74145--2/24/2006--OKLAHOMA_GAS_&_ELECTRIC

related topics

{cost, operation, labor}

{cost, contract, operation}

{gas, price, oil}

{operation, natural, condition}

{capital, credit, financial}

{condition, economic, financial}

{debt, indebtedness, cash}

{cost, regulation, environmental}

{interest, director, officer}

{competitive, industry, competition}

In addition to the other information in this 10-K and other documents filed by us with the SEC from time to time, the following factors should be carefully considered in evaluating the Company. Such factors could affect actual results and cause results to differ materially from those expressed in any forward-looking statements made by or on our behalf. Additional risks and uncertainties not currently known to us or that we currently view as immaterial may also impair our business operations. Our profitability depends to a large extent on our ability to fully recover our costs from our customers and there may be changes in the regulatory environment that impair our ability to recover costs from our customers. Our rates are subject to regulation by the states of Oklahoma and Arkansas, as well as by a federal agency, whose regulatory paradigms and goals may not be consistent. Costs of compliance with environmental laws and regulations are significant and the cost of compliance with future environmental laws and regulations may adversely affect our results of operations, financial position, or liquidity. Our results of operations could be affected by our ability to renegotiate franchise agreements with municipalities and counties in Oklahoma. The regional power market in which we operate has changing transmission regulatory structures, which may affect the transmission assets and related revenues and expenses. Our Settlement Agreement with the OCC relating to our 2002 rate case targets $75 million of savings over a three-year period from the acquisition of new generation. We may not be able to achieve such targeted savings, in which case, we will be required to credit any unrealized savings to our Oklahoma customers. Increased competition resulting from restructuring efforts could have a significant financial impact on us and consequently decrease our revenue. Recent events that are beyond our control have increased the level of public and regulatory scrutiny of our industry. Governmental and market reactions to these events may have negative impacts on our business, financial condition and access to capital. We are subject to substantial utility and energy regulation by governmental agencies. Compliance with current and future utility and energy regulatory requirements and procurement of necessary approvals, permits and certifications may result in significant costs to us. Our results of operations may be impacted by disruptions beyond our control. Weather conditions such as tornadoes, thunderstorms, ice storms, wind storms, as well as seasonal temperature variations may adversely affect our results of operations and financial position. Increasing costs associated with our defined benefit retirement plans, health care plans and other employee-related benefits may adversely affect our results of operations, financial position, or liquidity. We may be able to incur substantially more indebtedness, which may increase the risks created by our indebtedness. Any reductions in our credit ratings could increase our financing costs and the cost of maintaining certain contractual relationships. We are subject to commodity price risk. We are subject to credit risk.

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74145--2/24/2006--OKLAHOMA_GAS_&_ELECTRIC_CO