OGE ENERGY CORP (Form: 10-Q, Received: 05/07/2008 08:13:18)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF

THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2008

o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF

THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _____to_____

Commission File Number: 1-12579

OGE ENERGY CORP.

(Exact name of registrant as specified in its charter)

Oklahoma		73-1481638
(State or other jurisdiction of		(I.R.S. Employer
incorporation or organization)		Identification No.)

321 North Harvey

P.O. Box 321

Oklahoma City, Oklahoma 73101-0321

(Address of principal executive offices)

(Zip Code)

405-553-3000

(Registrant’s telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer x	Accelerated filer o
Non-accelerated filer o (Do not check if a smaller reporting company)	Smaller reporting company o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes o No x

At March 31, 2008, 91,974,496 shares of common stock, par value $0.01 per share, were outstanding.

OGE ENERGY CORP.

FORM 10-Q

FOR THE QUARTER ENDED MARCH 31, 2008

TABLE OF CONTENTS


		Page

FORWARD-LOOKING STATEMENTS		1


Part I – FINANCIAL INFORMATION

Item 1. Financial Statements (Unaudited)
Condensed Consolidated Statements of Income		2
Condensed Consolidated Balance Sheets		3
Condensed Consolidated Statements of Changes in Stockholders’ Equity		5
Condensed Consolidated Statements of Cash Flows		6
Notes to Condensed Consolidated Financial Statements		7

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations		23

Item 3. Quantitative and Qualitative Disclosures About Market Risk		40

Item 4. Controls and Procedures		41


Part II – OTHER INFORMATION

Item 1. Legal Proceedings		41

Item 1A. Risk Factors		41

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds		42

Item 6. Exhibits		42

Signature		43

FORWARD-LOOKING STATEMENTS

Except for the historical statements contained herein, the matters discussed in this Form 10-Q, including those matters discussed in “Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations,” are forward-looking statements that are subject to certain risks, uncertainties and assumptions. Such forward-looking statements are intended to be identified in this document by the words “anticipate”, “believe”, “estimate”, “expect”, “intend”, “objective”, “plan”, “possible”, “potential”, “project” and similar expressions. Actual results may vary materially. In addition to the specific risk factors discussed in “Item 1A. Risk Factors” in OGE Energy Corp.’s Annual Report on Form 10-K for the year ended December 31, 2007 (“2007 Form 10-K”) and “Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations,” herein, factors that could cause actual results to differ materially from the forward-looking statements include, but are not limited to:

•

general economic conditions, including the availability of credit, actions of rating agencies and their impact on capital expenditures;

•

OGE Energy Corp.’s (“OGE Energy” and collectively, with its subsidiaries, the “Company”) ability and the ability of its subsidiaries to obtain financing on favorable terms;

•

prices and availability of electricity, coal, natural gas and natural gas liquids (“NGL”), each on a stand-alone basis and in relation to each other;

•

business conditions in the energy and natural gas midstream industries;

•

competitive factors including the extent and timing of the entry of additional competition in the markets served by the Company;

•

unusual weather;

•

availability and prices of raw materials for current and future construction projects;

•

federal or state legislation and regulatory decisions (including the approval of regulatory filings related to the proposed acquisition of the Redbud power plant) and initiatives that affect cost and investment recovery, have an impact on rate structures or affect the speed and degree to which competition enters the Company’s markets;

•

environmental laws and regulations that may impact the Company’s operations;

•

changes in accounting standards, rules or guidelines;

•

the discontinuance of regulated accounting principles under Financial Accounting Standards Board (“FASB”) Statement of Financial Accounting Standards (“SFAS”) No. 71, “Accounting for the Effects of Certain Types of Regulation”;

•

creditworthiness of suppliers, customers and other contractual parties;

•

the higher degree of risk associated with the Company’s nonregulated business compared with the Company’s regulated utility business;

•

the impact of the proposed initial public offering of limited partner interests of OGE Enogex Partners L.P., a Delaware limited partnership (the “Partnership”); and

•

other risk factors listed in the reports filed by the Company with the Securities and Exchange Commission (“SEC”) including those listed in Item “1A. Risk Factors” and in Exhibit 99.01 to the Company’s 2007 Form 10-K.

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements.

OGE ENERGY CORP.

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(Unaudited)


	Three Months Ended
	March 31,
(In millions, except per share data)	2008		2007
OPERATING REVENUES
Electric Utility operating revenues	$	386.4	$	340.7
Natural Gas Pipeline operating revenues		608.3		540.8
Total operating revenues		994.7		881.5
COST OF GOODS SOLD (exclusive of depreciation shown below)
Electric Utility cost of goods sold		228.8		188.2
Natural Gas Pipeline cost of goods sold		520.0		478.7
Total cost of goods sold		748.8		666.9
Gross margin on revenues		245.9		214.6
Other operation and maintenance		125.2		98.8
Depreciation		50.7		48.7
Taxes other than income		21.9		20.9
OPERATING INCOME		48.1		46.2
OTHER INCOME (EXPENSE)
Interest income		0.9		0.7
Other income		3.9		2.6
Other expense		(4.1)		(0.9)
Net other income		0.7		2.4
INTEREST EXPENSE
Interest on long-term debt		23.4		22.1
Allowance for borrowed funds used during construction		(0.7)		(0.6)
Interest on short-term debt and other interest charges		6.5		2.7
Interest expense		29.2		24.2
INCOME BEFORE TAXES		19.6		24.4
INCOME TAX EXPENSE		6.6		7.2
NET INCOME	$	13.0	$	17.2

BASIC AVERAGE COMMON SHARES OUTSTANDING		91.9		91.5
DILUTED AVERAGE COMMON SHARES OUTSTANDING		92.5		92.4
BASIC EARNINGS PER AVERAGE COMMON SHARE	$	0.14	$	0.19
DILUTED EARNINGS PER AVERAGE COMMON SHARE	$	0.14	$	0.19

DIVIDENDS DECLARED PER SHARE	$	0.3475	$	0.34

The accompanying Notes to Condensed Consolidated Financial Statements are an integral part hereof .

OGE ENERGY CORP.

CONDENSED CONSOLIDATED BALANCE SHEETS

( Unaudited )

	March 31,		December 31,
(In millions)	2008		2007

ASSETS
CURRENT ASSETS
Cash and cash equivalents	$	2.7	$	8.8
Accounts receivable, less reserve of $2.3 and $3.8, respectively		343.1		334.4
Accrued unbilled revenues		37.2		45.7
Fuel inventories		72.8		82.0
Materials and supplies, at average cost		68.3		63.6
Price risk management		8.2		7.7
Gas imbalances		5.7		6.7
Accumulated deferred tax assets		27.3		38.1
Fuel clause under recoveries		30.1		27.3
Prepayments		8.3		8.0
Other		5.7		7.2
Total current assets		609.4		629.5

OTHER PROPERTY AND INVESTMENTS, at cost		44.0		44.5

PROPERTY, PLANT AND EQUIPMENT
In service		6,914.0		6,809.2
Construction work in progress		183.4		179.8
Total property, plant and equipment		7,097.4		6,989.0
Less accumulated depreciation		2,767.8		2,742.7
Net property, plant and equipment		4,329.6		4,246.3

DEFERRED CHARGES AND OTHER ASSETS
Income taxes recoverable from customers, net		17.1		17.4
Regulatory asset - SFAS 158		170.5		174.6
Price risk management		2.6		0.3
McClain Plant deferred expenses		10.9		12.4
Unamortized loss on reacquired debt		18.6		18.9
Unamortized debt issuance costs		10.9		8.3
Other		83.7		85.6
Total deferred charges and other assets		314.3		317.5

TOTAL ASSETS	$	5,297.3	$	5,237.8

The accompanying Notes to Condensed Consolidated Financial Statements are an integral part hereof.

OGE ENERGY CORP.

CONDENSED CONSOLIDATED BALANCE SHEETS (Continued)

(Unaudited)

	March 31,		December 31,
(In millions)	2008		2007

LIABILITIES AND STOCKHOLDERS’ EQUITY
CURRENT LIABILITIES
Short-term debt	$	266.3	$	295.8
Accounts payable		353.8		399.3
Dividends payable		32.0		31.9
Customer deposits		56.7		55.5
Accrued taxes		18.3		40.0
Accrued interest		24.8		37.0
Accrued compensation		25.5		53.9
Long-term debt due within one year		1.0		1.0
Price risk management		6.8		20.6
Gas imbalances		11.8		11.1
Fuel clause over recoveries		4.2		4.2
Other		34.4		38.2
Total current liabilities		835.6		988.5

LONG-TERM DEBT		1,543.3		1,344.6

COMMITMENTS AND CONTINGENCIES (NOTE 13)

DEFERRED CREDITS AND OTHER LIABILITIES
Accrued benefit obligations		159.9		156.2
Accumulated deferred income taxes		868.2		853.6
Accumulated deferred investment tax credits		20.8		22.0
Accrued removal obligations, net		141.1		139.7
Price risk management		5.6		11.3
Other		42.0		41.0
Total deferred credits and other liabilities		1,237.6		1,223.8

STOCKHOLDERS’ EQUITY
Common stockholders’ equity		758.4		756.2
Retained earnings		986.7		1,005.7
Accumulated other comprehensive loss, net of tax		(64.3)		(81.0)
Total stockholders’ equity		1,680.8		1,680.9

TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	5,297.3	$	5,237.8

The accompanying Notes to Condensed Consolidated Financial Statements are an integral part hereof.

OGE ENERGY CORP.
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY
(Unaudited)

		Premium		Accumulated
		on		Other
	Common	Capital	Retained	Comprehensive
(In millions)	Stock	Stock	Earnings	Income (Loss)	Total
Balance at December 31, 2006	$ 0.9	$ 740.1	$ 890.8	$ (28.0)	$ 1,603.8
Comprehensive income
Net income for first quarter of 2007	---	---	17.2	---	17.2
Other comprehensive income, net of tax
Defined benefit pension plan and restoration of
retirement income plan:
Net loss, net of tax ($0.5 pre-tax)	---	---	---	0.3	0.3
Prior service cost, net of tax ($0.3 pre-tax)	---	---	---	0.2	0.2
Defined benefit postretirement plans:
Net loss, net of tax ($0.1 pre-tax)	---	---	---	0.1	0.1
Net transition obligation, net of tax ($0.1 pre-tax)	---	---	---	0.1	0.1
Deferred hedging losses (($9.0) pre-tax)	---	---	---	(5.5)	(5.5)
Other comprehensive loss	---	---	---	(4.8)	(4.8)
Comprehensive income (loss)	---	---	17.2	(4.8)	12.4
Dividends declared on common stock	---	---	(31.2)	---	(31.2)
FIN No. 48 adoption (($6.2) pre-tax)	---	---	(3.8)	---	(3.8)
Issuance of common stock	---	9.5	---	---	9.5
Balance at March 31, 2007	$ 0.9	$ 749.6	$ 873.0	$ (32.8)	$ 1,590.7

Balance at December 31, 2007	$ 0.9	$ 755.3	$ 1,005.7	$ (81.0)	$ 1,680.9
Comprehensive income
Net income for first quarter of 2008	---	---	13.0	---	13.0
Other comprehensive income, net of tax
Defined benefit pension plan and restoration of
retirement income plan:
Net loss, net of tax ($0.5 pre-tax)	---	---	---	0.3	0.3
Prior service cost, net of tax ($0.1 pre-tax)	---	---	---	0.1	0.1
Defined benefit postretirement plans:
Net loss, net of tax ($0.1 pre-tax)	---	---	---	0.1	0.1
Prior service cost, net of tax ($0.1 pre-tax)	---	---	---	0.1	0.1
Deferred hedging gains ($26.0 pre-tax)	---	---	---	16.0	16.0
Amortization of cash flow hedge ($0.1 pre-tax)	---	---	---	0.1	0.1
Other comprehensive income	---	---	---	16.7	16.7
Comprehensive income	---	---	13.0	16.7	29.7
Dividends declared on common stock	---	---	(32.0)	---	(32.0)
Issuance of common stock	---	2.2	---	---	2.2
Balance at March 31, 2008	$ 0.9	$ 757.5	$ 986.7	$ (64.3)	$ 1,680.8

The accompanying Notes to Condensed Consolidated Financial Statements are an integral part hereof.

OGE ENERGY CORP.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)

	Three Months Ended
	March 31,
(In millions)	2008		2007

CASH FLOWS FROM OPERATING ACTIVITIES
Net income	$	13.0	$	17.2
Adjustments to reconcile net income to net cash (used in) provided
from operating activities
Minority interest income		1.6		---
Depreciation		50.7		48.7
Deferred income taxes and investment tax credits, net		14.3		4.1
Stock-based compensation expense		1.1		1.0
Price risk management assets		(2.8)		32.5
Price risk management liabilities		6.4		(10.1)
Other assets		7.6		5.9
Other liabilities		(3.6)		(1.9)
Change in certain current assets and liabilities
Accounts receivable, net		(8.7)		41.0
Accrued unbilled revenues		8.5		5.5
Fuel, materials and supplies inventories		4.5		4.1
Gas imbalance assets		1.0		(0.8)
Fuel clause under recoveries		(2.8)		---
Other current assets		1.2		2.6
Accounts payable		(45.5)		8.9
Customer deposits		1.2		1.8
Accrued taxes		(20.8)		(28.6)
Accrued interest		(12.2)		(14.0)
Accrued compensation		(28.4)		(19.3)
Gas imbalance liabilities		0.7		2.0
Fuel clause over recoveries		---		30.0
Other current liabilities		(3.8)		(4.6)
Net Cash (Used in) Provided from Operating Activities		(16.8)		126.0

CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditures (less allowance for equity funds used during
construction)		(125.9)		(119.6)
Proceeds from sale of assets		0.1		0.5
Net Cash Used in Investing Activities		(125.8)		(119.1)

CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from long-term debt		197.2		---
Decrease in short-term debt, net		(29.5)		---
Issuance of common stock		0.2		7.0
Contributions from partners		0.5		1.7
Dividends paid on common stock		(31.9)		(31.1)
Net Cash Provided from (Used in) Financing Activities		136.5		(22.4)

NET DECREASE IN CASH AND CASH EQUIVALENTS		(6.1)		(15.5)
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD		8.8		47.9
CASH AND CASH EQUIVALENTS AT END OF PERIOD	$	2.7	$	32.4

The accompanying Notes to Condensed Consolidated Financial Statements are an integral part hereof.

OGE ENERGY CORP.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

1.	Summary of Significant Accounting Policies

Organization

The Company is an energy and energy services provider offering physical delivery and related services for both electricity and natural gas primarily in the south central United States. The Company conducts these activities through four business segments: (i) electric utility, (ii) natural gas transportation and storage, (iii) natural gas gathering and processing and (iv) natural gas marketing. All significant intercompany transactions have been eliminated in consolidation.

The electric utility segment generates, transmits, distributes and sells electric energy in Oklahoma and western Arkansas. Its operations are conducted through Oklahoma Gas and Electric Company (“OG&E”) and are subject to regulation by the Oklahoma Corporation Commission (“OCC”), the Arkansas Public Service Commission (“APSC”) and the Federal Energy Regulatory Commission (“FERC”). OG&E was incorporated in 1902 under the laws of the Oklahoma Territory. OG&E is the largest electric utility in Oklahoma and its franchised service territory includes the Fort Smith, Arkansas area. OG&E sold its retail gas business in 1928 and is no longer engaged in the gas distribution business.

Enogex Inc. and its subsidiaries (“Enogex”) is a provider of integrated natural gas midstream services. The vast majority of Enogex’s natural gas gathering, processing, transportation and storage assets are strategically located primarily in the Arkoma and Anadarko basins of Oklahoma and the Texas Panhandle. Enogex’s ongoing operations are organized into two business segments: (1) natural gas transportation and storage and (2) natural gas gathering and processing. Historically, Enogex had also engaged in natural gas marketing through its subsidiary, OGE Energy Resources, Inc. (“OERI”). In connection with the proposed initial public offering of limited partner interests of the Partnership (discussed in Note 2), on January 1, 2008, Enogex distributed the stock of OERI to OGE Energy.

Effective April 1, 2008, Enogex Inc. converted from an Oklahoma corporation to a Delaware limited liability company. Also, effective April 1, 2008, Enogex Products Corporation, a wholly owned subsidiary of Enogex, converted from an Oklahoma corporation to an Oklahoma limited liability company.

The Company allocates operating costs to its subsidiaries based on several factors. Operating costs directly related to specific subsidiaries are assigned to those subsidiaries. Where more than one subsidiary benefits from certain expenditures, the costs are shared between those subsidiaries receiving the benefits. Operating costs incurred for the benefit of all subsidiaries are allocated among the subsidiaries, based primarily upon head-count, occupancy, usage or the “Distrigas” method. The Distrigas method is a three-factor formula that uses an equal weighting of payroll, net operating revenues and gross property, plant and equipment. The Company adopted the Distrigas method in January 1996 as a result of a recommendation by the OCC Staff. The Company believes this method provides a reasonable basis for allocating common expenses.

Basis of Presentation

The Condensed Consolidated Financial Statements included herein have been prepared by the Company, without audit, pursuant to the rules and regulations of the SEC. Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States have been condensed or omitted pursuant to such rules and regulations; however, the Company 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 the consolidated financial position of the Company at March 31, 2008 and December 31, 2007, the results of its operations for the three months ended March 31, 2008 and 2007, and the results of its cash flows for the three months ended March 31, 2008 and 2007, have been included and are of a normal recurring nature except as otherwise disclosed.

Due to seasonal fluctuations and other factors, the operating results for the three months ended March 31, 2008 are not necessarily indicative of the results that may be expected for the year ending December 31, 2008 or for any future period. The Condensed Consolidated Financial Statements and Notes thereto should be read in conjunction with the audited Consolidated Financial Statements and Notes thereto included in the Company’s 2007 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 the accounting principles prescribed by SFAS No. 71. SFAS No. 71 provides that certain actual or anticipated costs that would otherwise be charged to expense can be deferred as regulatory assets, based on the expected recovery from customers in future rates. Likewise, certain actual or anticipated credits that would otherwise reduce expense can be deferred as regulatory liabilities, based on the expected flowback to customers in future rates. Management’s expected recovery of deferred costs and flowback of deferred credits generally results from specific decisions by regulators granting such ratemaking treatment.

OG&E records certain actual or anticipated costs and obligations as regulatory assets or liabilities if it is probable, based on regulatory orders or other available evidence, that the cost or obligation will be included in amounts allowable for recovery or refund in future rates.

The following table is a summary of OG&E’s regulatory assets and liabilities at:

	March 31,		December 31,
(In millions)	2008		2007
Regulatory Assets
Regulatory asset - SFAS 158	$	170.5	$	174.6
Deferred storm expenses		35.0		35.9
Fuel clause under recoveries		30.1		27.3
Deferred pension plan expenses		22.3		24.8
Unamortized loss on reacquired debt		18.6		18.9
Income taxes recoverable from customers, net		17.1		17.4
Red Rock deferred expenses		14.7		14.7
McClain Plant deferred expenses		10.9		12.4
Cogeneration credit rider under recovery		0.8		3.9
Miscellaneous		0.4		0.8
Total Regulatory Assets	$	320.4	$	330.7

Regulatory Liabilities
Accrued removal obligations, net	$	141.1	$	139.7
Fuel clause over recoveries		4.2		4.2
Deferred gain on sale of assets		1.0		1.4
Miscellaneous		2.7		2.9
Total Regulatory Liabilities	$	149.0	$	148.2

For a discussion of proceedings related to the deferred storm expenses and deferred Red Rock expenses, see Note 14.

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 reduced or written off, as appropriate. If the Company were required to discontinue the application of SFAS No. 71 for some or all of its operations, it could result in writing off the related regulatory assets; the financial effects of which could be significant.

Fuel Inventories

OG&E

Fuel inventories for the generation of electricity consist of coal, natural gas and oil. Historically, the Company has used the last-in, first-out (“LIFO”) method of accounting for inventory removed from storage or stockpiles. Effective January 1, 2008, OG&E began using the weighted-average cost method to value inventory that is physically added to or withdrawn from storage or stockpiles in accordance with Oklahoma Senate Bill No. 609 (“SB 609”) that was adopted in Oklahoma in 2007. SB 609 requires that electric utilities record fuel or natural gas removed from storage or stockpiles using the weighted-average cost method of accounting for inventory. In addition to satisfying the requirements of SB 609, management believes that the change from LIFO to weighted-average cost is also preferable because it provides for a more meaningful presentation in the financial statements taken as a whole and reduces the volatility associated with fuel price fluctuations on OG&E’s customers. The majority of electric utility companies use the weighted-average cost method.

SFAS No. 154, “Accounting Changes and Error Corrections, a replacement of APB Opinion No. 20 and FASB Statement No. 3,” requires that an entity report a change in accounting principle through retrospective application of the new principle to all prior periods unless it is impractical to do so. However, SFAS No. 71 requires that changes in accounting methods for regulated entities that affect allowable costs for rate-making purposes should be implemented in the same way that such an accounting change would be implemented for rate-making purposes. In accordance with an order from the OCC, OG&E’s change in accounting method for inventory affected allowable costs for rate-making purposes, on a prospective basis only beginning January 1, 2008. Therefore the change in accounting was implemented prospectively for generally accepted accounting priniciples (“GAAP”) purposes also and OG&E will not restate previously issued financial statements. Also, in accordance with the order from the OCC, on January 1, 2008, OG&E recorded an increase in Fuel Inventories of approximately $7.9 million with a corresponding offset recorded in Fuel Clause Under and Over Recoveries on the Company’s Condensed Consolidated Financial Statements. OG&E will recover costs from its customers using the weighted-average cost method for inventory beginning January 1, 2008.

The change in accounting for fuel inventory to the weighted-average cost method had no material effect on the amount of fuel expense that the Company recorded for the first quarter of 2008.

Price Risk Management Assets and Liabilities

In accordance with FASB Interpretation No. 39 (As Amended), “Offsetting of Amounts Related to Certain Contracts – an interpretation of APB Opinion No. 10 and FASB Statement No. 105,” fair value amounts recognized for forward, interest rate swap, currency swap, option and other conditional or exchange contracts executed with the same counterparty under a master netting arrangement may be offset. The reporting entity’s choice to offset or not must be applied consistently. A master netting arrangement exists if the reporting entity has multiple contracts, whether for the same type of conditional or exchange contract or for different types of contracts, with a single counterparty that are subject to a contractual agreement that provides for the net settlement of all contracts through a single payment in a single currency in the event of default on or termination of any one contract. Offsetting the fair values recognized for forward, interest rate swap, currency swap, option and other conditional or exchange contracts outstanding with a single counterparty results in the net fair value of the transactions being reported as an asset or a liability in the Condensed Consolidated Balance Sheets. The Company has presented the fair values of its contracts under master netting agreements using a net fair value presentation. If these transactions with the same counterparty were presented on a gross basis in the Condensed Consolidated Balance Sheets, current Price Risk Management assets and liabilities would be approximately $23.5 million and $38.2 million, respectively, at March 31, 2008, and non-current Price Risk Management assets and liabilities would be approximately $6.2 million and $41.1 million, respectively, at March 31, 2008. If these transactions with the same counterparty were presented on a gross basis in the Condensed Consolidated Balance Sheets, current Price Risk Management assets and liabilities would be approximately $10.0 million and $51.4 million, respectively, at December 31, 2007, and non-current Price Risk Management assets and liabilities would be approximately $2.6 million and $38.9 million, respectively, at December 31, 2007.

2.	Formation of OGE Enogex Partners L.P.

In May 2007, the Company formed the Partnership as part of its strategy to further develop Enogex’s natural gas midstream assets and operations. The Partnership has filed a registration statement with the SEC for a proposed initial public offering of its common units, representing limited partner interests in the Partnership (the “Offering”). At the date of this quarterly report, the registration statement relating to the Offering is not effective. In connection with the Offering, Enogex Inc., which was an Oklahoma corporation, converted to Enogex LLC, a Delaware limited liability company, effective April 1, 2008. In connection with the Offering, the Company is expected to contribute an approximate 25 percent membership interest in Enogex LLC to a wholly owned subsidiary of the Partnership that would serve as Enogex LLC’s managing member and would control its assets and operations. A wholly owned subsidiary of the Company will retain the remaining approximately 75 percent membership interest in Enogex LLC. It is currently contemplated that at the completion of the Offering, the Company will indirectly own an approximate 69 percent limited partner interest and a two percent general partner interest in the Partnership.

The completion of the Offering is subject to numerous conditions and no assurances can be made that it will be successfully completed. The Company expects to continue to evaluate strategic alternatives for Enogex, including other transactions that the Company believes could provide long-term value to its shareowners and the proposed initial public offering. The securities offered under the registration statement may not be sold, nor may offers to buy be accepted, prior to the time that the registration statement becomes effective. The information contained in this quarterly report with respect to the Offering shall not constitute an offer to sell or a solicitation of an offer to buy any securities.

From a financial reporting perspective, the formation of the Partnership had no effect on the Company’s financial statements as of and for the period ended March 31, 2008. In the event that, and beginning with the period in which, the Offering is completed, the Company will consolidate the results of the Partnership with minority interest treatment for the common units of the Partnership owned by unitholders other than the Company or its consolidated subsidiaries.

3.	Accounting Pronouncements

In September 2006, the FASB issued SFAS No. 157, “Fair Value Measurements,” which defines fair value, establishes a framework for measuring fair value in GAAP and expands disclosures about fair value measurements (see Note 4 for a further discussion).

In September 2006, the Emerging Issues Task Force (“EITF”) reached a consensus on EITF Issue No. 06-4, “Accounting for Deferred Compensation and Postretirement Benefit Aspects of Endorsement Split-Dollar Life Insurance Arrangements,” which states that for an endorsement split-dollar life insurance arrangement that provides a benefit to an employee that extends to postretirement periods, an employer should recognize a liability for future benefits in accordance with SFAS No. 106, “Employers’ Accounting for Postretirement Benefits Other Than Pensions,” (if a postretirement benefit plan exists) or Accounting Principles Board Opinion No. 12 for deferred compensation contracts based on the substantive agreement with the employee. Application of the consensus in EITF 06-4 is effective for fiscal years beginning after December 15, 2007. Entities should recognize the effects of applying the consensus in EITF 06-4 through either: (a) a change in accounting principle through a cumulative effect adjustment to retained earnings or to other components of equity in the statement of financial position as of the beginning of the year of adoption; or (b) a change in accounting principle through retrospective application to all prior periods. The Company adopted this consensus effective January 1, 2008. The adoption of this consensus did not have a material impact on the Company’s consolidated financial position or results of operations.

In December 2007, the FASB issued SFAS No. 141 (Revised), “Business Combinations,” which is intended to improve the relevance, representational faithfulness and comparability of the information that a reporting entity provides in its financial reports about a business combination and its effects. SFAS No. 141(R) replaces SFAS No. 141, “Business Combinations,” and establishes principles and requirements for how the acquirer: (i) recognizes and measures in its financial statements the identifiable assets acquired, the liabilities assumed, and any noncontrolling interest in the acquiree; (ii) recognizes and measures the goodwill acquired in the business combination or a gain from a bargain purchase; and (iii) determines what information to disclose to enable users of the financial statements to evaluate the nature and financial effects of the business combination. SFAS No. 141(R) applies to all transactions or other events in which an entity obtains control of one or more businesses and combinations achieved without the transfer of consideration. SFAS No. 141(R) also applies to all business entities, including mutual entities that previously used the pooling-of-interests method of accounting for some business combinations. SFAS No. 141(R) does not apply to: (i) the formation of a joint venture; (ii) the acquisition of an asset or a group of assets that does not constitute a business; (iii) a combination between entities or businesses under common control; or (iv) a combination between not-for-profit organizations or the acquisition of a for-profit business by a not-for-profit organization. SFAS No. 141(R) also amends SFAS No. 109, “Accounting for Income Taxes,” to require the acquirer to recognize changes in the amount of its deferred tax benefits that are recognizable because of a business combination either in income from continuing operations in the period of the combination or directly in contributed capital, depending on the circumstances. SFAS No. 141(R) is effective for fiscal years, and interim periods within those fiscal years, beginning on or after December 15, 2008. The provisions of SFAS No. 141(R) are to be applied prospectively to business combinations for which the acquisition date is on or after the beginning of the first annual reporting period beginning on or after December 15, 2008. The Company will adopt this new standard effective January 1, 2009. The adoption of this new standard is not expected to have a material impact on the Company’s consolidated financial position or results of operations.

In December 2007, the FASB issued SFAS No. 160, “Noncontrolling Interests in Consolidated Financial Statements,” which is intended to improve the relevance, comparability and transparency of the financial information that a reporting entity provides in its consolidated financial statements by establishing accounting and reporting standards for the noncontrolling interest in a subsidiary and for the deconsolidation of a subsidiary. SFAS No. 160 applies to all entities that prepare consolidated financial statements, except not-for-profit organizations. SFAS No. 160 amends Accounting Research Bulletin No. 51, “Consolidated Financial Statements,” to establish accounting and reporting standards for the noncontrolling interest in a subsidiary and for the deconsolidation of a subsidiary. SFAS No. 160 also amends certain of ARB No. 51 consolidation procedures for consistency with the requirements of SFAS No. 141(R) SFAS No. 160 is effective for fiscal years, and interim periods within those fiscal years, beginning on or after December 15, 2008. The provisions of SFAS No. 160 are to be applied prospectively as of the beginning of the fiscal year in which it is initially adopted, except for the presentation and disclosure requirements, which are to be applied retrospectively for all periods presented. The Company

will adopt this new standard effective January 1, 2009. The adoption of this new standard will change the presentation of noncontrolling interests in the Company’s consolidated financial statements.

In March 2008, the FASB issued SFAS No. 161, “Disclosures about Derivative Instruments and Hedging Activities,” which requires enhanced disclosures about an entity’s derivative and hedging activities and is intended to improve the transparency of financial reporting. SFAS No. 161 applies to all entities. SFAS No. 161 applies to all derivative instruments, including bifurcated derivative instruments and related hedging items accounted for under SFAS No. 133, “Accounting for Derivative Instruments and Hedging Activities,” and its related interpretations. SFAS No. 161 amends and expands the disclosure requirements of SFAS No. 133 with the intent to provide users of financial statements with an enhanced understanding of: (i) how and why an entity uses derivative instruments, (ii) how derivative instruments and related hedged items are accounted for under SFAS No. 133 and its related interpretations and (iii) how derivative instruments and related hedged items affect an entity’s financial position, financial performance and cash flows. SFAS No. 161 is effective for fiscal years and interim periods beginning after November 15, 2008. The Company will adopt this new standard effective January 1, 2009. The adoption of this new standard will change the presentation of derivative and hedging activities in the Company’s consolidated financial statements.

4.	Fair Value Measurements

In September 2006, the FASB issued SFAS No. 157 which defines fair value, establishes a framework for measuring fair value in GAAP and establishes a hierarchical framework for disclosing the observability of the inputs utilized in measuring assets and liabilities at fair value. SFAS No. 157 expands disclosures about the use of fair value to measure assets and liabilities in interim and annual periods subsequent to initial recognition. The guidance in SFAS No. 157 applies to derivatives and other financial instruments measured at fair value under SFAS No. 133 at initial recognition and in all subsequent periods. Therefore, SFAS No. 157 nullifies the guidance in footnote 3 of EITF No. 02-3, “Issues Involved in Accounting for Derivative Contracts Held for Trading Purposes and Contracts Involved in Energy Trading and Risk Management Activities.” SFAS No. 157 also amends SFAS No. 133 to remove the guidance similar to that nullified in EITF 02-3. SFAS No. 157 is effective for financial statements issued for fiscal years beginning after November 15, 2007, and interim periods within those fiscal years. The provisions of SFAS No. 157 generally are to be applied prospectively as of the beginning of the fiscal year in which it is initially applied. The Company adopted this new standard effective January 1, 2008.

The following table is a summary of the Company’s assets and liabilities that are measured at fair value on a recurring basis in accordance with SFAS No. 157.

	March 31,
(In millions)	2008		Level 1		Level 2		Level 3
Assets
Gross derivative assets	$	47.2	$	14.2	$	31.5	$	1.5

Gas imbalance assets		5.7		---		5.7		---
Total	$	52.9	$	14.2	$	37.2	$	1.5

Liabilities
Gross derivative liabilities	$	96.3	$	14.6	$	81.7	$	---

Gas imbalance liabilities		11.8		---		11.8		---

Asset retirement obligations		5.0		---		---		5.0
Total	$	113.1	$	14.6	$	93.5	$	5.0

The three levels defined by the SFAS No. 157 hierarchy and examples of each are as follows:

Level 1 inputs are quoted prices in active markets for identical assets or liabilities that the reporting entity has the ability to access at the measurement date. An active market for the asset or liability is a market in which transactions for the asset or liability occur with sufficient frequency and volume to provide pricing information on an ongoing basis. An example of instruments that may be classified as Level 1 includes futures transactions for energy commodities traded on the New York Mercantile Exchange (“NYMEX”).

Level 2 inputs are inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly. If the asset or liability has a specified (contractual) term, a Level 2 input must be observable for substantially the full term of the asset or liability. Level 2 inputs include the following: (i) quoted prices for similar assets or liabilities in active markets; (ii) quoted prices for identical or similar assets or liabilities in markets that are not active; (iii) inputs other than quoted prices that are observable for the asset or liability; or (iv) inputs that are derived principally from or corroborated by observable market data by correlation or other means. An example of instruments that may be classified as Level 2 includes energy commodity purchase or sales transactions in a market such that the pricing is closely related to the NYMEX pricing.

Level 3 inputs are unobservable inputs for the asset or liability. Unobservable inputs shall be used to measure fair value to the extent that observable inputs are not available. Unobservable inputs shall 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). Unobservable inputs shall be developed based on the best information available in the circumstances, which might include the reporting entity’s own data. The reporting entity’s own data used to develop unobservable inputs shall be adjusted if information is reasonably available that indicates that market participants would use different assumptions. An example of instruments that may be classified as Level 3 includes energy commodity purchase or sales transactions of a longer duration or in an inactive market or the valuation of asset retirement obligations such that there are no closely related markets in which quoted prices are available.

The following table is a reconciliation of the Company’s total derivatives fair value to the Company’s Condensed Consolidated Balance Sheet at March 31, 2008.

	March 31,
(In millions)	2008
Assets
Gross derivative assets	$	47.2
Less: Amounts held in clearing broker accounts reflected in Other Current Assets		(17.5)
Less: Amounts offset under master netting agreements in accordance with FIN 39-1		(18.9)
Net Price Risk Management Assets	$	10.8

Liabilities
Gross derivative liabilities	$	96.3
Less: Amounts held in clearing broker accounts reflected in Other Current Assets		(17.0)
Less: Amounts offset under master netting agreements in accordance with FIN 39-1,
including amounts netted against collateral payments to counterparties		(66.9)
Net Price Risk Management Liabilities	$	12.4

The following table is a summary of the Company’s assets and liabilities that are measured at fair value on a recurring basis in accordance with SFAS No. 157 using significant unobservable inputs (Level 3).

	Derivative
(In millions)	Assets
Assets
Balance at January 1, 2008	$	1.4
Total gains or losses (realized/unrealized)
Included in earnings		---
Included in other comprehensive income		0.1
Purchases, sales, issuances and settlements, net		---
Transfers in and/or out of Level 3		---
Balance at March 31, 2008	$	1.5

The amount of total gains or losses for the period included in earnings attributable to the
change in unrealized gains or losses relating to assets held at March 31, 2008	$	---

	Asset
	Retirement
(In millions)	Obligations
Liabilities
Balance at January 1, 2008	$	4.9
Total gains or losses (realized/unrealized)
Included in earnings		0.1
Included in other comprehensive income		---
Purchases, sales, issuances and settlements, net		---
Transfers in and/or out of Level 3		---
Balance at March 31, 2008	$	5.0

The amount of total gains or losses for the period included in earnings attributable to the
change in unrealized gains or losses relating to liabilities held at March 31, 2008	$	---

Gains and losses (realized and unrealized) included in earnings for the three months ended March 31, 2008 attributable to the change in unrealized gains or losses relating to assets and liabilities held at March 31, 2008, if any, are reported in operating revenues.

The following information is provided regarding the estimated fair value of the Company’s financial instruments, including derivative contracts related to the Company’s price risk management activities, which have significantly changed since December 31, 2007.

	March 31, 2008				December 31, 2007
	Carrying		Fair		Carrying		Fair
(In millions)	Amount		Value		Amount		Value

Price Risk Management Assets
Energy Trading Contracts	$	10.8	$	10.8	$	8.0	$	8.0

Price Risk Management Liabilities
Energy Trading Contracts	$	12.4	$	12.4	$	30.2	$	30.2

The carrying value of the financial instruments on the Condensed Consolidated Balance Sheets not otherwise discussed above approximates fair value except for long-term debt which is valued at the carrying amount. The valuation of the Company’s interest rate swaps and energy trading contracts was determined generally based on quoted market prices. However, in certain instances where market quotes are not available, other valuation techniques or models are used to estimate market values. The valuation of instruments also considers the credit risk of the counterparties. The fair value of the Company’s long-term debt is based on quoted market prices and management’s estimate of current rates available for similar issues with similar maturities.

5.	Stock-Based Compensation

On January 21, 1998, the Company adopted a Stock Incentive Plan (the “1998 Plan”). In 2003, the Company adopted, and its shareowners approved, a new Stock Incentive Plan (the “2003 Plan” and together with the 1998 Plan, the “Plans”). The 2003 Plan replaced the 1998 Plan and no further awards will be granted under the 1998 Plan. As under the 1998 Plan, under the 2003 Plan, restricted stock, stock options, stock appreciation rights and performance units may be granted to officers, directors and other key employees of the Company and its subsidiaries. The Company has authorized the issuance of up to 2,700,000 shares under the 2003 Plan.

The Company recorded compensation expense of approximately $1.1 million pre-tax ($0.7 million after tax, or $0.01 per basic and diluted share) and $0.8 million pre-tax ($0.5 million after tax, or $0.01 per basic and diluted share) during the three months ended March 31, 2008 and 2007, respectively, related to the Company’s share-based payments.

During the three months ended March 31, 2008, the Company awarded 181,892 performance units based on total shareholder return and 60,611 performance units based on earnings per share with a grant date fair value of $33.62 and $29.22, respectively, to certain employees of the Company and its subsidiaries. Also, during the three months ended March

31, 2008, the Company converted 166,477 performance units based on a payout ratio of 147.33 percent of the target number of performance units granted in February 2005.

The Company issues new shares to satisfy stock option exercises. During the three months ended March 31, 2008, there were 7,500 shares of new common stock issued pursuant to the Company’s Plans related to exercised stock options and payouts of earned performance units. The Company received approximately $0.2 million and $7.0 million during the three months ended March 31, 2008 and 2007, respectively, related to exercised stock options.

6.	Accumulated Other Comprehensive Income (Loss)

The components of accumulated other comprehensive loss at March 31, 2008 and December 31, 2007 are as follows:

	March 31,		December 31,
(In millions)	2008		2007
Defined benefit pension plan and restoration of retirement income plan:
Net loss, net of tax (($28.9) and ($29.4) pre-tax, respectively)	$	(17.7)	$	(18.0)
Prior service cost, net of tax (($1.0) and ($1.1) pre-tax, respectively)		(0.7)		(0.8)
Defined benefit postretirement plans:
Net loss, net of tax (($8.3) and ($8.5) pre-tax, respectively)		(3.6)		(3.7)
Net transition obligation, net of tax (($1.0) and ($1.0) pre-tax,
respectively)		(0.7)		(0.7)
Prior service cost, net of tax (($0.6) and ($0.7) pre-tax, respectively)		(0.3)		(0.4)
Deferred hedging losses, net of tax (($64.9) and ($90.9) pre-tax,
respectively)		(39.7)		(55.7)
Settlement and amortization of cash flow hedge, net of tax (($2.6) and
($2.7) pre-tax, respectively)		(1.6)		(1.7)
Total accumulated other comprehensive loss, net of tax	$	(64.3)	$	(81.0)

7.	Income Taxes

The Company files consolidated income tax returns in the U.S. federal jurisdiction and various state jurisdictions. With few exceptions, the Company is no longer subject to U.S. federal or state and local income tax examinations by tax authorities for years before 2002. Income taxes are generally allocated to each company in the affiliated group based on its stand-alone taxable income or loss. Federal investment tax credits previously claimed on electric utility property have been deferred and are being amortized to income over the life of the related property. The Company continues to amortize its federal investment tax credits on a ratable basis throughout the year. This ratable amortization results in a larger percentage reconciling item related to these credits during the first quarter when the Company historically experiences decreased book income. The following schedule reconciles the statutory federal tax rate to the effective income tax rate:

	Three Months Ended
	March 31,
	2008	2007
Statutory federal tax rate	35.0%	35.0%
Intra period effect of OG&E net loss (A)	5.4	---
State income taxes, net of federal income tax benefit	1.5	2.2
Amortization of net unfunded deferred taxes	0.9	0.9
Federal investment tax credits, net	(5.9)	(4.9)
Federal renewable energy credit	(2.5)	(2.7)
401(k) dividends	(0.7)	(0.7)
Medicare Part D subsidy	(0.3)	(0.6)
Other	0.3	0.3
Effective income tax rate as reported	33.7%	29.5%

(A) During the three months ended March 31, 2008, OG&E incurred a pre-tax loss while the Company, on a consolidated basis, recognized a pre-tax gain. Due to the stand-alone tax allocation method prescribed by the FERC, a reconciling item is required in the first quarter 2008 tax rate to properly apply the interim reporting provisions of FASB Interpretation No. 18, “Accounting for Income Taxes in Interim Periods – an interpretation of APB Opinion No. 28” at the consolidated level. This reconciling item will not be required as OG&E recognizes pre-tax income, which is expected to occur later in 2008.

The Company follows the provisions of SFAS No. 109 which uses an asset and liability approach to accounting for income taxes. Under SFAS No. 109, deferred tax assets or liabilities are computed based on the difference between the financial statement and income tax bases of assets and liabilities using the enacted marginal tax rate. Deferred income tax expenses or benefits are based on the changes in the asset or liability from period to period.

8.	Earnings Per Share

Outstanding shares for purposes of basic and diluted earnings per average common share were calculated as follows:

	Three Months Ended
	March 31,
(In millions)	2008	2007

Average Common Shares Outstanding
Basic average common shares outstanding	91.9	91.5
Effect of dilutive securities:
Employee stock options and unvested stock grants	0.2	0.3
Contingently issuable shares (performance units)	0.4	0.6
Diluted average common shares outstanding	92.5	92.4
Anti-dilutive shares excluded from EPS calculation	---	---

9.	Long-Term Debt

At March 31, 2008, the Company was in compliance with all of its debt agreements.

Optional Redemption of Long-Term Debt

OG&E has three series of variable-rate industrial authority bonds (the “Bonds”) with optional redemption provisions that allow the holders to request repayment of the Bonds at various dates prior to the maturity. The Bonds, which can be tendered at the option of the holder during the next 12 months, are as follows (dollars in millions):

SERIES	DATE DUE	AMOUNT
1.40% - 3.18%	Garfield Industrial Authority, January 1, 2025	$	47.0
1.24% - 3.19%	Muskogee Industrial Authority, January 1, 2025		32.4
1.35% - 3.24%	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, at 100 percent of 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, the Company is obligated to repurchase such unremarketed Bonds. The Company believes that it has sufficient long-term liquidity to meet these obligations.

Issuance of New Long-Term Debt

In January 2008, OG&E issued $200.0 million of 6.45% senior notes due February 1, 2038. The proceeds from the issuance were used to repay commercial paper borrowings. OG&E entered into two separate treasury lock arrangements, effective November 16, 2007 and November 19, 2007, to hedge interest payments on the first $50.0 million and $25.0 million, respectively, of the long-term debt that was issued in January 2008. These treasury lock agreements were settled on January 29, 2008.

10.

Short-Term Debt

The short-term debt balance was approximately $266.3 million and $295.8 million at March 31, 2008 and December 31, 2007, respectively. The following table shows the Company’s revolving credit agreements and available cash at March 31, 2008.

Revolving Credit Agreements and Available Cash (In millions)
	Amount		Amount		Weighted-Average
Entity	Available		Outstanding		Interest Rate		Maturity
OGE Energy Corp. (A)	$	600.0	$	79.7		3.30%	December 6, 2012 (C)
OG&E (B)		400.0		185.8		3.19%	December 6, 2012 (C)
		1,000.0		265.5		3.24%
Cash		2.7		N/A		N/A	N/A
Total	$	1,002.7	$	265.5		3.24%

(A) This bank facility is available to back up the Company’s commercial paper borrowings and to provide revolving credit borrowings. This bank facility can also be used as a letter of credit facility. At March 31, 2008, there was approximately $79.7 million in outstanding commercial paper borrowings.

(B) This bank facility is available to back up OG&E’s commercial paper borrowings and to provide revolving credit borrowings. At March 31, 2008, OG&E had outstanding approximately $1.6 million supporting letters of credit and approximately $185.8 million in outstanding commercial paper borrowings.

(C) In December 2006, the Company and OG&E amended and restated their revolving credit agreements to total in the aggregate $1.0 billion, $600 million for the Company and $400 million for OG&E. Each of the credit facilities has a five-year term with an option to extend the term for two additional one-year periods. In November 2007, the Company and OG&E utilized one of these one-year extensions to extend the maturity of their credit agreements to December 6, 2012. Also, each of these credit facilities has an additional option at the end of the two renewal options to convert the outstanding balance to a one-year term loan.

The Company’s and OG&E’s ability to access the commercial paper market could be adversely impacted by a credit ratings downgrade or major market disruption. Pricing grids associated with the back-up lines of credit could cause annual fees and borrowing rates to increase if an adverse ratings impact occurs. The impact of any future downgrades of the Company would result in an increase in the cost of short-term borrowings but would not result in any defaults or accelerations as a result of the rating changes. Any future downgrade of the Company would also lead to higher long-term borrowing costs and, if below investment grade, would require the Company to post cash collateral or letters of credit. Also, any downgrade below investment grade at OERI could require the Company to issue guarantees to support some of OERI’s marketing operations.

Unlike the Company and Enogex, 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 million in short-term borrowings at any one time for a two-year period beginning January 1, 2007 and ending December 31, 2008.

Enogex Credit Facility

On April 1, 2008, Enogex entered into a $250 million unsecured five-year revolving credit facility. Subject to certain limitations, the facility provides Enogex with the option, exercisable annually, to extend the maturity of the facility for an additional year and, upon the expiration of the revolving term, an option to convert the outstanding balance under the facility to a one-year term loan. The facility provides the option for Enogex to increase the borrowing limit by up to an additional $250 million (to a maximum of $500 million) upon the agreement of the lenders (or any additional lender) and the satisfaction of other specified conditions. As of April 30, 2008, there was approximately $25 million outstanding under the facility.

Omnibus Agreement

Concurrent with the entry of the Enogex LLC credit facility on April 1, 2008, Enogex also entered into an omnibus agreement with OGE Energy. The omnibus agreement memorializes Enogex’s obligation to reimburse OGE Energy for costs incurred on behalf of Enogex and its subsidiaries. Specifically, Enogex reimburses OGE Energy for:

	•	the performance of general and administrative services for Enogex and its subsidiaries, such as legal, accounting, treasury, finance, investor relations, insurance administration and claims processing, risk management, health, safety and environmental, information technology, human resources, credit, payroll, internal audit, taxes, facilities, fleet management and media services; and

	•	the payment of certain operating expenses of Enogex and its subsidiaries, including for compensation and benefits of operating personnel.

The maximum reimbursement for general and administrative services is approximately $16.4 million annually for three years, subject to increases based on increases in the Consumer Price Index and subject to further increases in connection with expansions of Enogex’s operations through the acquisition or construction of new assets or businesses. The reimbursement for certain operating expenses is not subject to the $16.4 million maximum reimbursement for general and administrative expenses.

Enogex Intercompany Borrowing Agreement

On April 1, 2008, Enogex amended its intercompany borrowing agreement with OGE Energy to decrease the maximum amount permitted to be borrowed by Enogex from $200 million to $100 million. As of April 30, 2008, there was approximately $4 million in outstanding intercompany borrowings

11.

Retirement Plans and Postretirement Benefit Plans

In September 2006, the FASB issued SFAS No. 158, “Employers’ Accounting for Defined Benefit Pension and Other Postretirement Plans, an amendment of FASB Statements No. 87, 88, 106 and 132R,” which required an employer to recognize the overfunded or underfunded status of a defined benefit postretirement plan (other than a multiemployer plan) as an asset or liability in its statement of financial position and to recognize changes in that funded status in the year in which the changes occur through comprehensive income of a business entity. The requirement to initially recognize the funded status of the defined benefit postretirement plan and the disclosure requirements was effective for the year ended December 31, 2006 for the Company.

The details of net periodic benefit cost of the pension plan, the restoration of retirement income plan and the postretirement benefit plans included in the Condensed Consolidated Financial Statements are as follows:

Net Periodic Benefit Cost

	Pension Plan				Restoration of Retirement Income Plan
	Three Months Ended				Three Months Ended
	March 31,				March 31,
(In millions)	2008		2007		2008		2007
Service cost	$	4.7	$	5.2	$	0.1	$	0.1
Interest cost		7.8		8.0		0.1		0.1
Return on plan assets		(10.9)		(11.0)		---		---
Amortization of net loss		2.3		2.6		0.1		0.1
Amortization of recognized prior service cost		0.3		1.2		0.2		0.2
Net periodic benefit cost (A)	$	4.2	$	6.0	$	0.5	$	0.5


	Postretirement Benefit Plans
	Three Months Ended
	March 31,
(In millions)	2008		2007
Service cost	$	0.9	$	1.0
Interest cost		3.3		3.1
Return on plan assets		(1.6)		(1.5)
Amortization of transition obligation		0.7		0.7
Amortization of net loss		1.0		1.5
Amortization of recognized prior service cost		0.5		0.5
Net periodic benefit cost	$	4.8	$	5.3

(A) In addition to the $4.2 million and $6.0 million in SFAS No. 87, “Employers’ Accounting for Pensions,” net periodic benefit cost recognized during the three months ended March 31, 2008 and 2007, respectively, OG&E also recognized an expense of approximately $2.5 million and $1.1 million, respectively, related to the reversal of a portion of the regulatory asset identified as Deferred Pension Plan Expenses (see Note 1).

Pension Plan Funding

expects to contribute an additional $30 million to its pension plan during the remainder of 2008. Any expected contributions to the pension plan during 2008 are discretionary contributions, anticipated to be in the form of cash, and are not required to satisfy the minimum regulatory funding requirement specified by the Employee Retirement Income Security Act of 1974, as amended.

12.

Report of Business Segments

The Company’s business is divided into four segments for financial reporting purposes. These segments are as follows: (i) electric utility, which is engaged in the generation, transmission, distribution and sale of electric energy, (ii) natural gas transportation and storage, (iii) natural gas gathering and processing and (iv) natural gas marketing. As discussed in Note 1, on January 1, 2008, Enogex distributed the stock of OERI, which engages in the marketing of natural gas, to OGE Energy and, as a result, OERI is no longer a subsidiary of Enogex. Other Operations for the three months ended March 31, 2008 and 2007 primarily included consolidating eliminations. Intersegment revenues are recorded at prices comparable to those of unaffiliated customers and are affected by regulatory considerations. In reviewing its segment operating results, the Company focuses on operating income as its measure of segment profit and loss, and therefore has presented this information below. The following tables summarize the results of the Company’s business segments for the three months ended March 31, 2008 and 2007. The results of the Company’s business segments have been restated for all prior periods presented to conform to the 2008 presentation.

Transportation

Gathering

Three Months Ended

Electric

and

Other

March 31, 2008

Utility

Storage

Processing

Marketing

Operations

Eliminations

Total

(In millions)

Operating revenues

386.4

156.9

256.8

476.9

---

(282.3)

994.7

Cost of goods sold

240.6

122.7

195.6

471.4

---

(281.5)

748.8

Gross margin on revenues

145.8

34.2

61.2

5.5

---

(0.8)

245.9

Other operation and maintenance (A)

94.3

11.9

20.9

2.8

(3.2)

(1.5)

125.2

Depreciation

36.3

4.1

8.3

---

2.0

---

50.7

Taxes other than income

15.9

3.5

1.1

0.2

1.2

---

21.9

Operating income (loss)

(0.7)

14.7

30.9

2.5

---

0.7

48.1

Total assets

3,897.4

1,107.2

597.5

247.8

2,011.1

(2,563.7)

5,297.3

(A) In 2004, the Company adopted a standard costing model utilizing a fully loaded activity rate (including payroll, benefits, other employee related costs and overhead costs) to be applied to projects eligible for capitalization or deferral. In March 2008, the Company determined that the application of the fully loaded activity rates had unintentionally resulted in the over-capitalization of immaterial amounts of certain payroll, benefits, other employee related costs and overhead costs in prior years. To correct this issue, in March 2008, the Company recorded a pre-tax charge of approximately $9.5 million ($5.8 million after tax, or $0.06 per basic and diluted share) as an increase in Other Operation and Maintenance Expense in the Condensed Consolidated Statements of Income for the three months ended March 31, 2008 and a corresponding $8.6 million decrease in Construction Work in Progress and $0.9 million decrease in Other Deferred Charges and Other Assets related to the regulatory asset associated with storm costs in the Condensed Consolidated Balance Sheets as of March 31, 2008.

			Transportation		Gathering
Three Months Ended	Electric		and		and				Other
March 31, 2007	Utility		Storage		Processing		Marketing		Operations		Eliminations		Total
(In millions)

Operating revenues	$	340.7	$	59.1	$	165.6	$	462.2	$	---	$	(146.1)	$	881.5
Cost of goods sold		199.9		29.1		123.7		459.5		---		(145.3)		666.9
Gross margin on revenues		140.8		30.0		41.9		2.7		---		(0.8)		214.6
Other operation and maintenance		74.2		10.4		16.0		2.2		(3.2)		(0.8)		98.8
Depreciation		35.4		4.4		6.9		---		2.0		---		48.7
Taxes other than income		15.2		3.4		0.9		0.2		1.2		---		20.9

Operating income	$	16.0	$	11.8	$	18.1	$	0.3	$	---	$	---	$	46.2
Total assets	$	3,612.9	$	1,440.8	$	844.6	$	187.9	$	1,970.2	$	(3,197.1)	$	4,859.3

13.

Commitments and Contingencies

Except as set forth below and in Note 14, the circumstances set forth in Notes 16 and 17 to the Company’s Consolidated Financial Statements included in the Company’s 2007 Form 10-K appropriately represent, in all material respects, the current status of the Company’s material commitments and contingent liabilities.

OG&E Railcar Lease Agreement

At December 31, 2007, OG&E had a noncancellable operating lease with purchase options, covering 1,409 coal hopper railcars to transport coal from Wyoming to OG&E’s coal-fired generation units. In April 2008, OG&E amended its contract to add 55 new railcars for approximately $3.5 million. At the end of the new lease term, which is January 31, 2011, 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 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 approximately $31.5 million.

Agreement with Cheyenne Plains Gas Pipeline Company, L.L.C.

Cheyenne Plains Gas Pipeline Company, L.L.C (“Cheyenne Plains”) operates the Cheyenne Plains Pipeline that provides firm transportation services in Wyoming, Colorado and Kansas with a capacity of 730,000 decatherms/day (“Dth/day”). OERI entered into a Firm Transportation Service Agreement (“FTSA”) with Cheyenne Plains in 2004, for 60,000 Dth/day of firm capacity on the Cheyenne Plains Pipeline. The FTSA was for a 10-year term beginning with the in-service date of the Cheyenne Plains Pipeline in March 2005 with an annual demand fee of approximately $7.4 million. Effective March 1, 2007, OERI and Cheyenne Plains amended the FTSA to provide for OERI to turn back 20,000 Dth/day of its capacity beginning January 2008 through the remainder of the term. Additionally, in March 2008, OERI reached an agreement to release to a third party 10,000 Dth/day of its remaining capacity beginning in April 2008 through December 2012. OERI’s new demand fee obligations, net of this turn back, release agreement and other immaterial release agreements, are estimated to be approximately $5.1 million in 2008; $5.3 million for each of the years 2009 through 2012; $6.4 million for each of the years 2013 and 2014 and $1.7 million in 2015.

Environmental Laws and Regulations

OG&E

Air

On March 15, 2005, the U.S. Environmental Protection Agency (“EPA”) issued the Clean Air Mercury Rule (“CAMR”) to limit mercury emissions from coal-fired boilers. On February 8, 2008, the U.S. Court of Appeals for the D.C. Circuit Court vacated the rule and on March 24, 2008, the EPA filed a petition for rehearing. A decision by the court is expected by June 2008. The Company cannot predict the outcome of the federal litigation at this time. Until the rule was vacated, the CAMR required mercury monitoring to begin in 2009. Accordingly, OG&E installed mercury monitoring equipment on all five of its coal units. The cost of the monitoring equipment was approximately $5.0 million in 2007 and OG&E expects to spend approximately $0.7 million in 2008 to complete vendor qualification. Because the CAMR litigation is ongoing, the cost to install additional mercury controls is uncertain at this time but may be significant, particularly if the EPA develops more stringent requirements. Because of the uncertainty caused by the litigation regarding the CAMR, the promulgation of an Oklahoma rule that would apply to existing facilities has been delayed. An Oklahoma rule that would apply only to new generating units is expected to be proposed by the Oklahoma Department of Environmental Quality (“ODEQ”) in 2008. OG&E will continue to participate in the state rule making process.

In September 2005, the ODEQ informally notified affected utilities that they would be required to perform a study to determine their impact on visibility in national parks and wilderness areas (“Class I areas”). Affected utilities are those which have “Best Available Retrofit Technology (“BART”) eligible sources” (sources built between 1962 and 1977). For OG&E, these include various generating units at various generating stations. Regulations, however, allow an owner or operator of a BART-eligible source to request and obtain a waiver from BART if modeling shows no significant impact on visibility in nearby Class I areas. Based on this modeling, the ODEQ made a preliminary determination to accept an application for a waiver for the Horseshoe Lake generating station. The Horseshoe Lake waiver is expected to be included in the ODEQ state implementation plan. The due date for the ODEQ submission of the state implementation plan was December 17, 2007; however, the ODEQ has not yet submitted a plan to the EPA for approval. It is not known whether approval for the state implementation plan will be granted by the EPA.

The modeling did not support waivers for the affected units at the Seminole, Muskogee and Sooner generating stations. OG&E submitted a BART compliance plan for Seminole on March 30, 2007 committing to installation of nitrogen oxide (“NOX”) controls on all three units. At the same time, OG&E submitted a determination to the ODEQ that an alternative compliance plan for the affected units at the Muskogee and Sooner power plants will achieve overall greater visibility improvement than BART in the affected Class I areas and the alternative plan extends the timeline for compliance to 2018. The cost for this alternative compliance plan, including the BART compliance plan for the Seminole power plant (the alternative compliance plan and the BART compliance plan are collectively referred to herein as the “alternative plan”), was estimated at approximately $470 million in March 2007. The alternative plan includes installing semi-dry scrubbers on three of four affected coal units and low NOX burner equipment on all four coal units. This alternative plan was subject to approval by the ODEQ and the EPA. The EPA provided an opinion to the ODEQ that OG&E’s alternative plan does not meet the requirements of the regional haze rules. On November 16, 2007, the ODEQ notified OG&E that additional analysis will be required before the OG&E alternative plan can be accepted. As required by the ODEQ, OG&E has initiated the additional analysis with a projected completion date of June 1, 2008. Until a compliance plan is approved by the EPA, which is expected by December 31, 2008, the costs of compliance, including capital expenditures, cannot be estimated by the Company with a reasonable degree of certainty. Based on the information currently available to the Company, the Company would expect that the costs of its original alternative plan would be substantially higher than its original estimate of $470 million for the alternative plan. The cost to comply with the regional haze regulations could vary substantially based on the interpretation of the requirements by the ODEQ and the EPA, the availability of alternative control measures to achieve more cost effective visibility improvements, the cost and availability of materials, labor force, equipment and the specific design criteria for OG&E’s generating units. OG&E expects that any necessary environmental expenditures will qualify as part of a pre-approval plan to handle state and federally mandated environmental upgrades which will be recoverable in Oklahoma from OG&E’s retail customers under House Bill 1910, which was enacted into law in May 2005.

Currently, the EPA has designated Oklahoma “in attainment” with the ambient standard for ozone of 0.08 parts per million (“PPM”). On March 12, 2008, the EPA lowered the ambient primary and secondary standards to 0.075 PPM. Oklahoma has until March 2009 to designate any areas of non-attainment within the state, based on ozone levels in 2006 through 2008. Following the state’s designation, the EPA is expected to make a final designation by March 2010. States will be required to meet the ambient standards between 2013 and 2030, with deadlines depending on the severity of their ozone problem. Oklahoma City and Tulsa are the most likely areas to be designated non-attainment in Oklahoma. The Company cannot predict the final outcome of this evaluation or its timing or affect on the Company’s operations.

Other

In the normal course of business, the Company is confronted with issues or events that may result in a contingent liability. These generally relate to lawsuits, claims made by third parties, environmental actions or the action of various regulatory agencies. When appropriate, management consults with legal counsel and other appropriate experts to assess the claim. If in management’s opinion, the Company has incurred a probable loss as set forth by accounting principles generally accepted in the United States, an estimate is made of the loss and the appropriate accounting entries are reflected in the Company’s Condensed Consolidated Financial Statements. Except as otherwise stated above, in Note 14 below, in Item 1 of Part II of this Form 10-Q, in Notes 16 and 17 of Notes to the Company’s Consolidated Financial Statements included in the Company’s 2007 Form 10-K and in Item 3 of that report, management, after consultation with legal counsel, does not currently anticipate that liabilities arising out of these pending or threatened lawsuits, claims and contingencies will have a material adverse effect on the Company’s consolidated financial position, results of operations or cash flows.

14.

Rate Matters and Regulation

Except as set forth below, the circumstances set forth in Note 17 to the Company’s Consolidated Financial Statements included in the Company’s 2007 Form 10-K appropriately represent, in all material respects, the current status of any regulatory matters.

Completed Regulatory Matters

Enogex 2008 Fuel Filing

As required by the fuel tracker provisions of its Statement of Operating Conditions, Enogex files annually to update its fuel percentages. In the settlement of its 2004 Section 311 rate case, the Company agreed to move from a system-wide fuel percentage to zonal fuel percentages. Accordingly, in all of the annual fuel filings made subsequent to the FERC’s acceptance of the 2004 rate case settlement, the Company has filed for fixed fuel percentages for the East Zone and the West Zone. On November 15, 2007, Enogex made its annual filing to establish the fixed fuel percentages for its East Zone and

West Zone for calendar year 2008 (“2008 Fuel Year”). There were no protests and the FERC accepted the proposed zonal fuel percentages for 2008 Fuel Year by order of December 19, 2007. Enogex expects to file its next annual fuel filing to establish fuel percentages for calendar year 2009 on or about November 15, 2008.

Pending Regulatory Matters

Proposed Acquisition of Redbud Power Plant

On January 21, 2008, OG&E entered into a Purchase and Sale Agreement (“Purchase and Sale Agreement”) with Redbud Energy I, LLC, Redbud Energy II, LLC and Redbud Energy III, LLC (“Redbud Sellers”), which are indirectly owned by Kelson Holdings LLC, a subsidiary of Harbinger Capital Partners Master Fund I, Ltd. and Harbinger Capital Partners Special Situations Fund, L.P. Pursuant to the Purchase and Sale Agreement, OG&E agreed to acquire from the Redbud Sellers the entire partnership interest in Redbud Energy LP which currently owns a 1,230 megawatt (“MW”) natural gas-fired, combined-cycle power generation facility in Luther, Oklahoma (“Redbud Facility”), for approximately $852 million, subject to working capital and inventory adjustments in accordance with the terms of the Purchase and Sale Agreement.

In connection with the Purchase and Sale Agreement, OG&E also entered into (i) an Asset Purchase Agreement (“Asset Purchase Agreement”) with the Oklahoma Municipal Power Authority (“OMPA”) and the Grand River Dam Authority (“GRDA”), pursuant to which OG&E agreed that it would, after the closing of the transaction contemplated by the Purchase and Sale Agreement, dissolve Redbud Energy LP and sell a 13 percent undivided interest in the Redbud Facility to the OMPA and sell a 36 percent undivided interest in the Redbud Facility to the GRDA, and (ii) an Ownership and Operating Agreement (“Ownership and Operating Agreement”) with the OMPA and the GRDA, pursuant to which OG&E, the OMPA and the GRDA, following the completion of the transaction contemplated by the Asset Purchase Agreement, would jointly own the Redbud Facility and OG&E will act as the operations manager and perform the day-to-day operation and maintenance of the Redbud Facility. Under the Ownership and Operating Agreement, each of the parties would be entitled to its pro rata share, which is equal to its respective ownership interest, of all output of the Redbud Facility and would pay its pro rata share of all costs of operating and maintaining the Redbud Facility, including its pro rata share of the operations manager’s general and administrative overhead allocated to the Redbud Facility.

The transactions described above are subject to the expiration or termination of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act, an order from the FERC authorizing the contemplated transactions, an order from the OCC approving the prudence of the transactions and an appropriate reasonable recovery mechanism, and other customary conditions. OG&E will not be obligated to complete the transactions if the orders from the FERC and the OCC contain any conditions or restrictions which are materially more burdensome than those proposed in OG&E’s applications. Either OG&E or the Redbud Sellers may terminate the Purchase and Sale Agreement if the closing has not occurred on or prior to November 16, 2008; provided that the Redbud Sellers have the option to extend such deadline for up to an additional 180 days if the sole reason the closing has not occurred is because the governmental and regulatory approvals have not been obtained. In March 2008, the waiting period for the Hart-Scott-Rodino Antitrust Improvements Act ended and the filing was concluded with no action taken. OG&E filed an application with the FERC and the OCC in March 2008 asking the OCC to approve the prudency of the transactions and an appropriate reasonable recovery mechanism. The OCC rules provide that the OCC has up to 240 days to issue an order determining OG&E’s pre-approval request. Absent a settlement, the earliest OG&E expects an order from the OCC is November 2008. There can be no assurances that the transactions will be completed or as to its ultimate timing.

Cancelled Red Rock Power Plant

On October 11, 2007, the OCC issued an order denying OG&E and Public Service Company of Oklahoma’s (“PSO”) request for pre-approval of their proposed 950 MW Red Rock power plant project. The plant, which was to be built at OG&E’s Sooner plant site, was to be 42 percent owned by OG&E, 50 percent owned by PSO and eight percent owned by the OMPA. As a result, on October 11, 2007, OG&E, PSO and the OMPA agreed to terminate agreements to build and operate the plant. At December 31, 2007, OG&E had incurred approximately $17.5 million of capitalized costs associated with the Red Rock power plant project. In December 2007, OG&E filed an application with the OCC requesting authorization to defer, and establish a method of recovery of, approximately $14.7 million of Oklahoma jurisdictional costs associated with the Red Rock power plant project that are currently reflected in Deferred Charges and Other Assets on the Company’s Condensed Consolidated Balance Sheets. Specifically, OG&E requested authorization to sell approximately $14.7 million of its sulphur dioxide (“SO2”) allowances and to retain 100 percent of the proceeds to offset the $14.7 million of Red Rock costs. Under a prior order of the OCC, 90 percent of the proceeds from sales of SO2 allowances were to be credited to ratepayers. Any portion of the $14.7 million of deferred costs that the OCC does not approve for recovery by

OG&E will be expensed. In February 2008, the OCC issued a procedural schedule with a settlement conference on May 2, 2008 and a hearing scheduled for May 7, 2008. In April 2008, the OCC Staff and other parties in this matter filed responses to OG&E’s application. Two parties proposed no recovery of the $14.7 million in deferred costs. The OCC Staff proposed the recovery of approximately $10.8 million (approximately 73.5 percent) through a regulatory asset accruing a return until OG&E’s next general retail rate case. Also, in its response to OG&E’s Red Rock cost recovery application, the OCC Staff recommended that OG&E sell SO2 allowances and retain 100 percent of the proceeds from the sale which should be used to offset OG&E’s December 2007 ice storm costs. These ice storm costs are included as part of the regulatory asset balance of approximately $35.0 million at March 31, 2008 (see Note 1), in accordance with a prior order of the OCC, pending recovery in a future rate case. A settlement conference was held on May 2, 2008 and, at that time, the administrative law judge delayed the May 7, 2008 hearing to allow the parties further time to discuss a settlement. OG&E will pursue a settlement for the recovery of the Red Rock costs and the ice storm costs. If a settlement cannot be reached, the matter would proceed to hearing and OG&E would expect to receive an order from the OCC in this matter by the end of 2008.

OG&E Arkansas Rate Case Filing

Beginning in early 2008, OG&E began developing a rate case filing for the Arkansas jurisdiction. OG&E expects to make a rate case filing in Arkansas by August 2008 requesting an increase in electric rates with a targeted implementation date of July 2009. The amount of the requested increase has not yet been determined.

Renewables Proposal

OG&E expects to file an application in mid-May with the OCC requesting pre-approval to construct a transmission line from Oklahoma City, Oklahoma to Woodward, Oklahoma. This transmission line is a critical first step to increased wind development in western Oklahoma. In the application, OG&E will request authorization to implement a recovery rider to be effective when the transmission line goes in service which is expected in the first half of 2010. Finally, the application will request the OCC to approve new renewable tariff offerings to OG&E’s Oklahoma customers.

Enogex FERC Section 311 2007 Rate Case

On October 1, 2007, Enogex made its required triennial rate filing at the FERC to update its Section 311 maximum interruptible transportation rates for service in the East Zone and West Zone. Enogex’s filing requested an increase in the maximum zonal rates and proposed to place such rates into effect on January 1, 2008. A number of parties intervened and some additionally filed protests. Enogex responded to data requests from the FERC.

The regulations provide that the FERC has 150 days to act on the filing but also permit the FERC to issue an order extending the time period for action. By order of February 28, 2008, the FERC extended the time period in this docket by 120 days and encouraged the parties to settle. The parties are currently in settlement negotiations. Enogex has not, as of yet, placed the increased rates into effect. Enogex must file its next rate case no later than October 1, 2010 to comply with the FERC’s requirement for triennial filings.

Market-Based Rate Authority

On December 22, 2003, OG&E and OERI filed a triennial market power update based on the supply margin assessment test. On May 13, 2004, the FERC directed all utilities with pending three year market-based reviews to revise the generation market power portion of their three year review to address the new interim tests. OG&E and OERI submitted a compliance filing to the FERC on February 7, 2005 that applied the interim tests to OG&E and OERI. In the compliance filing, OG&E and OERI passed the pivotal supplier screen but did not pass the market share screen in OG&E’s control area. OG&E and OERI provided an explanation as to why their failure of the market share screen in OG&E’s control area should not be viewed as an indication that they can exercise generation market power.

On June 7, 2005, the FERC issued an order on OG&E’s and OERI’s market-based rate filing. Because OG&E and OERI failed the market share screen for OG&E’s control area, the FERC established hearing procedures to investigate whether OG&E and OERI may continue to sell power at market-based rates in OG&E’s control area. The order established a rebuttable presumption that OG&E and OERI have the ability to exercise market power in OG&E’s control area. OG&E and OERI were requested to provide additional information that demonstrates to the FERC that they cannot exercise market power in the first-tier markets as well. However, the order conditionally allows OG&E and OERI to sell power in first-tier markets subject to OG&E and OERI providing additional information that clearly shows that they pass the market share screen for the first-tier markets. OG&E and OERI provided that additional information on July 7, 2005. On August 8, 2005, OG&E and OERI informed the FERC that they will: (i) adopt the FERC default rate mechanism for sales of one week or less

to loads that sink in OG&E’s control area; and (ii) commit not to enter into any sales with a duration of between one week and one year to loads that sink in OG&E’s control area. OG&E and OERI also informed the FERC that any new agreements for long-term sales (one year or longer in duration) to loads that sink in OG&E’s control area will be filed with the FERC and that OG&E and OERI will not make such sales under their respective market-based rate tariffs. On January 20, 2006, the FERC issued a Notice of Institution of Proceeding and Refund Effective Date for the purpose of establishing the date from which any subsequent market-based sales would be subject to refund in the event the FERC concludes after investigation that the rates for such sales are not just and reasonable. The refund effective date was March 27, 2006.

On March 21, 2006, the FERC issued an order conditionally accepting OG&E’s and OERI’s proposal to mitigate the presumption of market power in OG&E’s control area. First, the FERC accepted the additional information related to first-tier markets submitted by OG&E and OERI, and concluded that OG&E and OERI satisfy the FERC’s generation market power standard for directly interconnected first-tier control areas. Second, the FERC directed the Company to make certain revisions to its mitigation proposal and file a cost-based rate tariff for short-term sales (one week or less) made within OG&E’s control area. The FERC also expanded the scope of the proposed mitigation to all sales made within OG&E’s control area (instead of only to sales sinking to load within OG&E’s control area). On April 20, 2006, the Company submitted: (i) a compliance filing containing the specified revisions to the Company’s market-based rate tariffs and the new cost-based rate tariff; and (ii) a request for rehearing asking the FERC to reconsider its expanded mitigation directive contained in the March 21, 2006 order. On May 22, 2006, the FERC issued a tolling order that effectively provided the FERC additional time to consider the April 20, 2006 rehearing request. On July 25, 2006 and August 25, 2006, pursuant to a FERC March 20, 2006 order, OG&E and OERI filed revisions to their market-based rate tariffs to allow them to sell energy imbalance service into the wholesale markets administered by the Southwest Power Pool at market-based rates. On February 6, 2007, OG&E and OERI submitted to the FERC a change in status report notifying the FERC that OG&E has placed into service OG&E’s Centennial wind farm, a wind farm with a nameplate capacity rating of 120 MW. OG&E and OERI explained that adding this capacity was not material to the FERC’s grant of market-based rate status to OG&E and OERI. On March 9, 2007, the FERC accepted OG&E’s and OERI’s change of status filing. On April 4, 2008, the FERC rejected OG&E’s April 20, 2006 request for rehearing and approved in part and rejected in part OG&E’s April 20, 2006 compliance filing. The April 4, 2008 order directed OG&E to evaluate whether any refunds are required to comply with the April 4, 2008 order and to: (i) make any necessary refunds, or (ii) file a report with the FERC stating that no refunds are due. Refunds would apply only to new market-based sales made or new market-based contracts entered into after the March 21, 2006 order. The April 4, 2008 order also directed OG&E to make another compliance filing to revise its market-based rate tariffs to adhere to the FERC’s June 21, 2007 final rule that revised standards for market-based rate sales of electric energy, capacity and ancillary services. On May 5, 2008, OG&E submitted a compliance report stating that no refunds were due.

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

Introduction

OGE Energy Corp. (collectively, with its subsidiaries, the “Company”) is an energy and energy services provider offering physical delivery and related services for both electricity and natural gas primarily in the south central United States. The Company conducts these activities through four business segments: (i) electric utility, (ii) natural gas transportation and storage, (iii) natural gas gathering and processing and (iv) natural gas marketing.

Enogex Inc. and its subsidiaries (“Enogex”) are a provider of integrated natural gas midstream services. Enogex is engaged in the business of gathering, processing, transporting and storing natural gas. The vast majority of Enogex’s natural gas gathering, processing, transportation and storage assets are strategically located primarily in the Arkoma and Anadarko basins of Oklahoma and the Texas Panhandle. Enogex’s ongoing operations are organized into two business segments: (1) natural gas transportation and storage and (2) natural gas gathering and processing. Historically, Enogex had also engaged in natural gas marketing through its subsidiary, OGE Energy Resources, Inc. (“OERI”). In connection with the proposed initial public offering of common units of OGE Enogex Partners L.P., a Delaware limited partnership (the “Partnership”), discussed in Note 2 of Notes to Condensed Consolidated Financial Statements, on January 1, 2008, Enogex distributed the stock of OERI to OGE Energy. Effective April 1, 2008, Enogex Inc. converted from an Oklahoma corporation to a Delaware limited

liability company. Also, effective April 1, 2008, Enogex Products Corporation, a wholly owned subsidiary of Enogex, converted from an Oklahoma corporation to an Oklahoma limited liability company.

In May 2007, the Company formed the Partnership as part of its strategy to further develop Enogex’s natural gas midstream assets and operations. The Partnership has filed a registration statement with the Securities and Exchange Commission for a proposed initial public offering of its common units, representing limited partner interests in the Partnership (the “Offering”). At the date of this quarterly report, the registration statement relating to the Offering is not effective. In connection with the Offering, the Company is expected to contribute an approximate 25 percent membership interest in Enogex LLC to a wholly owned subsidiary of the Partnership that would serve as Enogex LLC’s managing member and would control its assets and operations. A wholly owned subsidiary of the Company will retain the remaining approximately 75 percent membership interest in Enogex LLC. It is currently contemplated that at the completion of the Offering, the Company will indirectly own an approximate 69 percent limited partner interest and a two percent general partner interest in the Partnership.

The completion of the Offering is subject to numerous conditions and no assurances can be made that it will be successfully completed. The Company expects to continue to evaluate strategic alternatives for Enogex, including other transactions that the Company believes could provide long-term value to its shareowners and the proposed Offering. The securities offered under the registration statement may not be sold, nor may offers to buy be accepted, prior to the time that the registration statement becomes effective. The information contained in this quarterly report with respect to the Offering shall not constitute an offer to sell or a solicitation of an offer to buy any securities.

Summary of Operating Results

Quarter ended March 31, 2008 as compared to quarter ended March 31, 2007

Prior to January 1, 2008, Enogex had engaged in natural gas marketing through OERI. In connection with the proposed initial public offering of common units of the Partnership, on January 1, 2008, Enogex distributed the stock of OERI to OGE Energy. Accordingly, in the discussion below regarding the results of Enogex, the results of OERI are only included for the three months ended March 31, 2007.

The Company reported net income of approximately $13.0 million, or $0.14 per diluted share, during the three months ended March 31, 2008, as compared to approximately $17.2 million, or $0.19 per diluted share, during the three months ended March 31, 2007. The change in net income of approximately $4.2 million, or $0.05 per diluted share, during the three months ended March 31, 2008 as compared to the same period in 2007 was primarily due to:

•

a decrease in net income at OG&E of approximately $13.2 million, or $0.14 per diluted share of the Company’s common stock, during the three months ended March 31, 2008 as compared to the same period in 2007 primarily due to higher operation and maintenance expense and higher interest expense partially offset by a higher gross margin on revenues (“gross margin”) and a higher income tax benefit;

•

an increase in net income at Enogex of approximately $7.0 million, or $0.07 per diluted share of the Company’s common stock, during the three months ended March 31, 2008 as compared to the same period in 2007 primarily due to a higher gross margin in the transportation and storage and gathering and processing segments partially offset by higher operation and maintenance expense and higher income tax expense. Net income for Enogex during the three months ended March 31, 2007 included approximately $0.2 million, or less than $0.01 per diluted share, attributable to OERI;

•

net income at OERI of approximately $1.7 million, or $0.02 per diluted share of the Company’s common stock, during the three months ended March 31, 2008; and

•

net income at OGE Energy of approximately $0.1 million, or less than $0.01 per diluted share of the Company’s common stock, during the three months ended March 31, 2008 as compared to a net loss of approximately $0.2 million, or less than $0.01 per diluted share, during the same period in 2007 primarily due to a higher income tax benefit due to a higher pre-tax loss during the three months ended March 31, 2008 partially offset by higher other expense related to the Company’s deferred compensation plan and restoration of retirement income plan.

OERI’s net income during the three months ended March 31, 2008 was approximately $1.7 million, which included a net loss of approximately $1.0 million resulting from recording hedges associated with various transportation contracts at market value on March 31, 2008. The offsetting gains from physical utilization of the transportation capacity are expected to be realized during the second and third quarters of 2008.

Recent Developments and Regulatory Matters

Proposed Acquisition of Redbud Power Plant

Cancelled Red Rock Power Plant

On October 11, 2007, the OCC issued an order denying OG&E and Public Service Company of Oklahoma’s (“PSO”) request for pre-approval of their proposed 950 MW Red Rock power plant project. The plant, which was to be built at OG&E’s Sooner plant site, was to be 42 percent owned by OG&E, 50 percent owned by PSO and eight percent owned by the OMPA. As a result, on October 11, 2007, OG&E, PSO and the OMPA agreed to terminate agreements to build and operate the plant. At December 31, 2007, OG&E had incurred approximately $17.5 million of capitalized costs associated with the Red Rock power plant project. In December 2007, OG&E filed an application with the OCC requesting authorization to defer, and establish a method of recovery of, approximately $14.7 million of Oklahoma jurisdictional costs associated with the Red Rock power plant project that are currently reflected in Deferred Charges and Other Assets on the Company’s Condensed Consolidated Balance Sheets. Specifically, OG&E requested authorization to sell approximately $14.7 million of its sulphur dioxide (“SO2”) allowances and to retain 100 percent of the proceeds to offset the $14.7 million of Red Rock costs. Under a prior order of the OCC, 90 percent of the proceeds from sales of SO2 allowances were to be credited to taxpayers. Any portion of the $14.7 million of deferred costs that the OCC does not approve for recovery by

OG&E will be expensed. In February 2008, the OCC issued a procedural schedule with a settlement conference on May 2, 2008 and a hearing scheduled for May 7, 2008. In April 2008, the OCC Staff and other parties in this matter filed responses to OG&E’s application. Two parties proposed no recovery of the $14.7 million in deferred costs. The OCC Staff proposed the recovery of approximately $10.8 million (approximately 73.5 percent) through a regulatory asset accruing a return until OG&E’s next general retail rate case. Also, in its response to OG&E’s Red Rock cost recovery application, the OCC Staff recommended that OG&E sell SO2 allowances and retain 100 percent of the proceeds from the sale which should be used to offset OG&E’s December 2007 ice storm costs. These ice storm costs are included as part of the regulatory asset balance of approximately $35.0 million at March 31, 2008 (see Note 1 of Notes to Condensed Consolidated Financial Statements), in accordance with a prior order of the OCC, pending recovery in a future rate case. A settlement conference was held on May 2, 2008 and, at that time, the administrative law judge delayed the May 7, 2008 hearing to allow the parties further time to discuss a settlement. OG&E will pursue a settlement for the recovery of the Red Rock costs and the ice storm costs. If a settlement cannot be reached, the matter would proceed to hearing and OG&E would expect to receive an order from the OCC in this matter by the end of 2008.

2008 Outlook

The Company previously disclosed in its Annual Report on Form 10-K for the year ended December 31, 2007 (“2007 Form 10-K”) that its 2008 earnings guidance was $223 million to $242 million of net income, or $2.40 to $2.60 per diluted share as shown in the table below. The Company has reaffirmed 2008 earnings guidance, excluding any gains on asset sales and assuming approximately 93.1 million average diluted shares outstanding, cash flow from operations of between $483 million and $502 million and an effective tax rate of 33.5 percent. Though the consolidated earnings guidance has not changed, the guidance for the Company’s individual business segments have been revised. The change in earnings guidance between segments is due to an increase in the projected earnings at Enogex and a decrease in projected earnings at OG&E.

	Earnings guidance per 2007 10-K		Revised earnings guidance
(In millions, except per share data)	Dollars	Diluted EPS	Dollars	Diluted EPS
OG&E	$145 - $155	$1.56 - $1.66	$140 - $150	$1.50 - $1.61
Enogex	$83 - $91	$0.89 - $0.98	$88 - $101	$0.95 - $1.08
Holding Company	($5) - ($4)	($0.05) - ($0.04)	($5) - ($4)	($0.05) - ($0.04)
Total	$223 - $242	$2.40 - $2.60	$223 - $242	$2.40 - $2.60

Key assumptions for 2008 are:

As shown above, OG&E’s earnings guidance has been decreased from $145 million to $155 million, or $1.56 to $1.66 per diluted share, to $140 million to $150 million, or $1.50 to $1.61 per diluted share. As explained below, this decrease is attributable to higher operating expenses which includes the one-time, non-cash charge of $9.5 million to correct the over-capitalization in prior years of various operation and maintenance expenses. Key factors and assumptions underlying this guidance include:

OG&E

•

Normal weather patterns are experienced for the remainder of the year;

•

Gross margin on weather-adjusted, retail electric sales increases approximately two percent remains unchanged;

•

Operating expenses of approximately $545 million compared to $536 million projected in previous guidance;

•

Interest expense of approximately $77 million remains unchanged;

•

An effective tax rate of approximately 31.1 percent remains unchanged; and

•

Capital expenditures for investment in OG&E’s generation, transmission and distribution system of approximately $765 million in 2008, which includes capital expenditures in the amount of approximately $435 million associated with OG&E’s planned acquisition of the Redbud generating plant.

OG&E has significant seasonality in its earnings. OG&E typically shows minimal earnings or slight losses in the first and fourth quarters with a majority of earnings in the third quarter due to the seasonal nature of air conditioning demand.

Enogex

As shown above, Enogex’s earnings guidance has been increased from $83 million to $91 million, or $0.89 to $0.98 per diluted share, to $88 million to $101 million, or $0.95 to $1.08 per diluted share. Earnings before Interest, Taxes,

Depreciation and Amortization is between $232 million to $253 million. Key factors and assumptions underlying this guidance include:

•

Total Enogex anticipated gross margin of approximately $388 million to $409 million as compared to approximately $376 million to $390 million assumed in the previous 2008 earnings guidance. The revised guidance includes:

•

Transportation and storage gross margin contribution of approximately $141 million remains unchanged;

•

Gathering and processing gross margin contribution of approximately $247 million to $268 million as compared to approximately $235 million to $249 million assumed in the previous 2008 earnings guidance primarily due to increased commodity price assumptions. Key factors affecting the revised gathering and processing gross margin are:

•

Assumed increase of eight percent in gathered volumes over 2007 remains unchanged;

•

Commodity price assumptions are below;


	2007 10-K		Revised
	Low	High	Low	High
	Guidance	Guidance	Guidance	Guidance
Natural Gas Price ($ per MMBtu)	$7.64	$7.25	$9.30	$8.72
Weighted Average Natural Gas Liquids Price ($ per gallon)	$1.20	$1.27	$1.35	$1.45
Realized Weighted Average Commodity Spreads ($ per MMBtu)	$5.48	$6.09	$6.21	$7.12

•

The realized commodity spread takes into account that 59 percent of processing volumes that bear price risk are hedged;

•

Operating expenses of approximately $204 million compared to $201 million in the previous 2008 guidance;

•

Interest expense of approximately $35 million in 2008 as compared to $30 million in the previous 2008 guidance; and

•

Capital expenditures for investment in Enogex’s pipeline system of approximately $323 million in 2008 as compared to $292 million in the previous 2008 guidance; and

•

Increases in operating expenses, interest expense and capital expenditures are primarily due to additional growth projects on the Enogex system compared to the previous guidance reported in the Company’s 2007 Form 10-K.

Reconciliation of EBITDA to net cash provided from operating activities


	Twelve Months Ended
(In millions)	December 31, 2008

Net cash provided by operating activities	$	151.1
Interest expense, net		33.4
Changes in operating working capital which provided (used) cash:
Accounts receivable		4.0
Accounts payable		54.2
Other, including changes in noncurrent assets and liabilities		0.1
EBITDA	$	242.8

Reconciliation of EBITDA to net income

	Twelve Months Ended
(In millions)	December 31, 2008

Net Income	$	94.5
Add:
Interest expense, net		33.4
Income tax expense		60.2
Depreciation		54.7
EBITDA	$	242.8

For a discussion of the reasons for the use of EBITDA, as well as the limitations of EBITDA as an analytical tool, see “Enogex’s Non-GAAP Financial Measures” below.

Holding Company

As shown above, the projected loss at the holding company is between $4 million and $5 million, or $0.04 to $0.05 per diluted share, remains unchanged. The projected net loss is primarily due to interest expense relating to long and short-term debt borrowings and a projected loss of approximately $2 million, or $0.02 per diluted share, in the marketing business. In connection with the proposed initial public offering of limited partner interests of the Partnership (discussed in Note 2 of Notes to Condensed Consolidated Financial Statements), on January 1, 2008, Enogex distributed the stock of OERI to OGE Energy and OERI’s projected results for 2008 are included in the holding company’s projected loss for 2008.

Results of Operations

The following discussion and analysis presents factors that affected the Company’s consolidated results of operations for the three months ended March 31, 2008 as compared to the same period in 2007 and the Company’s consolidated financial position at March 31, 2008. Due to seasonal fluctuations and other factors, the operating results for the three months ended March 31, 2008 are not necessarily indicative of the results that may be expected for the year ending December 31, 2008 or for any future period. The following information should be read in conjunction with the Condensed Consolidated Financial Statements and Notes thereto. Known trends and contingencies of a material nature are discussed to the extent considered relevant.

	Three Months Ended
	March 31,
(In millions, except per share data)	2008		2007
Operating income	$	48.1	$	46.2
Net income	$	13.0	$	17.2
Basic average common shares outstanding		91.9		91.5
Diluted average common shares outstanding		92.5		92.4
Basic earnings per average common share	$	0.14	$	0.19
Diluted earnings per average common share	$	0.14	$	0.19
Dividends declared per share	$	0.3475	$	0.34

In reviewing its consolidated operating results, the Company believes that it is appropriate to focus on operating income as reported in its Condensed Consolidated Statements of Income as operating income indicates the ongoing profitability of the Company excluding the cost of capital and income taxes.

Operating Income (Loss) by Business Segment

	Three Months Ended
	March 31,
(In millions)	2008		2007
OG&E (Electric Utility)	$	(0.7)	$	16.0
Enogex (Natural Gas Pipeline)
Transportation and storage		14.7		11.8
Gathering and processing		30.9		18.1
OERI (Natural Gas Marketing) (A)		2.5		0.3
Other Operations (B)		0.7		---
Consolidated operating income	$	48.1	$	46.2

(A) In connection with the proposed initial public offering of common units of the Partnership, on January 1, 2008, Enogex distributed the stock of OERI to OGE Energy, and as a result, OERI is no longer a subsidiary of Enogex.

(B) Other Operations primarily includes consolidating eliminations.

The following operating income analysis by business segment includes intercompany transactions that are eliminated in the Condensed Consolidated Financial Statements.

OG&E

	Three Months Ended
	March 31,
(Dollars in millions)	2008		2007
Operating revenues	$	386.4	$	340.7
Cost of goods sold		240.6		199.9
Gross margin on revenues		145.8		140.8
Other operation and maintenance		94.3		74.2
Depreciation		36.3		35.4
Taxes other than income		15.9		15.2
Operating income (loss)		(0.7)		16.0
Interest income		0.3		---
Other income		2.3		1.3
Other expense		0.7		0.6
Interest expense		19.5		15.6
Income tax benefit		7.0		0.8
Net income (loss)	$	(11.3)	$	1.9
Operating revenues by classification
Residential	$	146.4	$	134.7
Commercial		89.4		76.2
Industrial		46.6		41.3
Oilfield		32.6		27.8
Public authorities and street light		36.1		31.3
Sales for resale		15.3		13.9
System sales revenues		366.4		325.2
Off-system sales revenues		12.3		9.3
Other		7.7		6.2
Total operating revenues	$	386.4	$	340.7
MWH (A) sales by classification (in millions)
Residential		2.2		2.0
Commercial		1.4		1.4
Industrial		1.0		1.0
Oilfield		0.7		0.7
Public authorities and street light		0.6		0.6
Sales for resale		0.4		0.3
System sales		6.3		6.0
Off-system sales		0.2		0.3
Total sales		6.5		6.3
Number of customers		765,165		758,244
Average cost of energy per KWH (B) – cents
Natural gas		7.598		7.343
Coal		1.074		1.104
Total fuel		3.118		2.610
Total fuel and purchased power		3.440		2.946
Degree days (C)
Heating
Actual		1,814		1,669
Normal		1,982		1,963
Cooling
Actual		12		43
Normal		9		8

	(A)	Megawatt-hour.
	(B)	Kilowatt-hour.
	(C)	Degree days are calculated as follows: The high and low degrees of a particular day are added together and then averaged. If the calculated average is above 65 degrees, then the difference between the calculated average and 65 is expressed as cooling degree days, with each degree of difference equaling one cooling degree day. If the calculated average is below 65 degrees, then the difference between the calculated average and 65 is expressed as heating degree days, with each degree of difference equaling one heating degree day. The daily calculations are then totaled for the particular reporting period.

Quarter ended March 31, 2008 as compared to quarter ended March 31, 2007

Operating Income

OG&E’s operating income decreased approximately $16.7 million during the three months ended March 31, 2008 as compared to the same period in 2007 primarily due to higher operation and maintenance expenses partially offset by higher gross margin.

Gross Margin

Gross margin was approximately $145.8 million during the three months ended March 31, 2008 as compared to approximately $140.8 million during the same period in 2007, an increase of approximately $5.0 million, or 3.6 percent. The gross margin increased primarily due to:

•

new customer growth in OG&E’s service territory, which increased the gross margin by approximately $2.1 million;

•

higher rates from the Centennial wind farm rider and Arkansas rate case, which increased the gross margin by approximately $2.0 million; and

•

increased peak demand and related revenues by non-residential customers in OG&E’s service territory, which increased the gross margin by approximately $1.1 million.

Cost of goods sold for OG&E consists of fuel used in electric generation, purchased power and transmission related charges. Fuel expense was approximately $186.6 million during the three months ended March 31, 2008 as compared to approximately $159.7 million during the same period in 2007, an increase of approximately $26.9 million, or 16.8 percent, primarily due to higher natural gas generation due to an outage at one of OG&E’s coal fired plants. OG&E’s electric generating capability is fairly evenly divided between coal and natural gas and provides for flexibility to use either fuel to the best economic advantage for OG&E and its customers. Purchased power costs were approximately $53.8 million during the three months ended March 31, 2008 as compared to approximately $40.2 million during the same period in 2007, an increase of approximately $13.6 million, or 33.8 percent, primarily due to increased purchases within the energy imbalance market.

Variances in the actual cost of fuel used in electric generation and certain purchased power costs, as compared to the fuel component included in the cost-of-service for ratemaking, are passed through to OG&E’s customers through automatic fuel adjustment clauses. The automatic fuel adjustment clauses are subject to periodic review by the OCC, the APSC and the FERC. The OCC, the APSC and the FERC have authority to review the appropriateness of gas transportation charges or other fees OG&E pays to Enogex.

Operating Expenses

Other operation and maintenance expenses were approximately $94.3 million during the three months ended March 31, 2008 as compared to approximately $74.2 million during the same period in 2007, an increase of approximately $20.1 million, or 27.1 percent. The increase in other operation and maintenance expenses was primarily due to:

•

an increase of approximately $9.5 million due to a correction of the over-capitalization of certain payroll, benefits, other employee related costs and overhead costs in previous years, as discussed in Note 12 of Notes to Condensed Consolidated Financial Statements;

•

increased labor costs in the first quarter of 2008 as compared to the first quarter of 2007, when a significant portion of the labor costs were capitalized due to the January 2007 ice storm, which increased operation and maintenance expenses by approximately $3.1 million;

•

an increase of approximately $3.5 million in contract services and approximately $2.1 million in materials and supplies attributable to overhauls at one of OG&E’s power plants; and

•

an increase of approximately $1.7 million in professional services primarily due to higher legal expenses in the first quarter of 2008 as compared to the same period in 2007.

These increases in other operating and maintenance expenses were partially offset by a decrease of approximately $2.2 million due to an increase in collections on uncollectible accounts.

Additional Information

Other Income . Other income includes, among other things, contract work performed, non-operating rental income and miscellaneous non-operating income. Other income was approximately $2.3 million during the three months ended March 31, 2008 as compared to approximately $1.3 million during the same period in 2007, an increase of approximately $1.0 million, or 76.9 percent. The increase in other income was primarily due to an increase of approximately $0.5 million related to the guaranteed flat bill tariff resulting from more customers participating in this plan.

Interest Expense . Interest expense was approximately $19.5 million during the three months ended March 31, 2008 as compared to $15.6 million during the same period in 2007, an increase of approximately $3.9 million, or 25.0 percent. The increase in interest expense was primarily due to:

•

an increase of approximately $2.4 million related to interest expense recorded on treasury lock agreements which OG&E entered into related to the issuance of long-term debt in January 2008; and

•

an increase of approximately $1.8 million in interest expense related to the issuance of $200 million of long-term debt by OG&E in January 2008.

Income Tax Benefit . Income tax benefit was approximately $7.0 million during the three months ended March 31, 2008 as compared to approximately $0.8 million during the same period in 2007, an increase of approximately $6.2 million, primarily due to lower pre-tax income in the first quarter of 2008 as compared to the same period in 2007.

Enogex

	Transportation		Gathering
Three Months Ended	and		and
March 31, 2008	Storage		Processing		Eliminations		Total
(In millions)

Operating revenues	$	156.9	$	256.8	$	(147.0)	$	266.7
Cost of goods sold		122.7		195.6		(147.0)		171.3
Gross margin on revenues		34.2		61.2		---		95.4
Other operation and maintenance		11.9		20.9		---		32.8
Depreciation		4.1		8.3		---		12.4
Taxes other than income		3.5		1.1		---		4.6
Operating income	$	14.7	$	30.9	$	---	$	45.6

	Transportation		Gathering
Three Months Ended	and		and
March 31, 2007	Storage		Processing		Marketing		Eliminations		Total
(In millions)

Operating revenues	$	59.1	$	165.6	$	462.2	$	(129.1)		$	557.8
Cost of goods sold		29.1		123.7		459.5		(128.3)			484.0
Gross margin on revenues		30.0		41.9		2.7		(0.8)			73.8
Other operation and maintenance		10.4		16.0		2.2		(0.8)			27.8
Depreciation		4.4		6.9		---		---			11.3
Taxes other than income		3.4		0.9		0.2		---			4.5
Operating income	$	11.8	$	18.1	$	0.3	$	---		$	30.2

Operating Data

	Three Months
	Ended March 31,
	2008	2007
New well connects (includes wells behind central receipt points) (A)	85	99
New well connects (excludes wells behind central receipt points)	39	46
Gathered volumes – TBtu/d (B)	1.07	0.99
Incremental transportation volumes – TBtu/d (C)	0.40	0.39
Total throughput volumes – TBtu/d	1.47	1.38
Natural gas processed – TBtu/d	0.61	0.52
Natural gas liquids sold (keep-whole) – million gallons	53	51
Natural gas liquids sold (purchased for resale) – million gallons	40	27
Natural gas liquids sold (percent-of-liquids) – million gallons	5	4
Total natural gas liquids sold – million gallons	98	82
Average sales price per gallon	$ 1.354	$ 0.860
Realized commodity spreads	$ 7.03	$ 3.20

(A) Includes wells behind central receipt points (as reported to management by third parties). A central receipt point is a single receipt point into a gathering line where a producer aggregates the volumes from one or more wells and delivers them into the gathering system at a single meter site.

(B) Trillion British thermal units per day.

Quarter ended March 31, 2008 as compared to quarter ended March 31, 2007

Operating Income

Enogex’s operating income increased approximately $15.4 million during the three months ended March 31, 2008 as compared to the same period in 2007 primarily due to higher gross margins in the transportation and storage and gathering and processing segments partially offset by higher operating expenses.

Gross Margin

Enogex’s consolidated gross margin increased approximately $21.6 million during the three months ended March 31, 2008 as compared to the same period in 2007. The increase resulted from a higher gross margin in the transportation and storage business ($4.2 million) and the gathering and processing business ($19.3 million). Gross margin during the three months ended March 31, 2007 included approximately $2.7 million attributable to OERI.

The transportation and storage business contributed approximately $34.2 million of Enogex’s consolidated gross margin during the three months ended March 31, 2008 as compared to approximately $30.0 million during the same period in 2007, an increase of approximately $4.2 million, or 14.0 percent. The transportation operations contributed approximately $25.7 million of Enogex’s consolidated gross margin during the three months ended March 31, 2008. The storage operations contributed approximately $8.5 million of Enogex’s consolidated gross margin during the three months ended March 31, 2008. The transportation and storage gross margin increased primarily due to:

•

a decreased imbalance liability, net of fuel recoveries and natural gas length positions, in the transportation operations during the three months ended March 31, 2008, which increased the gross margin by approximately $6.3 million;

•

increased storage demand fees due to entering into new contracts during the three months ended March 31, 2008 with more favorable terms, which increased the gross margin by approximately $1.7 million; and

•

increased crosshaul revenues due to entering into a new contract during the three months ended March 31, 2008, which increased the gross margin by approximately $1.4 million.

These increases in the transportation and storage gross margin were partially offset by:

•

lower gross margins on operational storage hedges during the three months ended March 31, 2008 as compared to the same period in 2007, which decreased the gross margin by approximately $2.8 million;

•

a decrease in demand fees in the transportation operations during the three months ended March 31, 2008, due to a renegotiated contract, which decreased the gross margin by approximately $1.3 million; and

•

a decrease of approximately $1.3 million in Enogex’s over-recovered position in the East Zone in its transportation operations during the three months ended March 31, 2007 which resulted in a gain with no comparable item during the three months ended March 31, 2008, as a result of Enogex being in an under-recovered position under its FERC-approved fuel tracker.

The gathering and processing business contributed approximately $61.2 million of Enogex’s consolidated gross margin during the three months ended March 31, 2008 as compared to approximately $41.9 million during the same period in 2007, an increase of approximately $19.3 million, or 46.1 percent. The gathering operations contributed approximately $18.9 million of Enogex’s consolidated gross margin during the three months ended March 31, 2008. The processing operations contributed approximately $42.3 million of Enogex’s consolidated gross margin during the three months ended March 31, 2008. The gathering and processing gross margin increased primarily due to:

•

an increase in keep-whole margins associated with the processing operations during the three months ended March 31, 2008 as compared to the same period in 2007 primarily due to higher commodity spreads and a slight increase in keep-whole gallons, which increased the gross margin by approximately $12.8 million;

•

increased condensate margin associated with the processing operations due to higher prices during the three months ended March 31, 2008 as compared to the same period in 2007, which increased the gross margin by approximately $5.4 million;

•

sales of residue gas, condensate and additional retained natural gas liquids associated with the processing operations of the Atoka joint venture, which began operations in August 2007, which increased the gross margin by approximately $2.7 million;

•

increased gross margin on percent-of-liquids contracts associated with the processing operations due to favorable pricing for natural gas liquids, which increased the gross margin by approximately $1.9 million;

•

higher compression and dehydration fees associated with the gathering operations resulting from new business in 2007, which increased the gross margin by approximately $0.9 million;

•

an increase from new volumes processed under fixed fee processing contracts, which increased the gross margin by approximately $0.9 million;

•

increased low pressure gathering fees associated with new projects, including Atoka, which increased the gross margin by approximately $0.9 million; and

•

increased gross margin on percent-of-liquids contracts associated with the processing operations due to new volumes from the Atoka processing plant, which increased the gross margin by approximately $0.7 million.

These increases in the gathering and processing gross margin were partially offset an increase in the imbalance liability, net of fuel recoveries and natural gas length positions during the three months ended March 31, 2008, which decreased the gross margin by approximately $5.8 million.

Operating Expenses

As shown above, the increase in Enogex’s operating income during the three months ended March 31, 2008 as compared to the same period in 2007 was attributable primarily to the $21.6 million increase described above in the consolidated gross margin, as the aggregate of other operation and maintenance expenses, depreciation expense and taxes other than income was approximately $6.2 million higher during the three months ended March 31, 2008 as compared to the same period in 2007. The variance in depreciation expense on both a consolidated basis and by segment reflects differing levels of depreciable plant in service. The $5.0 million increase in other operation and maintenance expenses on a consolidated basis was primarily due to an increase in expenses for system projects during the three months ended March 31, 2008 as compared to the same period in 2007.

Specifically, by segment, other operation and maintenance expenses for the transportation and storage business were approximately $1.5 million, or 14.4 percent, higher during the three months March 31, 2008 as compared to the same period in 2007 primarily due to:

•

an increase of approximately $2.6 million in contract professional services and materials and supplies expense due to an increase in system projects during the three months ended March 31, 2008;

•

higher salaries, wages and other employee benefits expense of approximately $1.6 million primarily due to higher incentive compensation and hiring additional employees to support business growth; and

•

higher allocations from OGE Energy for overhead costs of approximately $1.0 million.

These increases were partially offset by higher allocations for overhead costs of approximately $3.2 million to the other Enogex segments, which decreased operation and maintenance expenses for the transportation and storage segment.

Other operation and maintenance expenses for the gathering and processing business were approximately $4.9 million, or 30.6 percent, higher during the three months ended March 31, 2008 as compared to the same period in 2007 primarily due to higher allocations for overhead costs of approximately $3.4 million during the three months ended March 31, 2008.

Other operation and maintenance expenses for the marketing business were approximately $2.2 million during the three months ended March 31, 2007.

Enogex Consolidated Information

Interest Income . Enogex’s consolidated interest income was approximately $1.3 million during the three months ended March 31, 2008 as compared to approximately $2.6 million during the same period in 2007, a decrease of approximately $1.3 million, or 50.0 percent, primarily due to a decrease in interest earned as the balance of advances to OGE Energy decreased due to dividends and capital expenditures.

Other Expense. Enogex’s consolidated other expense was approximately $1.7 million during the three months ended March 31, 2008 as compared to approximately $0.1 million during the same period in 2007, an increase of approximately $1.6 million, primarily due to the minority interest in the Atoka joint venture, which began operations in August 2007.

Income Tax Expense . Enogex’s consolidated income tax expense was approximately $14.7 million during the three months ended March 31, 2008 as compared to approximately $9.4 million during the same period in 2007, an increase of approximately $5.3 million, or 56.3 percent, primarily due to higher pre-tax income in the first quarter of 2008 as compared to the same period in 2007.

Timing Items . For the three months ended March 31, 2007, Enogex’s consolidated net income was approximately $15.5 million, which included a loss of approximately $4.1 million at OERI resulting from recording hedges associated with the Cheyenne Plains transportation contract at market value on March 31, 2007. The offsetting gains from physical utilization of the transportation capacity were realized during the remainder of 2007.

Enogex’s Non-GAAP Financial Measures

Enogex has included in this Form 10-Q the non-GAAP financial measure EBITDA. Enogex defines EBITDA as net income before interest, income taxes and depreciation. EBITDA is used as a supplemental financial measure by external users of the Company’s financial statements such as investors, commercial banks and others, to assess:

•

the financial performance of Enogex’s assets without regard to financing methods, capital structure or historical cost basis;

•

Enogex’s operating performance and return on capital as compared to other companies in the midstream energy sector, without regard to financing or capital structure; and

•

the viability of acquisitions and capital expenditure projects and the overall rates of return on alternative investment opportunities.

The economic substance behind the use of EBITDA is to measure the ability of Enogex’s assets to generate cash sufficient to pay interest costs, support indebtedness and pay dividends to OGE Energy.

Enogex provides a reconciliation of EBITDA to its most directly comparable financial measures as calculated and presented in accordance with generally accepted accounting principles (“GAAP”). The GAAP measures most directly comparable to EBITDA are net cash provided from operating activities and net income. The non-GAAP financial measure of EBITDA should not be considered as an alternative to GAAP net cash provided from operating activities and GAAP net income. EBITDA is not a presentation made in accordance with GAAP and has important limitations as an analytical tool. EBITDA should not be considered in isolation or as a substitute for analysis of Enogex’s results as reported under GAAP. Because EBITDA excludes some, but not all, items that affect net income and net cash provided from operating activities and is defined differently by different companies in Enogex’s industry, Enogex’s definition of EBITDA may not be comparable to similarly titled measures of other companies.

To compensate for the limitations of EBITDA as an analytical tool, Enogex believes it is important to review the comparable GAAP measures and understand the differences between the measures.

Reconciliation of EBITDA to net cash provided from operating activities

	Three Months Ended
	March 31,
(In millions)	2008			2007

Net cash provided by operating activities (A)	$	18.5	$	49.7
Interest expense, net		6.8		5.5
Changes in operating working capital which provided (used) cash:
Accounts receivable		7.2		(24.5)
Accounts payable		16.9		19.5
Other, including changes in noncurrent assets and liabilities		7.0		(8.5)
EBITDA (B)	$	56.4	$	41.7

(A) Approximately $55.9 million of net cash provided by operating activities during the three months ended March 31, 2007 was attributable to OERI.

(B) Approximately $0.4 million of EBITDA during the three months ended March 31, 2007 was attributable to OERI.

Reconciliation of EBITDA to net income

	Three Months Ended
	March 31,
(In millions)	2008		2007

Net income (C)	$	22.5	$	15.5
Add:
Interest expense, net		6.8		5.5
Income tax expense		14.7		9.4
Depreciation		12.4		11.3
EBITDA	$	56.4	$	41.7

There are no results for OERI included in the above tables for the three months ended March 31, 2008 because, as of January 1, 2008, Enogex distributed the stock of OERI to OGE Energy.

OERI

	Three Months Ended
	March 31,
	2008		2007
(In millions)

Operating revenues	$	476.9	$	462.2
Cost of goods sold		471.4		459.5
Gross margin on revenues		5.5		2.7
Other operation and maintenance		2.8		2.2
Taxes other than income		0.2		0.2
Operating income	$	2.5	$	0.3

Quarter ended March 31, 2008 as compared to quarter ended March 31, 2007

Operating Income

OERI’s operating income increased approximately $2.2 million during the three months ended March 31, 2008 as compared to the same period in 2007 primarily due to an increase in gross margin partially offset by an increase in other operation and maintenance expense.

Gross Margin

Gross margin was approximately $5.5 million during the three months ended March 31, 2008 as compared to approximately $2.7 million during the same period in 2007, an increase of approximately $2.8 million. The gross margin increased primarily due to:

•

realized gains of approximately $5.2 million in the first quarter of 2008 on economic storage hedges previously deferred as well as losses of approximately $3.3 million in 2007 on economic storage hedges entered into during 2007 as a result of recording these hedges at market value, which increased the gross margin by approximately $8.5 million; and

•

decreased losses on economic hedges associated with various transportation contracts from recording these hedges at market value on March 31, 2008 as compared to March 31, 2007, which increased the gross margin by approximately $2.1 million.

These increases in the gross margin were partially offset by:

•

decreased gains on physical sales of natural gas storage inventory activity in addition to higher storage fees paid by OERI, which decreased the gross margin by approximately $4.2 million; and

•

decreased gains from origination and other marketing and trading activity during the three months ended March 31, 2008 as compared to the same period in 2007, which decreased the gross margin by approximately $2.2 million.

Operating Expenses

Other operation and maintenance expenses were approximately $2.8 million during the three months ended March 31, 2008 as compared to approximately $2.2 million during the same period in 2007, an increase of approximately $0.6 million, or 27.3 percent. The increase in other operation and maintenance expenses was primarily due to higher allocations from OGE Energy and its affiliates.

Additional Information

Income Tax Expense . Income tax expense was approximately $1.0 million during the three months ended March 31, 2008 as compared to approximately $0.1 million during the same period in 2007, an increase of approximately $0.9 million, primarily due to higher pre-tax income in the first quarter of 2008 as compared to the same period in 2007.

Timing Items . For the three months ended March 31, 2008, OERI’s net income was approximately $1.7 million, which included a net loss of approximately $1.0 million resulting from recording hedges associated with various transportation contracts at market value on March 31, 2008. The offsetting gains from physical utilization of the transportation capacity are expected to be realized during the second and third quarters of 2008.

For the three months ended March 31, 2007, OERI’s net income was approximately $0.2 million, which included a loss of approximately $4.1 million resulting from recording hedges associated with the Cheyenne Plains transportation contract at market value on March 31, 2007. The offsetting gains from physical utilization of the transportation capacity are expected to be realized during the remainder of 2007.

Financial Condition

The balance of Short-Term Debt was approximately $266.3 million and $295.8 million at March 31, 2008 and December 31, 2007, respectively, a decrease of approximately $29.5 million, or 10.0 percent, primarily due to the repayment of outstanding commercial paper borrowings from the proceeds of the issuance of $200 million of long-term debt by OG&E in January 2008 partially offset by increased commercial paper borrowings to meet the daily operational needs of the Company.

The balance of Accounts Payable was approximately $353.8 million and $399.3 million at March 31, 2008 and December 31, 2007, respectively, a decrease of approximately $45.5 million, or 11.4 percent, primarily due to payments made in the first quarter of 2008 related to the December 2007 ice storm.

The balance of Accrued Taxes was approximately $18.3 million and $40.0 million at March 31, 2008 and December 31, 2007, respectively, a decrease of approximately $21.7 million, or 54.3 percent, primarily due to ad valorem tax payments made in the first quarter of 2008.

The balance of Accrued Compensation was approximately $25.5 million and $53.9 million at March 31, 2008 and December 31, 2007, respectively, a decrease of approximately $28.4 million, or 52.7 percent, primarily due to the annual payment for incentive compensation made in the first quarter of 2008.

The balance of current Price Risk Management Liabilities was approximately $6.8 million and $20.6 million at March 31, 2008 and December 31, 2007, respectively, a decrease of approximately $13.8 million, or 67.0 percent, primarily due to the increased value of cash flow hedges of natural gas liquids sales and corresponding keep-whole natural gas purchases entered into during 2007 partially offset by refunds of collateral payments to the counterparties during the first quarter of 2008.

The balance of Long-Term Debt was approximately $1.5 billion and $1.3 billion at March 31, 2008 and December 31, 2007, respectively, an increase of approximately $198.7 million, or 14.8 percent, primarily due to the issuance of $200 million in long-term debt in January 2008.

The balance of Accumulated Other Comprehensive Loss was approximately $64.3 million and $81.0 million at March 31, 2008 and December 31, 2007, respectively, a decrease of approximately $16.7 million, or 20.6 percent, primarily due to hedging gains at Enogex during the first quarter of 2008.

Off-Balance Sheet Arrangements

Except as discussed below, there have been no significant changes in the Company’s off-balance sheet arrangements from those discussed in the Company’s 2007 Form 10-K.

OG&E Railcar Lease Agreement

Liquidity and Capital Requirements

The Company’s primary needs for capital are related to acquiring or constructing new facilities and replacing or expanding existing facilities at OG&E and Enogex. Other working capital requirements are primarily related to maturing debt, operating lease obligations, hedging activities, natural gas storage, delays in recovering unconditional fuel purchase obligations and fuel clause under and over recoveries. The Company generally meets its cash needs through a combination of cash generated from operations, short-term borrowings (through a combination of bank borrowings and commercial paper) and permanent financings.

Cash Flows

Three Months Ended March 31 (In millions)	2008	2007
Net cash (used in) provided from operating activities	$ (16.8)	$ 126.0
Net cash used in investing activities	(125.8)	(119.1)
Net cash provided from (used in) financing activities	136.5	(22.4)

The reduction of approximately $142.8 million in net cash provided from operating activities during the three months ended March 31, 2008 as compared to the same period in 2007 primarily related to an increase in accounts receivable primarily related to an increase in natural gas prices during the first quarter of 2008 partially offset by a decrease in the volume of natural gas sales and the timing of collection of outstanding receivables during the first quarter of 2007, in addition to decreases in accounts payable primarily due to payments by OG&E in the first quarter of 2008 related to the December 2007 ice storm and fuel clause over recoveries in the first quarter of 2008. The increase of approximately $6.7 million in net cash used in investing activities during the three months ended March 31, 2008 as compared to the same period in 2007 primarily related to higher levels of capital expenditures. The increase of approximately $158.9 million in net cash provided from financing activities during the three months ended March 31, 2008 as compared to the same period in 2007 primarily

related to proceeds received from issuance of long-term debt in the first quarter of 2008 partially offset by the epayment of short-term debt.

Future Capital Requirements

Capital Expenditures

The Company’s current 2008 to 2013 construction program includes continued investment in OG&E’s distribution, generation and transmission system and Enogex’s transportation, storage, gathering and processing assets. In the Company’s 2007 Form 10-K, the Company’s estimates of capital expenditures were approximately: 2008 - $1.1 billion (approximately $434.5 million are related to the proposed acquisition of the Redbud power plant), 2009 - $613.9 million, 2010 - $668.1 million, 2011 - $653.4 million, 2012 - $670.8 million and 2013 - $654.1 million. These estimates included approximately $12.0 million, $22.5 million, $83.0 million, $97.3 million, $93.8 million and $69.6 million, respectively, for environmental expenditures associated with Best Available Retrofit Technology (“BART”) requirements. As discussed in Note 13 of Notes to Condensed Consolidated Financial Statements, due to an opinion from the U.S. Environmental Protection Agency (“EPA”) that OG&E’s proposed initial compliance plan would not satisfy the applicable requirements, OG&E is undertaking additional analysis. Until a compliance plan is approved by the EPA, the costs of compliance, including capital expenditures, cannot be estimated by the Company with a reasonable degree of certainty. Based on information currently available to the Company, the Company would expect that the costs of its initial compliance plan would be substantially higher than its original estimate of $470 million. Due to this uncertainty regarding BART costs, the Company has excluded any BART costs from its updated capital expenditure estimates. Therefore, the Company’s current estimates of capital expenditures, without any BART costs, are approximately: 2008 - $1.1 billion (approximately $434.5 million are related to the proposed acquisition of the Redbud power plant), 2009 - $553.4 million, 2010 - $582.5 million, 2011 - $591.7 million, 2012 - $593.2 million and 2013 - $584.5 million. These capital expenditures also exclude expenditures related to the proposed transmission line from Oklahoma City, Oklahoma to Woodward, Oklahoma.

Pension Plan Funding

The Company previously disclosed in its 2007 Form 10-K that it may contribute up to $50 million to its pension plan during 2008. In April 2008, the Company contributed approximately $20 million to its pension plan and currently expects to contribute an additional $30 million to its pension plan during the remainder of 2008. Any remaining expected contributions to the pension plan during 2008 are discretionary contributions, anticipated to be in the form of cash, and are not required to satisfy the minimum regulatory funding requirement specified by the Employee Retirement Income Security Act of 1974, as amended.

Future Sources of Financing

Management expects that cash generated from operations, proceeds from the sale of assets, proceeds from the issuance of long and short-term debt and proceeds from the sale of common stock to the public through the Company’s Automatic Dividend Reinvestment and Stock Purchase Plan or other offerings will be adequate over the next three years to meet anticipated cash needs. The Company utilizes short-term borrowings (through a combination of bank borrowings and commercial paper) to satisfy temporary working capital needs and as an interim source of financing capital expenditures until permanent financing is arranged.

Issuance of New Long-Term Debt

In January 2008, OG&E issued $200.0 million of 6.45% senior notes due February 1, 2038. The proceeds from the issuance were used to repay commercial paper borrowings.

Short-Term Debt

Short-term borrowings generally are used to meet working capital requirements. At March 31, 2008 and December 31, 2007, respectively, the Company had approximately $265.5 million and $295.0 million, respectively, in outstanding commercial paper borrowings. Also, OG&E has the necessary regulatory approvals to incur up to $800 million in short-term borrowings at any time for a two-year period beginning January 1, 2007 and ending December 31, 2008.

facility to a one-year term loan . The facility provides the option for Enogex to increase the borrowing limit by up to an additional $250 million (to a maximum of $500 million) upon the agreement of the lenders (or any additional lender) and the satisfaction of other specified conditions. As of April 30, 2008, there was $25 million outstanding under the facility. See Note 10 of Notes to Condensed Consolidated Financial Statements for a discussion of the Company’s short-term debt activity.

Critical Accounting Policies and Estimates

The Condensed Consolidated Financial Statements and Notes to Condensed Consolidated Financial Statements contain information that is pertinent to Management’s Discussion and Analysis. In preparing the Condensed Consolidated Financial Statements, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and contingent liabilities at the date of the Condensed Consolidated Financial Statements and the reported amounts of revenues and expenses during the reporting period. Changes to these assumptions and estimates could have a material effect on the Company’s Condensed Consolidated Financial Statements. However, the Company believes it has taken reasonable, but conservative, positions where assumptions and estimates are used in order to minimize the negative financial impact to the Company that could result if actual results vary from the assumptions and estimates. In management’s opinion, the areas of the Company where the most significant judgment is exercised is in the valuation of pension plan assumptions, impairment estimates, contingency reserves, asset retirement obligations, fair value and cash flow hedges, regulatory assets and liabilities, unbilled revenues for OG&E, operating revenues for Enogex, natural gas purchases for Enogex, the allowance for uncollectible accounts receivable and the valuation of energy purchase and sale contracts. The selection, application and disclosure of the Company’s critical accounting estimates have been discussed with the Company’s Audit Committee and are discussed in detail in Management’s Discussion and Analysis of Financial Condition and Results of Operations in the Company’s 2007 Form 10-K.

Accounting Pronouncements

See Notes 3 and 4 of Notes to Condensed Consolidated Financial Statements for a discussion of recent accounting pronouncements that are applicable to the Company.

Historically, the Company has used the last-in, first-out (“LIFO”) method of accounting for inventory removed from storage or stockpiles. Effective January 1, 2008, OG&E began using the weighted-average cost method to value inventory that is physically added to or withdrawn from storage or stockpiles in accordance with Oklahoma Senate Bill No. 609 (“SB 609”) that was adopted in Oklahoma in 2007. SB 609 requires that electric utilities record fuel or natural gas removed from storage or stockpiles using the weighted-average cost method of accounting for inventory. In addition to satisfying the requirements of SB 609, management believes that the change from LIFO to weighted-average cost is also preferable because it provides for a more meaningful presentation in the financial statements taken as a whole and reduces the volatility associated with fuel price fluctuations on OG&E’s customers. The majority of electric utility companies use the weighted-average cost method. See Note 1 of Notes to Condensed Consolidated Financial Statements for a further discussion.

Electric Competition; Regulation

OG&E and Enogex have been and will continue to be affected by competitive changes to the utility and energy industries. Significant changes already have occurred and additional changes are being proposed to the wholesale electric market. Although retail restructuring efforts in Oklahoma and Arkansas were postponed in 2001, if such efforts were renewed, retail competition and the unbundling of regulated energy service could have a significant financial impact on the Company due to an impairment of assets, a loss of retail customers, lower profit margins and/or increased costs of capital. Any such restructuring also could have a significant impact on the Company’s consolidated financial position, results of operations and cash flows. The Company cannot predict when it will be subject to changes in legislation or regulation, nor can it predict the impact of these changes on the Company’s consolidated financial position, results of operations or cash flows. The Company believes that the prices for electricity and the quality and reliability of the Company’s service currently place us in a position to compete effectively in the energy market. OG&E is also subject to competition in various degrees from state-owned electric systems, municipally-owned electric systems, rural electric cooperatives and, in certain respects, from other private utilities, power marketers and cogenerators. OG&E has a franchise to serve in more than 270 towns and cities throughout its service territory.

Commitments and Contingencies

Except as disclosed otherwise in this Form 10-Q and the Company’s 2007 Form 10-K, management, after consultation with legal counsel, does not currently anticipate that liabilities arising out of these pending or threatened

lawsuits, claims and contingencies will have a material adverse effect on the Company’s consolidated financial position, results of operations or cash flows. See Notes 13 and 14 of Notes to Condensed Consolidated Financial Statements in this Form 10-Q and Notes 16 and 17 of Notes to Consolidated Financial Statements and Item 3 of Part I of the 2007 Form 10-K for a discussion of the Company’s commitments and contingencies.

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

Except as set forth below, the market risks set forth in Part II, Item 7A of the Company’s 2007 Form 10-K appropriately represent, in all material respects, the market risks affecting the Company.

Commodity Price Risk

The market risks inherent in the Company’s market risk sensitive instruments, positions and anticipated commodity transactions are the potential losses in value arising from adverse changes in the commodity prices to which the Company is exposed. These market risks can be classified as trading, which includes transactions that are entered into voluntarily to capture subsequent changes in commodity prices, or non-trading, which includes the exposure some of the Company’s assets have to commodity prices.

Trading Activities

The trading activities are conducted throughout the year subject to daily and monthly trading stop loss limits set by the Risk Oversight Committee. Those trading stop loss limits currently are $2.5 million. The daily loss exposure from trading activities is measured primarily using value-at-risk (“VaR”), which estimates the potential losses the trading activities could incur over a specified time horizon and confidence level. The VaR limit set by the Risk Oversight Committee for the Company’s trading activities, assuming a 95 percent confidence level, currently is $1.5 million. These limits are designed to mitigate the possibility of trading activities having a material adverse effect on the Company’s operating income.

A sensitivity analysis has been prepared to estimate the Company’s exposure to market risk created by trading activities. The value of trading positions is a summation of the fair values calculated for each net commodity position based upon quoted market prices. Market risk is estimated as the potential loss in fair value resulting from a hypothetical 10 percent adverse change in quoted market prices over the next 12 months. The result of this analysis, which may differ from actual results, is as follows at March 31, 2008.

(In millions)	Trading

Commodity market risk, net	$ 0.1

Non-Trading Activities

The prices of natural gas, natural gas liquids and natural gas liquids processing spreads are subject to fluctuations resulting from changes in supply and demand. The changes in these prices have a direct effect on the compensation the Company receives for operating some of its assets. To partially reduce non-trading commodity price risk, the Company hedges, through the utilization of derivatives and other forward transactions, the effects these market fluctuations have on the Company’s operating income. Because the commodities covered by these hedges are substantially the same commodities that the Company buys and sells in the physical market, no special studies other than monitoring the degree of correlation between the derivative and cash markets are deemed necessary.

A sensitivity analysis has been prepared to estimate the Company’s exposure to the market risk of the Company’s non-trading activities. The Company’s daily net commodity position consists of natural gas inventories, commodity purchase and sales contracts, financial and commodity derivative instruments and anticipated natural gas processing spreads and fuel recoveries. Quoted market prices are not available for all of the Company’s non-trading positions, therefore, the value of non-trading positions is a summation of the forecasted values calculated for each commodity based upon internally generated forward price curves. Market risk is estimated as the potential loss in fair value resulting from a hypothetical 10 percent adverse change in such prices over the next 12 months. The result of this analysis, which may differ from actual results, is as follows at March 31, 2008.

(In millions)	Non-Trading

Commodity market risk, net	$ 12.2

Management may designate certain derivative instruments for the purchase or sale of physical commodities, purchase or sale of electric power and fuel procurement as normal purchases and normal sales contracts under the provisions of SFAS No. 133, “Accounting for Derivative Instruments and Hedging Activities.” Normal purchases and normal sales contracts are not recorded in Price Risk Management assets or liabilities in the Condensed Consolidated Balance Sheets and earnings recognition is recorded in the period in which physical delivery of the commodity occurs. Management applies normal purchases and normal sales to (i) commodity contracts for the purchase and sale of natural gas; (ii) commodity contracts for the sale of natural gas liquids produced by its subsidiary, Enogex Products LLC; (iii) electric power contracts by OG&E; and (iv) fuel procurement by OG&E.

Credit Risk

Credit risk includes the risk that counterparties that owe the Company money or energy will breach their obligations. If the counterparties to these arrangements fail to perform, the Company may be forced to enter into alternative arrangements. In that event, the Company’s financial results could be adversely affected and the Company could incur losses.

For Enogex and OERI, credit risk is the risk of financial loss if counterparties fail to perform their contractual obligations. Enogex and OERI maintain credit policies with regard to its counterparties that management believes minimize overall credit risk. These policies include the evaluation of a potential counterparty’s financial position (including credit rating, if available), collateral requirements under certain circumstances and the use of standardized agreements which provide for the netting of cash flows associated with a single counterparty. Enogex and OERI also monitor the financial position of existing counterparties on an ongoing basis. At March 31, 2008, Oneok Inc. and its subsidiaries (“Oneok”) had credit lines totaling approximately $140 million which represented approximately 11 percent of the total credit lines Enogex and OERI had extended to counterparties. At April 1, 2008, the amount of Oneok’s credit line was reduced to approximately $90 million.

Item 4. Controls and Procedures.

The Company maintains a set of disclosure controls and procedures designed to ensure that information required to be disclosed by the Company 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 (“SEC”) 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 (“CEO”) and chief financial officer (“CFO”), 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 the Company’s management, including the CEO and CFO, of the effectiveness of the Company’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 CEO and CFO have concluded that the Company’s disclosure controls and procedures are effective.

No change in the Company’s internal control over financial reporting has occurred during the Company’s most recently completed fiscal quarter that has materially affected, or is reasonably likely to materially affect, the Company’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).

PART II. OTHER INFORMATION

Item 1. Legal Proceedings.

Reference is made to Part I, Item 3 of the Company’s 2007 Form 10-K for a description of certain legal proceedings presently pending. Except as set forth in Notes 13 and 14 of Notes to Condensed Consolidated Financial Statements in this Form 10-Q, there are no new significant cases to report against the Company or its subsidiaries and there have been no material changes in the previously reported proceedings.

Item 1A. Risk Factors.

There have been no significant changes in the Company’s risk factors from those discussed in the Company’s 2007 Form 10-K.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

The shares indicated below represent shares of Company common stock purchased on the open market by the trustee for the Company’s Stock Ownership and Retirement Savings Plan and reflect shares purchased with employee contributions as well as the portion attributable to the Company’s matching contributions.

				Approximate Dollar
			Total Number of	Value of Shares that
			Shares Purchased as	May Yet Be
	Total Number of	Average Price Paid	Part of Publicly	Purchased Under the
Period	Shares Purchased	per Share	Announced Plan	Plan
1/1/08 – 1/31/08	95,600	$ 33.37	N/A	N/A
2/1/08 – 2/29/08	20,900	$ 33.56	N/A	N/A
3/1/08 – 3/31/08	56,500	$ 31.69	N/A	N/A

N/A – not applicable

Item 6. Exhibits.

Exhibit No.

Description

10.01

Credit Agreement dated as of April 1, 2008, by and among Enogex LLC, the Lenders thereto, Wachovia Bank, National Association, as Administrative Agent, The Royal Bank of Scotland plc, as Syndication Agent, and JPMorgan Chase Bank, N.A, Mizuho Corporate Bank, LTD. and Union Bank of California, as Co-Documentation Agents. (Filed as Exhibit 10.01 to OGE Energy Corp.’s Form 8-K filed April 7, 2008 (File No. 1 12579) and incorporated by reference herein).

10.02

Amendment No. 1 to the Company’s 2003 Annual Incentive Compensation Plan.

10.03

OGE Energy Corp. Supplemental Executive Retirement Plan, as amended and restated.

10.04

OGE Energy Corp. Restoration of Retirement Income Plan, as amended and restated.

10.05

OGE Energy Corp. Deferred Compensation Plan, as amended and restated.

10.06

Amendment No. 3 to the Company’s 2003 Stock Incentive Plan.

10.07

Amendment to the Company’s Stock Incentive Plan.

10.08

Form of Amended and Restated Employment Agreement with current officers of the Company.

10.09

Form of Employment Agreement with future officers of the Company.

18.01

Letter from Ernst & Young LLP related to a change in accounting principle.

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.

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.

	OGE ENERGY CORP.
	(Registrant)


By	/s/ Scott Forbes
	Scott Forbes
	Controller – Chief Accounting Officer

May 7, 2008

Exhibit 10.02

Amendment No. 1 to the

OGE Energy Corp. 2003 Annual Incentive Compensation Plan

OGE Energy Corp., an Oklahoma corporation (the “Company”), by action of its Board of Directors taken in accordance with the authority granted to it by Article III of the OGE Energy Corp. 2003 Annual Incentive Compensation Plan (the “Plan”), hereby amends the Plan in the following respects effective as of January 1, 2005:

By deleting the text of Article VII of the Plan and inserting in lieu thereof the following:

“Earned Award payments, if any, to be made for a Plan Year under Articles 5 and 6 shall be paid, in cash, as soon as practicable after the Plan Year during which the award was earned, but in no event later than the 15 ^th day of the third month after the end of such Plan Year, except to the extent the Participant has elected to defer payment pursuant to the terms of any applicable plan, contract or other arrangement of Energy Corp. or a subsidiary permitting such deferral.”

By deleting the last sentence of Section 8.1 of the Plan and inserting in lieu thereof the following:

“The Earned Award thus determined for a Plan Year shall be paid as provided in Article 7”.

By adding a new sentence at the end of Section 8.2 of the Plan as follows:

“The Earned Award thus determined for a Plan Year shall be paid as provided in Article 7.”

By deleting Section 10.1 of the Plan and inserting in lieu thereof the following:

“10.1.

Termination Other than for Cause . Notwithstanding any other provisions of the Plan, in the event a Participant’s employment with Energy Corp. or any of its subsidiaries is terminated voluntarily or involuntarily for any reason other than for cause (with cause being determined by the Committee in accordance with Section 10.2 hereof), within twenty-four (24) months after a Change of Control, the Target Company Award and Target Individual Award, if any, established for the Participant for the Plan Year in progress at the time of the employment termination, prorated for the number of days in the Plan Year in which the Participant was employed by Energy Corp. or any of its subsidiaries, up to and including the date of termination, shall be paid to the Participant within ten (10) business days after termination or, to the extent the Participant has elected to defer payment pursuant to the terms of any applicable plan, contract or other arrangement of Energy Corp. or a subsidiary permitting such deferral, deferred pursuant to the terms of such plan, contract or arrangement.”

IN WITNESS WHEREOF, OGE Energy Corp. has caused this instrument to be signed in its name by a duly authorized officer on this 17th day of April, 2008.

OGE Energy Corp.

By: / s/ Peter B. Delaney

Chairman, President and Chief Executive Officer

Exhibit 10.03

OGE ENERGY CORP.

SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN

(SERP)

(As Amended and Restated Effective as of January 1, 2005)

OGE ENERGY CORP.

SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN

(As Amended and Restated Effective as of January 1, 2005)

Purpose

The purpose of this Supplemental Executive Retirement Plan is to promote the best interests of the Company by enabling the Company: (a) to attract to its key management positions persons of outstanding ability, and (b) to retain in its employ those persons of outstanding competence who occupy key executive positions and who in the past contributed and who continue in the future to contribute materially to the success of the business by their ability, ingenuity and industry. This Supplemental Executive Retirement Plan was established to accomplish such purpose effective January 1, 1993, by Oklahoma Gas and Electric Company and assumed by the Company on November 18, 1998. OGE Energy Corp. hereby amends and restates the Supplemental Executive Retirement Plan, as heretofore amended, effective as of January 1, 2005, as provided herein. It is intended to be a plan which is unfunded and is maintained by the Company primarily for the purpose of providing deferred compensation for a select group of management or highly compensated employees.

ARTICLE 1

Definitions

The following words and phrases as used herein shall have the following meanings, unless a different meaning is plainly required from time to time.

1.1

“Affiliate” shall mean any corporation, partnership, joint venture, trust, association or other business enterprise which is a member of the same controlled group of corporations, trades or businesses as a Company within the meaning of Code Section 414(b) or (c); provided, however, that for purposes only of the term “Affiliate” when used in the definition of “Separation from Service” below, in applying Code Section 1563(a)(1), (2), and (3) in determining a controlled group of corporations under Code Section 414(b), the language “at least 50 percent” shall be used instead of “at least 80 percent” each place it appears in Code Section 1563(a)(1), (2), and (3), and in applying Treasury Reg. § 1.414(c)-2 for purposes of determining trades or businesses (whether or not incorporated) that are under common control for purposes of Code Section 414(c), “at least 50 percent” shall be used instead of “at least 80 percent” each place it appears in Treasury Reg. § 1.414(c)-2.

1.2	“Board of Directors” means the Board of Directors of OGE Energy Corp. as constituted from time to time.

1.3	“Code” means the Internal Revenue Code of 1986, as amended from time to time.

1.4	“Committee” means the Compensation Committee of the Board of Directors.

1.5	“Company” means OGE Energy Corp. and any of its domestic subsidiaries and divisions, as designated by the Board of Directors, and any successor of OGE Energy Corp. under the terms of Section 7.3.

1.6	“Company’s Pension Plan” means the OGE Energy Corp. Retirement Plan, as amended from time to time.

1.7

“Compensation” means, at any date, the Participant’s Compensation as defined under the Company’s Pension Plan as in effect with respect to that Participant on such date, except that (i) such Compensation shall not be limited by Code Section 401(a)(17) and (ii) such Compensation shall include amounts, if any, that would have been Compensation as so defined but for the fact such amounts were deferred by the Participant for the periods in question under the OGE Energy Corp. Deferred Compensation Plan or any successor thereto.

1.8	“Effective Date” means January 1, 1993.

1.9

“Final Average Compensation” means the monthly average of the Participant’s Compensation earned during the last 36 consecutive months of employment with the Company. If the Participant does not have 36 consecutive months of employment, “Final Average Compensation” shall be the average Compensation for his period of employment with the Company.

1.10	“Normal Retirement Date” means the first day of the month coinciding with or following the Participant’s 65 ^th birthday.

1.11

“Other Pension Benefits” means benefits paid or payable to a Participant from the Company’s Pension Plan, the Company’s Restoration of Retirement Income Plan, the qualified or nonqualified pension plans of any prior employer unrelated to the Company, or any governmental or church pension plan as defined in Sections 3(32) and 3(33) of the Employee Retirement Income Security Act of 1974, as amended (“ERISA”); excluding, however, any portion of such benefits attributable to the Participant’s own contributions as determined by the plan’s administrator or other responsible agent. Regardless of the form, amount or timing of payment, “Other Pension Benefits” shall be calculated, based on applicable actuarial assumptions (including assumptions as to mortality and interest rates) used under the Company’s Pension Plan, by the Company’s actuary as of the Participant’s commencement of benefits under this Plan on the basis of a 100% joint and survivor annuity, payable monthly, for married Participants, and on the basis of a 10-year certain and life annuity, payable monthly, for unmarried Participants.

1.12	“Participant” means an employee of the Company specifically designated by the Committee to be covered under this Plan and who continues to fulfill all requirements for participation.

1.13	“Plan” means the Supplemental Executive Retirement Plan as herein set forth and as it may be amended from time to time.

1.14

“Service” means, at any date, the Participant’s “Credited Service” as determined for purposes of calculating the Participant’s benefit under Article V, assuming it were applicable to the Participant, under the Company’s Pension Plan, as in effect on that date, plus service with any immediate predecessor company which was acquired, merged, or consolidated with the Company, as permitted in the sole discretion of the Committee.

1.15

“Separation from Service” means in respect of a Participant, any termination of employment with the Company employing the Participant and all its Affiliates due to retirement, death, Total and Permanent Disability or other reason; provided, however, that, no Separation from Service for reasons other than death shall be deemed to occur for purposes of the Plan while the Participant is on military leave, sick leave, or other bona fide leave of absence that does not exceed six months or, if longer, the period during which the Participant’s right to reemployment with the Company or its Affiliates is provided either under applicable statute or by contract; and provided further that, if the period of leave exceeds six months and the Participant does not retain a right to reemployment under an applicable statute or by contract, a Separation from Service will be deemed to have occurred on the first day following such six-month period. Whether or when a Separation from Service has occurred for purposes of the Plan shall be determined based on the meaning of “separation from service” under Code Section 409A and the regulations promulgated thereunder and, accordingly, shall be based on whether the facts and circumstances indicate that the Company employing the Participant and its Affiliates and the Participant reasonably anticipate that no further services will be performed after a certain date or that the level of bona fide services the Participant will perform after such date (whether as an employee or as an independent contractor) will permanently decrease to no more than 20% of the average level of bona fide services performed (whether as an employee or independent contractor) over the immediately preceding 36-month period (or the full period of services to such Company and its Affiliates if the Participant has been providing services to the Company and its Affiliates less than 36 months). A Participant shall be presumed for this purpose to have a Separation from Service where the level of bona fide services decreases to a level equal to 20% or less of such average level of services.

1.16	“Specified Employee” means, during the 12-month period beginning on April 1st of 2005 or of any subsequent calendar year, an employee of a Participant’s employing Company or its Affiliates who met the

requirements of Section 416(i)(1)(A)(i), (ii) or (iii) of the Code (applied in accordance with the regulations thereunder and without regard to Code Section 416(i)(5)) for being a “key employee” at any time during the 12-month period ending on the December 31st immediately preceding such April 1st. Notwithstanding the foregoing, a Participant who otherwise would be a Specified Employee under the preceding sentence shall not be a Specified Employee for purposes of the Plan unless, as of the date of the Participant’s Separation from Service, stock of such Company or an Affiliate thereof is publicly traded on an established securities market or otherwise.

1.17	“Social Security Benefits” means 1/12 ^th of the annual primary insurance amount estimated by the Committee to be payable to the Participant at his social security retirement age under the Federal Social Security Act.

1.18	“Surviving Spouse” means the spouse to whom the Participant is lawfully married at the time of his death.

1.19	“Totally and Permanently Disabled” or “Total and Permanent Disability” means that the Participant is eligible to receive disability retirement benefits under the Company’s Pension Plan, determined without regard to Section 6.3(a)(ii) thereof.

ARTICLE 2

Retirement Benefits

2.1	Normal Retirement Benefit

(a)

Upon a vested Participant’s Separation from Service on or after his Normal Retirement Date for reasons other than death, the Company shall pay retirement benefits to the Participant in such amount and at such time as hereinafter described.

(b)

Subject to Section 2.4 relating to delay in payment for Specified Employees and Section 5.1 relating to the form of payment, the normal retirement benefit payable to the Participant in monthly amounts during his lifetime and commencing as of the first day of the month coincident with or next following his Separation from Service (but subject to Section 7.11) shall equal 65% of the Participant’s Final Average Compensation, offset or reduced by the following:

(i)

Other Pension Benefits; and

(ii)

Social Security Benefits.

(c)

Benefit payments which have commenced under the terms of this Plan shall not be affected by any subsequent change in Other Pension Benefits under a plan of the Company.

2.2	Early Retirement Benefit

(a)

Subject to Section 2.4 relating to delay in payment for Specified Employees and Section 5.1 relating to the form of payment, any vested Participant who has a Separation from Service prior to his Normal Retirement Date for reasons other than death or Total and Permanent Disability shall be entitled to early retirement benefits under this Section 2.2. Such benefits shall commence as of the first day of the month coincident with or next following the Participant’s Separation from Service but subject to Section 7.11. If early retirement benefits commence prior to the Participant’s Normal Retirement Date, the amount of the Participant’s benefit under this Plan shall be reduced according to the following schedule:

Age at

Commencement of Benefits

Benefit as a % of Final

Average Compensation

55	32%
56	38%
57	44%
58	50%
59	54%
60	58%
61	60%
62	62%
63	63%
64	64%

(b)

Benefits payable under Section 2.2(a) shall be reduced or offset as described in Section 2.1(b).

2.3	Disability Retirement Benefit

Subject to Section 2.4 relating to delay in payment for Specified Employees and Section 5.1 relating to the form of payment, a vested Participant who has a Separation from Service by reason of being Totally and Permanently Disabled shall be entitled to benefits under this Plan as set forth in Section 2.1. Disability retirement benefits to which a vested Participant is entitled under this Section 2.3 shall commence as of the first day of the month coincident with or next following the date of the Participant’s Separation from Service but subject to Section 7.11.

2.4	Delay in Payment for Specified Employees

Notwithstanding the foregoing provisions of this Article 2, if a Participant is a Specified Employee at the time of his Separation from Service for reasons other than death and is to commence to receive payment under this Article 2 before the date that is six months after the date of such Separation from Service, no payment of the Participant’s benefits shall be made to or in respect of the Participant until the end of such six-month period (or until the Participant’s death, if earlier). Any such payment to which the Participant would otherwise be entitled to receive during such six-month period shall instead be accumulated and paid, with interest at the rate used in determining the actuarial equivalent lump sum amount of such payment, as of the first day of the seventh month following the date of Separation from Service or, in the event of the Participant’s earlier death, as soon as practicable after his death to his Surviving Spouse, if any, or otherwise to his estate. If a Participant dies after the date payment of retirement benefits would have commenced under this Article 2 but for this Section 2.4 and before payments commence due to the operation of this Section 2.4, he shall be deemed for purposes of Article 3 to have died after the commencement of benefits under the Plan.

ARTICLE 3

Death Benefits

3.1	The following death benefit shall be payable to a Surviving Spouse under the Plan:

(a)

Upon the death of a vested Participant prior to his commencement of benefits under this Plan, the Participant’s Surviving Spouse, if any, shall receive, as of the first day of the month following the Participant’s death, but subject to Section 7.11, a lump sum payment which is the actuarial equivalent of a life annuity, commencing as of such date, payable monthly in an amount equal to 100% of the monthly amount of the Participant’s Normal or Early Retirement Benefit as calculated under Section 2.1 or 2.2, whichever is applicable, based on the Participant’s age at date of death.

(b)

If the Surviving Spouse is more than ten years younger that the Participant at the time of the Participant’s death, benefits payable to the Surviving Spouse under this Section 3.1 shall be reduced by 50%.

3.2	The Surviving Spouse’s benefits provided herein shall be in addition to any pre- or post-retirement life insurance benefits under the Company’s insurance programs.

3.3	Except as provided in Sections 2.4 and 3.1, no other death benefits shall be payable under this Plan on the death of a Participant, whether or not vested.

ARTICLE 4

Vesting

4.1	Any participant having completed a minimum of 10 years of Service with the Company and attained age 55 while employed by the Company shall be considered vested in rights to retirement benefits as provided in this Plan, subject to the provisions of Section 7.2 of this Plan.

4.2	By written action of the Committee and in its sole discretion, the requirement of 10 years of Service with the Company for vesting purposes under the terms of this Plan may be partially or fully waived for a specified Participant on such terms as the Committee may determine.

ARTICLE 5

Form of Payment of Benefits

5.1

Benefits under this Plan for a Participant who is not married when benefits commence to him under this Plan shall be payable in the form of a lump sum payment which is the actuarial equivalent of the monthly amount of benefit determined under Article 2 to which the Participant is entitled if such monthly amount were payable for the life of the Participant in the form of a 10-year certain and life annuity. Benefits under this Plan for a Participant who is married when benefits commence to him under this Plan shall be payable in the form of a lump sum payment which is the actuarial equivalent of the monthly amount of benefit determined under Article 2 to which the Participant is entitled if such monthly amount were payable as a 100% joint and survivor annuity for the life of the Participant and his spouse to whom he is lawfully married at the time of commencement of benefits.

5.2

The undertakings of the Company herein constitute an unsecured promise of the Company to make the payments as provided in the Plan. This Plan is unfunded and no current beneficial interest in any asset of the Company shall accrue to any Participant or other person under the terms of this Plan. All Participants shall be entitled to the benefits provided by the Plan. It is the intent of the Company that the total cost of providing the benefits under this Plan will be borne by the Company.

ARTICLE 6

Administration

6.1

The Committee shall have sole and absolute discretionary power and authority to interpret, construe and administer this Plan, to adopt appropriate procedures and to make all decisions, including deciding all questions of fact, necessary or proper in its judgment to carry out the terms of this Plan. The Committee’s interpretation and construction hereof, and actions hereunder, including any valuation of the amount or recipient of the payments to be made thereunder, shall be binding and conclusive on all persons for all purposes. The Company’s Chief Accounting Officer, shall act as the Committee’s agent in administering this Plan. Neither the Company, or its officers, employees or directors, nor the Committee or any member thereof shall be liable to any person for any action taken or omitted in connection with the interpretation and administration of this Plan.

6.2	Each Participant shall furnish to the Committee such information as it may from time to time request for the purpose of the proper administration of this Plan.

6.3

The OGE Energy Corp., by action of the Board of Directors, reserves the exclusive right to amend, modify, alter or terminate this Plan in whole or in part without notice to the Participants. Except to the extent necessary to comply with Section 409A of the Code, no such termination, modification or amendment shall terminate or diminish the amount of benefits then being paid, or to be paid on subsequent termination of employment, to any Participant or Surviving Spouse. Notwithstanding the foregoing, no benefits may be distributed on termination of the Plan other than as provided in Articles 2 and 3 except to the extent acceleration of the time and form of payment is permitted under Section 409A of the Code and the regulations and guidance issued thereunder.

6.4	OGE Energy Corp. shall be the “Administrator” of the Plan for purposes of ERISA.

ARTICLE 7

General Provisions

7.1

This Plan shall not be deemed to give any Participant or other person in the employ of the Company any right to be retained in the employment of the Company, or to interfere with the right of the Company to terminate any Participant or such other person at any time and to treat him without regard to the effect which such treatment might have upon him as a Participant in the Plan.

7.2	In the event a Participant is discharged for cause involving illegal or fraudulent acts, such discharge may result in forfeiture of all benefits and rights under the Plan, in the sole discretion of the Committee.

7.3	The rights, privileges, benefits and obligations under this Plan are intended to be, and shall be treated as, legal obligations of the Company and binding upon the Company, its successors and assigns, including successors by corporate merger, consolidation, reorganization or otherwise.

7.4	Copies of this Plan, together with copies of any approved procedures for administration will be furnished to each Participant together with an annual statement of benefits over the signature of the Chairman of the Board or his designee.

7.5	This Plan was approved initially by resolution of the Board of Directors of Oklahoma Gas and Electric Company at a regular meeting on November 9, 1993 to be effective as of January 1, 1993 and was subsequently assumed and amended by resolutions of the Board of Directors.

7.6	The provisions of this Plan shall be construed according to the law of the State of Oklahoma excluding the provisions of any such laws that would require the application of the laws of another jurisdiction.

7.7	The masculine pronoun wherever used shall include the feminine. Wherever any words are used herein in the singular, they shall be construed as though they were also used in the plural in all cases where they shall so apply.

7.8	The titles to articles and headings of sections of this Plan are for convenience of reference and in case of any conflict the text of this Plan, rather than such titles and headings, shall control.

7.9	Amounts payable under the Plan shall be reduced to the extent of amounts required to be withheld by the Company under Federal, state, or local law.

7.10

Whenever and as often as any person is entitled to payments under the Plan shall be under a legal disability or, in the sole judgment of the Committee, shall otherwise be unable to apply such payments to his own best interest and advantage, the Committee, in the exercise of its discretion may direct all or any portion of such payments to be made in any one or more of the following ways: (i) directly to him; (ii) to his legal guardian or conservator; or (iii) to his spouse or to any other person, to be expended for his benefit; and the decision of the Committee shall in each case be final and binding upon all person in interest.

7.11

Notwithstanding any provision of the Plan to the contrary, a distribution to be made as of a specified date in Article 2 or 3 shall be treated for purposes of Code Section 409A as made on the date specified if the distribution is made at such date specified or a later date in the same calendar year or, if later and provided that the Participant or other recipient is not permitted, directly or indirectly, to designate the year in which distribution is made, by the 15th day of the third calendar month following the specified date. In addition, if calculation of the amount of a payment is not administratively practicable due to events beyond the control of the Participant or his estate, a payment will be treated as made on the specified date for purposes of Code Section 409A if the payment is made during the first calendar year in which payment is administratively practicable.

7.12

The provisions of this Plan are not intended, and should not be construed to be legal, business or tax advice. The Company, Participants and any other party having any interest herein are hereby informed that the U.S. federal tax advice contained in this document (if any) is not intended or written to be used, and cannot be used, for the purpose of (i) avoiding penalties under the Code or (ii) promoting, marketing or recommending to any party any transaction or matter addressed herein.

7.13	To the extent applicable, it is intended that this Plan be in full compliance with the provisions of Section 409A of the Code. The Plan shall be interpreted, construed and administered in a manner consistent with this intent.

7.14	In determining actuarially equivalent values for purposes of the Plan, the corresponding actuarial assumptions (including assumptions as to mortality and interest rates) used from time to time under the Company’s Pension Plan shall be used for purposes of the Plan.

ARTICLE 8

Claims Procedure

8.1	Initial Claims Procedure

The Participant or his Surviving Spouse or any other person shall follow such procedures for making a claim as are provided by the Committee. The Committee shall make a decision upon each claim within 90 days of its receipt of such claim. If the claim is approved, the Committee shall determine the extent of benefits and initiate payment thereof. In the event that no action is taken on the applicant’s initial application for benefits within the period specified in this Section 8.1, the claim shall be deemed denied, and the applicant’s appeal rights under Section 8.3 will be in effect as of the end of such period.

8.2	Notice of Denial of Claim

If an application for benefits under Section 8.1 is denied in whole or in part, the Committee shall provide the applicant with a written notice of denial, setting forth: (a) the specific reason or reasons the claim was denied, (b) a specific reference to pertinent provisions of the Plan upon which the denial was based, (c) a description of the additional material or information (if any) necessary to perfect the claim, together with an explanation of why such material or information is necessary, and (d) an explanation of the Plan’s review procedure and the time limits applicable including a statement of the applicant’s rights to bring a civil action under Section 502(a) of ERISA following an adverse determination or review. This written notice of denial shall be furnished within 90 days after receipt of the claim by the Committee unless specific circumstances require an extension of time for processing. If an extension is required, written notice of the extension shall be furnished prior to the termination of the initial 90-day period. In no event shall such extension exceed a period of 90 days from the end of such initial period. The extension notice shall indicate the special circumstances requiring an extension of time and the date by which the Committee expects the render the final decision.

8.3	Claims Review Procedure

Within 60 days after receipt of a notice of denial, the applicant or his duly authorized representative may file a written notice of appeal of such denial with the Committee. Such notice of appeal must set forth the specific reasons for the appeal. In addition, within such appeal period the applicant or his duly authorized representative shall be provided, upon written request and free of charge, reasonable access to, and copies of, all documents, records, and other information relevant to the claim for benefits and may submit written comments, documents, records and other information relating to the claim. The 60-day period within which the request for review must be filed may be extended if the nature of the benefit which is the subject of the claim and other attendant circumstances so warrant and the 60-day limitations period would otherwise be unreasonable. In its sole discretion, the Committee may grant the applicant an oral hearing on his appeal. In considering the claim on review, the Committee will take into account all documents and information related to the claim that were submitted by the applicant and shall deliver to the applicant, or authorized representative, a written decision on the claim within 60 days after the receipt of the request for review, except that if there are special circumstances which require an extension of time, the 60 period may be extended to 120 days. If such extension is required, written notice shall be furnished to the applicant, or authorized representative, prior to the termination of the initial 60 day period. The decision shall be written in a manner calculated to be understood by the claimant, include the specific reason or reasons for the decision and contain a specific reference to the pertinent Plan provisions upon which the decision is based, a statement that a applicant, or his/her authorized representative, shall have reasonable access to, and be entitled to receive, upon request and free of charge, copies of, all documents, records, and other information relevant to the applicant’s claim for benefits, and a statement describing the claimant’s right to bring an action under Section 502(a) of ERISA.

Dated: April 17, 2008

OGE ENERGY CORP.

By: /s/ Peter B. Delaney

Its: Chairman, Chief Executive Officer and President

Attest:

/s/ Carla D. Brockman

Secretary

Exhibit 10.04

OGE ENERGY CORP.

RESTORATION OF RETIREMENT INCOME PLAN

(As Amended and Restated Effective as of January 1, 2005)

1.	Purposes of the Plan

The OGE Energy Corp. Restoration of Retirement Income Plan (the “Plan”) was established to provide for the payment of certain pension and pension-related benefits to certain participants in the OGE Energy Corp. Retirement Plan (formerly known as the Oklahoma Gas and Electric Company Employees’ Retirement Plan and which, as it may be amended from time to time, is hereinafter referred to as the “Retirement Plan”) whose benefits under the Retirement Plan are restricted by the limitations of Sections 401(a)(17) and 415 of the Internal Revenue Code of 1986, as amended (the “Code”), so that the total pension and pension-related benefits of such participants can be determined on the same basis as is applicable to all other participants in the Retirement Plan. The Plan is hereby amended and restated by OGE Energy Corp. (the “Company”), the Plan sponsor, effective as of January 1, 2005, as hereinafter set forth.

2.	Definitions

When used in the Plan and initially capitalized, the following words and phrases shall have the meanings indicated:

“Affiliate” shall mean any corporation, partnership, joint venture, trust, association or other business enterprise which is a member of the same controlled group of corporations, trades or businesses as an Employer within the meaning of Code Section 414(b) or (c); provided, however, that for purposes only of the term “Affiliate” when used in the definition of “Separation from Service” below, in applying Code Section 1563(a)(1), (2), and (3) in determining a controlled group of corporations under Code Section 414(b), the language “at least 50 percent” shall be used instead of “at least 80 percent” each place it appears in Code Section 1563(a)(1), (2), and (3), and in applying Treasury Reg. § 1.414(c)-2 for purposes of determining trades or businesses (whether or not incorporated) that are under common control for purposes of Code Section 414(c), “at least 50 percent” shall be used instead of “at least 80 percent” each place it appears in Treasury Reg. § 1.414(c)-2.

“Compensation” shall mean, during an applicable period, the Participant’s Compensation under the Retirement Plan, except that (i) such Compensation shall not be limited by Code Section 401(a)(17) as in effect during such applicable period, (ii) such Compensation shall include amounts, if any, that would otherwise have been included in Compensation under the Retirement Plan but for the fact they were deferred by the Participant for the calendar year in question under the OGE Energy Corp. Deferred Compensation Plan, as it may be amended from time to time (the Deferred Compensation Plan”), and (iii) Compensation under this Plan shall include bonuses includable in Compensation under the Retirement Plan that are payable pursuant to the OGE Energy Corp. Annual Incentive Plan, as it may be amended from time to time. Such bonuses shall be included as Compensation for purposes of the Plan in the year in which the bonuses are actually declared and paid to Participants.

“Employer” shall mean the Company or other employer that has adopted the Plan as provided in Section 16.

“Grandfathered Benefit” shall mean the portion of the benefit to which a Participant is entitled under the Plan on Separation from Service, determined on an actuarial equivalent basis, equal to the present value as of December 31, 2004 of the amount to which the Participant would have been entitled under the Plan if he had voluntarily terminated services without cause on December 31, 2004 and received a payment of benefits available from the Plan on the earliest possible date allowed under the Plan to receive a payment of benefits following the termination of service and received the benefits in the form with the maximum value, as such present value may be increased to the determination date (using the same interest rate used to calculate the present value of the benefit at December 31, 2004) to reflect, due solely to the passage of time, the shortening of the discount period before future payments are made, and, if applicable, the Participant’s survivorship. Present value shall be determined using the actuarial assumptions used under the Plan.

“Post-2004 Accruals” shall mean the portion of the benefit to which the Participant is entitled under the Plan on Separation from Service that exceeds the Participant’s Grandfathered Benefit, if any.

“Separation from Service” means in respect of a Participant, any termination of employment with the Participant’s Employer and its Affiliates due to retirement, death, or other reason; provided, however, that in respect of a Participant’s Post-2004 Accruals, no Separation from Service for reasons other than death shall be deemed to occur for purposes of the Plan while the Participant is on military leave, sick leave, or other bona fide leave of absence that does not exceed six months or, if longer, the period during which the Participant’s right to reemployment with the Employer or its Affiliates is provided either under applicable statute or by contract; and provided further that, if the period of leave exceeds six months and the Participant does not retain a right to reemployment under an applicable statute or by contract, a Separation from Service will be deemed to have occurred on the first day following such six-month period. Whether or when a Separation from Service has occurred for purposes of the Plan in respect of a Participant’s Post-2004 Accruals shall be determined based on the meaning of “separation from service” under Code Section 409A and the regulations promulgated thereunder and, accordingly, shall be based on whether the facts and circumstances indicate that the Employer and its Affiliates and the Participant reasonably anticipate that no further services will be performed after a certain date or that the level of bona fide services the Participant will perform after such date (whether as an employee or as an independent contractor) will permanently decrease to no more than 20% of the average level of bona fide services performed (whether as an employee or independent contractor) over the immediately preceding 36-month period (or the full period of services to Employer and its Affiliates if the Participant has been providing services to the Employer and its Affiliates less than 36 months). A Participant shall be presumed for this purpose to have a Separation from Service where the level of bona fide services decreases to a level equal to 20% or less of such average level of services.

“Specified Employee” means, during the 12-month period beginning on April 1st of 2005 or of any subsequent calendar year, an employee of a Participant’s Employer or its Affiliates who met the requirements of Section 416(i)(1)(A)(i), (ii) or (iii) of the Code (applied in accordance with the regulations thereunder and without regard to Code Section 416(i)(5)) for being a “key employee” at any time during the 12-month period ending on the December 31st immediately preceding such April 1st. Notwithstanding the foregoing, a Participant who otherwise would be a Specified Employee under the preceding sentence shall not be a Specified Employee for purposes of the Plan unless, as of the date of the Participant’s Separation from Service, stock of the such Employer or an Affiliate thereof is publicly traded on an established securities market or otherwise.

Other terms are defined elsewhere in this Plan, and, if necessary, reference should be made to the Retirement Plan for the meaning of any capitalized terms not herein defined unless otherwise stated or implied by the context hereof.

3.	Administration

This Plan shall be administered by a committee (the “Benefits Committee”) which shall consist of at least five (5) members and not more than nine (9) members appointed by the Benefits Oversight Committee of the Company. Members of the Benefits Oversight Committee may also serve as members of the Benefits Committee. The Benefits Oversight Committee will designate one member of the Benefits Committee as Chairman. The Benefits Committee will appoint a Secretary who does not have to be a member of the Benefits Committee. The Benefits Committee members may resign by written notice to, or may be removed by, the Benefits Oversight Committee, which shall appoint a successor to fill any vacancy on the Benefits Committee so as to maintain at least five (5) members. This Plan shall be administered as an unfunded plan which is not intended to meet the qualification requirements of Section 401(a) of the Code. The Benefits Committee shall have the full, discretionary and exclusive power and authority to interpret, construe and administer this Plan, and the Benefits Committee’s interpretations and construction thereof, and actions thereunder, including the determination of the amount or recipient of the payments to be made therefrom or other questions of fact thereunder, shall be binding and conclusive on all persons for all purposes. The Benefits Committeeshall be the “administrator” under the Plan for purposes of the Employee Retirement Income Security Act of 1974, as amended (“ERISA”).

4.	Eligibility

Participants in the Retirement Plan whose pension or pension-related benefits under the Retirement Plan are limited by (i) the provisions thereof relating to the maximum benefit limitations of Section 415 of the Code (the

“415 Limit”), (ii) the limitation on includible Compensation under the Code 401(a)(17), as in effect on and after January 1, 1989, and as adjusted and/or amended from time to time (the “401(a)(17) Limit”), or (iii) by reason of deferrals under the Deferred Compensation Plan, shall be eligible for benefits under this Plan and are referred to herein individually as a “Participant” and collectively as the “Participants”. In no event shall a participant who is not entitled to benefits under the Retirement Plan be a Participant in, or eligible for a benefit under, this Plan.

5.	Amount of Benefit

The benefits payable to a Participant or his beneficiary or beneficiaries under this Plan shall be equal to the excess, if any, of:

(a) the benefits which would have been paid on or after July 14, 1987, to such Participant, or on his behalf to his beneficiary or beneficiaries, under the Retirement Plan, if the provisions of the Retirement Plan were administered (i) using the definition of Compensation contained in Section 2 of the Plan and (ii) without regard to the 415 Limit or the 401(a)(17) Limit, over

(b) the benefits which are payable to such Participant, or on his behalf to his beneficiary or beneficiaries, under the Retirement Plan.

In no event, however, shall the benefit payable under the Plan to any Participant who was a Participant in the Plan immediately prior to the effective date of this amendment and restatement, or on his behalf to his beneficiary or beneficiaries, be less than the benefit to which such recipient would have been entitled under the Plan pursuant to the foregoing formula but using for purposes of item (a) thereof the amount determined in accordance with the provisions of item (a) of Section 5 of the Plan as in effect on the earlier of the date immediately prior to the effective date of this amendment and restatement or Participant’s termination of employment and as if the Participant had terminated his employment on such date.

Benefits payable under this Plan shall be computed in accordance with the foregoing and with the objective that such recipient should receive under this Plan and the Retirement Plan the total amount which would have been payable to that recipient solely under the Retirement Plan had the 415 Limit and the 401(a)(17) Limit not been applicable thereto and the Participant’s deferrals under the Deferred Compensation Plan were treated as compensation under the Retirement Plan. In the event that the maximum amount of retirement income limitation of Section 401(a)(l7) or Section 415 of the Code as set forth in the Retirement Plan is increased after the date of commencement or payment of the Participant’s retirement income under the Retirement Plan due to any cost-of-living adjustment announced by the Internal Revenue Service pursuant to the provisions of Section 401(a)(17) or Section 415(d) of the Code and if, as a result of such increase, the amount of retirement income or other benefit payable under the Retirement Plan is increased, the amount of the retirement income or other benefit payable to or on behalf of the Participant under the Plan will be correspondingly reduced. If, because the date that the amount of such cost-of-living adjustment announced by the Internal Revenue Service is after the effective date of such adjustment, or because of any other reason, the Participant or his beneficiary has received a increase in the amount of the benefit payable on his behalf under the Retirement Plan that causes the benefits that he receives under this Plan to be in excess of the amounts that are or were due under the Plan, the excess of the benefits that have actually been paid to or on behalf of the Participant under this Plan over the amounts that are due under this Plan shall be forfeited and must be refunded to the Company or the Participant’s Employer by the Participant or, if applicable, his beneficiary, in a manner suitable to the Benefits Committee.

6.	Payment of Benefits

Payment of benefits under this Plan shall be made as follows but only if the Participant is entitled to benefits under the Retirement Plan:

(a) Payments of Grandfathered Benefits shall be made as of the first day of the month on or next following the Participant’s Separation from Service or as soon as practicable thereafter, and such payments shall be made, on an actuarial equivalent basis, in a lump sum.

(b) Subject to Section 6(c) relating to payments to Specified Employees, payment of a Participant’s Post-2004 Accruals shall be made, on an actuarial equivalent basis, in a lump sum as of the first day of the

month on or next following the Participant’s Separation from Service, or as soon as practicable hereafter but subject to Section 20.

(c) Notwithstanding the provisions of Section 6(b), if a Participant is a Specified Employee at the time of his Separation from Service for reasons other than death and is to receive payment of his Post-2004 Accruals under this Section 6 before the date that is six months after the date of such Separation from Service, no payment of the Participant’s Post-2004 Accruals shall be made to or in respect of the Participant until the end of such six-month period (or until the Participant’s death, if earlier). Any such payment to which the Participant is otherwise entitled to receive during such six-month period shall instead be paid, on an actuarial equivalent basis, in a lump sum as of the first day of the seventh month following the date of Separation from Service or, in the event of the Participant’s earlier death, as provided in the Plan.

(d) In the event a Participant incurs a Separation from Service after December 31, 2004 but on or prior to December 1, 2005, such Participant’s participation in the Plan shall thereupon terminate, and the benefits accrued to the date of the Separation from Service that are payable to the Participant or his beneficiary or beneficiaries as determined under Section 5 shall, notwithstanding Section 6(a), (b) or (c), be paid in a lump sum, on an actuarial equivalent basis, as soon as practicable after his Separation from Service but in no event later than December 31, 2005.

(e) Notwithstanding the foregoing, the Benefits Committee may accelerate payments of Grandfathered Benefits in the event of changes in the tax laws or accounting principles adversely affecting the Plan and its effect on the Company, the Participants or their beneficiaries. Nothing contained herein shall enable the Benefits Committee to accelerate payments because of the financial condition of the Company as opposed to the adverse effect on the Company, the Participants or their beneficiaries arising out of the good and substantial reasons described herein. In addition, payment to a Participant under the Plan will be delayed, subject to the conditions of Code Section 409A and the regulations thereunder, where the Benefits Committee reasonably anticipates that if the payment was made as scheduled, the Company’s or other Employer’s deduction with respect to such payment otherwise would not be permitted due to the application of Section 162(m) of the Code, provided, however, that such delayed payment is made either (i) during the first calendar year in which the Benefits Committee reasonably anticipates, or should anticipate, that if the payment is made during such year, the deduction of such payment will not be barred by application of Code Section 162(m) or (ii) during the period beginning with the Participant’s Separation from Service (or, if the Participant is a Specified Employee, beginning with the date that is six months after Separation from Service) and ending on the later of the last day of the calendar year in which such period begins or the 15 ^th day of the third month following the Participant’s Separation from Service (or, if the Participant is a Specified Employee, the 15 ^th day of the third month following the date that is six months after Separation from Service).

(f) Amounts payable under the Plan shall be reduced to the extent of amounts required to be withheld by the Company or other Employer under Federal, state, or local law.

(g) For purposes of the Plan, a Participant’s beneficiary or beneficiaries shall be the Participant’s Beneficiary for purposes of the corresponding benefit under the Retirement Plan.

7.	Participant’s Rights

A Participant or beneficiary who feels he is being denied any benefit or right provided under this Plan must file a written claim with the Benefits Committee. All such claims shall be submitted on a form provided by the Benefits Committee which shall be signed by the claimant and shall be considered filed on the date the claim is received by the Benefits Committee.

Upon the receipt of such a claim and in the event the claim is denied, the Benefits Committee shall, within 90 days after its receipt of such claim, provide such claimant a statement in writing, written in a manner calculated to be understood by the claimant, which shall be delivered or mailed to the claimant by certified or registered mail to his last known address, which statement shall contain the following:

(a) the specific reason or reasons for the denial of benefits;

(b) a specific reference to the pertinent provisions of this Plan or the Retirement Plan upon which the denial is based;

(c) a description of any additional material or information which is necessary to perfect the claim, together with an explanation of why such material or information is necessary; and

(d) an explanation of the review procedure provided below and the time limits applicable, including a statement of the claimant’s rights to bring a civil action under Section 502(a) of ERISA following an adverse determination on review;

provided, however, in the event that special circumstances require an extension of time for processing the claim, the Benefits Committee shall provide such claimant with such written statement described above not later than 180 days after receipt of the claimant’s claim, but, in such event, the Benefits Committee shall furnish the claimant, within 90 days after its receipt of such claim, written notification of the extension explaining the circumstances requiring such extension and the date that it is anticipated that such written statement will be furnished.

Within 60 days after receipt of a notice of a denial of benefits as provided above, if the claimant disagrees with the denial of benefits, the claimant or his authorized representative must request, in writing, that the Benefits Committee review his claim and may request to appear before the Benefits Committee for such review. In conducting its review, the Benefits Committee shall consider any written statement or other evidence presented by the claimant or his authorized representative in support of his claim. The Benefits Committee shall give the claimant and his authorized representative reasonable access to, and they shall be entitled to receive, upon request and free of charge, copies of, all documents, records, and other information relating to the claim.

Within 60 days after receipt by the Benefits Committee of a written application for review of his claim, the Benefits Committee shall notify the claimant of its decision by delivery or by certified or registered mail to his last known address; provided, however, in the event that special circumstances require an extension of time for processing such application, the Benefits Committee shall so notify the claimant of its decision not later than 120 days after receipt of such application, but, in such event, the Committee shall furnish the claimant, within 60 days after its receipt of such application, written notification of the extension explaining the circumstances requiring such extension and the date that it is anticipated that its decision will be furnished. The decision of the Benefits Committee shall be in writing and shall include the specific reasons for the decision presented in a manner calculated to be understood by the claimant and shall contain reference to all relevant Plan provisions on which the decision was based, a statement that the claimant, or his authorized representatives, shall have reasonable access to, and be entitled to receive, upon request and free of charge, copies of, all documents, records and other information relevant to the claimant to claim for benefits, and a statement describing the claimant’s right to bring an action under Section 502(a) of ERISA. The decision of the Benefits Committee shall be final and conclusive.

A Participant shall not be entitled to any payments from the trust fund maintained under the Retirement Plan on the basis of any benefits to which he may be entitled under this Plan. All benefits payable under this Plan to or on behalf of Participants who were employed by the Company shall be paid from the general assets of the Company and all benefits payable to or on behalf of the Participants who were employed by any other Employer which has adopted this Plan with the consent of the Company shall be paid from the general assets of such Employer. The Company or such other Employer may, in its sole discretion, establish a separate fund or account to make payment of benefits to a Participant or his beneficiary or beneficiaries hereunder. Whether or not the Company or such other Employer, in its sole discretion, does establish such a fund or account, no Participant, his beneficiary or beneficiaries or any other person shall have, under any circumstances, any interest whatever in any particular property or assets of the Company or of any other Employer by virtue of this Plan, and the rights of the Participant, his beneficiary or beneficiaries or any other person who may claim a right to receive benefits under this Plan shall be no greater than the rights of a general unsecured creditor of the Company or such other Employer.

8.	Actuarial Equivalents

In determining actuarially equivalent values for purposes of this Plan, such reasonable actuarial assumptions (including assumptions as to mortality and interest rates) as are adopted by the Benefits Committee for the purposes of this Plan shall be used. Such assumptions may, but need not, be the same as the corresponding

the purposes of this Plan shall be used. Such assumptions may, but need not, be the same as the corresponding assumptions used under the Retirement Plan.

9.	Amendment and Termination

The Board of Directors of the Company may at any time or from time to time amend or terminate this Plan in whole or in part; provided, however, the Benefits Oversight Committee of the Company shall also have the authority to amend the Plan to the extent that such amendment (i) is necessary or desirable to comply with legal requirements, (ii) is a non-substantive administrative amendment, or (iii) does not result, alone or in the aggregate with other related amendments, in an estimated annual cost to the Plan of $1 million or more. However, except to the extent necessary to comply with Section 409A of the Code, no amendment or termination of the Plan may adversely affect the rights of any person without his consent if such person (i) is receiving benefits under the Plan, (ii) is entitled to receive benefits under the Plan on account of a prior termination of employment, or (iii) would be entitled to a benefit under the Plan if such person terminated employment immediately prior to the effective date of such amendment or termination. No amendment shall be deemed to adversely affect the rights under the Plan of any person who is in the employment of the Company or other Employer as of the effective date of the amendment merely by reason of the fact that the benefit to which such a Participant would be entitled under the Plan if he had terminated employment immediately prior to the effective date of the amendment is reduced through increased accruals under the Retirement Plan after the effective date of the amendment. Notwithstanding the foregoing, if this Plan should be terminated in whole or in part, the Company or any other Employer which has adopted this Plan, as the case may be, shall be liable for and distribute in a lump sum as soon as practicable after the effective date of termination any benefits accrued under the Plan, or portion thereof being terminated, as of such effective date for Participants who are or have been employed by the Company, or such other Employer, where such accrued benefits shall be the actuarially determinedbenefits as of such date of Plan termination which each Participant or his beneficiary or beneficiaries is receiving under this Plan or, with respect to Participants who are in the employment of the Company or any other Employer which has adopted this Plan on such date, which each such Participant would have received as of such date under this Plan if his employment had terminated as of the effective date of termination of the Plan. Notwithstanding the foregoing, no Post-2004 Accruals may be so distributed upon termination of the Plan in whole or in part except to the extent such acceleration of the time and form of payment is permitted under Section 409A of the Code and the regulations and guidance issued thereunder and, if not so permitted, such amounts shall only be paid as provided in Section 6.

10.	Restriction on Assignment

The benefits provided hereunder are intended for the personal security of persons entitled to payment under this Plan and are not subject in any manner to the debts or other obligations of the persons to whom they are payable. The interest of any Participant or his beneficiary or beneficiaries may not be sold, transferred, assigned, or encumbered in any manner, either voluntarily or involuntarily, and any attempt so to anticipate, alienate, sell, transfer, assign, pledge, encumber, or charge the same shall be null and void; neither shall the benefits hereunder be liable for or subject to the debts, contracts, liabilities, engagements, or torts of any person to whom such benefits or funds are payable, nor shall they be subject to garnishment, attachment, or other legal or equitable process nor shall they be an asset in bankruptcy.

If a Participant or any other person entitled to a benefit under this Plan becomes bankrupt or makes an assignment for the benefit of creditors or in any way suffers a lien or judgment against his personal assets, or in any way attempts to anticipate, alienate, sell, assign, pledge, encumber or charge a benefit, right or account, then such benefit, right or account in the discretion of the Benefits Committee may cease and terminate.

11.	Continued Employment

Nothing contained in this Plan shall be construed as conferring upon an employee the right to continue in the employment of the Company or any other Employer in any capacity or as otherwise affecting the employment relationship.

12	Liability of Benefits Committee

No member of the Benefits Committee shall be liable for any loss unless resulting from his own fraud or willful misconduct, and no member shall be personally liable upon or with respect to any agreement, act, transaction

or omission executed, committed or suffered to be committed by himself as a member of the Benefits Committee or by any other member, agent, representative or employee of the Benefits Committee. The Benefits Committee and any individual member of the Benefits Committee and any agent thereof shall be fully protected in relying upon the advice of the following professional consultants or advisors employed by the Company or the Benefits Committee: any attorney insofar as legal matters are concerned, any accountant insofar as accounting matters are concerned, and any actuary insofar as actuarial matters are concerned.

13.	Indemnification

The Company hereby indemnifies and agrees to hold harmless the members of the Benefits Committee and all directors, officers, and employees of the Company and of any other Employer which has adopted this Plan against any and all parties whomsoever, and all losses therefrom, including without limitation, costs of defense and attorneys’ fees, based upon or arising out of any act or omission relating to, or in connection with this Plan other than losses resulting from such person’s fraud or willful misconduct.

14.	Termination of Service for Dishonesty

If a Participant’s service with the Company or other Employer participating in this Plan, is terminated because of dishonest conduct injurious to the Company or such other Employer, or if dishonest conduct injurious to the Company or such other Employer committed by a Participant is determined by the Company during the lifetime of the Participant and within one year after his service with the Company or such other Employer is terminated, the Benefits Committee may terminate such a Participant’s interest and benefits under this Plan, in which case such interest and benefits shall be immediately forfeited.

The dishonest conduct injurious to the Company or any other Employer participating in this Plan committed by a Participant shall be determined and decided by the Benefits Committee only after a full investigation of such alleged dishonest conduct and an opportunity has been given the Participant to appear before the Benefits Committee to present his case. The decision made by the Benefits Committee in such cases shall be final and binding on all Participants and other persons affected by such decision.

15.	Binding on Employer, Participants and Their Successors

This Plan shall be binding upon and inure to the benefit of the Company and to any other Employers participating in this Plan, their successors and assigns and the Participant and his heirs, executors, administrators, and duly appointed legal representatives.

16.	Rights of Affiliates to Participate

Any Employer participating in the Retirement Plan may adopt this Plan with the consent of the Company provided the proper action is taken by the board of directors or other governing body of such Employer. Upon such adoption, such Employer shall become an “Employer” for purposes of this Plan. Notwithstanding the foregoing, if an Employer that has adopted the Plan ceases to be an Employer participating in the Retirement Plan, Participants employed by such Employer shall cease to accrue any further benefits under the Plan after such date, but any benefits accrued as of such date shall be payable by the Employer to its Participants subject and pursuant to the terms of the Plan. The administrative powers and control of the Company, as provided in this Plan, shall not be deemed diminished under this Plan by reason of the participation of any other Employer and the administrative powers and control granted hereunder to the Benefits Committee shall be binding upon any Employer adopting this Plan. Each Employer adopting this Plan shall have the obligation to pay the benefits to its Participants who were in its employment hereunder and no other Employer shall have such obligation and any failure by a particular Employer to live up to its obligations under this Plan shall have no effect on any other Employer. Any Employer as to itself may terminate this Plan at any time by proper action of its board of directors or other governing body, subject to the provisions of Section 9.

17.	Law Governing

This Plan shall be construed in accordance with and governed by the laws of the State of Oklahoma to the extent not preempted by ERISA.

18.	Effective Date

This Plan, as herein amended and restated, shall be effective January 1, 2005, with respect to payments made to or on behalf of Participants on and after such date.

19.	Facility of Payment

Whenever and as often as any person is entitled to payments under the Plan shall be under a legal disability or, in the sole judgment of the Benefits Committee, shall otherwise be unable to apply such payments to his own best interest and advantage, the Benefits Committee, in the exercise of its discretion may direct all or any portion of such payments to be made in any one or more of the following ways: (i) directly to him; (ii) to his legal guardian or conservator; or (iii) to his spouse or to any other person, to be expended for his benefit; and the decision of the Benefits Committee shall in each case be final and binding upon all persons in interest.

20.	Timing of Payments for Purposes of Section 409A.

Notwithstanding any provision of the Plan to the contrary, a distribution of a Participant’s Post-2004 Accruals to be made as of a specified date in Section 6 or as soon as practicable thereafter shall in no event be made later than the last day of the calendar year in which such date occurs or, if later and provided the Participant or other recipient is not permitted, directly or indirectly, to designate the year in which the distribution is made, by the 15th day of the third calendar month following the specified date. In addition, if calculation of the amount of a payment is not administratively practicable due to events beyond the control of the Participant or his or her estate, a payment will be treated as made on the specified date for purposes of Code Section 409A if the payment is made during the first calendar year in which the calculation of the amount of the payment is administratively practicable.

22.	Tax Penalty Avoidance.

23.	Section 409A Compliance.

To the extent applicable, it is intended that this Plan be in full compliance with the provisions of Section 409A of the Code. The Plan shall be interpreted, construed and administered in a manner consistent with this intent.

IN WITNESS WHEREOF, OGE ENERGY CORP. has caused this instrument to be executed in its name by its duly authorized officer on this 17th day of April, 2008.

OGE ENERGY CORP.

By :/s/ Peter B. Delaney

Chairman, President and Chief Executive Officer

Exhibit 10.05

OGE ENERGY CORP.

DEFERRED COMPENSATION PLAN

(As Amended and Restated Effective January 1, 2005)

TABLE OF CONTENTS
Page
I.	PURPOSE AND EFFECTIVE DATE		1

	1.1	Purpose	1
	1.2	Effective Date	1
	1.3	Continuation of Prior Plan	1

II.	DEFINITIONS		1

	2.1	“Account”	1
	2.2	“Administrator”	1
	2.3	“Affiliate”	1
	2.4	“Affiliate Board”	2
	2.5	“Base Salary”	2
	2.6	“Beneficiary”	2
	2.7	“Board”	2
	2.8	“Bonus”	2
	2.9	“Change in Control”	2
	2.10	“Code”	3
	2.11	“Company”	3
	2.12	“Compensation”	3
	2.13	“Deferral Election”	3
	2.14	“Director Compensation”	3
	2.15	“Disability”	3
	2.16	“Discretionary Credit”	4
	2.17	“Election Period”	4
	2.18	“Eligible Director”	4
	2.19	“Eligible Employee”	4
	2.20	“Employer”	4
	2.21	“Matching Credit”	4
	2.22	“Participant”	4
	2.23	“Partnership Units”	4
	2.24	“Plan”	4
	2.25	“Plan Year”	4
	2.26	“Prior Plan”	4
	2.27	“Retirement”	4
	2.28	“RSP”	5
	2.29	“Separation from Service”	5
	2.30	“Specified Employee”	5
	2.31	“Supplemental RSP”	5
	2.32	“Valuation Date”	5

III.	PARTICIPATION		5

IV.	DEFERRAL OF COMPENSATION		6

	4.1	Deferral of Base Salary	6
	4.2	Deferral of Bonus	6
	4.3	Deferral of Director Compensation	6
	4.4	Deferral Elections	6
	4.5	Crediting of Deferral Elections	7

V.	EMPLOYER CREDITS		7

	5.1	Matching Credits	7
	5.2	Discretionary Credits	8
	5.3	Vesting	8


TABLE OF CONTENTS
(continued)
Page
	5.4	Acceleration of Vesting	9

VI.	PLAN ACCOUNTS		9

	6.1	Valuation of Accounts	9
	6.2	Crediting of Investment Return	9
	6.3	Assumed Investment Alternatives	10
	6.4	Investment Alternatives After Death	10

VII.	PAYMENT OF BENEFITS		10

	7.1	Distribution at Specific Future Date	10
	7.2	Distribution Upon Retirement or Disability Termination of Board Service	11
	7.3	Distribution On Other Termination of Employment	12
	7.4	Unscheduled Withdrawal of Pre-2005 Accounts	12
	7.5	Unscheduled Withdrawal of Pre-2005 Accounts on Unforeseeable Emergency	12
	7.6	Form of Elections	12
	7.7	Form of Payment; Withholding	12
	7.8	Delay In Payment to Specified Employees	12
	7.9	Termination of Service on Board or Affiliate Board	13

VIII.	DEATH BENEFITS		13

	8.1	Death Prior to Termination	13
	8.2	Death After Termination	13
	8.3	Post-Retirement Survivor Benefit	13
	8.4	Other Conditions	14
	8.5	Administrator Discretion Regarding Form	14

IX.	ADMINISTRATION		14

	9.1	Authority of Administrator	14
	9.2	Participant’s Duty to Furnish Information	14
	9.3	Claims Procedure	14
	9.4	Participating Statements	16

X.	AMENDMENT AND TERMINATION		16

XI.	MISCELLANEOUS		17

	11.1	No Implied Rights; Rights on Termination of Service	17
	11.2	No Employment Rights	17
	11.3	Unfunded Plan	17
	11.4	Nontransferability	17
	11.5	Successors and Assigns	17
	11.6	Applicable Law	18
	11.7	Timing of Payments	18
	11.8	Tax Penalty Avoidance	18
	11.9	Section 409A Compliance	18

OGE ENERGY CORP.

DEFERRED COMPENSATION PLAN

(As Amended and Restated Effective January 1, 2005)

I.	PURPOSE AND EFFECTIVE DATE

1.1

Purpose. The OGE Energy Corp. Deferred Compensation Plan has been established by OGE Energy Corp. to attract and retain key management employees by providing a tax-deferred capital accumulation vehicle and to supplement such employees’ 401(k) contributions, thereby encouraging savings for retirement.

1.2	Effective Date. The following provisions constitute an amendment and restatement of the Plan, effective January 1, 2005. The Plan shall remain in effect until terminated in accordance with Article X.

1.3

Continuation of Prior Plan. The Plan as originally adopted was intended to be an amendment, restatement and continuation of the OGE Energy Corp. Restoration of Retirement Savings Plan (the “Supplemental RSP”). Effective March 27, 2001, the OGE Energy Corp. Directors’ Deferred Compensation Plan (formerly known as the Stock Equivalent and Deferred Compensation Plan For Directors of OGE Energy Corp.) (the “Directors’ Plan”) was merged with and into the Plan.

II.

DEFINITIONS

When used in the Plan and initially capitalized, the following words and phrases shall have the meanings indicated:

2.1

“Account” means the recordkeeping account established for each Participant in the Plan for purposes of accounting for the amount of Base Salary, Bonus or Director Compensation deferred under Article IV and Matching and Discretionary Credits, if any, to be credited under Article V, adjusted periodically to reflect assumed investment return on such deferrals, Matching and Discretionary Credits in accordance with Article VI. A Participant’s Account may be divided into two or more subaccounts as the Administrator determines necessary or desirable for the administration of the Plan, and shall be divided into the following subaccounts, where applicable: (i) “Pre-2005 Account(s)” to which shall be credited any deferrals, Matching and Discretionary Credits, as adjusted to reflect assumed investment return, that were earned and vested as of December 31, 2004 and (ii) “Post-2004 Account(s)” to which shall be credited any deferrals, Matching and Discretionary Credits, as adjusted to reflect assumed investment return, made for Plan Years beginning before January 1, 2005 but that were not earned and vested as of December 31, 2004 and any deferrals, Matching and Discretionary Credits, as adjusted to reflect assumed investment return, made for Plan Years beginning on or after January 1, 2005.

2.2	“Administrator” means the Benefits Committee of the Company or such other individual or committee appointed by the Company’s Benefits Oversight Committee to administer the Plan in accordance with Article IX.

2.3

“Affiliate” means in respect of the Company or other Employer, any corporation, partnership, joint venture, trust, association or other business enterprise which is a member of the same controlled group of corporations, trades or businesses as the Company or other Employer, as the case may be, within the meaning of Code Section 414(b) or (c); provided, however, that, except for purposes of the term “Affiliate” when used in Section 2.30 below, in applying Code Section 1563(a)(1), (2), and (3) in determining a controlled group of corporations under Code Section 414(b), the language “at least 50 percent” shall be used instead of “at least 80 percent” each place it appears in Code Section 1563(a)(1), (2), and (3), and in applying Treasury Reg. § 1.414(c)-2 for purposes of determining trades or businesses (whether or not incorporated) that are under common control for purposes of Code Section 414(c), “at least 50 percent” shall be used instead of “at least 80 percent” each place it appears in Treasury Reg. § 1.414(c)-2. Notwithstanding the foregoing, any such entity which is an Affiliate of the Company solely because of the proviso in the preceding sentence shall be an Affiliate of the Company for purposes of Section 2.18 or 2.19 only if it has been designated by the Board as an Affiliate whose employees or non-employee directors, as the case may be, are eligible to participate in the Plan.

2.4	“Affiliate Board” means the Board of Directors of any Affiliate.

2.5	“Base Salary” means a Participant’s base salary, prior to any reductions therein, as shown in the personnel records of the Company or applicable Affiliate.

2.6

“Beneficiary” means the person or entity designated by the Participant to receive the Participant’s Plan benefits in the event of the Participant’s death. If the Participant does not designate a Beneficiary, or if the Participant’s designated Beneficiary predeceases the Participant, the Participant’s estate shall be the Beneficiary under the Plan. All Beneficiary designations shall be made in writing in such manner, including electronically, as the Administrator shall prescribe. Any properly completed Beneficiary designation, or changes therein, will be effective on the date it is filed with the Administrator or its delegate during the Participant’s lifetime and, once filed, shall revoke any prior designations.

2.7	“Board” means the Board of Directors of the Company.

2.8	“Bonus” means the annual bonus payable to a Participant under the OGE Energy Corp. Annual Incentive Compensation Plan or any successor thereto or replacement thereof.

2.9	“Change in Control” means the happening of any of the following events:

(a)

an acquisition by any individual, entity or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934, as amended (“Exchange Act”)) (a “Person”) of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of 20% or more of either (1) the then outstanding shares of common stock of the Company (the “Outstanding Company Common Stock”) or (2) the combined voting power of the then outstanding voting securities of the Company entitled to vote generally in the election of directors (the “Outstanding Company Voting Securities”); excluding however the following: (1) any acquisition directly from the Company, (2) any acquisition by the Company, (3) any acquisition by any employee benefit plan (or related trust) sponsored by or maintained by the Company or any corporation or other Person controlled by the Company or (4) any acquisition by any corporation or other Person pursuant to a transaction which complies with clauses (1), (2) and (3) of subsection (c) of this Section 2.9; or

(b)

a change in the composition of the Board such that the individuals who as of January 1, 2005, constitute the Board (the “Incumbent Board”) cease for any reason to constitute at least a majority of the Board; provided, however, for purposes of this Section 2.9, that any individual who becomes a member of the Board subsequent to January 1, 2005, whose election or nomination for election by the Company’s shareowners was approved by a vote of at least a majority of those individuals then comprising the Incumbent Board shall be considered as though such individual were a member of the Incumbent Board; but provided further, that any such individual whose initial assumption of office occurs as a result of either an actual or threatened election contest with respect to the election or removal of directors or other actual or threatened solicitation of proxies or consents by or on behalf of a Person other than the Board shall not be so considered as a member of the Incumbent Board; or

(c)

consummation of a reorganization, merger, share exchange or consolidation or sale or other disposition of all or substantially all of the assets of the Company (a “Business Combination”), excluding, however, such a Business Combination pursuant to which (1) all or substantially all of the individuals and entities who are the beneficial owners, respectively, of the Outstanding Company Common Stock and Outstanding Company Voting Securities immediately prior to such Business Combination beneficially own,

directly or indirectly, more than 60% of, respectively, the then outstanding shares of common stock or equity interests and the combined voting power of the then outstanding voting securities entitled to vote generally in the election of directors or other controlling persons, as the case may be, of the corporation or other Person resulting from such Business Combination (including, without limitation, a corporation or other Person which as a result of such transaction owns the Company or all or substantially all of the Company’s assets either directly or through one or more subsidiaries) in substantially the same proportions as their ownership, immediately prior to such Business Combination, of the Outstanding Company Common Stock and Outstanding Company Voting Securities, as the case may be, (2) no Person (other than the corporation or other Person resulting from such Business Combination or any employee benefit plan (or related trust) of the Company or such corporation or other Person resulting from such Business Combination) beneficially owns, directly or indirectly, 20% or more of, respectively, the then outstanding shares of common stock or equity interests of the corporation or other Person resulting from such Business Combination or the combined voting power of the then outstanding voting securities of such corporation or other Person except to the extent that such ownership existed with respect to the Company prior to the Business Combination and (3) at least a majority of the members of the board of directors or other governing body of the corporation or other Person resulting from such Business Combination were members of the Incumbent Board at the time of the execution of the initial agreement, or the action of the Board providing for such Business Combination; or

(d)

the approval by the shareholders of the Company of a complete liquidation or dissolution of the Company.

2.10	“Code” means the Internal Revenue Code of 1986, as amended.

2.11	“Company” means OGE Energy Corp. and any successor thereto.

2.12	“Compensation” means Base Salary and/or Bonus with respect to an Eligible Employee and means Director Compensation with respect to an Eligible Director.

2.13	“Deferral Election” means the election made by an Eligible Employee or Eligible Director to defer Compensation in accordance with Article IV.

2.14	“Director Compensation” means annual retainer and attendance fees, prior to any reduction therein, payable to an Eligible Director in cash for services as a member of the Board or, effective on or after November 28, 2007, an Affiliate Board.

2.15

“Disability” (i) as applicable to a Participant’s Pre-2005 Account(s), shall have the same meaning as permanent disability under the RSP and (ii) as applicable to a Participant’s Post-2004 Account(s), means that the Participant is unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment that can be expected to result in death or to last for a continuous period of not less than 12 months; provided, however, that in either case, the Disability must be incurred prior to the Participant’s Separation from Service or termination of service on the Board and Affiliate Boards, as the case may be. A Participant will be treated for purposes of the Plan as incurring a Disability on the date on which the Administrator makes its determination of Disability. A determination of Disability shall be made by the Administrator based upon the written opinion of a licensed physician who has been approved by the Administrator. The decision of the Administrator with respect to a Disability shall be conclusive for all purposes of the Plan.

2.16	“Discretionary Credit” means an amount credited to a Participant’s Account, as determined by the Compensation Committee of the Board in its sole discretion.

2.17	“Election Period” means the period specified by the Administrator as provided in Article IV during which a Deferral Election may be made with respect to Compensation payable for a Plan Year.

2.18	“Eligible Director” means a member of the Board or, effective on or after November 28, 2007, an Affiliate Board and who, in either case, is not also an employee of the Company or Affiliate thereof.

2.19

“Eligible Employee” means (i) with respect to any Plan Year commencing on or after January 1, 2003 and prior to January 1, 2007, unless determined otherwise by the Board, an employee of the Company or an Affiliate thereof who (A) is at OGE Grade 31 or above or, if OGE Grade levels do not apply to the particular business unit in which the employee is employed, is in a comparable salary grade or has comparable salary to employees at OGE Grade 31 or above, as determined by the Administrator, or (B) was an Eligible Employee under the Plan as in effect prior to January 1, 2003 and had a Deferral Election in effect for the Plan Year beginning January 1, 2002, and (ii) with respect to any Plan Year commencing on or after January 1, 2007, unless determined otherwise by the Board, an employee of the Company or of an Affiliate thereof who (A) is at OGE Grade 61 or above (or, if OGE Grade levels do not apply to the particular business unit in which the employee is employed, is in a comparable salary grade or has comparable salary to employees at OGE Grade 61 or above, as determined by the Administrator) and, as determined by the employee’s supervisor, is a supervisor or a key contributor, or (B) was an Eligible Employee under the Plan as in effect prior to January 1, 2003 and had a Deferral Election in effect for the Plan Year beginning January 1, 2002. Notwithstanding the foregoing, an employee shall not be an Eligible Employee if he or she is deemed by the Administrator not to be a member of a select group of management or highly compensated employees of the Company and its Affiliates.

2.20	“Employer” means (i) the Company or (ii) an Affiliate thereof that employed an Eligible Employee or in respect of which an Eligible Director was a non-employee director, in either case while a Participant, and any successor thereto.

2.21	“Matching Credit” means the amount credited to a Participant’s Account pursuant to Section 5.1.

2.22	“Participant” means an Eligible Employee or Eligible Director who has elected to defer Compensation or who has been credited with a Discretionary Credit.

2.23	“Partnership Units” means a common unit of OGE Enogex Partners L.P., a Delaware limited partnership, or any successor thereto.

2.24	“Plan” means the OGE Energy Corp. Deferred Compensation Plan, as amended from time to time.

2.25	“Plan Year” means the calendar year.

2.26	“Prior Plan” means the Supplemental RSP or the Directors’ Plan (as defined in Section 1.3), as applicable.

2.27

“Retirement” means a Separation from Service, for reasons other than death, occurring on or after the earlier of (i) the Participant’s attainment of at least age 55 with five (5) or more years of “Vesting Service”, as such term is defined in the OGE Energy Corp. Retirement Plan or any successor thereto or (ii) the Participant’s attainment of age 65.

2.28	“RSP” means the OGE Energy Corp. Employees’ Stock Ownership and Retirement Savings Plan, as amended from time to time.

2.29

“Separation from Service” means in respect of a Participant (other than a Participant who is an Eligible Director), any termination of employment with the Participant’s Employer and its Affiliates due to Retirement, death or any other reason; provided, however, that in respect of a Participant’s Post-2004 Account(s), no Separation from Service for reasons other than death shall be deemed to occur for purposes of the Plan while the Participant is on military leave, sick leave, or other bona fide leave of absence that does not exceed six months or, if longer, the period during which the Participant’s right to reemployment with the Employer or its Affiliates is provided either under applicable statute or by contract; and provided

further that, if the period of leave exceeds six months and the Participant does not retain a right to reemployment under an applicable statute or by contract, a Separation from Service will be deemed to have occurred on the first day following such six-month period. Whether and when a Separation of Service has occurred for purposes of the Plan in respect of a Participant’s Post-2004 Accounts shall be determined based on the meaning of “separation from service” under Code Section 409A and the regulations promulgated thereunder and, accordingly, shall be based on whether the facts and circumstances indicate that the Employer and its Affiliates and the Participant reasonably anticipate that no further services will be performed after a certain date or that the level of bona fide services the Participant will perform after such date (whether as an employee or as an independent contractor) will permanently decrease to no more than 20% of the average level of bona fide services performed (whether as an employee or independent contractor) over the immediately preceding 36-month period (or the full period of services to Employer and its Affiliates if the Participant has been providing services to the Employer and its Affiliates less than 36 months). A Participant shall be presumed for this purpose to have a Separation from Service where the level of bona fide services decreases to a level equal to 20% or less of such average level of services.

2.30

“Specified Employee” means, during the 12-month period beginning on April 1 ^st of 2005 or of any subsequent calendar year, an employee or director of the Participant’s Employer or its Affiliates who met the requirements of Section 416(i)(1)(A)(i), (ii) or (iii) of the Code (applied in accordance with the regulations thereunder and without regard to Code Section 416(i)(5)) for being a “key employee” at any time during the 12-month period ending on the December 31st immediately preceding such April 1 ^st . Notwithstanding the foregoing, a Participant who otherwise would be a Specified Employee under the preceding sentence shall not be a Specified Employee for the purposes of the Plan unless, as of the date of the Participant’s Separation from Service or termination of service on the Board and Affiliate Boards, as the case may be, stock of such Employer or an Affiliate thereof is publicly traded on an established securities market or otherwise.

2.31	“Supplemental RSP” has the meaning ascribed to such term in Section 1.3.

2.32

“Valuation Date” means the last business day of each calendar month and such other dates as may be specified by the Administrator; provided, however, that for purposes of Section 4.5 and Article VI only, effective January 1, 2006, Valuation Date shall also mean the last business day of each calendar week.

III.

PARTICIPATION

An Eligible Employee or Eligible Director shall become a Participant in the Plan by filing a Deferral Election with the Administrator in accordance with Article IV. In addition, an Eligible Employee or Eligible Director who is not otherwise a Participant in the Plan shall become a Participant in the Plan on the date he or she is credited with a Discretionary Credit. If the Administrator determines that participation by one or more Participants shall cause the Plan to be subject to Part 2, 3 or 4 of Title I of the Employee Retirement Income Security Act of 1974, as amended (“ERISA”), the entire interest of such Participant or Participants under the Plan shall be segregated from the Plan and held under a mirror plan with identical terms for the benefit of the Participant, and such Participant or Participants shall cease to have any interest under the Plan. Subject to the preceding sentence, if a Participant ceases for any Plan Year to be an Eligible Employee or Eligible Director, as the case may be, but remains or becomes an employee or member of the Board of Directors of the Company or an Affiliate, (i) the Participant’s Deferral Election shall continue in effect for the remainder of the Plan Year (or until payment of his Account balance under Section 7.2 or 7.3, if earlier) as if he had remained an Eligible Employee or Eligible Director but the Participant shall be unable to defer Compensation under Article IV for any subsequent Plan Year until the Participant should again become an Eligible Employee or Eligible Director and becomes a Participant by filing a Deferral Election in accordance with Article IV, (ii) the Participant shall no longer be able to receive Matching and Discretionary Credits, if any, under Article V for such Plan Year or for any subsequent Plan Year until the Participant should again become an Eligible Employee or Eligible Director, and (iii) such Participant’s Account shall continue to be subject to all the terms and conditions of the Plan, including Sections 5.3 and 5.4 and Articles VI, VII and VIII, as if such Participant had remained an Eligible Employee or Eligible Director.

IV.

DEFERRAL OF COMPENSATION

4.1	Deferral of Base Salary. An Eligible Employee may elect to defer up to 70% of his or her Base Salary for a Plan Year by filing a Deferral Election in accordance with Section 4.4.

4.2	Deferral of Bonus. An Eligible Employee may elect to defer up to 100% of his or her Bonus for a Plan Year by filing a Deferral Election in accordance with Section 4.4.

4.3	Deferral of Director Compensation. An Eligible Director may elect to defer up to 100% of his or her Director Compensation for a Plan Year by filing a Deferral Election in accordance with Section 4.4.

4.4	Deferral Elections. A Participant’s Deferral Election shall be in writing, and shall be filed with the Administrator at such time and in such manner, including electronically, as the Administrator shall provide, subject to the following:

(a)

A Deferral Election shall be made during the Election Period established by the Administrator which, in the case of Base Salary and Director Compensation, shall end no later than the day preceding the first day of the Plan Year in which the services in respect of which such Base Salary or Director Compensation would otherwise be payable are performed and, in the case of Bonus, shall end no later than the last day of the Plan Year preceding the Plan Year to which such Bonus relates. For purposes of the Plan, a bonus relates to Plan Year with respect to which the services entitling the Participant to the bonus are performed regardless of whether the bonus is payable in that or any later year.

(b)

Deferral Elections may be expressed as a percentage or fixed dollar amount of Base Salary, Bonus, or Director Compensation, as applicable, within the limits provided under the Plan.

(c)

In lieu of a Deferral Election under Section 4.1 or 4.2, the Participant may elect with respect to a Plan Year that deferrals of Base Salary and Bonus be made to the Plan starting when the Participant has made the maximum deferrals permitted for the Plan Year under the RSP because of limitations on such deferrals contained in the Code. Any such election will be based on a joint deferral percentage elected for that Plan Year under both the RSP and this Plan during the Election Period ending no later than the last day immediately preceding that Plan Year and may not be revoked or changed under this Plan during the Plan Year. If, notwithstanding the foregoing, the Participant should change his or her deferral election under the RSP during such Plan Year, deferrals will continue to be made under this Plan for the remainder of the Plan Year as if the RSP deferral election had remained unchanged. Notwithstanding the foregoing, (i) any such election under the RSP and this Plan applied to a Plan Year in which a Bonus is payable shall be applied independently of and separately from any election made previously under Section 4.2 with respect to the same Bonus, and (ii) if, at the time all or any portion of a Bonus is payable, the maximum deferrals permitted under the RSP for the Plan Year have been made due to the limitations on such deferrals contained in the Code, the election, if any, made under this Section 4.4(c) for the Plan Year to which the Bonus relates (as provided in Section 4.4(a)) shall apply under the Plan (and not the election made under this Section 4.4(c) for the Plan Year in which the Bonus is payable) to that portion of the Bonus that cannot be taken into account in making deferrals under the RSP for such Plan Year because of the Code limitations on deferrals.

Once made, a Deferral Election for a Plan Year shall become irrevocable at the end of the Plan Year in which occurs the Election Period during which the Deferral Election was made, but such Deferral Election may be changed or revoked prior to that time in accordance with rules established by the Administrator. A Deferral Election which has become irrevocable shall remain in effect for the Plan Year for which made and for subsequent Plan Years unless changed or revoked by the Participant in accordance with rules established by the Administrator. Any such

modification or revocation, however, shall be effective beginning for the Plan Year following the Plan Year in which the modification or revocation is filed with the Administrator; provided that, a revocation shall become effective as soon as practicable during the Plan Year in which filed with the Administrator in the event the revocation is required because the Participant obtained a hardship withdrawal under the RSP. If a Deferral Election is revoked during a Plan Year in accordance with the preceding sentence in order for the Participant to obtain a hardship withdrawal under the RSP, the Participant may not make a new Deferral Election before the Election Period established by the Administrator for making deferrals to be effective for the next Plan Year. As of the last day of each Plan Year, a Deferral Election then in effect, shall become irrevocable for the immediately following Plan Year except to the extent modified or revoked as provided above.

Notwithstanding the foregoing provisions of this Section 4.4, the Administrator may provide that an individual who becomes an Eligible Director after the first day of a Plan Year may make a Deferral Election within 30 days of becoming an Eligible Director, which Deferral Election shall relate to Director Compensation paid for services to be performed after the date such election is made.

4.5

Crediting of Deferral Elections. The amount of Compensation that a Participant elects to defer under the Plan shall be credited by the Company to the Participant’s Account as of the Valuation Date on or immediately preceding the date on which the Compensation would have been payable absent the Deferral Election. The amounts so credited shall be deemed invested in the assumed investment alternatives available under the Plan as provided in Article VI.

V.	EMPLOYER CREDITS

5.1

Matching Credits. A Participant (other than a Participant who is an Eligible Director) who has made a Deferral Election for a Plan Year shall be credited with a “Matching Credit” for the Plan Year equal to the excess of (i) the matching contribution that would have been made under the RSP for such Plan Year if the first 6% of the Participant’s Base Salary and Bonus otherwise payable in such Plan Year that is deferred under this Plan and the RSP (other than as “Catch-up Contributions” thereunder) were treated as “Tax-Deferred Contributions” under the RSP, without regard to any limitations on such matching contributions contained in the RSP due to the application of Sections 401(a)(17), 401(k)(3), 401(m), 402(g) or 415 of the Code, over (ii) the greater for such Plan Year of (A) the maximum amount of matching contributions the Participant is eligible to receive under the RSP with respect to Tax Deferred Contributions (determined by taking into account the provisions of the RSP), or (B) the actual matching contributions received under the RSP with respect to all contributions. Such Matching Credit shall be credited to the Participant’s Account at the same time that the underlying Base Salary or Bonus deferral is credited to the Participant’s Account. The amounts so credited shall be deemed invested in the assumed investment alternatives available under the Plan to the Participant as provided in Article VI. Notwithstanding the foregoing, if after the beginning of a Plan Year a Participant changes in any way his or her Tax-Deferred Contributions and/or After-Tax Contribution elections under the RSP in a manner that would affect the amount of Matching Credits to be made under the Plan for such Plan Year, the Matching Credits to be credited to the Participant’s Account for such Plan Year shall be appropriately reduced or increased, as the case may be, provided that the aggregate Matching Credits under the Plan for such Plan Year do not exceed 100% of the matching contributions that would be provided under the RSP absent any plan-based restrictions that reflect limits on contributions under the Code.

5.2

Discretionary Credits. The Compensation Committee of the Board may award a Participant a Discretionary Credit at such time and in such amount determined by that Committee in its sole discretion. Any such Discretionary Credit shall be credited to the Participant’s Account at the time determined in writing by the Compensation Committee of the Board at the time of the award, which determination shall also specify the terms and conditions of the award relating to vesting and how such credit shall be deemed invested under the Plan.

5.3

Vesting. A Participant’s Matching Credits, as adjusted for assumed investment return, shall vest based on the Participant’s years of service (which shall be equal to the Participant’s “Years of Vesting Service” within the meaning of and as credited to the Participant under the RSP) under the following schedule:

Years of Service	Percentage of Matching Credits Vested

Less than 3	0%
3 but less than 4	30%
4 but less than 5	40%
5 but less than 6	60%
6 but less than 7	80%
7 or more	100%

Notwithstanding the foregoing, with respect to any Participant who is employed by the Company or Affiliates on or after January 1, 2002, the Participant’s vested percentage of the Participant’s Matching Credits, as adjusted for assumed investment return, shall be determined in accordance with the following schedule:

Years of Service	Percentage of Matching Credits Vested

Less than 2	0%
2 but less than 3	20%
3 but less than 4	40%
4 but less than 5	60%
5 but less than 6	80%
6 or more	100%

A Participant’s Discretionary Credit, if any, shall vest in accordance with the terms established in writing by the Compensation Committee of the Board at the time it is awarded. Subject to Section 5.4, any portion of a Participant’s Account that is not vested upon the Participant’s Separation from Service or termination of service on the Board and Affiliate Boards, as the case may be, shall be permanently forfeited.

5.4	Acceleration of Vesting. Notwithstanding the provisions of Section 5.3, a Participant’s Matching Credits and Discretionary Credits, if any, as adjusted for assumed investment return, shall become fully vested upon the following events:

(a) the Participant’s Retirement (other than in respect of a Participant who is a Eligible Director);

(b)

the Participant’s Disability;

(c)

the Participant’s death;

(d)

a Change in Control; or

(e)

Termination of the entire Plan under Article X.

VI.

PLAN ACCOUNTS

6.1

Valuation of Accounts. The Administrator shall establish an Account for each Participant who has filed a Deferral Election to defer Compensation or who has been awarded a Discretionary Credit, or who had an account with respect to the Prior Plans as of the effective date of this restatement of the Plan. Such Account and applicable subaccounts shall be credited with a Participant’s deferrals, Matching Credits and Discretionary Credits as set forth in Sections 4.5, 5.1 and 5.2, respectively, and with the Participant’s Prior Plan account balance, if any. As of each Valuation Date, the Participant’s Account and applicable subaccounts thereunder shall be adjusted upward or downward to reflect (i) the investment return to be credited as of such Valuation Date pursuant to Section 6.2, (ii) the amount of distributions, if any, debited since the next preceding Valuation Date under Article VII or Article VIII, and (iii) the amount of forfeitures or reductions, if any, debited since the next preceding Valuation Date under Sections 5.1, 5.3 or 7.4.

6.2

Crediting of Investment Return. Subject to such rules and limitations as the Administrator may determine and the provisions of this Section 6.2, each Participant shall designate from among the available assumed investment alternatives established by the Administrator under Section 6.3, one or more assumed investments in which the amounts credited to his or her Account shall be deemed invested. As of each Valuation Date, a Participant’s Account balance and subaccounts thereunder shall be adjusted upward or downward for increases and decreases in the fair market value of the investments in which deemed invested during the period since the immediately preceding Valuation Date, net of any allocable expenses of the Plan and related trusts that the Company does not elect to pay. On or before the last business day of each calendar month (or, effective on and after January 1, 2006, on or before 1:00 p.m. Pacific Time on the last business day of each calendar week or other such time as the Administrator or its delegate shall provide from time to time), a Participant may make a new election, to be effective immediately after the close of business on the last business day of the month (or effective on or after January 1, 2006, week), in which the election is filed with the Administrator, with respect to the assumed investments in which his or her Account shall be deemed invested in the future. Such new election may, subject to the following sentence, (i) redirect the investment of his or her ending Account balance as of the close of business on the Valuation Date coinciding with the last business day of such month (or effective on or after January 1, 2006, week), among the available assumed investment alternatives and/or (ii) change the assumed investment alternatives in which future contribution credits to be made as of or after the effective date of the election will be deemed invested. Any such election shall be made in the form and at the time specified by the Administrator, including electronically; provided, however, prior to a Participant’s attainment of age 55, Matching Credits and the portion of his or her Account attributable to Matching Credits shall be deemed to be invested only in the assumed investment alternative based on the Company’s common stock; and provided further that any Discretionary Credits allocable for investment in the assumed investment alternative based on the Company’s common stock or on Partnership Units, as the case may be, and the portion of the Account attributable to such Discretionary Credits may not be redirected to other assumed investment alternatives, except to the extent permitted by the terms of the award of such Discretionary Credits. The portion of a Participant’s Account that is deemed invested in Company common stock or Partnership Units, if any, shall also be credited with deemed dividends or other distributions as of the Valuation Date on or immediately preceding the date on which such dividends or other distribution on Company common stock or Partnership Units are paid.

Participants who are subject to the reporting requirements of Section 16 of the Securities Exchange Act of 1934 may be subject to election restrictions with respect to the assumed investment alternative based on the Company’s common stock or Partnership Units, including a restriction that such election will not take effect until approved by the Secretary of the Company.

6.3

Assumed Investment Alternatives . The Administrator shall designate the assumed investment alternatives that will be available from time to time under the Plan for purposes of measuring a Participant’s investment return under Section 6.2. Such assumed investment alternatives shall include an assumed investment in Company common stock and, following the initial public offering of the Partnership Units, may include in respect of some or all Participants, an assumed investment in Partnership Units. The value of deemed investments in Company common stock or Partnership Units shall be determined based on the fair market value of a share of Company common stock or Partnership Unit, as the case may be, as reported on the New York Stock Exchange composite tape at the close of business on the Valuation Date on or next

preceding the date on which the amount or value of such investment is being determined. Notwithstanding the foregoing, any assumed investment alternative made available under the Plan must qualify as a predetermined actual investment within the meaning of Treasury Reg. § 31.3121(v)(2)-1(d)(2) or for any Plan Year reflect a reasonable rate of interest (determined in accordance with Treasury Reg. § 31.3121(v)(2)-1(d)(2)(i)(C)).

6.4

Investment Alternatives After Death. For periods after the Valuation Date coincident with or next following a Participant’s death, the Participant’s Account balance shall be treated as if it were invested in a fixed interest rate account at prevailing short-term interest rates, as determined by the Administrator. Beneficiaries shall not be permitted to make elections with respect to assumed investment alternatives under the Plan.

VII.

PAYMENT OF BENEFITS

7.1

Distribution at Specific Future Date. At the time a Participant initially elects to participate in the Plan or, if earlier, by the last to occur of (i) 30 days after the date he or she becomes an Eligible Employee or Eligible Director, as the case may be, (ii) the last day of the calendar year ending immediately prior to the calendar year in which he or she performs services for which a Discretionary Credit under the Plan is first made for the Participant, or (iii) December 31, 2008, the Participant may elect one or more future Valuation Dates on which all or a portion of his or her vested Account as of such date shall be paid. Participants who participated in the Plan prior to the 2005 Plan Year and who have Post-2004 Accounts may, but are not required to, make a separate election under this Section 7.1 that is applicable to distribution of his or her vested Post-2004 Account, provided that, such election is made at such time and in such form, including electronically, during 2005 as the Administrator shall prescribe. Any future date elected in an election under this Section 7.1 shall be a Valuation Date in a specific future year which is at least two Plan Years after the Plan Year for which the initial election is made (or is at least two Plan Years after a 2005 election for Post-2004 Accounts, as applicable); provided, however, that only one distribution per Plan Year may be elected in an election under this Section 7.1; provided, further that, if the Participant elects a distribution at one or more specific future dates and incurs a Disability or a Separation from Service or termination of service on the Board and Affiliate Boards, as the case may be, prior to any such date, such election shall be without further effect and distribution shall commence pursuant to Sections 7.2, 7.3, 8.1 or 8.2, as applicable. A distribution election under this Section 7.1 may be revoked or extended to a Valuation Date in a future Plan Year by filing a revocation or extension election with the Administrator at least 12 months prior to the first day of the Plan Year in which such distribution was scheduled to take place; provided, however, that such revocation or extension shall only apply to the Participant’s Pre-2005 Account. Only one such subsequent change shall be permitted with respect to any distribution election.

7.2

Distribution Upon Retirement or Disability; Termination of Board Service. Subject to Section 7.8 relating to distributions to Specified Employees, if a Participant (other than a Participant who is an Eligible Director) incurs a Disability or a Separation from Service by reason of Retirement or, with respect to an Eligible Director, incurs a Disability or terminates service on the Board and Affiliate Boards, distribution of the Participant’s Account (or in the case of Disability, the portion(s) of the Account with respect to which the Participant has incurred a Disability) shall be made or commence, but subject to Section 11.7, as of one of the following dates elected by the Participant in his or her Deferral Election made at the time the Participant initially elects to participate in the Plan or , if earlier, by the last to occur of (i) 30 days after the date he or she becomes an Eligible Employee or Eligible Director, as the case may be, (ii) the last day of the calendar year ending immediately prior to the calendar year in which he or she performs services for which a Discretionary Credit under the Plan is first made for the Participant, or (iii) December 31, 2008 provided that this clause (iii) shall only be applicable if the election under this Section 7.2 is not made in the year in which the Participant’s Disability, Separation from Service or termination of Board and Affiliate Board service occurs:

(a)

the Valuation Date coincident with or next following the date the Participant incurs a Disability or a Separation from Service or termination of Board and Affiliate Board service, as applicable; or

(b)

January 1 ^st of the Plan Year immediately following the Plan Year in which the Participant incurs a Disability or a Separation from Service or termination of Board and Affiliate Board service, as applicable.

Participants who participated in the Plan prior to the 2005 Plan Year and who have Post-2004 Accounts may, but not required to, make a separate distribution election under this Section 7.2 that is applicable to the distribution of his or her Post-2004 Account balance, provided that, such election is made at such time and in such form, including electronically, during 2005 as the Administrator shall prescribe.

Distribution under this Section 7.2 pursuant to any such election shall be made (i) in a lump sum in an amount equal to the balance in the portion of the Account to be paid in a lump sum determined as of the Valuation Date coincident with or next preceding the date of payment, (ii) in annual installments of up to 15 years as designated in the Participant’s election, with such installments to be made as of the date designated above and anniversaries thereof (and, for purposes of Section 409A of the Code, each such installment payment shall be a separate payment and not one of a series of payments treated as a single payment), or (iii) in a combination of (i) and (ii), as elected by the Participant in his or her election(s). The amount of each installment payment to be made to a Participant under clause (ii) above shall be equal to the quotient obtained by dividing the balance in the portion of his or her Account subject to the election as of the Valuation Date coincident with or next preceding the date of such installment payment by the number of installment payments remaining to be made to the Participant at the time of such calculation. A Participant may change the time and form of his or her distribution election under this Section 7.2 but only with respect to his or her Pre-2005 Account balance by filing a new election with the Administrator; provided, however, that any election change that has not been on file with the Administrator at least 12 months prior to the first day of the Plan Year in which the Participant’s Disability, Separation from Service or termination of service on the Board and Affiliate Boards, as the case may be, occurs shall be void and disregarded. Notwithstanding the foregoing, a Participant who incurs a Disability may request that the Administrator distribute the Participant’s Pre-2005 Account balance in a lump sum payment following the occurrence of such Disability in which case the Administrator, in its sole discretion, shall determine whether to make payment in a lump sum. If the Participant does not make a valid distribution election, in accordance with the foregoing provisions of this Section 7.2, with respect to all or any portion of the Participant’s Account, the Participant’s Account or such portion thereof not covered by a valid distribution election shall be paid in a lump sum under subparagraph (a) of the first paragraph of this Section 7.2.

7.3

Distribution On Other Termination of Employment. Subject to Section 7.8 relating to distributions to Specified Employees, if a Participant’s Separation from Service occurs for any reason other than Retirement or death and the Participant has not incurred a Disability prior thereto, the Participant’s Account (or the portion thereof with respect to which the Participant has incurred such a termination) shall be paid in a lump sum payment, but subject to Section 11.7, as of the Valuation Date coincident with or next following such Separation from Service. Notwithstanding the foregoing, the Administrator, in its sole discretion, may elect to distribute the Participant’s Pre-2005 Account under this Section 7.3 in up to five substantially equal annual payments commencing as of the Valuation Date coincident with or next following the Participant’s Separation from Service. This Section 7.3 shall not apply to a Participant who is an Eligible Director.

7.4

Unscheduled Withdrawal of Pre-2005 Accounts. A Participant may request a withdrawal of all or a portion of his or her Pre-2005 Account by filing an election with the Administrator specifying the amount of the Pre-2005 Account to be withdrawn. Payment of such amount, adjusted by the amount forfeited as provided in the following sentence, shall be made as of the first Valuation Date administratively practicable after such request is received. An amount equal to 10% of the withdrawal requested shall be debited to the Participant’s Account and permanently forfeited at the time the withdrawal is made.

7.5

Withdrawal of Pre-2005 Accounts on Unforeseeable Emergency. Prior to the date otherwise scheduled for payment under the Plan, upon showing an unforeseeable emergency, a Participant who has not incurred a Disability, Separation from Service or terminated service on the Board and Affiliate Boards, as the case may be, may request that the Administrator accelerate payment of all or a portion of his or her Pre-2005 Account in an amount not exceeding the amount necessary to meet the unforeseeable emergency. For purposes of the Plan, an unforeseeable emergency means an unanticipated emergency that is caused by an event beyond the control of the Participant and that would result in severe financial hardship to the Participant if early withdrawal were not permitted. The determination of an unforeseeable emergency shall be made by the Administrator in its sole discretion, based on such information as the Administrator shall deem to be necessary.

7.6	Form of Elections. All distribution and withdrawal elections under this Article VII shall be made in the form established by the Administrator.

7.7	Form of Payment; Withholding. All payments under the Plan shall be made in cash and are subject to the withholding of all applicable taxes.

7.8

Delay In Payment to Specified Employees. Notwithstanding the foregoing provisions of this Article VII, if a Participant is a Specified Employee at the time of his or her Separation from Service or termination of service on the Board and Affiliate Boards, as the case may be, for reasons other than death and is to receive as a result of such Separation from Service or termination of service a distribution from his or her Post-2004 Account under Section 7.2 or 7.3 before the date that is six months after the date of such Separation from Service or termination of service on the Board and Affiliate Boards, no distribution from the Participant’s Post-2004 Account shall be made to or in respect of the Participant under section 7.2 or 7.3 of the Plan until the end of such six-month period (or until the Participant’s death, if earlier). Any such distribution to which the Participant is otherwise entitled to receive during such six-month period shall instead be paid as of the first day of the seventh month following the date of Separation from Service or termination of service on the Board and Affiliate Boards or, in the event of the Participant’s earlier death, as provided in Article VIII. Until paid, any amount otherwise distributable from the Participant’s Post-2004 Account prior to the end of such six-month period (or the Participant’s death, if earlier) shall continue to be adjusted under Article VI to reflect investment returns of the investments in which the Participant’s Post-2004 Account is deemed invested, and the amount distributable shall be valued as of the Valuation Date coincident with or next preceding the date payment is made.

7.9

Termination of Service on Board or Affiliate Board. For purposes of the Plan, a Participant who is an Eligible Director shall be deemed to terminate service on the Board or an Affiliate Board only when the Participant is considered to have a “separation from service”, within the meaning of Section 409A of the Code, with the Company and its Affiliates.

VIII.

DEATH BENEFITS

8.1	Death Prior to Termination .

(a)

Participants other than Eligible Directors . If a Participant, other than an Eligible Director, incurs a Separation from Service by reason of death and had not incurred a Disability prior thereto, the Participant’s Beneficiary shall receive a survivor benefit in an amount equal to the sum of:

(i)

the Participant’s Account balance,

plus

(ii)

the Participant’s total Base Salary and Bonus deferrals deferred under the Plan and the Prior Plans, multiplied by two.

(b)

Eligible Directors . If a Participant who is an Eligible Director dies prior to termination of his or her service on the Board and Affiliate Boards and prior to incurring a Disability, the Participant’s Beneficiary shall receive a survivor benefit in an amount equal to the sum of:

(i)

the Participant’s Account balance,

plus

(ii)

the Participant’s total Director Compensation deferrals deferred under the Plan and the Prior Plans for periods on or after January 1, 2000, multiplied by two.

Such survivor benefits shall be paid in a single lump sum, but subject to Section 11.7, as of the Valuation Date coincident with or next following the date of Participant’s death.

8.2

Death After Termination. Subject to Section 8.3, if (i) a Participant incurs a Disability or (ii) prior to incurring a Disability a Participant’s Separation from Service for reasons other than death occurs or, in the case of an Eligible Director, the Participant terminates service on the Board and Affiliate Boards, and thereafter the Participant dies prior to the time his or her vested Account balance has been fully distributed, the Participant’s Beneficiary shall receive any remaining portion of the Participant’s vested Account at the regularly-scheduled date of payment of the Account balance or for the remaining installment payments of the Participant’s Account, as the case may be.

8.3

Post-Retirement Survivor Benefit. If a Participant has a Separation from Service by reason of Retirement and thereafter dies with an Eligible Spouse (defined below) surviving, then in addition to the remaining installments or Account balance payable to the Participant’s Beneficiary under Section 8.2, if any, the Participant’s Eligible Spouse shall be entitled to a “Supplemental Retirement Benefit.” The Supplemental Retirement Benefit shall be payable in the form of an annual annuity for the life of the Eligible Spouse, with such annuity to commence as provided in the following paragraph. The amount of the annuity shall be the amount that would be payable if 50% of the Participant’s Account balance as of the Valuation Date coincident with or next following the Participant’s Retirement had been used to purchase an annual annuity for the life of the Eligible Spouse, determined using interest and actuarial factors established by the Administrator, commencing as of the first day of the month following the month in which Retirement occurs. For purposes of this Section 8.3, the term “Eligible Spouse” means the person to whom the Participant was married both on the date of his or her Retirement and death.

If such Participant does not have an Account balance under the Plan at the time of his or her death, payment of the annual Supplemental Retirement Benefit shall commence as of the first day of the month following the month in which the Participant’s death occurs. If the Participant has an Account balance remaining unpaid under the Plan at the time of death, payment of the annual Supplemental Retirement Benefit shall commence as of the first day of the month that is 12 months after the month in which the payment of the Account in a lump sum or the last installment payment of the Participant’s Account is made, as the case may be. Subsequent payments shall be made as of the anniversary of the annuity commencement date.

This Section 8.3 shall not apply to a Participant who is an Eligible Director.

8.4

Other Conditions. Notwithstanding the foregoing provisions of this Article VIII, if the Participant’s death occurs within two years of initial Plan participation, and such death occurs by reason of suicide (as reported on the Participant’s death certificate or determined by the Administrator in good faith), the Participant’s Beneficiary shall receive the Participant’s vested Account balance as of the date of his or her death, subject to adjustment for investment return under Article VI until distributed, in full satisfaction of the Company’s obligations under the Plan, and no other benefit, including a Supplemental Retirement Benefit or the amount referenced in Sections 8.1(a)(ii) and (b)(ii) above shall be payable under the Plan.

8.5	Administrator Discretion Regarding Form. Notwithstanding the foregoing provisions of this Article VIII, a Beneficiary may request that the Administrator approve an alternate form of payment of survivor benefits

payable under this Article VIII from a Participant’s Pre-2005 Account, which request may be granted in the sole discretion of the Administrator.

IX.

ADMINISTRATION

9.1

Authority of Administrator. The Administrator shall have full power and authority to carry out the terms of the Plan, including the discretionary authority to construe and interpret the Plan, make factual findings, decide all questions of eligibility and determine the amount, manner and time of payment of any benefits hereunder. The Administrator’s interpretation, construction and administration of the Plan, including any adjustment of the amount or recipient of the payments to be made, shall be binding and conclusive on all persons for all purposes. Neither the Company, including its officers, employees or directors, nor the Administrator or the Board or any member thereof, shall be liable to any person for any action taken or omitted in connection with the interpretation, construction and administration of the Plan.

9.2	Participant’s Duty to Furnish Information. Each Participant shall furnish to the Administrator such information as it may from time to time request for the purpose of the proper administration of this Plan.

9.3

Claims Procedure. If a Participant or Beneficiary (“Claimant”) is denied all or a portion of an expected benefit under this Plan for any reason, he or she may file a claim with the Administrator. The Administrator shall notify the Claimant within 90 days (45 days in the case of a claim for benefits payable by reason of a Disability (a “disability claim”)) of allowance or denial of the claim, unless with respect to a claim other than a disability claim, the Claimant receives written notice from the Administrator prior to the end of the 90-day period stating that special circumstances require an extension (of up to 90 additional days) of the time for decision. In the case of a disability claim, the 45-day period provided for above may be extended by the Administrator for up to 30 days (and an additional period of up to 30 days), provided the Administrator:

(i) determines that such an extension is necessary due to matters beyond the control of the Plan,

(ii) notifies the Claimant, before the expiration of the initial 45-day period or the additional 30-day period, as the case may be, of the circumstances requiring the extension of time and the date by which the Plan expects to render a decision;

(iii) includes in the notice of the extension an explanation of (A) the standards on which entitlement to a benefit is based, (B) the unresolved issues that prevent a decision on the claim, and (C) the additional information needed to resolve those issues; and

(iv) provides the Claimant at least 45 days within which to provide the additional information described in (iii)(C) above.

In the event that a period of time is extended due to a Claimant’s failure to submit information necessary to decide a disability claim, the period for making the benefit determination shall be tolled from the date on which the notification of the extension is sent to the Claimant until the date on which the Claimant responds to the request for additional information.

The notice of the decision on a claim shall be in writing, sent by mail to Claimant’s last known address, and if a denial of the claim, shall contain the following information: (a) the specific reasons for the denial; (b) specific reference to pertinent provisions of the Plan on which the denial is based; (c) if applicable, a description of any additional information or material necessary to perfect the claim and an explanation of why such information or material is necessary; (d) an explanation of the claims review procedure and the time limits applicable, including a statement of the Claimant’s rights to bring a civil action under Section 502(a) of ERISA following an adverse determination on review; and (e) in the case of denial of a disability claim:

(i) the specific internal rule, guideline, protocol, or similar factor (if any) on which the adverse determination was based or a statement that a copy thereof is available to the Claimant free of charge upon request; and

(ii) a statement explaining the scientific or clinical judgment (if any) used in applying the terms of the Plan to the Claimant’s medical circumstances or a statement that such explanation will be provided free of charge to the Claimant.

A Claimant is entitled to request a review of any denial of his or her claim by the Board. The request for review must be submitted within 60 days (180 days in the case of a disability claim) of mailing of notice of the denial. Absent a request for review within the 60-day period (180 days for a disability claim), the claim shall be deemed to be conclusively denied. The Claimant or his or her representatives shall be entitled to review all pertinent documents, and to submit issues and comments orally and in writing. The Claimant will be provided, upon request and free of charge, reasonable access to, and copies of, all documents, records, and other information relevant to the claim. The Board shall render a review decision in writing within 60 days (45 days in the case of a disability claim) after receipt of a request for a review, provided that, in special circumstances the Board may extend the time for decision by not more than 60 days (45 days in the case of a disability claim) upon written notice to the Claimant. A claim will be reviewed by the Board taking into account all comments, documents, records, and other information submitted by the Claimant and relating to the claim, without regard to whether such information was submitted or considered in the initial benefit determination. A claim will be reviewed by the Board without any deference to the initial claim denial. In addition, in the case of denial of a disability claim, the Board will (i) if the original adverse determination was based, in whole or in part, on a medical judgment, will consult a health care professional who has appropriate training and experience in the field of medicine involved in the medical judgment and who did not consult the Plan in connection with the original adverse determination; and (ii) provide the Claimant with the name of any medical or vocational experts with whom the Plan consulted in making its original determination, whether or not the determination was based on such experts’ advice. The Claimant shall receive written notice of the Board’s review decision, together with specific reasons for the decision and reference to the pertinent provisions of the Plan, a statement that the Claimant is entitled to receive, upon request and free of charge, reasonable access to and copies of all documents, records, and other relevant information to the claim for benefits, a statement of the Claimant’s right to bring an action under ERISA Section 502(a), and in the case of denial of a disability claim:

(iii) the following statement: “You and your Plan may have other voluntary alternative dispute resolution options, such as mediation. One way to find out what may be available is to contact your local U.S. Department of Labor Office.”

The Board’s decision shall be final and binding. In performing the duties under this Section 9.3, the Board shall have the same powers to interpret the Plan and make factual findings with respect thereto as are granted to the Administrator under Section 9.1.

9.4

Participating Statements. As soon as practicable after the end of each calendar quarter, a statement will be furnished or made available to each Participant showing the status of his or her Account as of the beginning and end of the calendar quarter, any changes to such Account during such calendar quarter, and such other information as the Administrator may determine. The Administrator may, in its sole discretion, change the frequency in which statements are provided to any or all Participants.

X.	AMENDMENT AND TERMINATION

The Board may amend or terminate the Plan in whole or in part at any time; provided, however, the Benefits Oversight Committee of the Company shall also have the authority to amend the Plan to the extent that such amendment (i) is necessary or desirable to comply with legal requirements, (ii) is a non-substantive administrative amendment, or (iii) does not result, alone or in the aggregate with other amendments, in an estimated annual cost to the Plan of $1 million or more. Notwithstanding the foregoing, no such amendment or termination shall have a material adverse affect on any Participant’s rights under the Plan accrued as of the date of such amendment or termination except to the extent necessary to comply with Section 409A of the Code. Upon termination of the Plan, in whole or in part, the Board (i) shall cause a lump-sum payment of all benefits under the Plan, or the portion thereof being terminated, attributable to Pre-2005 Accounts to be made to all Participants or Beneficiaries or other persons entitled thereto at substantially the same time and (ii) shall cause a lump-sum payment of all benefits under the Plan, or the portion thereof being terminated, attributable to Post-2004 Accounts to be made to all Participants or Beneficiaries or other persons entitled thereto at substantially the same time to the extent such acceleration of the time and form of payment is permitted under Section 409A and the regulations and guidance issued thereunder and, if not, as provided under Articles VII and VIII.

XI.

MISCELLANEOUS

11.1

No Implied Rights; Rights on Termination of Service. Neither the establishment of the Plan nor any amendment thereof shall be construed as giving any Participant, Beneficiary or any other person, individually or as a member of a group, any legal or equitable right unless such right shall be specifically provided for in the Plan or conferred by specific action of the Board or the Administrator in accordance with the terms and provisions of the Plan. Except as expressly provided in this Plan, neither the Company or other Employer nor any of their Affiliates shall be required or be liable to make any payment under the Plan.

11.2

No Employment Rights. Nothing herein shall constitute a contract of employment or of continuing service or in any manner obligate the Company or any Affiliate to continue the services of any Participant, or obligate any Participant to continue in the service of the Company or Affiliates, or as a limitation of the right of the Company or Affiliates to discharge any of their employees, with or without cause.

11.3

Unfunded Plan. The Plan is an unfunded and unsecured nonqualified deferred compensation plan. No funds shall be segregated or earmarked for any current or former Participant, Beneficiary or other person under the Plan. Payment of benefits from the Plan in respect of a Participant who is an Eligible Director that are attributable to service on the Board shall only be made by the Company and payment of benefits from the Plan in respect of a Participant who is an Eligible Director that are attributable to service on an Affiliate Board shall only be made by such Affiliate. Payment of benefits from the Plan in respect of a Participant who is an Eligible Employee shall be made only by the Employer which last employed the Participant before payments commence; provided, however, that each other Employer shall reimburse the paying Employer for the period, if any, that the Participant was employed while a Participant by such other Employer, in a manner as determined by the Company in its sole discretion. Notwithstanding the foregoing, the Company may establish one or more trusts to assist in meeting its obligations under the Plan, the assets of which shall be subject to the claims of the Company’s general creditors. No current or former Participant, Beneficiary or other person, individually or as a member of a group, shall have any right, title or interest in any account, fund, grantor trust, or any asset that may be acquired by the Company in respect of its obligations under the Plan (other than as a general creditor of the Company with an unsecured claim against its general assets). The Company may also choose to use life insurance to assist in meeting obligations under the Plan. As a condition of participation in the Plan, each Participant agrees to execute any documents that may be required in connection with obtaining such insurance and to cooperate with any life insurance underwriting requirements; provided, however, that a Participant shall not be required to undergo a medical examination in connection therewith.

11.4	Nontransferability. Prior to payment thereof, no benefit under the Plan shall be assignable or subject to any manner of alienation, sale, transfer, claims of creditors, pledge, attachment or encumbrances of any kind,

except pursuant to a domestic relations order (as defined in Code Section 414(p)(1)(B)) awarding benefits to an “alternate payee” (within the meaning of Code Section 414(p)(8)) that the Administrator determines satisfies the criteria set forth in paragraphs (1), (2) and (3) of Code Section 414(p) (a “DRO”). Notwithstanding any provision of the Plan to the contrary, the Plan benefits awarded to an alternate payee under a DRO may be paid pursuant to the DRO in a single lump sum to the alternate payee on the Valuation Date as soon as administratively practicable following the date the Administrator determines the order is a DRO, and such amounts, as adjusted for earnings, gains and losses, will be deducted from the Participant’s Accounts as of such Valuation Date.

11.5

Successors and Assigns. The rights, privileges, benefits and obligations under the Plan are intended to be, and shall be treated as legal obligations of and binding upon the Company and each Employer, and their respective successors and assigns, including successors by merger, consolidation, reorganization or otherwise.

11.6	Applicable Law. This Plan is established under and will be construed according to the laws of the State of Oklahoma, to the extent not preempted by the laws of the United States.

11.7

Timing of Payments. Notwithstanding any provision of the Plan to the contrary, a distribution to be made as of a specified date in Article VII or Article VIII shall be made on the date specified or as soon as administratively practicable thereafter, but in no event shall any portion of the distribution attributable to a Participant’s Post-2004 Accounts be made later than the last day of the same calendar year in which such date occurs or, if later and provided that Participant or Beneficiary is not permitted, directly or indirectly, to designate the year in which the distribution is made, by the 15th day of the third calendar month following the specified date. Until paid, any amount otherwise distributable from a Participant’s Account shall continue to be adjusted under Article VI to reflect investment returns of the investments in which the Account is deemed invested, and the amount distributable shall be valued as of the Valuation Date coincident with or next preceding the date payment is made. In addition, if calculation of the amount of a payment is not administratively practicable due to events beyond the control of the Participant or his or her Beneficiary, a payment will be treated as made on the specified date for purposes of Code Section 409A if the payment is made during the first calendar year in which the calculation of the amount of the payment is administratively practicable.

11.8

Tax Penalty Avoidance. The provisions of this Plan are not intended, and should not be construed to be legal, business or tax advice. The Company, Participants and any other party having any interest herein are hereby informed that the U.S. federal tax advice contained in this document (if any) is not intended or written to be used, and cannot be used, for the purpose of (i) avoiding penalties under the Code or (ii) promoting, marketing or recommending to any party any transaction or matter addressed herein.

11.9	Section 409A Compliance. To the extent applicable, it is intended that this Plan be in full compliance with the provisions of Section 409A of the Code. The Plan shall be interpreted, construed and administered in a manner consistent with this intent.

IN WITNESS WHEREOF, OGE Energy Corp. has caused this instrument to be executed in its name by its duly authorized officer on this 17th day of April, 2008.

OGE Energy Corp.

By: /s/ Peter B. Delaney

Chairman, President and Chief Executive Officer

Exhibit 10.06

Amendment No. 3 to the

OGE Energy Corp. 2003 Stock Incentive Plan

OGE Energy Corp., an Oklahoma corporation (the “Company”), by action of its Board of Directors taken in accordance with the authority granted to it by Section 11 of the OGE Energy Corp. 2003 Stock Incentive Plan (the “Plan”), hereby amends the Plan in the following respects effective as of January 1, 2005:

By adding at the end of Section 8(b)(i) of the Plan a new sentence as follows:

“Settlement of earned Performance Units, if any, for an Award Cycle shall in no event be made later than the 15 ^th day of the third month after the end of such Award Cycle.”

By adding after the word “practicable” at the end of Section 9(a)(iii) of the Plan a new phrase as follows:

“but in no event later that the 15 ^th day if the third month after the occurenxe of the Change of Control”.

By deleting the “provided, however,” clause at the end of Section 9(c) of the Plan and inserting in lieu thereof the following:

“provided, however, that in the case of Incentive Stock Options and any Non-Qualified Stock Option that was not exercisable on December 31, 2004, and Stock Appreciation Rights relating to Incentive Stock Options on such Non-Qualified Options, the Change of Control Price shall be in all cases the Fair Market Value of the Common Stock on the date such Incentive Stock Option, Non-Qualified Stock Option or Stock Appreciation Right is exercised.”

IN WITNESS WHEREOF, OGE Energy Corp. has caused this instrument to be signed in its name by a duly authorized officer on this 17th day of April, 2008.

OGE Energy Corp.

By: /s/ Peter B. Delaney

Chairman, President and Chief Executive Officer

Exhibit 10.07

Amendment to the

OGE Energy Corp. Stock Incentive Plan

OGE Energy Corp., an Oklahoma corporation (the “Company”), by action of its Board of Directors taken in accordance with the authority granted to it by Section 11 of the OGE Energy Corp. Stock Incentive Plan (the “Plan”), hereby amends the Plan in the following respect effective as of January 1, 2005:

1. By deleting the clause beginning with “provided, however,” at the end of the first sentence of Section 9(c) of the Plan and inserting in lieu thereof the following:

“provided, however, that in the case of Incentive Stock Options and any Non-Qualified Stock Option (but only to the extent of the portion of such Non-Qualified Stock Option that was not exercisable on December 31, 2004), and Stock Appreciation Rights relating to Incentive Stock Options or such Non-Qualified Options, the Change of Control Price shall be in all cases the Fair Market Value of the Common Stock on the date such Incentive Stock Option, Non-Qualified Stock Option or Stock Appreciation Right is exercised.”

IN WITNESS WHEREOF, OGE Energy Corp. has caused this instrument to be signed in its name by a duly authorized officer on this 17th day of April, 2008.

OGE Energy Corp.

By: /s/ Peter B. Delaney

Chairman, President and Chief Executive Officer

Exhibit 10.08

AMENDED AND RESTATED EMPLOYMENT AGREEMENT

AGREEMENT by and between OGE Energy Corp., an Oklahoma corporation, and ______________ (the “Executive”), dated as of the _____ day of ______ 2008.

WHEREAS, the Board of Directors (the “Board”) of the Company (as hereinafter defined) recognizes that the possibility of a Change of Control (as hereinafter defined) exists and that the occurrence of a Change of Control can result in significant distractions of its key management personnel because of the uncertainties inherent in such a situation;

WHEREAS, the Board has determined that it is essential and in the best interest of the Company and its shareowners to retain the services of the Executive in the event of a Change of Control and to ensure the Executive’s continued dedication and efforts in such event without undue concern for the Executive’s personal financial and employment security;

WHEREAS, in order to induce the Executive to remain in the employ of the Company or an Affiliate (as hereinafter defined), as the case may be, particularly in the event of a threat or the occurrence of a Change of Control, the Board has caused the Company to enter into an Employment Agreement with the Executive, dated ___________, ____ (the “Prior Employment Agreement”) to provide the Executive with certain benefits in the event the Executive’s employment is terminated as a result of, or in connection with, a Change of Control; and

WHEREAS, the Company and the Executive now desire to amend and restate and make certain changes to the Prior Employment Agreement in order to, among other things, comply with Section 409A of the Internal Revenue Code of 1986, as amended.

NOW, THEREFORE, IT IS HEREBY AGREED TO AMEND AND RESTATE THE PRIOR EMPLOYMENT AGEEEMENT IN ITS ENTIRETY AS FOLLOWS:

1. Certain Definitions. (a) The “Effective Date” shall mean the first date during the Change of Control Period (as defined in Section l(b)) on which a Change of Control (as defined in Section 2) occurs. Anything in this Agreement to the contrary notwithstanding, if a Change of Control occurs during the Change of Control Period and if the Executive’s employment with the Employer (as defined in Section 1(d)) is terminated prior to the date on which the Change of Control occurs, and it is reasonably demonstrated by the Executive that such termination of employment (i) was at the request of a third party who has taken steps reasonably calculated to effect a Change of Control or (ii) otherwise arose in connection with or in anticipation of a Change of Control, then for all purposes of this Agreement the “Effective Date” shall mean the date immediately prior to the date of such termination of employment.

(b) The “Change of Control Period” shall mean the period commencing on the date hereof and ending on the third anniversary of the date hereof; provided, however, that commencing on the date one year after the date hereof, and on each annual anniversary of such date (such date and each annual anniversary thereof shall be hereinafter referred to as the “Renewal Date”), unless previously terminated, the Change of Control Period shall be automatically extended so as to terminate three years from such Renewal Date, unless at least 60 days prior to the Renewal Date the Company shall give notice to the Executive that the Change of Control Period shall not be so extended.

(c) The “Company” shall mean OGE Energy Corp. and any successor to its business and/or assets which assumes and agrees to perform this Agreement, pursuant to Section 11 herein, by operation of law, or otherwise.

prior to the Effective Date, any such Affiliate; and (iii) in the event the Executive is an officer of the Company and one or more Affiliates of the Company immediately prior to the Effective Date, any such entity of which the Executive is an officer immediately prior to the Effective Date.

(e) “Affiliate”, for all purposes of this Agreement other than Section 5 and Section 6(e), shall mean, with respect to any Person (as defined in Section 2(a)), any other Person that directly or indirectly through one or more intermediaries controls, is controlled by or is under common control with, the Person in question. As used herein, the term “control” means the possession, direct or indirect, of the power to direct or cause the direction of the management and policies of a Person, whether through ownership of voting securities, by contract or otherwise. For purposes of Sections 5 and 6(e), however, “Affiliate” shall mean any Person which is a member of the same controlled group of corporations, trades or businesses within the meaning of the Section 414(b) or (c) of the Internal Revenue Code of 1986, as amended (the “Code”), as any other Person, provided that for purposes of Section 5 (but not for purposes of Section 6(e)) in applying Code Section 1563(a)(1), (2), and (3) in determining a controlled group of corporations under Code Section 414(b), the language “at least 50 percent” shall be used instead of “at least 80 percent” each place it appears in Code Section 1563(a)(1), (2), and (3), and in applying Treasury Reg. § 1.414(c)-2 for purposes of determining trades or businesses (whether or not incorporated) that are under common control for purposes of Code Section 414(c), “at least 50 percent” shall be used instead of “at least 80 percent” each place it appears in Treasury Reg. § 1.414(c)-2.

Change of Control.

For the purpose of this Agreement, a “Change of Control” shall mean:

(a) The acquisition by any individual, entity or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) (a “Person”) of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of 20% or more of either (i) the then-outstanding shares of common stock of the Company (the “Outstanding Company Common Stock”) or (ii) the combined voting power of the then-outstanding voting securities of the Company entitled to vote generally in the election of directors (the “Outstanding Company Voting Securities”); provided, however, that for purposes of this subsection (a), the following acquisitions shall not constitute a Change of Control: (i) any acquisition directly from the Company, (ii) any acquisition by the Company, (iii) any acquisition by any employee benefit plan (or related trust) sponsored or maintained by the Company or any corporation or other Person controlled by the Company, or (iv) any acquisition by any corporation or other Person pursuant to a transaction which complies with clauses (i), (ii) and (iii) of subsection (c) of this Section 2; or

(b) Individuals who, as of the date hereof, constitute the Board (the “Incumbent Board”) cease for any reason to constitute at least a majority of the Board; provided, however, that any individual becoming a director subsequent to the date hereof whose election, or nomination for election by the Company’s shareowners, was approved by a vote of at least a majority of the directors then comprising the Incumbent Board shall be considered as though such individual were a member of the Incumbent Board, but excluding, for this purpose, any such individual whose initial assumption of office occurs as a result of an actual or threatened election contest with respect to the election or removal of directors or other actual or threatened solicitation of proxies or consents by or on behalf of a Person other than the Board; or

(c) Consummation of a reorganization, merger, share exchange or consolidation or sale or other disposition of all or substantially all of the assets of the Company (a “Business Combination”), in each case, unless, following such Business Combination, (i) all or substantially all of the individuals and entities who were the beneficial owners, respectively, of the Outstanding Company Common Stock and Outstanding Company Voting Securities immediately prior to such Business Combination beneficially own, directly or indirectly, more than 60% of, respectively, the then-outstanding shares of common stock or equity interests and the combined voting power of the then-outstanding voting securities entitled to vote generally in the election of directors or other controlling persons, as the case may be, of the corporation or other Person resulting from such Business Combination (including, without limitation, a corporation or other Person which as a result of such transaction owns the Company or all or substantially all of the Company’s assets either directly or through one or more subsidiaries) in substantially the same proportions as their ownership, immediately prior to such Business Combination of the Outstanding Company Common Stock and Outstanding Company Voting Securities, as the case may be, (ii) no Person (excluding any corporation or other Person resulting from such Business Combination or any employee benefit plan

(or related trust) of the Company or such corporation or other Person resulting from such Business Combination) beneficially owns, directly or indirectly, 20% or more of, respectively, the then-outstanding shares of common stock or equity interests of the corporation or other Person resulting from such Business Combination, or the combined voting power of the then-outstanding voting securities of such corporation or other Person except to the extent that such ownership existed with respect to the Company prior to the Business Combination and (iii) at least a majority of the members of the board of directors or other governing body of the corporation or other Person resulting from such Business Combination were members of the Incumbent Board at the time of the execution of the initial agreement, or of the action of the Board, providing for such Business Combination; or

(d) Approval by the shareowners of the Company of a complete liquidation or dissolution of the Company.

3. Employment Period . The Executive shall remain in the employ of the Employer subject to the terms and conditions of this Agreement, for the period commencing on the Effective Date and ending, unless earlier terminated by the occurrence of the Executive’s Date of Termination as provided in Section 5, on the third anniversary of such date (the “Employment Period”).

4. Terms of Employment . (a) Position and Duties. (i) During the Employment Period, (A) the Executive’s position (including status, offices, titles and reporting requirements), authority, duties and responsibilities shall be at least commensurate in all material respects with the most significant of those held, exercised and assigned at any time during the 120-day period immediately preceding the Effective Date and (B) the Executive’s services shall be performed at the location where the Executive performed the majority of the Executive’s services immediately preceding the Effective Date or any office or location less than 50 miles from such location.

(ii) During the Employment Period, and excluding any periods of vacation and sick leave to which the Executive is entitled, the Executive agrees to devote reasonable attention and time during normal business hours to the business and affairs of the Employer and, to the extent necessary to discharge the responsibilities assigned to the Executive hereunder, to use the Executive’s reasonable best efforts to perform faithfully and efficiently such responsibilities. During the Employment Period it shall not be a violation of this Agreement for the Executive to (A) serve on corporate, civic or charitable boards or committees, (B) deliver lectures, fulfill speaking engagements or teach at educational institutions, and (C) manage personal investments, so long as such activities do not significantly interfere with the performance of the Executive’s responsibilities as an employee of the Employer in accordance with this Agreement. It is expressly understood and agreed that to the extent that any such activities have been conducted by the Executive prior to the Effective Date, the continued conduct of such activities (or the conduct of activities similar in nature and scope thereto) subsequent to the Effective Date shall not thereafter be deemed to interfere with the performance of the Executive’s responsibilities to the Employer.

(b) Compensation. (i) Base Salary. During the Employment Period, the Executive shall receive an annual base salary (“Annual Base Salary”), which shall be paid at a monthly rate, at least equal to twelve times the highest monthly base salary paid or payable, including any base salary which has been earned but deferred, to the Executive by the Company and its Affiliates in respect of the twelve-month period immediately preceding the month in which the Effective Date occurs. During the Employment Period, the Annual Base Salary shall be reviewed no more than 12 months after the last salary increase awarded to the Executive prior to the Effective Date and thereafter at least annually. Any increase in Annual Base Salary shall not serve to limit or reduce any other obligation to the Executive under this Agreement. Annual Base Salary shall not be reduced after any such increase and the term Annual Base Salary as utilized in this Agreement shall refer to Annual Base Salary as so increased.

(ii) Annual Bonus . In addition to Annual Base Salary, the Executive shall be awarded, for each fiscal year ending during the Employment Period, an annual bonus (the “Annual Bonus”) in cash at least equal to the Executive’s highest bonus under the Company’s or any of its Affiliates’ Annual Incentive Compensation Plan, or any comparable bonus under any predecessor or successor plan of the Company or any of its Affiliates, for the last three full fiscal years ending prior to the Effective Date (annualized in the event that the Executive was not employed by the Employer for the whole of such fiscal year) (the “Recent Annual Bonus”). Each such Annual Bonus shall be paid during the period beginning on the first day of the first month and ending on the 15 ^th day of the

third month of the fiscal year next following the fiscal year for which the Annual Bonus is awarded, unless the Executive shall elect to defer the receipt of such Annual Bonus pursuant to the terms of a plan of the Company or an Affiliate thereof permitting such deferral.

(iii) Incentive, Savings and Retirement Plans. During the Employment Period, the Executive shall be entitled to participate in all incentive, savings and retirement plans, practices, policies and programs applicable generally to other peer executives of the Company and its Affiliates, including, but not limited to, those specified in Exhibit A attached hereto, but in no event shall such plans, practices, policies and programs provide the Executive with incentive opportunities (measured with respect to both regular and special incentive opportunities, to the extent, if any, that such distinction is applicable), savings opportunities and retirement benefit opportunities, in each case, less favorable, in the aggregate, than the most favorable of those provided by the Company and its Affiliates for the Executive under such plans, practices, policies and programs as in effect at any time during the 120-day period immediately preceding the Effective Date or if more favorable to the Executive, those provided generally at any time after the Effective Date to other peer executives of the Company and its Affiliates.

(iv) Welfare Benefit Plans. During the Employment Period, the Executive and/or the Executive’s family, as the case may be, shall be eligible for participation in and shall receive all benefits under welfare benefit plans, practices, policies and programs provided by the Company and its Affiliates (including, without limitation, medical, prescription, dental, vision, disability, employee life, group life, accidental death and travel accident insurance plans and programs) to the extent applicable generally to other peer executives of the Company and its Affiliates, but in no event shall such plans, practices, policies and programs provide the Executive with benefits which are less favorable, in the aggregate, than the most favorable of such plans, practices, policies and programs in effect for the Executive at any time during the 120-day period immediately preceding the Effective Date or, if more favorable to the Executive, those provided generally at any time after the Effective Date to other peer executives of the Company and its Affiliates.

(v) Expenses. During the Employment Period, the Executive shall be entitled to receive prompt reimbursement for all reasonable expenses incurred by the Executive in accordance withthe most favorable policies, practices and procedures of the Company and its Affiliates in effect for the Executive at any time during the 120-day period immediately preceding the Effective Date or, if more favorable to the Executive, as in effect generally at any time thereafter with respect to other peer executives of the Company and its Affiliates.

(v) Fringe Benefits. During the Employment Period, the Executive shall be entitled to fringe benefits, including, without limitation, tax and financial planning services, payment of club dues, and, if applicable, use of an automobile and payment of related expenses, in accordance with the most favorable plans, practices, programs and policies of the Company and its Affiliates in effect for the Executive at any time during the 120-day period immediately preceding the Effective Date or, if more favorable to the Executive, as in effect generally at any time thereafter with respect to other peer executives of the Company and its Affiliates.

(vi) Office and Support Staff. During the Employment Period, the Executive shall be entitled to an office or offices of a size and with furnishings and other appointments, and to personal secretarial and other assistance, at least equal to the most favorable of the foregoing provided to the Executive by the Company and its Affiliates at any time during the 120-day period immediately preceding the Effective Date or, if more favorable to the Executive, as provided generally at any time thereafter with respect to other peer executives of the Company and its Affiliates.

(vii) V acation. During the Employment Period, the Executive shall be entitled to paid vacation in accordance with the most favorable plans, policies, programs and practices of the Company and its Affiliates as in effect for the Executive at any time during the 120-day period immediately preceding the Effective Date or, if more favorable to the Executive, as in effect generally at any time thereafter with respect to other peer executives of the Company and its Affiliates.

Employer and its Affiliates because of death, retirement or termination of employment for any other reason, including any reason specified in Section 5(a), (b) or (c) below; provided, however, that no termination shall be deemed to occur for purposes of the Agreement while the Executive continues to perform services for the Employer or its Affiliates in a capacity as an employee or as an independent contractor at a level that is more than 20% of the average level of bona fide services performed (whether as an employee or otherwise) by the Executive during the immediately preceding 36-month period (or, if employed less than 36 months, such lesser period).

(a) Death or Disability. The Executive’s employment shall terminate automatically upon the Executive’s death during the Employment Period. If the Employer determines in good faith that the Disability of the Executive has occurred during the Employment Period (pursuant to the definition of Disability set forth below), it may give to the Executive written notice in accordance with Section 12(b) of this Agreement of its intention to terminate the Executive’s employment. In such event, the Executive’s employment with the Employer shall terminate effective on the 30th day after receipt of such notice by the Executive (the “Disability Effective Date”), provided that, within the 30 days after such receipt, the Executive shall not have returned to full-time performance of the Executive’s duties. For purposes of this Agreement, “Disability” shall mean the absence of the Executive from the Executive’s duties with the Employer on a full-time basis for 180 consecutive business days as a result of incapacity due to mental or physical illness which is determined to be total and permanent by a physician selected by the Employer or its insurers and acceptable to the Executive or the Executive’s legal representative.

(b) Cause. The Employer may terminate the Executive’s employment during the Employment Period for Cause. For purposes of this Agreement, “Cause” shall mean:

(i) the willful and continued failure of the Executive to perform substantially the Executive’s duties with the Employer or one of its Affiliates (other than any such failure resulting from incapacity due to physical or mental illness), after a written demand for substantial performance is delivered to the Executive by the Board or the Chief Executive Officer of the Company which specifically identifies the manner in which the Board or Chief Executive Officer believes that the Executive has not substantially performed the Executive’s duties, or

(ii) the willful engaging by the Executive in illegal conduct or gross misconduct which is materially and demonstrably injurious to the Employer.

For purposes of this provision, no act or failure to act, on the part of the Executive, shall be considered “willful” unless it is done, or omitted to be done, by the Executive in bad faith or without reasonable belief that the Executive’s action or omission was in the best interests of the Employer. Any act, or failure to act, based upon authority given pursuant to a resolution duly adopted by the Board or upon the instructions of the Chief Executive Officer or a senior officer of the Company (in either case, who is not the Executive) or based upon the advice of counsel for the Company shall be conclusively presumed to be done, or omitted to be done, by the Executive in good faith and in the best interests of the Employer. The cessation of employment of the Executive shall not be deemed to be for Cause unless and until there shall have been delivered to the Executive a copy of a resolution duly adopted by the affirmative vote of not less than three quarters of the entire membership of the Board at a meeting of the Board called and held for such purpose (after reasonable notice is provided to the Executive and the Executive is given an opportunity, together with counsel, to be heard before the Board), finding that, in the good faith opinion of the Board, the Executive is guilty of the conduct described in subparagraph (i) or (ii) above, and specifying the particulars thereof in detail.

(c) Good Reason. The Executive’s employment may be terminated by the Executive for Good Reason. For purposes of this Agreement, “Good Reason” shall mean:

(i) the assignment to the Executive of any duties inconsistent in any respect with the Executive’s position (including status, offices, titles and reporting requirements), authority, duties or responsibilities as contemplated by Section 4(a) of this Agreement, or any other action by the Employer which results in a diminution in such position, authority, duties or responsibilities, excluding for this purpose an isolated, insubstantial and inadvertent action not taken in bad faith and which is remedied by the Company promptly after receipt of notice thereof given by the Executive;

(ii) any failure by the Employer to comply with any of the provisions of Section 4(b) of this Agreement, other than an isolated, insubstantial and inadvertent failure not occurring in bad faith and which is remedied by the Company promptly after receipt of notice thereof given by the Executive;

(iii) the Employer’s requiring the Executive to be based at any office or location other than as provided in Section 4(a)(i)(B) hereof or the Employer’s requiring the Executive to travel on Employer business to a substantially greater extent than required immediately prior to the Effective Date;

(iv) any purported termination by the Employer of the Executive’s employment otherwise than as expressly permitted by this Agreement; or

(v)

any failure by the Employer to comply with and satisfy Section 11(c) of this Agreement.

For purposes of this Section 5(c), any good faith determination of “Good Reason” made by the Executive shall be conclusive. Anything in this Agreement to the contrary notwithstanding, a termination by the Executive for any reason during the 30-day period immediately following the first anniversary of the Effective Date shall be deemed to be a termination for Good Reason for all purposes of this Agreement.

(d) Notice of Termination . Any termination by the Employer for Cause, or by the Executive for Good Reason, shall be communicated by Notice of Termination to the other party hereto given in accordance with Section 12(b) of this Agreement. For purposes of this Agreement, a “Notice of Termination” means a written notice which (i) indicates the specific termination provision in this Agreement relied upon, (ii) to the extent applicable, sets forth in reasonable detail the facts and circumstances claimed to provide a basis for termination of the Executive’s employment under the provision so indicated and (iii) if the Date of Termination (as defined below) is other than the date of receipt of such notice, specifies the termination date (which date shall be not more than thirty days after the giving of such notice). The failure by the Executive or the Employer to set forth in the Notice of Termination any fact or circumstance which contributes to a showing of Good Reason or Cause shall not waive any right of the Executive or the Employer, respectively, hereunder or preclude the Executive or the Employer, respectively, from asserting such fact or circumstance in enforcing the Executive’s or the Employer’s rights hereunder.

(e) Date of Termination . “Date of Termination” in respect of the Executive’s separation from service under this Agreement means (i) if the Executive’s employment is terminated by the Employer for Cause, or by the Executive for Good Reason, the date of receipt of the Notice of Termination or any later date specified therein, as the case may be, (ii) if the Executive’s employment is terminated by the Employer other than for Cause or Disability, the Date of Termination shall be the date on which the Employer notifies the Executive of such termination or any later date specified therein, (iii) if the Executive’s employment is terminated by reason of death or Disability, the Date of Termination shall be the date of death of the Executive or the Disability Effective Date, as the case may be, and (iv) if the Executive’s employment is terminated by the Executive voluntarily other than for Good Reason, the Date of Termination shall be the date on which the Executive notifies the Employer of such termination or any later date specified therein.

Obligations of the Company upon Termination. Subject to Section 6(e) below:

(a) Good Reason; Other Than for Cause, Death or Disability. If, during the Employment Period, the Employer shall terminate the Executive’s employment other than for Cause, death or Disability or the Executive shall terminate employment for Good Reason, the Employment Period shall thereupon terminate and:

(i) the Company shall pay to the Executive in a lump sum in cash within 30 days after the Date of Termination the aggregate of the following amounts, subject to reduction as set forth in Section 9:

twelve full months or during which the Executive was employed for less than twelve full months), for the most recently completed fiscal year during the Employment Period, if any (such higher amount being referred to as the “Highest Annual Bonus”) and (y) a fraction, the numerator of which is the number of days in the current fiscal year through the Date of Termination, and the denominator of which is 365 and (3) any accrued vacation pay to the extent not theretofore paid (the sum of the amounts described in clauses (1), (2), and (3) shall be hereinafter referred to as the “Accrued Obligations”); and

B. the amount equal to the product of (1) 2.99 and (2) the sum of (x) the Executive’s Annual Base Salary and (y) the Highest Annual Bonus;

(ii) for three years after the Executive’s Date of Termination, the Company shall continue benefits under the medical, prescription, vision, dental, disability, employee life, group life, accidental death and travel accident insurance plans programs to the Executive and/or the Executive’s family at least equal to those which would have been provided to them in accordance with the plans, programs, practices and policies described in Section 4(b)(iv) of this Agreement if the Executive’s employment had not been terminated or, if more favorable to the Executive, as in effect generally at any time thereafter with respect to other peer executives of the Company and its Affiliates and their families, provided, however, that if the Executive becomes reemployed with another employer and is eligible to receive medical or other welfare benefits under another employer-provided plan, the medical and other welfare benefits described herein shall be secondary to those provided under such other plan during such applicable period of eligibility, and provided further, that (A) with respect to any such benefits providing for the reimbursement of medical expenses referred to in Section 105(b) of the Code under a self-insured medical reimbursement plan (within the meaning of Code Section 105(h)), (a “Self-Insured Medical Plan”), including, without limitation, medical, prescription, vision or dental benefits, that are incurred following the period the Executive would be entitled (or would, but for this Section 6(a)(ii), be entitled) to continuation coverage under such plan under Code Section 4980B (COBRA) if the Executive had elected such coverage and paid the applicable premiums, the reimbursement of an eligible medical expense must be made on or before the last day of the calendar year following the calendar year in which the expense was incurred and (B) the Executive and/or the Executive’s family pays to the Company the cost, on an after-tax basis, for the premium payments (both the employee and employer portion) required for such continued coverage under any Self-Insured Medical Plan. For purposes of determining eligibility (but not the time of commencement of benefits) of the Executive for retiree benefits pursuant to such plans, practices, programs and policies, the Executive shall be considered to have remained employed until three years after the Date of Termination and to have retired on the last day of such period;

(iii) the Company shall, at its sole expense as incurred, provide the Executive with reasonable outplacement services the scope and provider of which shall be selected by the Executive in his sole discretion, provided that, such services must be provided and the expenses therefor incurred prior to the end of the second calendar year following the calendar year in which the Date of Termination occurs, and provided further, that the Company shall pay all reimbursements for such expenses so incurred not later than the end of the third calendar year following the calendar year in which the Date of Termination occurs;

(iv) to the extent not theretofore paid or provided, the Company shall timely pay or provide to the Executive any other amounts or benefits required to be paid or provided or which the Executive is eligible to receive under any plan, program, policy or practice or contract or agreement of the Company or its Affiliates (such other amounts and benefits shall be hereinafter referred to as the “Other Benefits”); and

(v) on or about January 31 of the year following the year in which the Date of Termination occurs and continuing on or about each January 31 thereafter until the year following the year in which the Executive’s continued coverage under any Self-Insured Medical Plan pursuant to the first sentence of Section 6(a)(ii) terminates, the Company will make a payment in cash to the Executive and/or the Executive’s family equal, on an after-tax basis, to the amount, if any, the Executive and/or the Executive’s family paid in premium payments during the immediately preceding calendar year for continued coverage under any Self-Insured Medical Plan described in Section 6(a)(ii) exceeds the amount the Executive and/or

the Executive’s family would have paid if the Executive had remained in employment during such year, provided that each such cash payment by the Company pursuant to this Section 6(a)(v) shall be considered a separate payment and not one of a series of payments for purposes of Code Section 409A.

Following such termination of the Executive’s employment, except as set forth in this Section 6(a) or Section 8 or 9, the Executive shall have no further rights to compensation or other benefits under this Agreement.

(b) Death. If the Executive’s employment is terminated by reason of the Executive’s death during the Employment Period, this Agreement and the Employment Period shall thereupon terminate without further obligations to the Executive’s legal representatives under this Agreement, other than for payment of Accrued Obligations and the timely payment or provision of Other Benefits. Accrued Obligations shall be paid to the Executive’s estate or beneficiary, as applicable, in a lump sum in cash within 30 days of the Date of Termination. With respect to the provision of Other Benefits, the term Other Benefits as utilized in this Section 6(b) shall include, without limitation, and the Executive’s estate and/or beneficiaries shall be entitled to receive, benefits at least equal to the most favorable benefits provided by the Company and its Affiliates to the estates and beneficiaries of peer executives of the Company and such Affiliates under such plans, programs, practices and policies relating to death benefits, if any, as in effect with respect to other peer executives and their beneficiaries at any time during the 120-day period immediately preceding the Effective Date or, if more favorable to the Executive’s estate and/or the Executive’s beneficiaries, as in effect on the date of the Executive’s death with respect to other peer executives of the Company and its Affiliates and their beneficiaries.

(c) Disability. If the Executive’s employment is terminated by reason of the Executive’s Disability during the Employment Period, this Agreement and the Employment Period shall thereupon terminate without further obligations to the Executive, other than for payment of Accrued Obligations and the timely payment or provision of Other Benefits. Accrued Obligations shall be paid to the Executive in a lump sum in cash within 30 days of the Date of Termination. With respect to the provision of Other Benefits, the term “Other Benefits” as utilized in this Section 6(c) shall include, and the Executive shall be entitled after the Disability Effective Date to receive, disability and other benefits at least equal to the most favorable of those generally provided by the Company and its Affiliates to disabled executives and/or their families in accordance with such plans, programs, practices and policies relating to disability, if any, as in effect generally with respect to other peer executives and their families at any time during the 120-day period immediately preceding the Effective Date or, if more favorable to the Executive and/or the Executive’s family, as in effect at any time thereafter generally with respect to other peer executives of the Company and its Affiliates and their families.

(d) Cause; Other than for Good Reason. If the Executive’s employment shall be terminated for Cause during the Employment Period, this Agreement and the Employment Period shall thereupon terminate without further obligations to the Executive other than the obligation to pay to the Executive (x) his Annual Base Salary through the Date of Termination and (y) Other Benefits, in each case to the extent theretofore unpaid. All amounts payable under clause (x) shall be paid to the Executive in a lump sum in cash within 30 days of the Date of Termination. If the Executive voluntarily terminates employment during the Employment Period, excluding a termination for Good Reason, this Agreement and the Employment Period shall thereupon terminate without further obligations to the Executive, other than for Accrued Obligations and the timely payment or provision of Other Benefits. In such case, all Accrued Obligations shall be paid to the Executive in a lump sum in cash within 30 days of the Date of Termination.

(e) (i) Notwithstanding anything in this Section 6 or any other provision of this Agreement to the contrary, if, at the Executive’s Date of Termination, stock of the Company or any Affiliate is publicly traded on an established securities market or otherwise and the Executive is a “Specified Employee” (as defined in Section 6(e)(ii)) at the Date of Termination, then the Company will defer the payment or commencement of the payment, as the case may be, of any amounts described in Section 6(a)(i)(A)(2) (but only where payable under Section 6(a), 6(c) or 6(d)), Section 6(a)(i)(B) and Section 6(a)(v) that, in any such case, otherwise become payable during the first six months following the Executive’s Date of Termination, until the earlier of (A) the first day of the seventh month following the Executive’s Date of Termination or (B) the Executive’s death. Any payments or benefits delayed as a result of the preceding sentence shall be accumulated and paid in a lump sum, without interest, as soon as practicable but not later than five business days after the first day of the seventh month following the Executive’s

Date of Termination (or the Executive’s earlier death). Thereafter, payments will resume in accordance with this Agreement.

(ii) For purposes of this Agreement, a “Specified Employee” means, during the 12-month period beginning on April 1st of 2008 or on April 1st of any subsequent calendar year, an employee of the Company or its Affiliates who met the requirements of Section 416(i)(1)(A)(i), (ii) or (iii) of the Code (applied in accordance with the regulations thereunder and without regard to Code Section 416(i)(5)) for being a “key employee” at any time during the 12-month period ending on the December 31st immediately preceding such April 1st.

7. Nonexclusivity of Rights. Nothing in this Agreement shall prevent or limit the Executive’s continuing or future participation in any plan, program, policy or practice provided by the Company or any of its Affiliates and for which the Executive may qualify, nor, subject to Section 12(f), shall anything herein limit or otherwise affect such rights as the Executive may have under any contract or agreement with the Company or any of its Affiliates. Amounts which are vested benefits or which the Executive is otherwise entitled to receive under any plan, policy, practice or program of or any contract or agreement with the Company or any of its Affiliates at or subsequent to the Date of Termination shall be payable in accordance with such plan, policy, practice or program or contract or agreement except as explicitly modified by this Agreement.

8. Full Settlement. Subject to Section 9 herein, the Company’s obligation to make the payments provided for in this Agreement and otherwise to perform its obligations hereunder shall not be affected by any set-off, counterclaim, recoupment, defense or other claim, right or action which the Company or any of its Affiliates may have against the Executive or others. In no event shall the Executive be obligated to seek other employment or take any other action by way of mitigation of the amounts payable to the Executive under any of the provisions of this Agreement and such amounts shall not be reduced whether or not the Executive obtains other employment (except as provided in Section 6(a)(ii) where the medical and other welfare benefits described therein shall be secondary to those provided under another employer-provided plan). Notwithstanding any other provision of this Agreement, the Company agrees to pay as incurred but in no event later than the end of the calendar year following the calendar year in which incurred, to the full extent permitted by law, all legal fees and expenses which the Executive may reasonably incur during the period beginning on the date of this Agreement and ending ten (10) years after the Date of Termination as a result of any contest (regardless of the outcome thereof) by the Company, the Executive or others of the validity or enforceability of, or liability under, any provision of this Agreement or any guarantee of performance thereof (including as a result of any contest by the Executive about the amount of any payment pursuant to this Agreement), plus in each case interest on any delayed payment at the applicable Federal rate provided for in Section 7872(f)(2)(A) of the Code.

Certain Reduction of Payments by the Company .

(a) For purposes of this Section 9, (i) a Payment shall mean any payment or distribution in the nature of compensation to or for the benefit of the Executive, whether paid or payable pursuant to this Agreement or otherwise, including, without limitation, any stock option, stock appreciation right or similar right, or the lapse or termination of any restriction on or the vesting or exercisability of any of the foregoing; (ii) Change of Control Payment shall mean a Payment paid or payable pursuant to this Agreement (disregarding this Section); (iii) Net After Tax Receipt shall mean the Present Value of a Payment net of all taxes imposed on the Executive with respect thereto under Sections 1 and 4999 of the Code, determined by applying the highest marginal rate under Section 1 of the Code which applied to the Executive’s taxable income for the immediately preceding taxable year; (iv) “Present Value” shall mean such value determined in accordance with Section 280G(d)(4) of the Code; and (v) “Reduced Amount” shall mean the greatest aggregate amount of Change of Control Payments which (A) is less than the sum of all Change of Control Payments and (B) results in aggregate Net After Tax Receipts which are equal to or greater than the Net After Tax Receipts which would result if the Executive were paid the sum of all Change of Control Payments.

Accounting Firm determines that there is a Reduced Amount, the aggregate Change of Control Payments shall be reduced to such Reduced Amount as provided below. All fees payable to the Accounting Firm shall be paid solely by the Company.

(c) If Accounting Firm determines that aggregate Change of Control Payments should be reduced to the Reduced Amount, the Change of Control Payments shall be reduced or eliminated, as determined by Accounting Firm, in the following order so that after such reduction or elimination the Present Value of the aggregate Change of Control Payments equals the Reduced Amount: (i) cash payments, (ii) outplacement services and (iii) welfare benefits. The Company shall promptly give the Executive notice of the Accounting Firm’s determinations and a copy of the detailed calculations thereof showing that aggregate Change of Control Payments should be reduced to the Reduced Amount and the required reduction or elimination of such Change of Control Payments in the order set forth above so that after reduction or elimination the Present Value of the aggregate Change of Control Payments equals the Reduced Amount. All determinations made by Accounting Firm under this Section shall be binding upon the Company and the Executive and shall be made within 60 days of the Executive’s Date of Termination. As promptly as practicable following such determination but in no event later than the last day of the calendar year in which the Date of Termination occurs or, if later and the Executive is not permitted, directly or indirectly, to designate the year of payment, by the 15th day of the third calendar month following the Date of Termination, the Company shall pay to or distribute for the benefit of the Executive such Change of Control Payments as are then due to the Executive under this Agreement and shall promptly pay to or distribute for the benefit of the Executive in the future such Change of Control Payments as become due to the Executive under this Agreement.

(d) While it is the intention of the Company to reduce the amounts payable or distributable to the Executive hereunder only if the aggregate Net After Tax Receipts to the Executive would thereby be increased, as a result of the uncertainty in the application of Section 4999 of the Code at the time of the initial determination by Accounting Firm hereunder, it is possible that amounts will have been paid or distributed by the Company to or for the benefit of the Executive pursuant to this Agreement which should not have been so paid or distributed (“Overpayment”) or that additional amounts which will have not been paid or distributed by the Company to or for the benefit of the Executive pursuant to this Agreement could have been so paid or distributed (“Underpayment”), in each case, consistent with the calculation of the Reduced Amount hereunder. In the event that Accounting Firm, based upon the assertion of a deficiency by the Internal Revenue Service against either the Company or the Executive which Accounting Firm believes has a high probability of success determines that an Overpayment has been made, any such Overpayment paid or distributed by the Company to or for the benefit of the Executive shall be treated for all purposes as a loan to the Executive which the Executive shall repay to the Company together with interest at the applicable federal rate provided for in Section 7872(f)(2) of the Code; provided, however, that no such loan shall be deemed to have been made and no amount shall be payable by an Executive to the Company if and to the extent such deemed loan and payment would not either reduce the amount on which the Executive is subject to tax under Section 1 and Section 4999 of the Code or generate a refund of such taxes. In the event that Accounting Firm, based upon controlling precedent or substantial authority, determines that an Underpayment has occurred, any such Underpayment shall be promptly paid by the Company to or for the benefit of the Executive together with interest at the applicable federal rate provided for in Section 7872(f)(2) of the Code, but in no event shall the Underpayment be paid later than the end of the first calendar year in which the calculation of the Underpayment is administratively practicable.

10. Confidential Information . The Executive shall hold in a fiduciary capacity for the benefit of the Company all secret or confidential information, knowledge or data relating to the Company or any of its Affiliates, and their respective businesses, which shall have been obtained by the Executive during the Executive’s employment by the Company or any of its Affiliates and which shall not be or become public knowledge (other than by acts by the Executive or representatives of the Executive in violation of this Agreement). After termination of the Executive’s employment with the Employer, the Executive shall not, without the prior written consent of the Employer or as may otherwise be required by law or legal process, communicate or divulge any such information, knowledge or data to anyone other than the Employer and those designated by it. In no event shall an asserted violation of the provisions of this Section 10 constitute a basis for deferring or withholding any amounts otherwise payable to the Executive under this Agreement.

11. Successors. (a) This Agreement is personal to the Executive and without the prior written consent of the Company shall not be assignable by the Executive otherwise than by will or the laws of descent and distribution. This Agreement shall inure to the benefit of and be enforceable by the Executive’s legal representatives.

(b) This Agreement shall inure to the benefit of and be binding upon the Company and its successors and assigns.

(c) The Company will require any successor (whether direct or indirect, by purchase, merger, consolidation or otherwise) to all or substantially all of the business and/or assets of the Company to assume expressly and agree to perform this Agreement in the same manner and to the same extent that the Company would be required to perform it if no such succession had taken place.

12. Miscellaneous. (a) This Agreement shall be governed by and construed in accordance with the laws of the State of Oklahoma, without reference to principles of conflict of laws. The captions of this Agreement are not part of the provisions hereof and shall have no force or effect. This Agreement may not be amended or modified otherwise than by a written agreement executed by the parties hereto or their respective successors and legal representatives.

(b) All notices and other communications hereunder shall be in writing and shall be given by hand delivery to the other party or by registered or certified mail, return receipt requested, postage prepaid, addressed as follows:

If to the Executive :

_______________

OGE Energy Corp.

321 North Harvey

Oklahoma City, Oklahoma 73102

If to the Company

OGE Energy Corp.

or the Employer

321 North Harvey

Oklahoma City, Oklahoma 73102

Attention: General Counsel

or to such other address as either party shall have furnished to the other in writing in accordance herewith. Notice and communications shall be effective when actually received by the addressee.

(c) The invalidity or unenforceability of any provision of this Agreement shall not affect the validity or enforceability of any other provision of this Agreement.

(d) The Company may withhold from any amounts payable under this Agreement such Federal, state, local or foreign taxes as shall be required to be withheld pursuant to any applicable law or regulation.

(e) The Executive’s or the Company’s failure to insist upon strict compliance with any provision of this Agreement or the failure to assert any right the Executive or the Company may have hereunder, including, without limitation, the right of the Executive to terminate employment for Good Reason pursuant to Section 5(c)(i)-(v) of this Agreement, shall not be deemed to be a waiver of such provision or right or any other provision or right of this Agreement.

(f) The Executive and the Company acknowledge that, except as may otherwise be provided under any other written agreement between the Executive and the Company or any of its Affiliates, the employment of the Executive by the Company or any of its Affiliates is “at will” and, subject to Section 1(a) hereof, prior to the Effective Date, the Executive’s employment may be terminated by either the Executive or the Company or any of its Affiliates, as the case may be, at any time prior to the Effective Date, in which case the Executive shall have no further rights under this Agreement. From and after the Effective Date this Agreement shall supersede any other

agreement between the parties with respect to the subject matter hereof. Notwithstanding the foregoing sentence, this Agreement amends and restates the Prior Employment Agreement, which Prior Employment Agreement, without further action, shall be superseded and without further effect as of the date first written above.

(g) To the extent applicable, it is intended that the compensation arrangements under this Agreement be in full compliance with the provisions of Section 409A of the Code. This Agreement shall be administered in a manner consistent with this intent. Notwithstanding any provision of the Plan to the contrary, a distribution to be made as of a specified date in Section 6 shall be treated for purposes of Code Section 409A as made on the date specified if the distribution is made at such date specified or a later date in the same calendar year or, if later, and provided the Executive is not permitted, directly or indirectly, to designate the year in which the distribution is made, by the 15th day of the third calendar month following the specified date. In addition, to the extent any provision of this Agreement, is or will be in violation of Section 409A of the Code and the regulations thereunder, this Agreement shall be amended in such manner as the parties may agree such that the Agreement is or remains in compliance with Section 409A of the Code and the foregoing intent of the parties is maintained to the maximum extent possible. Each party is responsible for reviewing this Agreement for compliance with Section 409A.

(h) The provisions of this Agreement are not intended, and should not be construed to be legal, business or tax advice. The Company, the Executive and any other party having any interest herein are hereby informed that the U.S. federal tax advice contained in this document (if any) is not intended or written to be used, and cannot be used, for the purpose of (i) avoiding penalties under the Code or (ii) promoting, marketing or recommending to any party any transaction or matter addressed herein.

IN WITNESS WHEREOF, the Executive has hereunto set the Executive’s hand and, pursuant to the authorization from its Board of Directors, OGE Energy Corp. has caused these presents to be executed in its name on its behalf, all as of the day and year first above written.

OGE ENERGY CORP.

By: /s/ Peter B. Delaney

Chairman, President and Chief Executive Officer

Exhibit A

Incentive, Savings and Retirement Plans

Annual Incentive Compensation Plan

Stock Incentive Plan

OGE Energy Corp. Employees’ Stock Ownership and Retirement Savings Plan

OGE Energy Corp. Deferred Compensation Plan

Retirement Plan

Restoration of Retirement Income Plan

Exhibit 10.09

EMPLOYMENT AGREEMENT

AGREEMENT by and between OGE Energy Corp., an Oklahoma corporation, and ______________ (the “Executive”), dated as of the _____ day of ______ 20__.

WHEREAS, in order to induce the Executive to remain in the employ of the Company or an Affiliate (as hereinafter defined), as the case may be, particularly in the event of a threat or the occurrence of a Change of Control, the Company desires to enter into this Employment Agreement with the Executive to provide the Executive with certain benefits in the event the Executive’s employment is terminated as a result of, or in connection with, a Change of Control.

NOW, THEREFORE, IT IS HEREBY AGREED AS FOLLOWS:

(d) “Employer” shall mean (i) in the event the Executive is an officer of the Company and not of any Affiliate (as defined in Section 1(e)) of the Company immediately prior to the Effective Date, the Company; (ii) in the event the Executive is an officer of one or more Affiliates of the Company, but not of the Company, immediately prior to the Effective Date, any such Affiliate; and (iii) in the event the Executive is an officer of the Company and one or more Affiliates of the Company immediately prior to the Effective Date, any such entity of which the Executive is an officer immediately prior to the Effective Date.

Change of Control.

For the purpose of this Agreement, a “Change of Control” shall mean:

such ownership existed with respect to the Company prior to the Business Combination and (iii) at least a majority of the members of the board of directors or other governing body of the corporation or other Person resulting from such Business Combination were members of the Incumbent Board at the time of the execution of the initial agreement, or of the action of the Board, providing for such Business Combination; or

(d) Approval by the shareowners of the Company of a complete liquidation or dissolution of the Company.

5. Termination of Employment . Subject to the provisions of this Section 5, the Executive’s employment shall be deemed terminated for purposes of this Agreement when the Executive incurs a “separation from service” (as such phrase is defined in Code Section 409A and the regulations promulgated thereunder) with the Employer and its Affiliates because of death, retirement or termination of employment for any other reason, including any reason specified in Section 5(a), (b) or (c) below; provided, however, that no termination shall be deemed to occur for purposes of the Agreement while the Executive continues to perform services for the Employer or its Affiliates in a capacity as an employee or as an independent contractor at a level that is more than 20% of the

average level of bona fide services performed (whether as an employee or otherwise) by the Executive during the immediately preceding 36-month period (or, if employed less than 36 months, such lesser period).

(b) Cause. The Employer may terminate the Executive’s employment during the Employment Period for Cause. For purposes of this Agreement, “Cause” shall mean:

(ii) the willful engaging by the Executive in illegal conduct or gross misconduct which is materially and demonstrably injurious to the Employer.

(c) Good Reason. The Executive’s employment may be terminated by the Executive for Good Reason. For purposes of this Agreement, “Good Reason” shall mean:

(iv) any purported termination by the Employer of the Executive’s employment otherwise than as expressly permitted by this Agreement; or

(v)

any failure by the Employer to comply with and satisfy Section 11(c) of this Agreement.

Obligations of the Company upon Termination. Subject to Section 6(e) below:

(i) the Company shall pay to the Executive in a lump sum in cash within 30 days after the Date of Termination the aggregate of the following amounts, subject to reduction as set forth in Section 9:

A. the sum of (1) the Executive’s Annual Base Salary through the Date of Termination to the extent not theretofore paid, (2) the product of (x) the higher of (I) the Recent Annual Bonus and (II) the Annual Bonus paid or payable, including any bonus or portion thereof which has been earned but deferred (and annualized for any fiscal year consisting of less than twelve full months or during which the Executive was employed for less than twelve full months), for the most recently completed fiscal year during the Employment Period, if any (such higher amount being referred to as the “Highest Annual Bonus”) and (y) a fraction, the numerator of which is the number of days in the current fiscal year through the Date of Termination, and the

denominator of which is 365 and (3) any accrued vacation pay to the extent not theretofore paid (the sum of the amounts described in clauses (1), (2), and (3) shall be hereinafter referred to as the “Accrued Obligations”); and

B. the amount equal to the product of (1) 2.99 and (2) the sum of (x) the Executive’s Annual Base Salary and (y) the Highest Annual Bonus;

Certain Reduction of Payments by the Company .

(b) Anything in this Agreement to the contrary notwithstanding, in the event Ernst & Young or such other certified public accounting firm designated by the Executive (the “Accounting Firm”) shall determine that receipt of all Payments would subject the Executive to tax under Section 4999 of the Code, it shall determine whether some amount of Change of Control Payments would meet the definition of a “Reduced Amount.” If the Accounting Firm determines that there is a Reduced Amount, the aggregate Change of Control Payments shall be reduced to such Reduced Amount as provided below. All fees payable to the Accounting Firm shall be paid solely by the Company.

(b) This Agreement shall inure to the benefit of and be binding upon the Company and its successors and assigns.

If to the Executive :

_______________

OGE Energy Corp.

321 North Harvey

Oklahoma City, Oklahoma 73102

If to the Company

OGE Energy Corp.

or the Employer

321 North Harvey

Oklahoma City, Oklahoma 73102

Attention: General Counsel

or to such other address as either party shall have furnished to the other in writing in accordance herewith. Notice and communications shall be effective when actually received by the addressee.

(c) The invalidity or unenforceability of any provision of this Agreement shall not affect the validity or enforceability of any other provision of this Agreement.

manner consistent with this intent. Notwithstanding any provision of the Plan to the contrary, a distribution to be made as of a specified date in Section 6 shall be treated for purposes of Code Section 409A as made on the date specified if the distribution is made at such date specified or a later date in the same calendar year or, if later, and provided the Executive is not permitted, directly or indirectly, to designate the year in which the distribution is made, by the 15th day of the third calendar month following the specified date. In addition, to the extent any provision of this Agreement, is or will be in violation of Section 409A of the Code and the regulations thereunder, this Agreement shall be amended in such manner as the parties may agree such that the Agreement is or remains in compliance with Section 409A of the Code and the foregoing intent of the parties is maintained to the maximum extent possible. Each party is responsible for reviewing this Agreement for compliance with Section 409A.

OGE ENERGY CORP.

By: /s/ Peter B. Delaney

Chairman, President and Chief Executive Officer

Exhibit A

Incentive, Savings and Retirement Plans

Annual Incentive Compensation Plan

Stock Incentive Plan

OGE Energy Corp. Employees’ Stock Ownership and Retirement Savings Plan

OGE Energy Corp. Deferred Compensation Plan

Retirement Plan

Restoration of Retirement Income Plan

Exhibit 18.01

May 6, 2008

Board of Directors

OGE Energy Corp.

321 North Harvey

Oklahoma City, Oklahoma 73101

Dear Ladies and Gentleman:

Note 1 of Notes to Condensed Consolidated Financial Statements of OGE Energy Corp. included in its Form 10-Q for the period ended March 31, 2008 describes a change in the method of accounting for the valuation of certain inventories from the last in, first out (LIFO) method to the weighted-average cost method. There are no authoritative criteria for determining a ‘preferable’ method of valuing inventories based on the Company's particular circumstances; however, we conclude that such change in the method of accounting is to an acceptable alternative method which, based on your business judgment to make this change and for the stated reasons, is preferable in your circumstances. We have not conducted an audit in accordance with the standards of the Public Company Accounting Oversight Board (United States) of any financial statements of the Company as of any date or for any period subsequent to December 31, 2007, and therefore we do not express any opinion on any financial statements of OGE Energy Corp. subsequent to that date.

Very truly yours,

/s/ Ernst & Young LLP

Exhibit 31.01

CERTIFICATIONS

I, Peter B. Delaney, certify that:

1. I have reviewed this quarterly report on Form 10-Q of OGE Energy Corp.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: May 7, 2008

/s/ Peter B. Delaney

Peter B. Delaney

Chairman of the Board, President and

Chief Executive Officer

Exhibit 31.01

CERTIFICATIONS

I, James R. Hatfield, certify that:

1. I have reviewed this quarterly report on Form 10-Q of OGE Energy Corp.;

b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: May 7, 2008

/s/ James R. Hatfield

James R. Hatfield

Senior Vice President and

Chief Financial Officer

Exhibit 32.01

Certification Pursuant to 18 U.S.C. Section 1350

As Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

In connection with the Quarterly Report of OGE Energy Corp. (the “Company”) on Form 10-Q for the period ended March 31, 2008, as filed with the Securities and Exchange Commission (the “Report”), each of the undersigned does hereby certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

May 7, 2008

/s/ Peter B. Delaney

Peter B. Delaney

Chairman of the Board, President and

Chief Executive Officer

/s/ James R. Hatfield

James R. Hatfield

Senior Vice President and

Chief Financial Officer