustment clauses. On February 1, 2024, OG&E has the option to either purchase the railcars at a stipulated fair market value or renew the lease. If OG&E chooses not to purchase the railcars or renew the lease agreement and the actual fair value of the railcars is less than the stipulated fair market value, OG&E would be responsible for the difference in those values up to a maximum of $6.8 million.

~~OG&E Wind Farm Land Lease Agreements~~

OG&E has operating leases related to land for Centennial, OU Spirit and Crossroads wind farms with terms of 25 to 30 years. The Centennial lease has rent escalations which increase annually based on the Consumer Price Index. While lease liabilities are not remeasured as a result of changes to the Consumer Price Index, changes to the Consumer Price Index are treated as variable

lease payments and recognized in the period in which the obligation for those payments was incurred. The OU Spirit and Crossroads leases have rent escalations which increase after five and 10 years. Although the leases are cancellable, OG&E is required to make annual lease payments as long as the wind turbines are located on the land. OG&E does not expect to terminate the leases until the wind turbines reach the end of their useful life.

~~Financial Statement Information and Maturity Analysis of Lease Liabilities~~

Operating lease cost was $1.2 million and $2.5 million for the three and six months ended June 30, 2019, respectively. Payments for operating lease obligations were $4.1 million for the year ended December 31, 2018.

The following table presents amounts recognized for operating leases in OG&E's 2019 Condensed Cash Flow Statement and Balance Sheet and supplemental information related to those amounts recognized, as well as a maturity analysis of OG&E's operating lease liabilities.

Six Months Ended
(In millions) June 30, 2019
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows for operating leases $ 3.6
Right-of-use assets obtained in exchange for new operating lease liabilities $ 10.7

(Dollars in millions) June 30, 2019
Right-of-use assets at period end (A) $ 41.3
Operating lease liabilities at period end (B) $ 46.0
Operating lease weighted-average remaining lease term (in years)
13.8
Operating lease weighted-average discount rate 3.9 %

Future minimum operating lease payments as of:
(In millions)
June 30, 2019 December 31,
2018 (C)(D)
2019 $ 1.2
$ 21.1
2020 5.3
2.9
2021 5.2
2.9
2022 5.2
2.9
2023 5.2
2.9
Thereafter 37.8
37.6
Total future minimum lease payments 59.9
$ 70.3
Less: Imputed interest 13.9

Present value of net minimum lease payments $ 46.0


~~(A)~~	~~Included in Property, Plant and Equipment in the 2019 Condensed Balance Sheet.~~


~~(B)~~	~~Included in Other Deferred Credits and Other Liabilities in the 2019 Condensed Balance Sheet.~~


~~(C)~~	~~Amounts included for comparability and accounted for in accordance with ASC 840, "Leases."~~

~~(D)~~

At the end of the railcar lease term, which was February 1, 2019, OG&E had the option to either purchase the railcars at a stipulated fair market value or renew the lease. OG&E renewed the lease effective February 1, 2019. If OG&E chose not to purchase the railcars or renew the lease agreement and the actual fair value of the railcars was less than the stipulated fair market value, OG&E would have been responsible for the difference in those values up to a maximum of $16.2 million.


5.	~~Related Party Transactions~~

OGE Energy charges operating costs to OG&E based on several factors, and operating costs directly related to OG&E 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, which is a three-factor formula that uses an equal weighting of payroll, net operating revenues and gross property, plant and equipment.

OGE Energy charged operating costs to OG&E of ~~$35.9~~$36.9 million and ~~$33.9~~$35.9 million during the three months ended June 30, ~~2019~~2020 and ~~2018~~,2019, respectively, and ~~$72.9~~$74.8 million and ~~$67.6~~$72.9 million during the six months ended June 30, 2020 and 2019, ~~and 2018,~~ respectively.

~~As discussed in OG&E's~~ ~~2018 Form 10-K~~, Enable provides gas transportation services to OG&E pursuant to an agreement that 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 and six months ended June 30, ~~2019~~2020 and ~~2018~~.2019.


	Three Months Ended						Six Months Ended
	June 30,						June 30,
(In millions)	2020		2019		2020		2019
Operating revenues:
Electricity to power electric compression assets	$	3.5	$	3.8	$	7.2	$	7.6
Cost of sales:
Natural gas transportation services	$	9.4	$	9.3	$	14.1	$	24.1
Natural gas purchases (sales)	$	(1.7)	$	(3.3)	$	(1.0)	$	(4.3)

Three Months Ended Six Months Ended
June 30, June 30,
(In millions) 2019 2018 2019 2018
Operating revenues:
Electricity to power electric compression assets $ 3.8
$ 3.6
$ 7.6
$ 7.6
Cost of sales:
Natural gas transportation services $ 9.3
$ 8.8
$ 24.1
$ 17.5
Natural gas (sales) purchases $ (3.3 ) $ 2.2
$ (4.3 ) $ 2.5


6.	~~Fair Value Measurements~~

5.Fair Value Measurements

The classification of OG&E's fair value measurements requires judgment regarding the degree to which market data is observable or corroborated by observable market data. GAAP establishes a fair value hierarchy that prioritizes the inputs used to measure fair value based on observable and unobservable data. The hierarchy categorizes the inputs into three levels, with the highest priority given to quoted prices in active markets for identical unrestricted assets or liabilities (Level 1), and the lowest

priority given to unobservable inputs (Level 3). Financial assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement. The three levels defined in the fair value hierarchy are as follows:

Level 1 inputs are quoted prices in active markets for identical unrestricted assets or liabilities that are accessible at the measurement date.

Level 2 inputs are inputs other than quoted prices in active markets included within Level 1 that are either directly or indirectly observable at the reporting date for the asset or liability for substantially the full term of the asset or liability. Level 2 inputs include quoted prices for similar assets or liabilities in active markets and quoted prices for identical or similar assets or liabilities in markets that are not active.

Level 3 inputs are prices or valuation techniques for the asset or liability that require inputs that are both significant to the fair value measurement and unobservable (i.e., supported by little or no market activity). Unobservable inputs reflect the reporting entity's own assumptions about the assumptions that market participants would use in pricing the asset or liability (including assumptions about risk).

OG&E had no0 financial instruments measured at fair value on a recurring basis at June 30, ~~2019~~2020 and December 31, 2018. The fair value of OG&E's long-term debt is based on quoted market prices and estimates of current rates available for similar issues with similar maturities and is classified as Level 2 in the fair value hierarchy, with the exception of the Tinker Debt which is classified as Level 3 in the fair value hierarchy as its fair value is based on calculating the net present value of the monthly payments discounted by OG&E's current borrowing rate.2019. The following table summarizes the carrying amount and fair value ~~and carrying amount~~ of OG&E's financial instruments at June 30, ~~2019~~2020 and December 31, ~~2018.~~2019.


	June 30,						December 31,
	2020						2019
(In millions)	Carrying Amount		Fair Value		Carrying Amount		Fair Value		Classification
Long-term Debt (including Long-term Debt due within one year):
Senior Notes	$	3,348.5	$	4,024.7	$	3,050.3	$	3,500.4	Level 2

Industrial Authority Bonds	$	135.4	$	135.4	$	135.4	$	135.4	Level 2
Tinker Debt	$	9.5	$	10.7	$	9.5	$	10.0	Level 3

June 30, December 31,
2019 2018
(In millions) Carrying Amount Fair
Value Carrying Amount Fair
Value
Long-term Debt (including Long-term Debt due within one year):
Senior Notes $ 3,048.6
$ 3,428.0
$ 3,001.9
$ 3,178.2
OG&E Industrial Authority Bonds $ 135.4
$ 135.4
$ 135.4
$ 135.4
Tinker Debt $ 9.6
$ 9.3
$ 9.6
$ 8.7


7.	~~Stock-Based Compensation~~

6.Stock-Based Compensation

The following table summarizes OG&E's pre-tax compensation expense and related income tax benefit during the ~~three and six months ended~~ ~~June 30, 2019~~ ~~and~~ ~~2018related to~~ ~~OGE Energy's~~ ~~performance units and restricted stock~~ ~~for OG&E employees.~~

Three Months Ended June 30, Six Months Ended June 30,
(In millions) 2019 2018 2019 2018
Performance units:
Total shareholder return $ 0.7
$ 0.8
$ 1.5
$ 1.5
Earnings per share 0.2
0.4
0.3
0.6
Total performance units 0.9
1.2
1.8
2.1
Restricted stock 0.1
—
0.2
—
Total compensation expense $ 1.0
$ 1.2
$ 2.0
$ 2.1
Income tax benefit $ 0.2
$ 0.3
$ 0.5
$ 0.5

~~During the~~ three and six months ended June 30, 2020 and 2019 related to OGE Energy's performance units and restricted stock units for OG&E employees.


	Three Months Ended June 30,						Six Months Ended June 30,
(In millions)	2020		2019		2020		2019
Performance units:
Total shareholder return	$	0.6	$	0.7	$	1.3	$	1.5
Earnings per share	—		0.2		0.1		0.3
Total performance units	0.6		0.9		1.4		1.8
Restricted stock units	0.1		0.1		0.2		0.2
Total compensation expense	$	0.7	$	1.0	$	1.6	$	2.0
Income tax benefit	$	0.2	$	0.2	$	0.4	$	0.5

During the six months ended June 30, 2020, OGE Energy ~~issued~~purchased 255,000 shares of its common stock at an average cost of $38.04 per share on the open market, and 89,225 of these shares were used during the same period to satisfy payouts of earned performance units to OG&E employees ~~zero shares and 164,571 shares, respectively, of new common stock~~ pursuant to OGE Energy's Stock Incentive ~~Plan to satisfy restricted stock grants and payouts of earned performance units.~~


8.	~~Income Taxes~~

Plan.

7.Income Taxes

OG&E is a member of an affiliated group that files consolidated income tax returns in the U.S. federal jurisdiction and various state jurisdictions. With few exceptions, OG&E is no longer subject to U.S. federal tax or state and local ~~tax~~ examinations by tax authorities for years prior to~~2015~~. 2016. 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 will be amortized to income over the life of the related property. Additionally, OG&E earns ~~both~~ federal ~~and Oklahoma state~~ tax credits associated with production from its wind ~~farms~~facilities. Oklahoma production and ~~earns Oklahoma~~investment state tax credits ~~associated with its~~are also earned on investments in electric and solar generating facilities which further reduce OG&E's effective tax rate.


9.	~~Long-Term Debt~~

At8.Long-Term Debt

At June 30, ~~2019~~,2020, OG&E was in compliance with all of its debt agreements.

Industrial Authority Bonds

OG&E has tax-exempt pollution control bonds with optional redemption provisions that allow the holders to request repayment of the bonds on any business day. The bonds, which can be tendered at the option of the holder during the next 12 months, are included in the following table.


Series						Date Due	Amount
				(In millions)
0.35%	-	2.20%	Garfield Industrial Authority, January 1, 2025	$	47.0
0.37%	-	1.50%	Muskogee Industrial Authority, January 1, 2025	32.4
0.35%	-	2.20%	Muskogee Industrial Authority, June 1, 2027	56.0
Total (redeemable during next 12 months)								$	135.4

Series Date Due Amount
(In millions)
1.46% - 2.50% Garfield Industrial Authority, January 1, 2025 $ 47.0
1.43% - 2.35% Muskogee Industrial Authority, January 1, 2025 32.4
1.45% - 2.48% Muskogee Industrial Authority, June 1, 2027 56.0
Total (redeemable during next 12 months) $ 135.4

All of these bonds are subject to an optional tender at the request of the holders, at100 percentof the principal amount, together with accrued and unpaid interest to the date of purchase. The bond holders, on any business day, can request repayment of the bond by delivering an irrevocable notice to the tender agent stating the principal amount of the bond, payment instructions for the purchase price and the business day the bond is to be purchased. The repayment option may only be exercised by the holder of a bond for the principal amount. When a tender notice has been received by the trustee, a third-party remarketing agent for the bonds will attempt to remarket any bonds tendered for purchase. This process occurs once per week. Since the original issuance of these series of bonds in 1995 and 1997, the remarketing agent has successfully remarketed all tendered bonds. If the remarketing agent is unable to remarket any such bonds, OG&E is obligated to repurchase such unremarketed bonds. As OG&E has both the intent and ability to refinance the bonds on a long-term basis and such ability is supported by an ability to consummate the

refinancing, the bonds are classified as Long-term Debt in OG&E's CondensedBalance Sheets. OG&E believes that it has sufficient liquidity to meet these obligations.

Issuance of Long-Term Debt

In ~~June 2019,~~April 2020, OG&E issued $300.0 million of ~~3.30~~3.25 percent senior notes due ~~March 15, 2030~~.April 1, 2030. The proceeds from the issuance were added to OG&E's general funds to be used for general corporate purposes, including to ~~repay short-term debt (including debt pertaining to the acquisition of the River Valley plant) and to~~ fund ongoing capital expenditures and working capital.

9.Short-Term Debt and Credit Facility


~~10.~~	~~Short-Term Debt and Credit~~ ~~Facility~~

2020.

At June 30, ~~2019,~~2020, there were ~~$117.1~~$397.6 million in advances to OGE Energy compared to ~~$319.5~~$304.8 million at December 31, ~~2018.~~ 2019. OG&E has an intercompany borrowing agreement with OGE Energy whereby OG&E has access to up to~~$350.0~~ $350.0 millionof OGE Energy's revolving credit amount. This agreement has a termination date of March 8, 2023. At June 30, ~~2019~~,2020, there were no0 intercompany borrowings under this agreement.

OGE Energy's and OG&E's ability to access the commercial paper market could be adversely impacted by a credit ratings downgrade or major market disruptions.Pricing grids associated with OGE Energy's and OG&E's credit facilities could cause annual fees and borrowing rates to increase if an adverse rating impact occurs. The impact of any future downgrade could include an increase in the costs of OGE Energy's and OG&E's short-term borrowings, but a reduction in OGE Energy's and OG&E's credit ratings would not result in any defaults or accelerations.Any future downgrade of OG&E could also lead to higher long-term borrowing costs and, if below investment grade, would require OG&E to post collateral or letters of credit.

OG&E must obtain regulatory approval from the FERC in order to borrow on a short-term basis. OG&E has the necessary regulatory approvals to incur up to $800.0 million in short-term borrowings at any one time for a two-year period beginning January 1, 2019 and ending December 31, 2020.


~~11.~~	~~Retirement Plans and Postretirement Benefit Plans~~

10.Retirement Plans and Postretirement Benefit Plans

In accordance with ASC Topic 715, "Compensation - Retirement Benefits," a one-time settlement charge is required to be recorded by an organization when lump sum payments or other settlements that relieve the organization from the responsibility for the pension benefit obligation during the plan year exceed the service cost and interest cost components of the organization's net periodic pension cost. During the first six months of 2019, OG&E experienced an increase in both the number of employees electing to retire and the amount of lump sum payments paid to such employees upon retirement, which resulted in OG&E recording a pension settlement charge of $11.2 million. The pension settlement charge did not require a cash outlay by OG&E and did not increase OG&E's total pension expense over time, as the charge was an acceleration of costs that otherwise would be recognized as pension expense in future periods.

Net Periodic Benefit Cost

The following table presents the net periodic benefit cost components, before consideration of capitalized amounts, of OG&E's portion of OGE Energy's Pension Plan, Restoration of Retirement Income Plan and postretirement benefit plans that are included in the Condensed Financial Statements. Service cost is presented within Other Operation and Maintenance, and ~~interest~~the remaining net periodic benefit cost ~~expected return on plan assets, amortization of net loss, amortization of unrecognized prior service cost and settlement cost~~components as listed in the table below are presented within Other Net Periodic Benefit Income (Expense) in OG&E's Condensed Statements of Income. OG&E recovers specific amounts of pension and postretirement medical costs in rates approved in its Oklahoma rate reviews. 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 review as a regulatory asset or regulatory liability. These amounts have been recorded in the Pension tracker in the regulatory assets and liabilities table in Note 1 and within Other Net Periodic Benefit Income (Expense) in OG&E's Condensed Statements of Income.

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)
2019
(A)
2018
(A)
2019
(B) 2018
(B) 2019
(A) 2018
(A) 2019
(B) 2018
(B)
Service cost $ 2.0
$ 2.3
$ 4.4
$ 5.0
$ 0.1
$ 0.1
$ 0.1
$ 0.1
Interest cost 3.9
4.3
8.2
8.7
—
0.1
0.1
0.1
Expected return on plan assets (6.9 ) (8.4 ) (13.5 ) (16.9 ) —
—
—
—
Amortization of net loss 3.6
3.1
6.4
6.1
0.1
0.2
0.2
0.3
Settlement cost 0.3
—
11.2
—
—
—
—
—
Total net periodic benefit cost 2.9
1.3
16.7
2.9
0.2
0.4
0.4
0.5
Plus: Amount allocated from OGE Energy 0.6
0.5
2.6
1.0
0.1
0.2
0.2
0.3
Net periodic benefit cost $ 3.5
$ 1.8
$ 19.3
$ 3.9
$ 0.3
$ 0.6
$ 0.6
$ 0.8

~~(A)~~

~~In addition to the $3.8 million~~


	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)	2020		2019		2020		2019		2020		2019		2020		2019

Service cost	$	1.9	$	2.0	$	4.5	$	4.4	$	—	$	0.1	$	0.1	$	0.1

Interest cost	3.4		3.9		6.8		8.2		0.1		—		0.1		0.1

Expected return on plan assets	(6.8)		(6.9)		(13.9)		(13.5)		—		—		—		—
Amortization of net loss	3.2		3.6		6.0		6.4		0.1		0.1		0.2		0.2

Settlement cost	—		0.3		—		11.2		—		—		—		—
Total net periodic benefit cost	1.7		2.9		3.4		16.7		0.2		0.2		0.4		0.4
Plus: Amount allocated from OGE Energy	0.5		0.6		1.0		2.6		0.4		0.1		0.6		0.2
Net periodic benefit cost	$	2.2	$	3.5	$	4.4	$	19.3	$	0.6	$	0.3	$	1.0	$	0.6

In addition to the net periodic benefit cost amounts recognized, as presented in the table above, for the Pension and Restoration of Retirement Income Plans for the three and $2.4 million of net periodic benefit cost recognized during the three months ended June 30, 2019 and 2018, respectively, OG&E recognized a decrease of pension expense of $0.7 million and an increase of $3.8 million during the three months ended June 30, 2019 and 2018, 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).


~~(B)~~	~~In addition to the $19.9 million and $4.7 million of net periodic benefit cost recognized during the six months ended June 30, 2019 and 2018, respectively, OG&E recognized the following:~~

~~a decrease of pension expense of $1.7 million and an increase of $7.8 million during the~~ six months ended June 30, 2020 and 2019, ~~and 2018, respectively, to maintain~~OG&E recognized the ~~allowable amount to be recovered for pension expense~~following:


	Three Months Ended						Six Months Ended
	June 30,						June 30,
(In millions)	2020		2019		2020		2019
Increase (decrease) of pension expense to maintain allowed recoverable amount in Oklahoma jurisdiction (A)(B)	$	1.6	$	(0.7)	$	3.3	$	(1.7)
Deferral of pension expense related to pension settlement charges:
Oklahoma jurisdiction (A)(B)	$	0.3	$	0.5	$	0.3	$	11.7
Arkansas jurisdiction (A)(B)	$	—	$	0.1	$	—	$	1.1

(A)Included in the ~~Oklahoma~~pension regulatory asset or liability in each jurisdiction, ~~which are included~~as indicated in the ~~Pension tracker~~ regulatory ~~liability (see~~assets and liabilities table in Note ~~1);~~1.

(B)Includes a ~~deferral~~portion of OGE Energy's pension ~~expense during~~expense.


	Postretirement Benefit Plans
	Three Months Ended						Six Months Ended
	June 30,						June 30,
(In millions)	2020		2019		2020		2019
Service cost	$	0.1	$	0.1	$	0.1	$	0.1
Interest cost	0.8		1.1		1.6		2.1
Expected return on plan assets	(0.4)		(0.5)		(0.8)		(0.9)
Amortization of net loss	0.4		0.4		1.1		1.1
Amortization of unrecognized prior service cost (A)	(1.6)		(1.5)		(3.1)		(3.0)
Total net periodic benefit cost	(0.7)		(0.4)		(1.1)		(0.6)
Plus: Amount allocated from OGE Energy	(0.2)		(0.1)		(0.4)		(0.3)
Net periodic benefit cost	$	(0.9)	$	(0.5)	$	(1.5)	$	(0.9)

(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.

In addition to the net periodic benefit income amounts recognized, as presented in the table above, for the postretirement benefit plans for the three and six months ended June 30, 2020 and 2019, ~~of $10.3 million related to~~OG&E recognized the ~~pension settlement charge of $11.2 million~~following:


	Three Months Ended						Six Months Ended
	June 30,						June 30,
(In millions)	2020		2019		2020		2019
Increase of postretirement expense to maintain allowed recoverable amount in Oklahoma jurisdiction (A)(B)	$	0.6	$	0.5	$	0.8	$	0.8

(A)Included in ~~accordance with~~ the ~~Oklahoma~~ Pension tracker, as presented in the regulatory ~~liability (see~~assets and liabilities table in Note ~~1); and~~1.

(B)Includes a ~~deferral of pension expense during the six months ended June 30, 2019 of $0.9 million related to the Arkansas jurisdictional~~ portion of ~~the~~OGE Energy's pension ~~settlement charge of $11.2 million (see Note 1).~~expense.

Postretirement Benefit Plans
Three Months Ended Six Months Ended
June 30, June 30,
(In millions) 2019
(B) 2018
(B) 2019
(C) 2018
(C)
Service cost $ 0.1
$ —
$ 0.1
$ 0.1
Interest cost 1.1
1.1
2.1
2.1
Expected return on plan assets (0.5 ) (0.4 ) (0.9 ) (0.9 )
Amortization of net loss 0.4
0.9
1.1
1.9
Amortization of unrecognized prior service cost (A) (1.5 ) (1.6 ) (3.0 ) (3.1 )
Total net periodic benefit cost (0.4 ) —
(0.6 ) 0.1
Plus: Amount allocated from OGE Energy (0.1 ) (0.1 ) (0.3 ) (0.3 )
Net periodic benefit cost $ (0.5 ) $ (0.1 ) $ (0.9 ) $ (0.2 )


~~(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 $0.5 million and $0.1 million of net periodic benefit income recognized during the three months ended June 30, 2019 and 2018, respectively, OG&E recognized an increase in postretirement medical expense during the three months ended June 30, 2019 and 2018 of $0.5 million and $2.2 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 $0.9 million and $0.2 million of net periodic benefit income recognized during the six months ended June 30, 2019 and 2018, respectively, OG&E recognized an increase in postretirement medical expense during the six months ended June 30, 2019 and 2018 of $0.8 million and $4.3 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) 2019 2018 2019 2018
Capitalized portion of net periodic pension benefit cost $ 0.7
$ 0.8
$ 1.5
$ 1.6
Capitalized portion of net periodic postretirement benefit cost $ —
$ 0.1
$ 0.1
$ 0.1


	Three Months Ended						Six Months Ended
	June 30,						June 30,
(In millions)	2020		2019		2020		2019
Capitalized portion of net periodic pension benefit cost	$	0.6	$	0.7	$	1.5	$	1.5
Capitalized portion of net periodic postretirement benefit cost	$	0.1	$	—	$	0.1	$	0.1


~~12.~~	~~Commitments and Contingencies~~

11.Commitments and Contingencies

Except as set forth below, in Note 13 12 and under "Environmental Laws and Regulations" in Item 2 of Part I and in Item 1 of Part II of this Form 10-Q, the circumstances set forth in Notes 13 14 and 14 15 to OG&E's Financial Statements included in OG&E's ~~2018~~2019 Form 10-K appropriately represent, in all material respects, the current status of OG&E's material commitments and contingent liabilities.

~~Public Utility Regulatory Policy Act of 1978~~

~~As previously disclosed in OG&E's~~ ~~2018 Form 10-K~~, OG&E has a QF contract with Oklahoma Cogeneration LLC which expires on August 31, 2019. For this 120 MW contract, OG&E purchases 100 percent of the electricity generated. OG&E also had a 320 MW contract with AES that expired on January 15, 2019, through which OG&E purchased 100 percent of the electricity generated.

In December 2018, OG&E announced its plan to acquire power plants from AES and Oklahoma Cogeneration LLC, pending regulatory approval, to meet customers' energy needs. In May 2019, OG&E received the necessary approval from the OCC and the FERC and conditional approval from the APSC to acquire both plants. In May 2019, OG&E acquired the power plant from AES and expects to acquire the plant from Oklahoma Cogeneration LLC in the third quarter of 2019. Further discussion can be found in Note 13.

Environmental Laws and Regulations

The activities of OG&E are subject to numerous stringent and complex federal, state and local laws and regulations governing environmental protection. These laws and regulations can change, restrict or otherwise impact OG&E's business activities in many ways, including the handling or disposal of waste material, planning for future construction activities to avoid or mitigate harm to threatened or endangered species and requiring the installation and operation of emissions or pollution control equipment. Failure to comply with these laws and regulations could result in the assessment of administrative, civil and criminal penalties, the imposition of remedial requirements and the issuance of orders enjoining future operations. Management believes that all of its operations are in substantial compliance with current federal, state and local environmental standards.

Environmental regulation can increase the cost of planning, design, initial installation and operation of OG&E's facilities. Management continues to evaluate its compliance with existing and proposed environmental legislation and regulations and implement appropriate environmental programs in a competitive market.

Other

In the normal course of business, OG&E is confronted with issues or events that may result in a contingent liability.These generally relate to lawsuits or claims made by third parties, including governmental agencies.When appropriate, management consults with legal counsel and other experts to assess the claim.If, in management's opinion, OG&E has incurred a probable loss as set forth by GAAP, an estimate is made of the loss, and the appropriate accounting entries are reflected in OG&E's CondensedFinancial Statements.At the present time, based on currently available information, OG&E believes that any reasonably possible losses in excess of accrued amounts arising out of pending or threatened lawsuits or claims would not be quantitatively material to its financial statements and would not have a material adverse effect on OG&E's financial position, results of operations or cash flows.

12.Rate Matters and Regulation


~~13.~~	~~Rate Matters and Regulation~~

Except as set forth below, the circumstances set forth in Note 14 15 to ~~OG&E's~~ the Financial Statements included in OG&E's ~~2018~~2019 Form 10-K appropriately represent, in all material respects, the current status of OG&E's regulatory matters.

Completed Regulatory Matters

APSC Proceedings

Arkansas 2019 Formula Rate Plan Filing

~~Per OG&E's settlement in its last general rate review,~~ OG&E filed anits second evaluation report under its Formula Rate Plan in October ~~2018.~~2019. On ~~March 6, 2019,~~January 29, 2020, OG&E, the General Staff of the APSC and the Office of the Arkansas Attorney General filed a settlement agreement requesting the APSC approve a $5.2 million revenue increase, with rates effective April 1, 2020. The settling parties agreed that the Series I grid modernization projects are prudent in both action and cost and that the Series II grid modernization projects are prudent in action only and the determination of prudence of costs will be reserved until the actual historical costs are reviewed. The settling parties also agreed that OG&E will no longer use projections for the remaining initial term or extension of its current Formula Rate Plan and that all costs will be included for recovery for the first time in the historical year. On February 28, 2020, the APSC approved athe settlement ~~agreement for a $3.3 million revenue increase, and new rates were effective as of April 1, 2019.~~

agreement.

~~OCC and FERC Approval for Acquisition of Existing Power Plants~~

Order Regarding COVID-19

On April 10, 2020, the APSC issued Order No. 1 related to COVID-19 and the provision of safe, adequate and reliable utility service at just and reasonable rates. Among other things, the APSC ordered the suspension of customer disconnects for non-payment during the pendency of the Arkansas Governor's emergency declaration or until the directive is rescinded by the APSC, neither of which have occurred yet. The order encourages companies to provide reasonable payment arrangements once the suspension is lifted. The APSC also authorized utilities to establish regulatory assets to record costs resulting from the

suspension of disconnections. These regulatory assets will be reviewed in future proceedings for reasonableness. The APSC ordered the General Staff of the APSC to consult with utilities to create a quarterly report to be used to report the costs incurred and saved that have been booked to the regulatory asset. OG&E is monitoring the regulatory activity regarding COVID-19 at the APSC and will consider the request for additional regulatory action by the APSC as needed.

On May 1, 2020, OG&E filed a Request for Additional Actions and Tariff Deviation seeking relief from the Arkansas General Service Rules and OG&E's Terms and Conditions under the tariff, in order to allow for: more flexible deferred payment agreements for all customer classes, suspension of increased deposits due to non-payment and suspension of the removal of customers from certain billing and extended due date plans for late payments. In ~~December 2018,~~addition, OG&E requested that incremental expenses, such as additional personal protective equipment, increased sanitation efforts at facilities, implementing health-screening processes and securing temporary facilities for potential sequestration of critical operation personnel, be tracked in a regulatory asset. OG&E noted that all possible cost categories are not known currently and reserved the right to file subsequent requests as needed.

On May 27, 2020, the APSC issued an order approving OG&E's request to deviate from the specified terms in the Arkansas General Service Rules and OG&E's Terms and Conditions to allow deferred payment arrangements to be offered to all customer classes and have more flexible payment arrangements. OG&E is authorized to record the expenses requested in its regulatory asset to defer and seek future recovery. The APSC found that because each utility has different cost recovery mechanisms and the magnitude of the utilities' expenses are unknown at this time, the APSC finds that it is premature to decide the exact recovery mechanism for any utility for COVID-19 related costs.

OCC Proceedings

OCC Public Utility Division Motion Regarding COVID-19

On April 28, 2020, the Director of the Public Utility Division filed an application ~~for pre-approval~~requesting an order from the OCC authorizing action in response to ~~acquire~~COVID-19. The application requested that the OCC authorize the State's utilities to record as a 360 MW capacity coal- and natural gas-fired plant from AES and a 146 MW capacity natural gas-fired combined-cycle plant from Oklahoma Cogeneration LLC in 2019 for $53.5 million. The purchase of these assets replaces capacity provided by purchased power contracts that have expired or are expiring in 2019 and helps OG&E satisfy its customers' energy needs and load obligations to the SPP. In addition, the filing sought approval of a rider mechanism to collectregulatory asset increased bad debt expenses, costs associated with expanded payment plans, waived fees and incremental expenses that are directly related to the ~~purchase~~suspension of or delay in disconnection of service beginning March 15, 2020, which coincides with the issuance of the Oklahoma Governor's emergency declaration. The application also requested that the OCC allow utilities to defer additional expenses associated with ensuring the continuity of utility service, such as additional personal protective equipment, increased sanitation efforts at facilities, implementing heath-screening processes and securing temporary facilities for potential sequestration of critical operation personnel. The application asked the OCC to consider in future proceedings whether each utility's request for recovery of these ~~generating facilities.~~ regulatory assets is reasonable and necessary and to consider issues such as the incremental bad debt experienced over normal periods, the appropriate period of recovery for any approved amount of regulatory asset, any amount of carrying costs and other related matters.

On May ~~13, 2019,~~7, 2020, the OCC ~~approved OG&E's acquisition of both plants, the requested rider mechanism for the AES plant and~~ordered that each utility is authorized to record as a regulatory asset ~~treatment for~~any increased bad debt expense, cost associated with expanded payment plans, waived fees and incremental expenses that are directly related to the ~~Oklahoma Cogeneration LLC plant that~~suspension of or delay in disconnection of service beginning March 15, 2020 until September 2020, unless otherwise ordered by the OCC. The OCC will ~~defer non-fuel operation and maintenance expenses, depreciation and ad valorem taxes.~~

~~On January 23, 2019, OG&E filed an application for Federal Power Act Section 203 approval with a~~consider in future proceedings whether each utility's request for ~~expedited consideration. This application requested FERC's prior authorization~~recovery of these regulatory assets is reasonable and necessary. The OCC will also consider issues such as the incremental bad debt experienced over normal periods, appropriate period of recovery for any approved amount of regulatory assets, any amounts of carrying costs thereon and other related matters. The OCC also authorized utilities to ~~acquire~~defer expenses associated with ensuring continuity of service and protecting utility personnel, customers and the ~~AES and Oklahoma Cogeneration LLC plants. On May 22, 2019, OG&E received authorization from the FERC to acquire both plants.~~

general public.

In May 2019, OG&E completed the acquisition of the power plant from AES and placed it into service, which is now named the River Valley power plant. Closing for the acquisition of the power plant from Oklahoma Cogeneration LLC is anticipated during the third quarter of 2019.

~~Fuel Adjustment Clause Review for Calendar Year 2017~~

In July 2018, the OCC staff filed an application to review OG&E's fuel adjustment clause for the calendar year 2017, including the prudence of OG&E's electric generation, purchased power and fuel procurement costs. On February 1, 2019, the ALJ recommended that OG&E's processes, costs, investments and decisions regarding fuel procurement for the 2017 calendar year be found prudent. On May 22, 2019, the OCC deemed OG&E's electric generation, purchased power and fuel procurement costs to be materially prudent.

Pending Regulatory Matters

~~Set forth below is a list of various~~Various proceedings pending before state or federal regulatory ~~agencies.~~agencies are described below. Unless stated otherwise, OG&E cannot predict when the regulatory agency will act or what action the regulatory agency will take. OG&E's financial results are dependent in part on timely and adequate decisions by the regulatory agencies that set OG&E's rates.

FERC Proceedings

~~FERC - Section 206 Filing~~

In January 2018, the Oklahoma Municipal Power Authority filed a complaint at the FERC stating that the base return on common equity used by OG&E in calculating formula transmission rates under the SPP Open Access Transmission Tariff is unjust and unreasonable and should be reduced from 10.60 percent to 7.85 percent, effective upon the date of the complaint. In addition to the request to reduce the return on equity, the Oklahoma Municipal Power Authority's complaint also requests that modifications be made to OG&E's transmission formula rates to reflect the impacts of the 2017 Tax Act, including the 2017 Tax Act's impact on accumulated deferred income tax balances. In May 2019, all parties agreed to a settlement which provides for 10 percent base return on equity, plus a 50-basis point adder, and a five-year amortization period of the unprotected excess accumulated deferred income taxes associated with the 2017 Tax Act. While pending approval by the FERC, interim rates are currently being applied by the SPP pursuant to the terms of the settlement agreement.

~~Oklahoma Rate Review Filing - December 2018~~

In December 2018, OG&E filed a general rate review with the OCC, requesting a rate increase of $77.6 million per year to recover its investment in the Dry Scrubbers project and in the conversion of Muskogee Units 4 and 5 to natural gas. The filing also sought to align OG&E's return on equity more closely to the industry average and to align OG&E's depreciation rates to more realistically reflect its assets' lifespans.

On May 24, 2019, OG&E entered into a non-unanimous joint stipulation and settlement agreement with the OCC staff, the Attorney General's Office of Oklahoma, the Oklahoma Industrial Energy Consumers and other certain parties associated with the requested rate increase. The filing was further amended on May 30, 2019 to include Oklahoma Association of Electric Cooperatives as a settling party. The settlement is subject to OCC approval. Under the terms of the settlement agreement, OG&E would receive full recovery of its environmental investments in the Dry Scrubbers project and in the conversion of Muskogee Units 4 and 5 to natural gas. Base rates would not change as a result of the settlement agreement due to the reduction of costs related to cogeneration contracts and the acceleration of unprotected deferred tax savings over a 10-year period. Further, OG&E's current depreciation rates and return on equity of 9.5 percent for purposes of calculating the allowance for funds used during construction and OG&E's various recovery riders that include a full return component would remain unchanged.

~~On July 1, 2019, OG&E implemented interim rates, which are subject to refund of any amount recovered in excess of the rates ultimately approved by the OCC in the rate review.~~

On July 12, 2019, the ALJ issued a report that recommended approval of the settlement agreement and found the settlement agreement fair, just, reasonable and in the public interest. The ALJ's report also recommended that OG&E's environmental compliance decisions and costs related to the Dry Scrubbers project and the conversion of Muskogee Units 4 and 5 to natural gas be found prudent and used and useful with cost recovery allowed. These recommendations are subject to approval by the OCC. A hearing on exceptions was held on August 6, 2019, and OG&E is awaiting a final order from the OCC.

The Dry Scrubbers project, which includes the installation of two dry scrubbers at the Sooner plant, and the conversion of Muskogee Units 4 and 5 to natural gas were initiated in response to the EPA's MATS and Regional Haze Rule FIP. The Dry Scrubber systems on Sooner Unit 1 and Unit 2 were placed into service in October 2018 and January 2019, respectively. Muskogee Units 4 and 5 were placed into service in March 2019. As of June 30, 2019, OG&E has invested $512.4 million in the Dry Scrubbers and $57.0 million in the Muskogee natural gas conversion.

~~FERC~~ Order for Sponsored Transmission Upgrades within SPP

Under the SPP Open Access Transmission Tariff, costs of participant-funded, or "sponsored," transmission upgrades may be recovered from other SPP customers whose transmission service depends on capacity enabled by the upgrade. The SPP Open Access Transmission Tariff ~~allowed~~required the SPP to charge for these upgrades ~~since~~beginning in 2008, but the SPP had not been charging its customers for these upgrades due to information system limitations. However, the SPP had informed participants in the market that these charges would be forthcoming. In July 2016, the FERC granted the SPP's request to recover the charges not billed since 2008. The SPP subsequently billed OG&E for these charges and credited OG&E related to transmission upgrades that OG&E had sponsored, which resulted in OG&E being a net receiver of sponsored upgrade credits. The majority of these net credits were refunded to customers through OG&E's various rate riders that include SPP activity with the remaining amounts retained by OG&E.

Several ~~impacted~~ companies that were net payers of Z2 charges sought rehearing of the FERC's July 2016 order; however, in November 2017, the FERC denied the rehearing requests. In January 2018, one of the impacted companies appealed the FERC's decision to the U.S. Court of Appeals for the District of ~~Columbia.~~Columbia Circuit. In July 2018, ~~the U.S. Court of Appeals for the District of Columbia~~that court granted a motion requested by the FERC that the case be remanded back to the FERC for further examination and proceedings. In February 2019, the FERC reversed its July 2016 order and November 2017 rehearing denial, ruled that the SPP violated its tariff to charge for the 2008 - 2015 period in 2016, held that the SPP tariff provision that prohibited those charges could not be waived and ordered the SPP to develop a plan to refund the payments but not to implement the refunds until further ordered to do so. In response, onin April 1, 2019, OG&E filed a request for rehearing with the FERC, and onin May ~~24,~~ 2019, OG&E filed a FERC 206 complaint against the SPP, alleging that the SPP's forced unwinding of the revenue credit payments to OG&E would violate the provisions of the Sponsored Upgrade ~~Agreement.~~Agreement and of the applicable tariff. OG&E's filing requested that the FERC rule that the SPP is not entitled to seek refunds or in any other way seek to unwind the revenue credit payments it had paid to OG&E pursuant to the Sponsored Upgrade Agreement. The SPP's response to OG&E's filing agreed that OG&E should be entitled to keep its Z2 payments and argued that the SPP should not be held responsible for those payments if refunds are ordered. Further, the SPP has requested the FERC to negotiate a global settlement with all impacted parties, including other project sponsors who, like OG&E, have also filed complaints at FERC contending that the payments they have received cannot properly be unwound.

On February 20, 2020, the FERC denied OG&E's request for rehearing of its February 2019 order, denying the waiver and ruling that the SPP must seek refunds from project sponsors for Z2 payments for the 2008 through 2015 period and pay them back to transmission owners. The FERC also denied the SPP's request for a stay and for institution of settlement procedures. The FERC stated it would not institute settlement procedures unless parties on both sides of the matter requested them. The FERC did not rule on OG&E's complaint or the complaints of other project sponsors, or consider the SPP's refund plan. The FERC thus has not set any date for payment of refunds. On March 2, 2020, OG&E petitioned the U.S. Court of Appeals for the District of Columbia Circuit for review of the FERC's order denying the waiver and requiring refunds. The appeal will likely be decided by the second quarter of 2021.

OG&E cannot predict the outcome of this proceeding based on currently available information, and as of June 30, ~~2019~~2020 and at present time, OG&E has not reserved an amount for a potential refund. If the reversal of the July 2016 FERC order remains intact, OG&E estimates it would be required to refund $13.0 million, which is net of amounts paid to other utilities for upgrades and would be subject to interest at the FERC-approved rate. If refunds were required, recovery of these upgrade credits would shift to future periods. Of the $13.0 million, OG&E would be impacted by $5.0 million in expense that initially benefited OG&E in 2016, and OG&E customers would incur a net impact of $8.0 million in expense through rider mechanisms or the FERC formula rate.

The SPP has recently proposed eliminating Attachment Z2 revenue crediting and replacing it with a different mechanism that would provide project sponsors such as OG&E the same level of recovery they would receive if payments continued under Attachment Z2. The FERC rejected that proposal to the extent it would limit recovery to the amount of the upgrade sponsor's directly assigned upgrade costs with interest, finding that providing the possibility of recovering greater than the cost of the investment could serve as an incentive for entities to build merchant transmission projects. The SPP is allowed to resubmit a proposal without this limited recovery.

~~Fuel Adjustment Clause Review for Calendar Year 2018~~

APSC Proceedings

In June 2019, the OCC staff filed an application to review OG&E's fuel adjustment clause for the calendar year 2018, including the prudence of OG&E's electric generation, purchased power and fuel procurement costs.

~~APSC -~~ Environmental Compliance Plan Rider

OnIn May ~~31,~~ 2019, OG&E filed an environmental compliance plan rider in Arkansas to recover its investment for the environmentally mandated costs associated with the Sooner Dry Scrubbers project and the conversion of Muskogee Units 4 and 5 to natural gas. The filing isinitiated an interim surcharge, subject to refund, that began with the first billing cycle of June 2019. OG&E is reserving the amounts collected through the interim surcharge, pending APSC approval of OG&E's filing.

A hearing on the merits was held in December 2019. Parties submitted additional briefs to the APSC in March 2020, which were requested due to certain intervenors questioning whether a company can utilize an environmental compliance plan rider while also being regulated under a formula rate plan. The APSC Staff concurred with OG&E that the rider may run concurrently with a formula rate plan, and the Arkansas Attorney General and other intervenors were in opposition. On July 31, 2020, OG&E's request to recover its investment for these environmentally mandated costs through the interim surcharge was not approved, as the APSC indicated OG&E could otherwise recover this investment, such as through the Formula Rate Plan Rider. OG&E will return $5.1 million to customers that had been reserved for refund and will include these costs for recovery in its upcoming Formula Rate Plan filing.

~~APSC Approval for Acquisition of Existing Power Plants~~

Net Metering Order

On ~~April~~June 1, 2020, the APSC revised its net-metering rules. The revised rules retained 1:1 full credit for net excess generation of residential customers and commercial customers up to 1 MW without demand charges. For larger commercial customers, 1 MW to 20 MW, the APSC found that some cost shifting to non-net-metering customers may occur. While the rules retain 1:1 full credit for net excess generation, they allow for a grid charge. The grid charge is initially set at zero; however, a utility may request approval to revise the grid charge based on evidence that an unreasonable cost shift to non-net-metering customers is occurring. OG&E does not currently have a significant number of net-metering customers in Arkansas. OG&E is reviewing its existing net-metering tariffs considering the new rules and will request the APSC approve any changes that are believed to be necessary.

OCC Proceedings

Oklahoma Grid Enhancement Plan

On February 24, ~~2019,~~2020, OG&E filed an application with the ~~APSC requesting~~OCC for approval of ~~the acquisition, as well as depreciation rates,~~a mechanism that allows for interim recovery of the ~~AES~~costs associated with its grid enhancement plan. The plan includes approximately $800.0 million of strategic, data-driven investments, over five years, covering grid resiliency, grid automation, communication systems and ~~Oklahoma Cogeneration LLC plants,~~technology platforms and applications. On May 19, 2020, the OCC temporarily suspended the procedural schedule in light of various conditions related to the COVID-19 pandemic and the uncertainty surrounding the method and date in which the hearing on the merits may occur. On July 9, 2020, a prehearing conference was held before the Administrative Law Judge to establish a procedural schedule and lift the stay ordered on May 19, 2020. On July 23, 2020, the OCC issued an order approving the amended procedural schedule and thereby lifting the stay. A hearing on the merits is scheduled for October 8, 2020.

2019 Oklahoma Fuel Prudency

On June 16, 2020, the Public Utility Division Staff filed their application initiating the review of the 2019 fuel adjustment clause and prudence review. OG&E ~~received conditional approval for~~plans to file its Minimum Filing Requirements and Supporting Testimony on August 17, 2020.

Oklahoma Retail Electric Supplier Certified Territory Act Causes

Certain rural electric cooperative electricity suppliers have filed complaints with the ~~purchase~~OCC alleging that OG&E has violated the Oklahoma Retail Electric Supplier Certified Territory Act. OG&E believes it is lawfully serving customers specifically exempted from this act and has presented evidence and testimony to the OCC supporting its position. If the OCC were to ultimately find that some or all of the ~~generating facilities. Issues related~~customers being served are not exempted, then OG&E would have to ~~depreciation rates~~evaluate the recoverability of some plant investments made to serve these customers. OG&E may also be required to reimburse certified territory suppliers for an amount of lost revenue. Currently, the People's Electric Cooperative, Inc. case has been stayed with the OCC, and ~~prudence of action will continue to be addressed in~~an appeal has been filed with the ~~existing docket. Issues regarding prudence of cost may be addressed in the existing docket or in the Formula Rate Plan.~~Oklahoma Supreme Court.

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations.

Introduction

Overview

OG&E Mission and Focus

OGE Energy's mission, through OG&E and OGE Energy's equity interest in Enable, is to fulfill its critical role in the nation's electric utility and natural gas midstream pipeline infrastructure and meet individual customer's needs for energy and related services, focusing on safety, efficiency, reliability, customer service and risk management.

Recent Developments

COVID-19 Pandemic

In March 2020, the World Health Organization declared the outbreak of COVID-19 as a pandemic, which continues to spread throughout the U.S. and world. In an effort to contain COVID-19 or slow its spread, the U.S. federal, state and local governments enacted various measures, including orders to close or place restrictions on businesses not deemed "essential," enact "shelter in place" restrictions on residents and practice social distancing when engaging in essential activities. The COVID-19 outbreak has adversely impacted global markets and activity, including the energy industry, and it is impossible to predict the ultimate impact of the COVID-19 pandemic, as the situation continues to evolve. In Oklahoma City, OG&E's largest service territory, the mayor's "shelter in place" order required residents to stay home except for certain "essential" activities and closed down restaurant dining rooms, personal care services and other businesses that posed a high risk for spreading COVID-19. The order was effective from March 16, 2020 to April 30, 2020. Beginning May 1, 2020, Oklahoma City began its phased "re-opening," and there are currently no city-wide or state-wide "shelter in place" restrictions.

OG&E's current and potential future responses to the COVID-19 impacts on its employees, customers and shareholders are further discussed below.

•OG&E's top priority is to protect its employees and their families, as well as its customers. OG&E is taking all precautionary measures as directed by health authorities and local and national governments. OG&E continues to monitor the outbreak of COVID-19, and other facility closures, or closures for a longer period of time, may be required to help ensure the health and safety of its employees and customers. In order to promote the safety of OG&E's employees and the continuity of utility service, OG&E implemented health-screening processes and increased sanitation efforts at its facilities and secured additional personal protective equipment, among other additional measures taken. The OCC and the APSC both issued accounting orders allowing OG&E to defer these incremental costs incurred for recovery.

•As a precautionary measure in order to increase OGE Energy's cash position and preserve financial flexibility in light of current uncertainty resulting from the COVID-19 pandemic, OGE Energy entered into a one-year $75.0 million term loan agreement in April 2020. Further, OG&E issued $300.0 million in senior notes in April 2020.

•In March 2020, President Trump signed into U.S. federal law the Coronavirus Aid, Relief, and Economic Security Act, or the "CARES Act," which is aimed at addressing the economic disruption resulting from the COVID-19 pandemic and providing certain tax relief to businesses in the U.S. The CARES Act, among other things, includes provisions relating to refundable payroll tax credits, deferment of the employer portion of FICA payroll taxes, net operating loss carryback periods, alternative minimum tax credit refunds, modifications to the net interest deduction limitations and technical corrections to tax depreciation methods for qualified improvement property. OG&E concluded that the financial impact of the provisions it adopted is immaterial.

•OG&E voluntarily suspended all disconnects for nonpayment, effective March 16, 2020, and on June 25, 2020 announced that it would reinstate disconnects for nonpayment in Oklahoma, effective July 6, 2020. OG&E also announced that it will provide broad payment options to customers who repay their past due balances, including a six-month installment plan and the Average Monthly Billing plan which would spread past due balances over a

12-month period. OG&E adjusted its reserve on accounts receivable as of June 30, 2020 in light of the current expected credit loss model (ASU 2016-13) and the COVID-19 pandemic. The adjustment, which was $1.1 million, incorporated concerns of continued slower customer payment due to unemployment. OG&E deferred this credit reserve amount to a regulatory asset, as both the OCC and the APSC issued accounting orders allowing OG&E to seek recovery of incremental bad debt resulting from COVID-19. OG&E will continue to monitor the reserve as it gains better clarity on the impacts of COVID-19 on its customers and business. OG&E is also monitoring customer usage to determine any impact on load forecasts, in terms of both energy and demand usage. While other customer classes have experienced declines due to COVID-19, residential MWh sales have increased by 2.3 percent on a weather-adjusted basis for the six months ended June 30, 2020 compared to the same period in 2019, likely due to more customers spending a higher percentage of time at home as a result of the pandemic. Due to different customer characteristics, the contribution to margin varies by customer class and applicable tariffs. The below table presents a one percent annual gross margin sensitivity by class, based on the gross margin guidance OG&E provided in its 2019 Form 10-K. This analysis only incorporates retail gross margin and excludes transmission and other gross margin sensitivities.


Customer Class	1% Margin Sensitivity (In millions)
Residential	$	6.5
Commercial	$	3.6
Industrial	$	1.3
Oilfield	$	1.1
Public authorities	$	1.2

Regulatory Matters

Further discussion can be found in Note 12 within "Item 1. Financial Statements."

Arkansas 2019 Formula Rate Plan Filing

OG&E filed its second evaluation report under its Formula Rate Plan in October 2019. On January 29, 2020, OG&E, the General Staff of the APSC and the Office of the Arkansas Attorney General filed a settlement agreement requesting the APSC approve a $5.2 million revenue increase, with rates effective April 1, 2020. The settling parties agreed that the Series I grid modernization projects are prudent in both action and cost and that the Series II grid modernization projects are prudent in action only and the determination of prudence of costs will be reserved until the actual historical costs are reviewed. The settling parties also agreed that OG&E will no longer use projections for the remaining initial term or extension of its current Formula Rate Plan and that all costs will be included for recovery for the first time in the historical year. On February 28, 2020, the APSC approved the settlement agreement.

APSC Order Regarding COVID-19

On May 27, 2020, the APSC issued an order approving OG&E's request to deviate from the specified terms in the Arkansas General Service Rules and OG&E's Terms and Conditions to allow deferred payment arrangements to be offered to all customer classes and have more flexible payment arrangements. OG&E is also authorized to defer to a regulatory asset certain incremental expenses, such as additional personal protective equipment, increased sanitation efforts at facilities, implementing health-screening processes and securing temporary facilities for potential sequestration of critical operation personnel, and seek future recovery. The APSC found that it is premature to decide at this time the exact recovery mechanism for any utility for COVID-19 related costs.

OCC Public Utility Division Motion Regarding COVID-19

On May 7, 2020, the OCC ordered that the State's utilities, including OG&E, are authorized to record as a regulatory asset any increased bad debt expense, cost associated with expanded payment plans, waived fees and incremental expenses that are directly related to the suspension of or delay in disconnection of service beginning March 15, 2020 until September 2020, unless otherwise ordered by the OCC. The OCC will consider in future proceedings whether each utility's request for recovery of these regulatory assets is reasonable and necessary. The OCC will also consider issues such as the incremental bad debt experienced over normal periods, appropriate period of recovery for any approved amount of regulatory assets, any amounts of carrying costs thereon and other related matters. The OCC also authorized utilities to defer expenses associated with ensuring continuity of service and protecting utility personnel, customers and the general public.

Summary of Operating Results

Three Months Ended June 30, 2020 as compared to the Three Months Ended June 30, 2019 ~~as compared to Three Months Ended June 30, 2018~~

OG&E reported net income of $78.9 million and $74.5 million ~~and $92.0 million~~ during ~~the~~ three months ended June 30, ~~2019~~2020 and ~~2018~~,2019, respectively, ~~a decrease~~an increase of ~~$17.5~~$4.4 million, or ~~19.0~~5.9 percent, primarily due to ~~lower~~higher gross margin ~~(driven~~driven by ~~unfavorable weather and lower rates primarily resulting from lower income tax expense),~~the expiration of the cogeneration credit rider, partially offset by higher depreciation and amortization expense due to additional assets being placed into service and higher ~~other operation and maintenance expense. This decrease was partially offset~~interest expense driven by ~~lower income tax expense and lower interest expense.~~increased long-term debt outstanding.

Six Months Ended June 30, 2020 as compared to the Six Months Ended June 30, 2019 ~~as compared to Six Months Ended June 30, 2018~~

OG&E reported net income of ~~$94.1~~$98.8 million and ~~$123.3~~$94.1 million during the six months ended June 30, 2020 and 2019, ~~and 2018,~~ respectively, ~~a decrease~~an increase of ~~$29.2~~$4.7 million, or ~~23.7~~5.0 percent, primarily due to ~~lower~~higher gross margin ~~(driven~~driven by unfavorable weather and lower rates primarily resulting from lower income tax expense), lower allowance for equity funds used during construction due to certain environmental projects being completed and placed into service, higher other operation and maintenance expense andthe expiration of the cogeneration credit rider, partially offset by higher depreciation and amortization expense due to additional assets being placed into ~~service. This decrease was partially offset by lower~~service and higher interest expense ~~lower other net periodic benefit expense and lower income tax expense.~~driven by increased long-term debt outstanding.

2020 Outlook

~~Recent Developments and Regulatory Matters~~

~~Further discussion can be found in Note 13 within "Item 1. Financial Statements."~~

~~Arkansas Formula Rate Plan Filing~~

Per OG&E's settlement in its last general rate review, OG&E filed an evaluation report under its Formula Rate Plan in October 2018. On March 6, 2019, the APSC approved a settlement agreement for a $3.3 million revenue increase, and new rates were effective as of April 1, 2019.

~~Approval for Acquisition of Existing Power Plants~~

In May 2019, OG&E received approval from both the OCC and the FERC to acquire plants from AES and Oklahoma Cogeneration LLC. The OCC approved OG&E's acquisition price of $53.5 million, the requested rider mechanism for the AES plant and regulatory asset treatment for the Oklahoma Cogeneration LLC plant that will defer non-fuel operation and maintenance expenses, depreciation and ad valorem taxes. OG&E received conditional approval from the APSC to acquire both plants, and issues related to depreciation rates and prudence of action will continue to be addressed in the existing docket, while issues regarding prudence of cost may be addressed in the existing docket or in the Formula Rate Plan.

OG&E completed the acquisition of the power plant from AES and placed it into service in May 2019, which is now named the River Valley power plant. Closing for the acquisition of the power plant from Oklahoma Cogeneration LLC is anticipated during the third quarter of 2019.

~~FERC - Section 206 Filing~~

In May 2019, OG&E and the Oklahoma Municipal Power Authority agreed to a settlement regarding OG&E's formula transmission rates under the SPP Open Access Tariff which provides for 10 percent base return on equity, plus a 50-basis point adder, and a five-year amortization period of the unprotected excess accumulated deferred income taxes associated with the 2017 Tax Act. While pending approval by the FERC, interim rates are currently being applied by the SPP pursuant to the terms of the settlement agreement.

~~Oklahoma Rate Review Filing - December 2018~~

In May 2019, OG&E entered into a non-unanimous joint stipulation and settlement agreement regarding OG&E's general rate review request with the OCC staff, the Attorney General's Office of Oklahoma and other certain parties associated with the requested rate increase. The settlement is subject to OCC approval. Under the terms of the settlement agreement, OG&E would receive full recovery of its environmental investments in the Dry Scrubbers project and in the conversion of Muskogee Units 4 and 5 to natural gas. Base rates would not change as a result of the settlement agreement due to the reduction of costs related to cogeneration contracts and the acceleration of unprotected deferred tax savings over a 10-year period. Further, OG&E's current depreciation rates and return on equity of 9.5 percent for purposes of calculating the allowance for funds used during construction and OG&E's various recovery riders that include a full return component would remain unchanged.

In July 2019, OG&E implemented interim rates, which are subject to refund of any amount recovered in excess of the rates ultimately approved by the OCC in the rate review. Recommendations made by the ALJ are subject to approval by the OCC. A hearing on the exceptions was held in August 2019, and OG&E is awaiting a final order from the OCC.

~~APSC - Environmental Compliance Plan Rider~~

In May 2019, OG&E filed an environmental compliance plan rider in Arkansas to recover its investment for the environmentally mandated costs associated with the Dry Scrubbers project and the conversion of Muskogee Units 4 and 5 to natural gas. The filing is an interim surcharge, subject to refund, that began with the first billing cycle of June 2019. OG&E is reserving the amounts collected through the interim surcharge, pending APSC approval of OG&E's filing.

~~2019 Outlook~~

OG&E's ~~2019~~2020 earnings guidance remains unchanged and is between ~~$311~~$346 million to ~~$325~~$357 million of net income. The guidance assumes, among other things, normal weather for the year. See OG&E's ~~2018~~2019 Form 10-Kfor other key factors and assumptions underlying its ~~2019~~2020 earnings guidance.

Non-GAAP Financial Measures

Gross margin is defined by OG&E as operating revenues less cost of sales. Cost of sales, as reflected on the income statement, includes fuel, purchased power and certain transmission expenses. Gross margin is a non-GAAP financial measure because it excludes depreciation and amortization and other operation and maintenance expenses. Expenses for fuel and purchased power are recovered through fuel adjustment clauses, and as a result, changes in these expenses are offset in operating revenues with no impact on net income. OG&E believes gross margin provides a more meaningful basis for evaluating its operations across periods than operating revenues because gross margin excludes the revenue effect of fluctuations in these expenses. Gross margin is used internally to measure performance against budget and in reports for management and the Board of Directors. OG&E's definition of gross margin may be different from similar terms used by other companies. Further, gross margin is not intended to replace operating revenues as determined in accordance with GAAP as an indicator of operating performance. For a reconciliation of gross margin to revenue, which is the most directly comparable financial measure calculated and presented in accordance with GAAP, for the three and six months ended June 30, ~~2019~~2020 and ~~2018,~~2019, see "Results of Operations" below.

Results of Operations

The following discussion and analysis presents factors that affected OG&E's results of operations for the three and six months ended June 30, ~~2019~~2020 as compared to the same periods in~~2018~~ 2019 and OG&E's financial position atJune 30, ~~2019~~. 2020. Due to seasonal fluctuations and other factors,, OG&E'soperating results for the three and six months ended June 30, ~~2019~~2020 are not necessarily indicative of the results that may be expected for the year endingDecember 31, ~~2019~~2020 or for any future period.The following information should be read in conjunction with theCondensedFinancial Statements and Notes thereto. Known trends and contingencies of a material nature are discussed to the extent considered relevant.


	Three Months Ended						Six Months Ended							Three Months Ended						Six Months Ended
	June 30,													June 30,						June 30,
(Dollars in millions)	2019			2018			2019			2018			(Dollars in millions)	2020		2019		2020		2019
Operating revenues	$	513.7		$	567.0		$	1,003.7		$	1,059.7		Operating revenues	$	503.5	$	513.7	$	934.8	$	1,003.7
Cost of sales	178.7			208.7			391.3			419.2			Cost of sales	137.4		178.7		272.4		391.3
Other operation and maintenance	120.0			117.5			240.3			231.1			Other operation and maintenance	117.7		120.0		238.7		240.3
Depreciation and amortization	84.3			80.9			166.7			159.7			Depreciation and amortization	97.3		84.3		191.7		166.7
Taxes other than income	20.1			21.6			44.5			44.3			Taxes other than income	25.0		20.1		48.9		44.5
Operating income	110.6			138.3			160.9			205.4			Operating income	126.1		110.6		183.1		160.9
Allowance for equity funds used during construction	1.2			6.3			2.7			13.3			Allowance for equity funds used during construction	1.3		1.2		2.6		2.7
Other net periodic benefit income (expense)	—			(5.2		)	0.4			(10.0		)	Other net periodic benefit income (expense)	(1.0)		—		(1.5)		0.4
Other income	1.1			3.5			2.5			6.6			Other income	1.1		1.1		2.6		2.5
Other expense	0.8			0.6			1.5			1.4			Other expense	0.9		0.8		1.4		1.5
Interest expense	33.3			39.2			65.7			76.5			Interest expense	39.3		33.3		76.2		65.7
Income tax expense	4.3			11.1			5.2			14.1			Income tax expense	8.4		4.3		10.4		5.2
Net income	$	74.5		$	92.0		$	94.1		$	123.3		Net income	$	78.9	$	74.5	$	98.8	$	94.1
Operating revenues by classification:													Operating revenues by classification:
Residential	$	186.6		$	226.2		$	382.0		$	428.3		Residential	$	208.4	$	186.6	$	380.7	$	382.0
Commercial	119.8			140.9			220.1			246.6			Commercial	116.1		119.8		210.2		220.1
Industrial	54.3			58.5			107.9			110.4			Industrial	45.7		54.3		88.3		107.9
Oilfield	49.9			46.7			100.1			89.5			Oilfield	39.1		49.9		78.1		100.1
Public authorities and street light	45.8			53.0			87.3			96.5			Public authorities and street light	41.6		45.8		77.2		87.3
Sales for resale	0.1			—			0.1			0.1			Sales for resale	0.1		0.1		—		0.1
System sales revenues	456.5			525.3			897.5			971.4			System sales revenues	451.0		456.5		834.5		897.5
Provision for rate refund	(0.5		)	(16.5		)	(0.6		)	(19.7		)	Provision for rate refund	(1.0)		(0.5)		(1.6)		(0.6)
Integrated market	10.3			13.2			17.0			21.8			Integrated market	8.5		10.3		15.7		17.0
Transmission	39.8			40.2			75.9			76.0			Transmission	39.8		39.8		74.0		75.9
Other	7.6			4.8			13.9			10.2			Other	5.2		7.6		12.2		13.9
Total operating revenues	$	513.7		$	567.0		$	1,003.7		$	1,059.7		Total operating revenues	$	503.5	$	513.7	$	934.8	$	1,003.7
Reconciliation of gross margin to revenue:													Reconciliation of gross margin to revenue:
Operating revenues	$	513.7		$	567.0		$	1,003.7		$	1,059.7		Operating revenues	$	503.5	$	513.7	$	934.8	$	1,003.7
Cost of sales	178.7			208.7			391.3			419.2			Cost of sales	137.4		178.7		272.4		391.3
Gross margin	$	335.0		$	358.3		$	612.4		$	640.5		Gross margin	$	366.1	$	335.0	$	662.4	$	612.4
MWh sales by classification (In millions)													MWh sales by classification (In millions)
Residential	2.0			2.3			4.4			4.7			Residential	2.2		2.0		4.4		4.4
Commercial	1.5			1.9			2.9			3.3			Commercial	1.5		1.5		3.0		2.9
Industrial	1.2			1.1			2.3			2.1			Industrial	0.9		1.2		2.0		2.3
Oilfield	1.2			1.0			2.4			2.0			Oilfield	1.0		1.2		2.1		2.4
Public authorities and street light	0.7			0.8			1.4			1.5			Public authorities and street light	0.7		0.7		1.3		1.4

System sales	6.6			7.1			13.4			13.6			System sales	6.3		6.6		12.8		13.4
Integrated market	0.3			0.3			0.6			0.6			Integrated market	0.5		0.3		0.8		0.6
Total sales	6.9			7.4			14.0			14.2			Total sales	6.8		6.9		13.6		14.0
Number of customers	853,500			845,244			853,500			845,244			Number of customers	863,234		853,500		863,234		853,500
Weighted-average cost of energy per kilowatt-hour (In cents)													Weighted-average cost of energy per kilowatt-hour (In cents)
Natural gas	2.113			2.338			2.527			2.475			Natural gas	1.907		2.113		1.784		2.527
Coal	2.067			2.058			1.993			2.028			Coal	1.976		2.067		1.962		1.993
Total fuel	1.909			2.047			2.118			2.058			Total fuel	1.764		1.909		1.658		2.118
Total fuel and purchased power	2.471			2.721			2.672			2.827			Total fuel and purchased power	1.921		2.471		1.904		2.672
Degree days (A)													Degree days (A)
Heating - Actual	197			328			2,277			2,208			Heating - Actual	302		197		1,951		2,277
Heating - Normal	204			203			2,004			2,001			Heating - Normal	204		204		2,004		2,004
Cooling - Actual	481			776			481			786			Cooling - Actual	559		481		582		481
Cooling - Normal	626			625			639			638			Cooling - Normal	626		626		639		639


~~(A)~~	~~Decreased primarily due to lower fuel costs related to the generating assets utilized during the three and six months ended June 30, 2019.~~


~~(B)~~	~~Increased primarily due to a 47.2 percent and 30.8 percent increase in MWhs purchased for the three and six months ended June 30, 2019, respectively.~~


~~(C)~~	~~Decreased primarily due to the expiration of the AES cogeneration contract in January 2019, as discussed in Note 12 within "Item 1. Financial Statements."~~


~~(D)~~	~~Decreased due to a 30.9 percent decrease in MWs purchased during both the three and six months ended June 30, 2019.~~


~~(E)~~	~~Decreased primarily due to lower SPP charges for the base plan projects of other utilities.~~

Other operation and maintenance expense ~~increased $2.5~~decreased $2.3 million, or ~~2.1~~1.9 percent, and ~~$9.2~~$1.6 million, or ~~4.0~~0.7 percent, during the three and six months ended June 30, ~~2019,~~2020, respectively, as compared to the same periods in ~~2018.~~2019. The below factors contributed to the changes in other operation and maintenance expense.


	$ Change						% Change

(In millions)	Three Months Ended		Six Months Ended		Three Months Ended		Six Months Ended
Contract technical and construction services	$	(3.9)	$	(6.2)	(26.7)	%	(24.0)	%

Other	(1.6)		(2.8)		(1.6)	%	(1.3)	%
New expenses related to River Valley power plant (A)	3.2		7.4		*		*







Change in other operation and maintenance expense (B)	$	(2.3)	$	(1.6)

* Change is greater than 100 percent variance.

(A)Additional other operation and maintenance expenses related to the purchase of the River Valley plant are primarily recovered through a rider mechanism, as approved by the OCC in 2019.

$ Change % Change
(In millions) Three Months Ended Six Months Ended Three Months Ended Six Months Ended
Contract technical and construction services (A) $ 4.3
$ 7.6
41.3 % 41.1 %
Other (1.8 ) 1.6
1.7 % 0.8 %
Change in other operation and maintenance expense $ 2.5
$ 9.2


~~(A)~~	~~Increased primarily due to the timing of work performed.~~

(B)Certain incremental expenses incurred by OG&E related to its COVID-19 response have been deferred and are included in the regulatory assets and liabilities table in Note 1 within "Item 1. Financial Statements."

Depreciation and amortization expense increased ~~$3.4~~$13.0 million, or ~~4.2~~15.4 percent, and ~~$7.0~~$25.0 million, or ~~4.4~~15.0 percent, during the three and six months ended June 30, ~~2019,~~2020, respectively, as compared to the same periods in ~~2018,~~2019, primarily due to additional assets being placed into ~~service.~~service and depreciation expense for the Sooner Dry Scrubbers no longer being deferred to a regulatory asset.

~~Allowance for equity funds used during construction decreased $5.1~~Taxes other than income increased $4.9 million, or ~~81.0~~24.4 percent, and ~~$10.6~~$4.4 million, or ~~79.7~~9.9 percent, during the three and six months ended June 30, ~~2019,~~2020, respectively, as compared to the same periods in ~~2018,~~2019, primarily due to ~~lower construction work in progress balances resulting from certain environmental projects being completed and placed into service.~~increased ad valorem taxes.

~~Other net periodic benefit expense decreased $5.2~~Interest on long-term debt increased $7.0 million, or ~~100.0~~22.0 percent, and $10.4 million during the three and six months ended June 30, 2019, respectively, as compared to the same periods in 2018, primarily due to lower pension costs reflected in base rates as a result of the most recent Oklahoma rate review settlement in June 2018.

~~Other income decreased $2.4~~$11.0 million, or ~~68.6 percent, and $4.1 million, or 62.1~~17.1 percent, during the three and six months ended June 30, ~~2019,~~2020, respectively, as compared to the same periods in ~~2018,~~2019, primarily due to ~~a decrease in the tax gross-up related to lower allowance for funds used during construction.~~

~~Interest on~~increased long-term debt ~~decreased $7.9~~outstanding and interest expense for the Sooner Dry Scrubbers no longer being deferred to a regulatory asset.

Income tax expense increased $4.1 million, or ~~19.9~~95.3 percent, and ~~$14.9~~$5.2 million, or ~~18.8~~100.0 percent, during the three and six months ended June 30, ~~2019,~~2020, respectively, as compared to the same periods in ~~2018,~~2019, primarily due to ~~the timing of~~ higher interest rate debt maturing and being replaced with lower interest rate debt and due to the deferral of interest expense for the Sooner Dry Scrubbers to a regulatory asset, as disclosed in Note 1 within "Item 1. Financial Statements."

Allowance for borrowed funds used during construction decreased $2.2 million, or 78.6 percent, and $4.9 million, or 75.4 percent, during the three and six months ended June 30, 2019, respectively, as compared to the same periods in 2018, primarily due to lower construction work in progress balances resulting from certain environmental projects being completed and placed into service.

Income tax expense decreased $6.8 million, or 61.3 percent, and $8.9 million, or 63.1 percent, during the three and six months ended June 30, 2019, respectively, as compared to the same periods in 2018. The decrease during the three months ended June 30, 2019 was primarily due to lower pretax income, partially offset by lower tax credits. The decrease during the six months ended June 30, 2019 was primarily due to lower pretax income and ~~an increase in the amortization of net refundable deferred taxes, partially offset by lower~~reduced tax ~~credits.~~credit generation.

Off-Balance Sheet Arrangements

There have been no significant changes in OG&E's off-balance sheet arrangements from those discussed in OG&E's ~~2018~~2019 Form 10-K.

Liquidity and Capital Resources

Cash Flows

Six Months Ended
June 30, 2019 vs. 2018
(Dollars in millions) 2019 2018 $ Change % Change
Net cash provided from operating activities $ 74.0
$ 298.2
$ (224.2 ) (75.2 )%
Net cash used in investing activities $ (314.5 ) $ (273.8 ) $ (40.7 ) 14.9 %
Net cash provided from (used in) financing activities $ 240.5
$ (24.4 ) $ 264.9
*


	Six Months Ended
	June 30,						2020 vs. 2019
(Dollars in millions)	2020		2019		$ Change		% Change
Net cash provided from operating activities (A)	$	223.9	$	74.0	$	149.9	*
Net cash used in investing activities (B)	$	(280.8)	$	(314.5)	$	33.7	(10.7)	%
Net cash provided from financing activities (C)	$	124.4	$	240.5	$	(116.1)	(48.3)	%

* Change is greater than 100 percent variance.

~~The~~(A)~~decreasein net cash~~ ~~provided from~~ ~~operating activities~~ ~~was~~Increased primarily due to ~~decreased amounts received from customers and an increase~~a decrease in vendor ~~payments.~~payments, including for fuel and purchased power.

~~The~~(B)~~increasein net cashused ininvesting activitieswas~~Decreased primarily due to ~~an increase~~ environmental projects being completed and placed into service as well as fewer plant outages in ~~capital expenditures related to various capital projects and the River Valley plant acquisition.~~2020.

~~The~~(C) ~~increase~~ ~~in net cash~~ ~~provided from~~ ~~financing activitieswas~~Decreased primarily due to ~~the issuance of long-term debt in June 2019 and~~ changes in cash advances with parent, partially offset by the payment of long-term debt in January 2019.

Working Capital

Working capital is defined as the difference in current assets and current liabilities. OG&E's working capital requirements are driven generally by changes in accounts receivable, accounts payable, commodity prices, credit extended to and the timing of collections from customers, the level and timing of spending for maintenance and expansion activity, inventory levels and fuel recoveries. The following discussion addresses changes in working capital balances at June 30, ~~2019~~2020 compared to December 31, ~~2018.~~2019.

Cash and Cash Equivalents increased $67.5 million, primarily due to normal business operations and holding of short-term borrowings. OG&E expects to use the cash over time for general corporate purposes.

Accounts Receivable and Accrued Unbilled Revenuesincreased~~$13.8~~ $34.2 million,, or~~5.9~~ 15.7 percent,, primarily due toan increase in billings to OG&E's retail customers reflecting higher seasonal usage ~~due to warmer weather~~ in June ~~2019~~2020 as compared to December ~~2018, partially offset by mutual assistance payments received.~~2019, as well as increased customer balances due to the disconnection moratorium related to COVID-19, as discussed in "Recent Developments - COVID-19 Pandemic."

Advances to Parent ~~decreased $202.4~~increased $92.8 million, or ~~63.3~~30.4 percent, primarily due to ~~daily operational expenses, capital expenditures and the payment of long-term debt in January 2019, partially offset by~~ an increase in cash from customers and proceeds from long-term debt in ~~June 2019.~~April 2020, partially offset by daily operational expenses and capital expenditures.

Fuel Inventories decreased $9.7 million, or 16.8 percent, primarily due to decreased coal inventory related to the Dry Scrubber systems on Sooner Units 1 and 2 being placed into service and decreased gas inventory.

~~Materials and Supplies, at Average Cost decreased $39.8 million, or 31.4 percent, primarily due to decreased inventory related to long-term service agreements.~~

Fuel Clause Under Recoveries ~~increased $28.7~~decreased $39.5 million, primarily due to increased collections from customers and lower ~~recoveries from OG&E retail customers as compared~~fuel costs.

Other Current Assets increased $6.8 million, or 34.7 percent, primarily due to ~~the actual cost of fuel and purchased power.~~an increase in under-recovered riders.

Accounts Payable decreased ~~$78.5~~$45.0 million, or ~~36.5~~25.7 percent, primarily due to the timing of vendor ~~payments.~~

payments and lower fuel costs.

Accrued Taxes ~~decreased $3.4~~increased $4.3 million, or ~~7.7~~10.3 percent, primarily resulting from deferment of the employer portion of FICA payroll taxes as allowed by the CARES Act and the timing of ad valorem payments, partially offset by tax accruals.

~~Accrued Interest decreased $8.7~~Fuel Clause Over Recoveries increased $32.4 million, ~~or 19.6 percent,~~ primarily due to ~~the payment of the $250.0 million senior notes due January 15, 2019~~increased collections from customers and ~~related interest, as well as timing of payments and accruals.~~lower fuel costs.

~~Accrued Compensation decreased $9.4 million, or 27.8 percent, primarily due to 2018 incentive compensation payouts that occurred in the first quarter of 2019, partially offset by 2019 accruals.~~

~~Long-term Debt Due Within One Year decreased $250.0 million, or 100.0 percent, due to the payment of the $250.0 million senior notes due January 15, 2019.~~

Other Current Liabilities decreased ~~$9.8~~$23.9 million, or ~~11.3~~36.7 percent, primarily due to changes in amounts owed to ~~customers. Included~~customers which includes an $18.3 million reduction in ~~the June 30, 2019 balance is the reserve for tax refund of $17.3 million resulting from the 2017 Tax Act,~~ SPP reserves ~~of $20.6 million and~~related to the ~~over recovery of the SPP cost tracker of $8.0 million.~~transmission formula rate.

Future Capital Requirements

OG&E's primary needs for capital are related to acquiring or constructing new facilities and replacing or expanding existing ~~facilities~~. facilities. Other working capital requirements are expected to be primarily related to maturing debt, operating lease obligations, fuel clause under and over recoveries and other general corporate purposes. OG&E generally meets its cash needs through a combination of cash generated from operations, short-term borrowings (through a combination of bank borrowings,, commercial paper and borrowings from OGE Energy) and permanent financings.

Capital Expenditures

OG&E's estimates of capital expenditures, which represent base maintenance capital expenditures plus capital expenditures for known and committed projects, for the years ~~2019~~2020 through ~~2023~~2024 are discussed in detail within "Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations" in OG&E's ~~2018~~2019 Form 10-K. Additional capital expenditures beyond those identified in OG&E's ~~2018~~2019 Form 10-K, including additional incremental growth opportunities in electric transmission assets, will be evaluated based upon their impact upon achieving OG&E's financial objectives. OG&E remains on track for its approximately $575.0 million in capital investment planned for 2020 as disclosed in OG&E's 2019 Form 10-K. However, the progression of, and global response to, the COVID-19 outbreak increases the risk of delays in construction activities and equipment deliveries related to OG&E's capital projects, including potential delays in obtaining permits from government agencies, resulting in potential deferral of capital expenditures.

Financing Activities and Future Sources of Financing

Management expects that cash generated from operations, proceeds from the issuance of long- and short-term debt and funds received from OGE Energy (from proceeds from the sales of OGE Energy's common stock to the public through OGE Energy's Automatic Dividend Reinvestment and Stock Purchase Plan or other offerings) will be adequate over the next three years to meet anticipated cash needs and to fund future growth opportunities. OG&E utilizes short-term borrowings (through a combination of bank borrowings,, commercial paper and borrowings from OGE Energy) to satisfy temporary working capital needs and as an interim source of financing capital expenditures until permanent financing is arranged. As indicated above, as a precautionary measure in order to increase OG&E's cash position and preserve financial flexibility in light of current uncertainty resulting from the COVID-19 pandemic, OGE Energy entered into a one-year $75.0 million term loan agreement in April 2020. Further, OG&E issued $300.0 million in senior notes in April 2020. The disruption in the capital markets and the commercial paper markets caused by the COVID-19 outbreak could make additional financing more challenging, and there can be no assurance that OG&E will be able to obtain such financing on commercially reasonable terms or at all.

Short-Term Debt and Credit Facility

OG&E has a $450.0 million revolving credit facility that matures on March 8, 2023. This facility is available to back up OG&E's commercial paper borrowings, to provide revolving credit borrowings and can also be used as a letter of credit facility. At June 30, ~~2019~~,2020, there were ~~$117.1~~$397.6 million in advances to OGE Energy compared to ~~$319.5~~$304.8 million at December 31, ~~2018~~.2019. OG&E has an intercompany borrowing agreement with OGE Energy whereby OG&E has access to up to ~~$350.0~~$350.0 million of OGE Energy's revolving credit amount. This agreement has a termination date of March 8, 2023. The following table highlights OG&E's short-term debt activity as of June 30, ~~2019.~~2020.


(Dollars in millions)	June 30, 2020
Balance of outstanding supporting letters of credit	$	0.3
Weighted-average interest rate of outstanding supporting letters of credit	1.15		%
Balance of outstanding commercial paper borrowings	$	—
Net available liquidity under revolving credit agreements	$	449.7
Balance of outstanding intercompany borrowings with OGE Energy	$	—

(Dollars in millions) June 30, 2019
Balance of outstanding supporting letters of credit $ 0.3
Weighted-average interest rate of outstanding supporting letters of credit 1.15 %
Balance of outstanding commercial paper borrowings $ —
Net available liquidity under revolving credit agreements $ 449.7
Balance of outstanding intercompany borrowings with OGE Energy $ —

OG&E has the necessary regulatory approvals to incur up to $800.0 million in short-term borrowings at any one time for a two-year period beginning January 1, 2019 and ending December 31, 2020. See Note 109 within "Item 1. Financial Statements" for further discussion of OG&E's short-term debt activity.

Issuance of Long-Term Debt

In ~~June 2019,~~April 2020, OG&E issued $300.0 million of ~~3.30~~3.25 percent senior notes due ~~March 15,~~April 1, 2030. The proceeds from the issuance were added to OG&E's general funds to be used for general corporate purposes, including to ~~repay short-term debt~~

~~(including debt pertaining to the acquisition of the River Valley plant) and to~~ fund ongoing capital expenditures and working capital.

Security Ratings

Access to reasonably priced capital is dependent in part on credit and security ratings. Generally, lower ratings lead to higher financing costs. Pricing grids associated with OGE Energy's and OG&E's credit facilities could cause annual fees and borrowing rates to increase if an adverse rating impact occurs. The impact of any future downgrade could include an increase in the costs of OGE Energy's and OG&E's short-term borrowings, but a reduction in OGE Energy's and OG&E's credit ratings would not result in any defaults or accelerations.Any future downgrade of OGE Energy or OG&E could also lead to higher long-term borrowing costs and, if below investment grade, would require OG&E to post collateral or letters of credit.

A security rating is not a recommendation to buy, sell or hold securities. Such rating may be subject to revision or withdrawal at any time by the credit rating agency, and each rating should be evaluated independently of any other rating.

On ~~May 31, 2019, Moody's Investors Service lowered~~April 3, 2020, S&P's Global Ratings affirmed its ~~rating for OG&E's senior unsecured and~~ issuer ~~ratings from A2 to A3 and commercial paper rating from P-1 to P-2. OG&E's industrial authority bond rating was lowered from VMIG 1 to VMIG 2. OGE Energy's senior unsecured~~credit and commercial paper ratings, ~~were not changed, and the outlooks~~as listed in OGE Energy's 2019 Form 10-K, for both OGE Energy and OG&E. S&P's Global Ratings also affirmed both companies' stable outlooks. S&P's Global Ratings' affirmation follows the announcement that Enable will increase the level of cash it retains, which effectively reduces dividend distributions for OGE Energy by as much as half. However, S&P's Global Ratings indicated it does not expect OGE Energy's credit quality to weaken materially, given the cushion in its current financial measures.

Further, S&P's Global Ratings indicated they continue to view OG&E as insulated from OGE Energy, reflecting the combination of OG&E's stronger stand-alone credit profile and sufficient separateness between OG&E and OGE Energy.

On July 27, 2020, S&P's Global Ratings issued their annual update for OG&E, indicating their issuer credit rating, commercial paper rating and outlook for OG&E are ~~stable. Increased debt-financed capital spending~~unchanged from those affirmed on ~~mandated environmental compliance projects combined with lagging cash flow due~~April 3, 2020.

On June 24, 2020, Moody's Investors Service issued an opinion to ~~the 2017 Tax Act~~update its credit analysis for OGE Energy and ~~recent Oklahoma rate reviews were cited as contributing factors to~~ OG~~&E's downgrades.~~&E, in light of COVID-19 developments. Moody's Investors Service indicated it expects OGE Energy and its subsidiaries, including OG&E, to be resilient to recessionary pressures related to COVID-19 because of OGE Energy's and OG&E's primary rate regulated, essential service business model and cost recovery framework. Nevertheless, Moody's Investors Service indicated it is watching for electric usage declines, utility bill payment delinquency and the regulatory response to counter these effects on earnings and cash flow. Further, Moody's Investor Service indicated that the ~~stable outlook~~effects of the pandemic could result in financial metrics that are weaker than expected but see these issues as temporary and not reflective of the core operations or long-term financial or credit profile of OGE Energy and OG&E. Moody's Investor Service indicated that it views OG&E's regulatory relationships in Oklahoma as generally supportive and is a key credit driver for both OGE Energy and OG~~&E reflects a reduced capital plan, fewer rate review filings and a more predictable~~&E. Additionally, while Enable's quarterly distribution reduction is credit negative, Moody's Investor Service indicated OGE Energy's financial ~~profile.~~metrics are expected to remain solid.

Critical Accounting Policies and Estimates

The CondensedFinancial Statements and Notes to CondensedFinancial Statements contain information that is pertinent to Management's Discussion and Analysis.In preparing the CondensedFinancial 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 CondensedFinancial 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 OG&E's CondensedFinancial Statements. However, OG&E believes it has taken reasonable positions where assumptions and estimates are used in order to minimize the negative financial impact to OG&E that could result if actual results vary from the assumptions and estimates.

In management's opinion, the areas of OG&E where the most significant judgment is exercisedinclude the determination of Pension Plan assumptions, income taxes, contingency reserves, asset retirement obligations,, depreciable lives of property, plant and equipment, regulatory assets and liabilities and unbilled revenues. The selection, application and disclosure of OG&E's critical accounting estimates have been discussed with OGE Energy's Audit Committee and are discussed in detail within "Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations" in OG&E's ~~2018~~2019 Form 10-K.

Commitments and Contingencies

In the normal course of business, OG&E is confronted with issues or events that may result in a contingent liability.These generally relate to lawsuits or claims made by third parties, including governmental agencies.When appropriate, management consults with legal counsel and other experts to assess the claim.If, in management's opinion, OG&E has incurred a probable loss as set forth by GAAP, an estimate is made of the loss, and the appropriate accounting entries are reflected in OG&E's CondensedFinancial Statements.At the present time, based on available information, OG&E believes that any reasonably possible losses in excess of accrued amounts arising out of pending or threatened lawsuits or claims would not be quantitatively material to its financial statements and would not have a material adverse effect on OG&E's financial position, results of operations or cash flows. See Notes 1211 and 1312 within "Item 1. Financial Statements" for a discussion of OG&E's commitments and contingencies.

Environmental Laws and Regulations

The activities of OG&E are subject to numerous, stringent and complex federal, state and local laws and regulations governing environmental protection. These laws and regulations can change, restrict or otherwise impact OG&E's business activities in many ways, including the handling or disposal of waste material, planning for future construction activities to avoid or mitigate harm to threatened or endangered species and requiring the installation and operation of emissions or pollution control equipment. Failure to comply with these laws and regulations could result in the assessment of administrative, civil and criminal penalties, the imposition of remedial requirements and the issuance of orders enjoining future operations. Management believes that all of its operations are in substantial compliance with current federal, state and local environmental standards. These environmental laws and regulations are also discussed in detail within "Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations" in OG&E's ~~2018~~2019 Form 10-K.

Air

Federal Clean Air Act Overview

OG&E's operations are subject to the Federal Clean Air Act as amended and comparable state laws and regulations. These laws and regulations regulate emissions of air pollutants from various industrial sources, including electric generating units and also impose various monitoring and reporting requirements. Such laws and regulations may require that OG&E obtain pre-approval for the construction or modification of certain projects or facilities expected to produce air emissions or result in the increase of existing air emissions, obtain and strictly comply with air permits containing various emissions and operational limitations or install emission control equipment. OG&E likely will be required to incur certain capital expenditures in the future for air pollution control equipment and technology in connection with obtaining and maintaining operating permits and approvals for air emissions.

~~Regional Haze Control Measures~~

The EPA's 2005 Regional Haze Rule is intended to protect visibility in certain national parks and wilderness areas throughout the U.S. that may be impacted by air pollutant emissions. On December 28, 2011, the EPA issued a final Regional Haze Rule for Oklahoma which adopted a FIP for SO₂ ~~emissions at Sooner Units 1 and 2 and Muskogee Units 4 and 5. The FIP compliance date was January 4, 2019 as a result of an appeal filed by OG&E and others.~~

To satisfy the FIP, OG&E installed Dry Scrubbers at Sooner Units 1 and 2 and converted Muskogee Units 4 and 5 to natural gas. As of June 30, 2019, OG&E has invested $512.4 million in the Dry Scrubbers and $57.0 million in the Muskogee natural gas conversion.

Cross-State Air Pollution Rule

In August 2011, the EPA finalized its CSAPR that required 27 states in the eastern half of the U.S. (including Oklahoma) to reduce power plant emissions that contribute to ozone and particulate matter pollution in other states. Litigation challenging the rule delayed the effective date until 2014. Several parties to that litigation, including OG&E, have petitions for review that remain pending although the rule is now effective. Compliance with the CSAPR began in 2015 using the amount of allowances originally scheduled to be available in 2012. ~~OG&E has installed seven low NO~~_X ~~burner systems on two Muskogee units, two Sooner units and three Seminole units and is in compliance.~~

On September 7, 2016, the EPA finalized an update to the 2011 ~~CSAPR.~~Cross-State Air Pollution Rule. The new rule applies to ozone-season NO_X emissions from power plants in 22 eastern states (including Oklahoma),. The rule utilizes a cap and trade program for NO_X emissions and went into effect on May 1, ~~2017.~~2017 in Oklahoma. The 2016 rule reduces the ~~2016 CSAPR~~2011 Cross-State Air Pollution Rule emissions cap for all ~~seven~~ of OG&E's coal and gas facilities (except the River Valley and Frontier facilities which were not owned by OG&E until 2019) by 47 percent combined. OG&E and numerous other parties filed petitions for judicial and administrative review of the 2016 rule. ~~Oral argument before~~On September 13, 2019, the ~~D.C. Circuit~~ U.S. Court of Appeals ~~was held~~for the District of Columbia Circuit issued an opinion that partially remanded the Cross-State Air Pollution Rule update and also deferred a decision on ~~October 3, 2018.~~

~~Due~~our challenges to the rule pending ~~litigation~~an EPA review and decision on a separate administrative ~~proceedings,~~petition that we filed. Subsequently, all of OG&E's judicial challenges were voluntarily dismissed, but the ~~ultimate timing~~administrative petitions for reconsideration remain pending at the EPA. The EPA has proposed to conduct a rulemaking which may include emission reduction requirements for electric generating units.

OG&E continues to monitor these processes and their possible impact ofon its operations but, at this time, cannot determine with any certainty whether they will cause a material impact to OG&E's financial results. OG&E is in compliance with the 2016 ~~CSAPR update~~ rule ~~on our operations cannot be determined with certainty at this time. However,~~requirements which remain in effect. OG&E does not anticipate, at this time, additional capital expenditures ~~beyond what has already been disclosed and does not expect that~~for compliance with the ~~reduced emissions cap, if upheld, will have a material impact on OG&E's financial position, results of operations or cash flows.~~2016 rule.

Hazardous Air Pollutants Emission Standards

On February 16, 2012, the EPA published the final MATS rule regulating the emissions of certain hazardous air pollutants from electric generating ~~units, which became effective April 16, 2012.~~units. OG&E complied with the MATS rule by the April 16, 2016

deadline that applied to OG~~&E by installing activated carbon injection for all five~~&E's coal units. ~~Nonetheless, there is continuing litigation, to which OG&E is not a party, challenging whether the EPA had statutory authority to issue the MATS rule.~~ On ~~December 27, 2018,~~April 16, 2020, the EPA released a ~~proposed~~final rule ~~reconsidering~~which reconsidered certain elements of the 2012 rule in response to ~~lengthy~~ litigation in the D.C. Circuit Court. ~~OG&E cannot predict~~In the ~~outcome~~final rule, the EPA concluded that it is not "appropriate and necessary" to regulate MATS-related emissions from coal-fired units. Nonetheless, the EPA retained the emissions limits that were established in the 2012 rule, which remains in effect today. Petitions for judicial review of ~~this litigation or regulatory proposal or how it will affect OG&E.~~

the final May 2020 rule have been filed at the D.C. Circuit Court.

National Ambient Air Quality Standards

The EPA is required to set NAAQS for certain pollutants considered to be harmful to public health or the environment. The Clean Air Act requires the EPA to review each NAAQS every five years. As a result of these reviews, the EPA periodically has taken action to adopt more stringent NAAQS for those pollutants. If any areas of Oklahoma were to be designated as not attaining the NAAQS for a particular pollutant, OG&E could be required to install additional emission controls on its facilities to help the state achieve attainment with the NAAQS. As of June 30, ~~2019,~~2020, no areas of Oklahoma had been designated as non-attainment for pollutants that are likely to affect OG&E's operations. Several processes are under way to designate areas in Oklahoma as attaining or not attaining revised NAAQS.

The EPA proposed to designate part of Muskogee County, in which OG&E's Muskogee Power Plant is located, as non-attainment for the 2010 SO₂ NAAQS on March 1, 2016, even though nearby monitors ~~indicate~~indicated compliance with the

NAAQS. The proposed designation was based on modeling that did not reflect the conversion of two of the coal units at Muskogee to natural gas. ~~OG&E commented that the EPA should defer a designation of the area to allow time for additional monitoring.~~ The State of Oklahoma's ~~revised~~ monitoring ~~plan was approved by~~preliminarily indicates that ambient SO₂emissions in the area are well within the NAAQS. The EPA ~~and the required monitoring commenced~~has indicated that it anticipates finalizing a designation at ~~the beginning of 2017 and will continue through~~ the end of 2019. Nonetheless, the EPA has a deadline for making a decision on the designation pursuant to a consent decree entered by the U.S. District Court for the Northern District of California to resolve a citizen suit. The deadline has been extended several times, with the current deadline being August 26, 2017, but a decision has yet to be reached. It is unclear what impact, if any, the consent decree deadline will have on the monitoring plan.2020. At this time, OG&E cannot determine with any certainty whether the proposed designation of Muskogee County will cause a material impact to OG&E's financial results. ~~The EPA has published final decisions on all other areas of Oklahoma. In this decision, Noble County, in which the Sooner plant is located, was deemed to be in attainment with the 2010 standard.~~

OG&E continues to monitor these processes and their possible impact on its operations but, at this time, cannot determine with any certainty whether they will cause a material impact to OG&E's financial results.

Climate Change and Greenhouse Gas Emissions

There is continuing discussion and evaluation of possible global climate change in certain regulatory and legislative arenas. The focus is generally on emissions of greenhouse gases, including CO_2,, sulfur hexafluoride and methane, and whether these emissions are contributing to the warming of the earth's atmosphere. On ~~June 1, 2017,~~November 4, 2019, President Trump announced that the U.S. has officially notified the United Nations that the U.S. will withdraw from the ~~Paris Climate Accord and~~"Paris Agreement" on climate change after having announced in 2017 that the U.S. would begin negotiations to re-enter the agreement with different terms. A new agreement may result in future additional emissions reductions in the U.S.; however, it is not possible to determine what the international legal standards for greenhouse gas emissions will be in the future and the extent to which these commitments will be implemented through the Clean Air Act or any other existing statutes and new legislation.

If legislation or regulations are passed at the federal or state levels in the future requiring mandatory reductions of CO₂ and other greenhouse gases on OG&E's facilities, this could result in significant additional compliance costs that would affect OG&E's future financial position, results of operations and cash flows if such costs are not recovered through regulated rates. Several states outside the area where OG&E operates have passed laws, adopted regulations or undertaken regulatory initiatives to reduce the emission of greenhouse gases, primarily through the planned development of greenhouse gas emission inventories and/or regional greenhouse gas cap and trade programs.

~~Nonetheless,~~ OG&E's current business strategy ~~will result~~has resulted in a reduced carbon dioxide emissions ~~rate~~by over 40 percent compared to ~~current levels. As discussed in Note 14 within "Item 8. Financial Statements~~2005 levels, and ~~Supplementary Data" in~~during the same period, emissions of ozone-forming NO_x have been reduced by approximately 75 percent and emissions of SO₂ have been reduced by approximately 90 percent. OG~~&E's~~ ~~2018 Form 10-K~~,&E expects to further reduce carbon dioxide emissions to 50 percent of 2005 levels by 2030. To comply with the EPA's MATS rule and Regional Haze Rule FIP, OG&E ~~has~~ converted two coal-fired generating units at the Muskogee Station to natural gas, among other measures. OG&E's deployment of Smart Grid technology helps to reduce the peak load demand. OG&E is also deploying more renewable energy sources that do not emit greenhouse gases. OG&E's service territory borders one of the nation's best wind resource areas, and OG&E has leveraged its geographic position to develop renewable energy resources and completed transmission investments to deliver the renewable energy. The SPP has ~~begun to authorize~~authorized the construction of transmission lines capable of bringing renewable energy out of the wind resource areas in western Oklahoma, the Texas Panhandle and western Kansas to load centers by planning for more transmission to be built in the area. In addition to increasing overall system reliability, these new transmission resources should provide greater access to additional wind resources that are currently constrained due to existing transmission delivery limitations.

~~On October 23, 2015, the EPA published the final Clean Power Plan that established standards of performance for CO~~₂ ~~emissions from existing fossil-fuel-fired power plants along with state-specific CO~~₂ ~~reduction standards expressed as both rate-based (lbs./MWh) and mass-based (tons/yr.) goals.~~On July 8, 2019, the EPA ~~officially repealed the Clean Power Plan and~~ published the Affordable Clean Energy rule. Numerous parties, not including OG&E, have filed petitions for judicial review of the Affordable Clean Energy rule ~~to replace it.~~in the U.S. Court of Appeals for the District of Columbia Circuit. The Affordable Clean Energy rule requires states, including Oklahoma, to develop emission limitations for carbon dioxide for each existing coal-fired utility boiler within the state, including all of OG&E's coal units, and submit a compliance and implementation plan to the EPA by July 2022. The EPA will approve or disapprove the proposed state plan within 18 months of submittal and develop a federal implementation plan if the proposed state plan is disapproved. ~~OG&E's coal-fired units will be subject to the State of Oklahoma's implementation plan.~~ At this time, OG&E cannot determine with any certainty whether the implementation plan will cause a material impact to its financial results.

EPA Startup, Shutdown and Malfunction Policy

On May 22, 2015, the EPA issued a final rule to address the provisions in the SIPs of 36 states (including Oklahoma) regarding the treatment of emissions that occur during startup, shutdown and malfunction operations. The final rule clarifies the EPA's Startup, Shutdown and Malfunction Policy. Although judicial challenges to the rule are ongoing, the Oklahoma Department of Environmental Quality submitted a SIP revision for the EPA's approval on November 7, 2016 to comply with this rule. This rule has resulted in permit modifications for certain OG&E units and applications remain pending for other units. OG&E does not anticipate capital expenditures, or a material impact to its financial position, results of operations or cash flows, as a result of adoption of this rule.

Regional Haze Regulation - Second Planning Period

In January 2017, the EPA finalized a rule that would revise certain provisions of the Regional Haze Rule. Notably, the EPA extended the due date for the second Regional Haze implementation period by three years to 2021 and made changes to the provisions for impacts to national parks and other protected wilderness areas. Petitions for Reconsideration to the EPA were filed by industry groups. While not acting on the petitions, the EPA announced on January 17, 2018 that it intends to commence a notice-and-comment rulemaking revisiting certain aspects of the rule. During 2019, the EPA released technical resources to assist states in developing SIPs, including a significant non-binding guidance document and updated atmospheric modeling which will allow states to better account for international emissions affecting regional haze in the U.S. On July 1, 2020, the Oklahoma Department of Environmental Quality notified OG&E that the Horseshoe Lake generating units are to be included in the state's evaluation of visibility impairment impacts to the Wichita Mountains. OG&E will have to conduct an analysis of all potential control measures for NO_x on these units. The Oklahoma Department of Environmental Quality will identify any cost-effective control measures in a Regional Haze SIP, to be submitted to the EPA for approval by July 31, 2021. It is unknown at this time what the outcome, or any potential material impacts, will be from the evaluations by OG&E, the Oklahoma Department of Environmental Quality and the EPA.

Endangered Species

Certain federal laws, including the Bald and Golden Eagle Protection Act, the Migratory Bird Treaty Act and the Endangered Species Act, provide special protection to certain designated species. These laws and any state equivalents provide for significant civil and criminal penalties for unpermitted activities that result in harm to or harassment of certain protected animals and plants, including damage to their habitats. If such species are located in an area in which OG&E conducts operations, or if additional species in those areas become subject to protection, OG&E's operations and development projects, particularly transmission, wind or pipeline projects, could be restricted or delayed, or OG&E could be required to implement expensive mitigation measures.

Vegetation Management

~~Waste~~

On July 10, 2020, the U.S. Department of Agriculture – Forest Service published a final rule which updates procedures for creating operating plans and agreements for powerline facility maintenance and vegetation management within and abutting the linear boundary of a special use authorization for a powerline facility within Forest Service lands. This rule codifies the memorandum of understanding between utilities such as OG&E and the Forest Service regarding vegetation management best practices. All companies will be required to have an approved operating plan or agreement with the Forest Service. OG&E will be required to submit a draft operating plan to the Forest Service by August 10, 2023 for ongoing maintenance and vegetation management activities located within the Ozark National Forest in Arkansas.

Waste

OG&E's operations generate wastes that are subject to the Federal Resource Conservation and Recovery Act of 1976 as well as comparable state laws which impose detailed requirements for the handling, storage, treatment and disposal of waste.

In 2015, the EPA finalized a rule under the Federal Resource Conservation and Recovery Act for the handling and disposal of coal combustion residuals or coal ash. The rule regulates coal ash as a solid waste rather than a hazardous waste, which would have made the management of coal ash more costly. OnIn August ~~21, 2018,~~2019, the EPA proposed revisions to the 2015 coal ash rule in response to the D.C. Circuit Court of Appeals ~~issued~~issuing a decision regarding the ongoing Coal Combustion Residuals litigation. ~~Based upon~~The proposed changes do not appear to be material to OG&E at this ~~court decision,~~time. OG&E completed the ~~EPA is required to revise the 2015 coal ash rule. OG&E manages~~clean closure of one regulated inactive coal ash impoundment ~~that is expected to be clean-closed~~ in August 2019.

On June 28, 2018, the EPA approved the State of Oklahoma's application for a state coal ash permitting program that will operate in lieu of the federal coal ash program promulgated under the Federal Resource Conservation and Recovery Act. On September 26, 2018, a citizen suit was filed against the EPA in the U.S. District Court in the District of Columbia concerning the final approval. OG&E and others have moved to intervene on behalf of the EPA. OG&E is monitoring regulatory developments relating to this rule, none of which appear to be material to OG&E at this time. OG&E is in compliance with this rule at this time.

OG&E currently recycles and provides approximately 89 percent of its ash to the concrete and cement industries for use as a component within their products. Using fly ash in this way enables aggregate manufacturers to minimize their impact on the environment by avoiding the need to extract and process other natural resources.

OG&E has sought and will continue to seek pollution prevention opportunities and to evaluate the effectiveness of its waste reduction, reuse and recycling efforts. OG&E obtains refunds from the recycling of scrap metal, salvaged transformers and used transformer oil. Additional savings are expected to be gained through the reduction and/or avoidance of disposal costs and the reduction in material purchases due to the reuse of existing materials. Similar savings are anticipated in future years.

Water

OG&E's operations are subject to the Federal Clean Water Act and comparable state laws and regulations. These laws and regulations impose detailed requirements and strict controls regarding the discharge of pollutants into state and federal waters.

The EPA issued a final rule on May 19, 2014 to implement Section 316(b) of the Federal Clean Water Act, which requires that power plant cooling water intake structure location, design, construction and capacity reflect the best available technology

for minimizing their adverse environmental impact via the impingement and entrainment of aquatic organisms. The Oklahoma Department of Environmental Quality issued final permits on December 22, 2017 and August 22, 2018 for Muskogee Power Plant and Seminole Power Plant, respectively, in compliance with the final 316(b) rule, and OG&E did not incur any material costs associated with the rule's implementation at either location. OG&E expects to be able to provide a reasonable estimate of any material costs associated with the rule's implementation at other facilities following the future issuance of permits from the State of Oklahoma.

In 2015, the EPA issued a final rule addressing the effluent limitation guidelines for power plants under the Federal Clean Water Act. The final rule establishes technology- and performance-based standards that may apply to discharges of six waste streams including bottom ash transport water. Compliance with this rule will occur by 2023; however, on April 12, 2017, the EPA granted a Petition for Reconsideration of the 2015 Rule. On November 22, 2019, the EPA published a proposed rule to revise the technology-based effluent limitations for flue gas desulfurization waste water and bottom ash transport water. OG&E is evaluating what, if any, compliance actions are needed but is not able to quantify with any certainty what costs may be incurred. OG&E expects to be able to provide a reasonable estimate of any material costs associated with the rule's implementation following issuance of the permits from the State of Oklahoma.

On April 21, 2020, the EPA and U.S. Army Corps of Engineers published in the Federal Register "The Navigable Waters Protection Rule: Definition of Waters of the United States." This final rule replaces the repealed definition of waters of the U.S. from 2015. The effective date of this final rule will be June 22, 2020. OG&E does not expect any material impacts as a result of this rule.

Since the purchase of the Redbud facility in 2008, OG&E's average use of treated municipal effluent for all of the needed cooling water at Redbud and McClain is approximately 2.6 billion gallons per year. This use of treated municipal effluent offsets the need for fresh water as cooling water, making fresh water available for other beneficial uses like drinking water, irrigation and recreation.

Site Remediation

The Comprehensive Environmental Response, Compensation and Liability Act of 1980 and comparable state laws impose liability, without regard to the legality of the original conduct, on certain classes of persons responsible for the release of hazardous substances into the environment. Because OG&E utilizes various products and generates wastes that are considered hazardous substances for purposes of the Comprehensive Environmental Response, Compensation and Liability Act of 1980, OG&E could be subject to liability for the costs of cleaning up and restoring sites where those substances have been released to the environment. At this time, it is not anticipated that any associated liability will cause a significant impact to OG&E.

For further discussion regarding contingencies relating to environmental laws and regulations, see Note 1211 within "Item 1. Financial Statements."

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

Under the reduced disclosure format permitted by General Instruction H(2)(c) of Form 10-Q, the information otherwise required by Item 3 has been omitted.

Item 4. Controls and Procedures.

OG&E maintains a set of disclosure controls and procedures designed to ensure that information required to be disclosed by OG&E in reports that it files or submits under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission rules and forms. In addition, the disclosure controls and procedures ensure that information required to be disclosed is accumulated and communicated to management, including the chief executive officer and chief financial officer, allowing timely decisions regarding required disclosure.As of the end of the period covered by this report, based on an evaluation carried out under the supervision and with the participation of OG&E's management, including the chief executive officer and chief financial officer, of the effectiveness of OG&E's disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15(d)-15(e) under the Securities Exchange Act of 1934), the chief executive officer and chief financial officer have concluded that OG&E's disclosure controls and procedures are effective.

No change in OG&E's internal control over financial reporting has occurred during OG&E's most recently completed fiscal quarter that has materially affected, or is reasonably likely to materially affect, OG&E's internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Securities Exchange Act of 1934).

While remote work arrangements were implemented in response to the COVID-19 pandemic, OG&E believes there have been no material changes to the processes and procedures that impact financial reporting. OG&E continues to monitor potential internal control impacts of COVID-19 and plan accordingly to ensure the effectiveness of OG&E's internal controls over financial reporting and disclosures.

PART II. OTHER INFORMATION

Item 1. Legal Proceedings.

Reference is made to Item 3 of Part I of OG&E's ~~2018~~2019 Form 10-K for a description of certain legal proceedings presently pending. Except as described ~~above~~ under "Environmental Laws and Regulations" within ~~"Item~~"Part I - Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations," there are no new significant cases to report against OG&E and there have been no material changes in the previously reported proceedings.

Item 1A. Risk Factors.

~~There~~Except as detailed below, there have been no significant changes in OG&E's risk factors from those discussed in OG&E's ~~2018~~2019 Form 10-K, which are incorporated herein by reference.

We face risks related to health epidemics and other outbreaks.

The outbreak of COVID-19 is a rapidly developing situation around the globe that has adversely impacted economic activity and conditions worldwide. In particular, efforts to control the spread of COVID-19 have led to shutdowns of various facilities as well as disrupted supply chains around the world. Efforts to control the spread of COVID-19 have also resulted in remote work arrangements, increased unemployment, customer slow payment or non-payment and decreased commercial and industrial load. We expect these particular COVID-19 impacts will likely continue in the near future. We are continuing to monitor developments involving our workforce, customers and suppliers and cannot predict whether COVID-19 will have a material impact on our results of operations, financial condition and prospects. However, an extended slowdown of the United States' economic growth, demand for commodities and/or material changes in governmental policy could result in lower economic growth and lower demand for electricity in our key markets as well as the ability of various customers, contractors, suppliers and other business partners to fulfill their obligations, which could have a material adverse effect on our results of operations, financial condition and prospects.

In addition, we cannot predict the impact that COVID-19 will have on our customers, suppliers, vendors and other business partners and each of their financial conditions; however, any material effect on these parties could adversely impact us. The impact of COVID-19 may also exacerbate other risks discussed in "Item 1A. Risk Factors" in OG&E's 2019 Form 10-K, any of which could have a material effect on us. This situation is changing rapidly and additional impacts may arise that we are not aware of currently.

Item 6. Exhibits.


Exhibit No.		Description

~~Exhibit No.~~		~~Description~~
4.01	Supplemental Indenture No. 2021 dated as of ~~June~~April 1, ~~2019~~2020 between OG&E and BOKF, NA, as trustee (Filed as Exhibit 4.01 to OG&E's Form 8-K filed ~~June 7, 2019~~April 1, 2020 (File No. 1-01097) and incorporated by reference herein).

31.01		Certifications Pursuant to Rule 13a-14(a)/15d-14(a) As Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.01		Certification Pursuant to 18 U.S.C. Section 1350 As Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
~~101.INS~~

101.INS		Inline XBRL Instance Document - the instance document does not appear in the interactive data file because its XBRL tags are embedded within the Inline XBRL document.
101.SCH		Inline XBRL Taxonomy Schema Document.
101.PRE		Inline XBRL Taxonomy Presentation Linkbase Document.
101.LAB		Inline XBRL Taxonomy Label Linkbase Document.
101.CAL		Inline XBRL Taxonomy Calculation Linkbase Document.
101.DEF		Inline XBRL Definition Linkbase Document.
104		Cover Page Interactive Data File - the cover page XBRL tags are embedded within the Inline XBRL document (included in Exhibit 101).

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.



			OKLAHOMA GAS AND ELECTRIC COMPANY
			(Registrant)

By:			/s/ Sarah R. Stafford
			Sarah R. Stafford
			Controller and Chief Accounting Officer
			(On behalf of the Registrant and in her capacity as Chief Accounting Officer)

August 5, 2020

~~August 7, 2019~~

3534



Oklahoma						73-0382390
(State or other jurisdiction of						(I.R.S. Employer
incorporation or organization)						Identification No.)



Title of each class	Trading Symbol(s)	Name of each exchange on which registered
None	N/A	N/A



Large accelerated filer			☐	Accelerated filer	☐
~~Non-accelerated filer~~	☑	~~Smaller reporting company~~	☐
Non-accelerated filer			☑	Smaller reporting company	☐
				Emerging growth company	☐



			Page
GLOSSARY OF TERMS			ii
FORWARD-LOOKING STATEMENTS			1

Part I - FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited)
Condensed Statements of Income and Comprehensive Income			2
Condensed Statements of Cash Flows			3
Condensed Balance Sheets			4
Condensed Statements of Changes in Stockholder's Equity			6
Notes to Condensed Financial Statements			7

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations			2019

Item 3. Quantitative and Qualitative Disclosures About Market Risk			3332

Item 4. Controls and Procedures			3332

Part II - OTHER INFORMATION
Item 1. Legal Proceedings			3433

Item 1A. Risk Factors			3433

Item 6. Exhibits			3433

Signature			3534



Abbreviation			Definition
~~2018~~2019 Form 10-K			Annual Report on Form 10-K for the year ended December 31, ~~2018~~2019
~~2017 Tax Act~~			~~Tax Cuts and Jobs Act of 2017~~
~~AES~~			~~AES-Shady Point, Inc.~~
~~ALJ~~			~~Administrative Law Judge~~
APSC			Arkansas Public Service Commission
~~ASC~~			~~FASB Accounting Standards Codification~~
ASU			~~FASB~~ Accounting Standards Update from the Financial Accounting Standards Board


CO₂			Carbon dioxide
~~CSAPR~~			~~Cross-State Air Pollution Rule~~

COVID-19			Novel Coronavirus disease
Dry Scrubber			Dry flue gas desulfurization unit with spray dryer absorber
~~Enable~~
Enable			Enable Midstream Partners, LP, a midstream partnership formed between OGE Energy and CenterPoint Energy, Inc.
EPA			U.S. Environmental Protection Agency
~~FASB~~Federal Clean Air Act			~~Financial Accounting Standards Board~~Federal Clean Air Act of 1970, as amended
Federal Clean Water Act			Federal Water Pollution Control Act of 1972, as amended
FERC			Federal Energy Regulatory Commission
FIP			Federal Implementation Plan
GAAP			Accounting principles generally accepted in the U.S.
~~MATS~~

MATS			Mercury and Air Toxics Standards
MW			~~Megawatt~~
~~MWh~~MW			~~Megawatt-hour~~Megawatt
~~NAAQS~~MWh			Megawatt-hour
NAAQS			National Ambient Air Quality Standards
NO_X			Nitrogen oxide
OCC			Oklahoma Corporation Commission


OG&E			Oklahoma Gas and Electric Company, wholly owned subsidiary of OGE Energy
OGE Energy			OGE Energy Corp., parent company of OG&E
Pension Plan			Qualified defined benefit retirement plan
QF			~~Qualified cogeneration facility~~

Regional Haze Rule			The EPA's Regional Haze Rule
Restoration of Retirement Income Plan			Supplemental retirement plan to the Pension Plan
~~SIP~~
SIP			State Implementation Plan
SO₂			Sulfur dioxide
SPP			Southwest Power Pool

System sales			Sales to OG&E's customers
U.S.			United States of America


•	•the ability ofOG&E and OGE Energyto access the capital markets and obtain financing on favorable terms as well as inflation rates and monetary fluctuations; •~~OG&E and OGE Energyto access the capital markets and obtain financing on favorable terms as well as inflation rates and monetary fluctuations;~~


•	~~competitive factors, including the extent and timing of the entry of additional competition in the markets served byOG&E;~~


•	~~the impact on demand for our services resulting from cost-competitive advances in technology, such as distributed electricity generation and customer energy efficiency programs~~;


•	~~technological developments, changing markets and other factors that result in competitive disadvantages and create the potential for impairment of existing assets~~;


•	federal or state legislation and regulatory decisions and initiatives that affect cost and investment recovery, have an impact on rate structures or affect the speed and degree to which competition enters~~OG&E'smarkets;~~


•	~~environmental laws, safety laws or other regulations that may impact the cost of operations or restrict or change the wayOG&Eoperates its facilities;~~


•	•creditworthiness of suppliers, customers and other contractual parties; •


•	~~costs and other effects of legal and administrative proceedings, settlements, investigations, claims and matters, including, but not limited to, those described in this Form 10-Q;and~~


•	~~other risk factors listed in the reports filed byOG&Ewith the Securities and Exchange Commission, including those listed within"Item 1A.Risk Factors"in OG&E's2018 Form 10-K~~.



	Six Months Ended
(In millions)	June 30, 2019
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows for operating leases	$	3.6
Right-of-use assets obtained in exchange for new operating lease liabilities	$	10.7

(Dollars in millions)	June 30, 2019
Right-of-use assets at period end (A)	$	41.3
Operating lease liabilities at period end (B)	$	46.0
Operating lease weighted-average remaining lease term (in years)	13.8
Operating lease weighted-average discount rate	3.9		%


•	~~business conditions in the energy~~ ~~industry;~~



Future minimum operating lease payments as of: (In millions)	June 30, 2019		December 31, 2018 (C)(D)
2019	$	1.2	$	21.1
2020	5.3		2.9
2021	5.2		2.9
2022	5.2		2.9
2023	5.2		2.9
Thereafter	37.8		37.6
Total future minimum lease payments	59.9		$	70.3
Less: Imputed interest	13.9
Present value of net minimum lease payments	$	46.0


~~(A)~~	~~Decreased primarily due to an approximately 39 percent decrease in cooling degree days for both the three and six months ended June 30, 2019.~~



	Six Months Ended
	June 30,						2019 vs. 2018
(Dollars in millions)	2019			2018			$ Change			% Change
Net cash provided from operating activities	$	74.0		$	298.2		$	(224.2	)	(75.2	)%
Net cash used in investing activities	$	(314.5	)	$	(273.8	)	$	(40.7	)	14.9	%
Net cash provided from (used in) financing activities	$	240.5		$	(24.4	)	$	264.9		*