OGE ENERGY CORP. Leases Disclosure
4. Leases
Based on their evaluation of all contracts under ASC 842, as described in Note 1, the Registrants concluded they have operating lease obligations as described below.
OG&E Railcar Lease Agreement
Effective February 1, 2024, OG&E renewed its railcar lease agreement for 770 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 recoverable through OG&E's fuel adjustment clauses. On February 1, 2029, 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, it would be responsible for the difference between the actual fair value of the railcars and the stipulated fair market value, up to a maximum of $3.2 million. OG&E held an additional railcar lease agreement for 135 rotary gondola railcars to transport coal with a term of October 1, 2022 to December 31, 2025, which was not renewed.
OG&E Wind Farm Land Lease Agreements
OG&E has operating leases related to land for OG&E's Centennial, OU Spirit and Crossroads wind farms with terms of to 11 years remaining, depending on the lease. 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 each have rent escalations which increase after five and ten 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
The following tables present amounts recognized for operating leases in the Registrants' statements of income, statements of cash flows and balance sheets and supplemental information related to those amounts recognized.
OGE Energy and OG&E |
|
Year Ended December 31, |
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(In millions) |
|
2025 |
|
|
2024 |
|
|
2023 |
|
|||
Operating lease cost |
|
$ |
5.2 |
|
|
$ |
4.7 |
|
|
$ |
6.4 |
|
Cash paid for amounts included in the measurement of lease liabilities: |
|
|
|
|
|
|
|
|
|
|||
Operating cash flows for operating leases |
|
$ |
4.9 |
|
|
$ |
4.5 |
|
|
$ |
5.2 |
|
Right-of-use assets obtained in exchange for new operating lease liabilities |
|
$ |
— |
|
|
$ |
5.7 |
|
|
$ |
— |
|
OGE Energy and OG&E |
|
|
|
|
||
(Dollars in millions) |
December 31, 2025 |
|
December 31, 2024 |
|
||
(A) |
$ |
25.0 |
|
$ |
28.3 |
|
$ |
29.2 |
|
$ |
32.7 |
|
|
Operating lease weighted-average remaining lease term (in years) |
|
9.0 |
|
|
9.7 |
|
Operating lease weighted-average discount rate |
|
4.1 |
% |
|
4.2 |
% |
The following table presents a maturity analysis of the Registrants' operating lease liabilities.
OGE Energy and OG&E |
|
|
|
|
Future minimum operating lease payments as of December 31: |
|
|
|
|
(In millions) |
|
|
|
|
2026 |
|
$ |
4.3 |
|
2027 |
|
|
4.3 |
|
2028 |
|
|
4.3 |
|
2029 |
|
|
3.2 |
|
2030 |
|
|
3.5 |
|
Thereafter |
|
|
16.1 |
|
Total future minimum lease payments |
|
|
35.7 |
|
Less: Imputed interest |
|
|
6.5 |
|
Present value of net minimum lease payments |
|
$ |
29.2 |
|
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Feb 18, 2026 | Showing above |
| 2024 | Feb 19, 2025 | |
| 2023 | Feb 21, 2024 | |
| 2022 | Feb 23, 2023 | |
| 2021 | Feb 24, 2022 | |
| 2020 | Feb 25, 2021 | |
| 2019 | Feb 27, 2020 | |
About Leases Disclosures
Lease disclosures under ASC 842 provide a comprehensive view of a company's leased asset portfolio, including the split between operating and finance leases, discount rates used to present-value future payments, and the maturity schedule of lease obligations. This section reveals a significant source of off-balance-sheet commitments that were largely hidden before the current standard.
Key signals: the weighted-average discount rate affects the size of recorded lease liabilities — a higher rate reduces the reported obligation, so compare the chosen rate against the company's incremental borrowing rate. The operating versus finance lease mix affects both EBITDA and operating income presentation. Watch the maturity table for concentration risk: large payment cliffs in specific years may create cash flow pressure. Variable lease payments excluded from the liability measurement represent real obligations that do not appear on the balance sheet. Compare total lease costs against prior-year operating lease expense to assess the true economic burden.