Pay-As-You-Go Update November 2012

Program Overview Paying advance for electricity Flexibility and Customer benefits Make as many payments as necessary No due dates No fees No deposit requirements 2

How does Pay-As-You-Go Work? $25 minimum starting balance Similar to a gas tank or a pre-paid phone Your OG&E account is credited when you make a payment. As you use electricity, your account is deducted. You can modify your settings to receive notifications when your account balance is getting low. All current payment methodologies 3

Program & Recruitment Overview Pilot Program Started: February 20, 2012 Marketing & Official Enrollment: March 5, 2012 Enrollment Closed: June 12, 2012 Projected Completion Date: December 31, 2012 Pay-As-You-Go Pilot Enrollment RateGroupGoal Actual Enrollment Current Enrollment StandardBudget StandardConvenience TOUBudget TOUConvenience TOTAL: Actual enrollment numbers as of June 12 th. Current enrollment numbers as of November 1st.

Data from mid-point survey PAYG Net promote score: 26 OG&E NPS from these same participants: 14 Customer quotes: –“When you really need to control experiences and 6 months of payments is not lengthy enough, Pay-As-You- Go allows maximum flexibility. One payment keeps lights on and takes care of past debt.” –“I am not overly sold on the charges and the explanations.” –“The deposits required when moving add up significantly, and choosing the option to pay as I go greatly decreased the financial burden of moving. Thank you!!!” Notes: Survey fielded 7/18/12 through 08/06/12. Online survey Total number sent: 240, Responses: 60, Response rate: 25%

Why Are Customers Signing Up? Notes: Survey fielded 7/18/12 through 08/06/12. Online survey Total number sent: 240, Responses: 60, Response rate: 25%

Why Are Customers Signing Up? Notes: Survey fielded 7/18/12 through 08/06/12. Online survey Total number sent: 240, Responses: 60, Response rate: 25%

Unenrollments Note: Small sample size of 19 respondents Total number sent : 147, Responses: 19, Response rate: 12.9% * Approximately 70% of "Other" listed move-out as the reason Further analysis underway to understand if most unenrollees moved or had other reasons for dropping off.

Changed How I Feel About OG&E

Focus Group Clips

Focus Group Customer Quotes “I like the flexibility and knowing that I can put money towards my bill at anytime and that I won’t have a surprise big bill at the end of the month that I have to try and pay.” “Easier to track what you’re doing. There are too many pros not to do it.” “This is a Godsend for me.” “I am so enjoying this program and really want to continue. It has been so helpful in every way managing my bill and usage. Thank You, OG&E !!!” “I used to H.A.T.E OG&E and wonder how could I get on solar, how could I get on wind power. Since this happened, thank you OG&E. I cannot tell you what a difference this has made in our house.” “Some days I only have $5 to put on it. This is an easy way out for us.” “You are your own due date.” clip

OG&E was supposed to shut the pilot program down as of December 31, However, because of the customer satisfaction with the program OG&E did not want to do so without further discussion with interested parties. Therefore, the pilot program is still ongoing There are ~100 customers still participating out of a peak enrollment of 547 The program costs ~$10,000 per month to maintain in vendor payments and fees Current State Focus Groups conducted October 1 st, 2012

If OG&E can enroll 5% of its customer base to participate in the Pay As You Go program: –Each participating customer gets a $623 Net Benefit from participating in reduced KWH consumption (~15% reduction during the summer months), reduction in late payments, and reduced fuel costs –Each participating customer contributes an $843 Net Benefit to all OG&E customers in lower peak demand costs, lower operating costs (call center, bad debt expense, etc.) and lower generation costs –However, each participating customer contributes a $50 Net Cost to OG&E shareholders from reduced KWH consumption –TRC is estimated to be > Most program costs are fixed costs and therefore the TRC increases substantially with each additional customer sign-up All figures above are in Present Value dollars Customer Benefits Focus Groups conducted October 1 st, 2012

Although the program is great for customers, OG&E shareholders are negatively impacted by each participating customer OG&E shareholders do see benefits from reduced operating costs and bad debt reduction; however, these benefits are more than offset by the significant reduction in KWH consumption (~15% in the summer months) OG&E wants to find a solution that will allow its shareholders to be made whole from the reduction in KWH consumption, while still providing all customers significant value –OG&E shareholders lose ~$50 per customer and each participating customer provides all customers an ~$843 net benefit. Society has a net benefit of $793 OG&E Impact Focus Groups conducted October 1 st, 2012

Shut down the Pay As You Go program on December 31, 2013 Expand the Pay As You Go pilot program to a full product offering and attempt to enroll a significant amount of OG&E customers by including the program in: –Standalone filing for product offerings outside of a general rate case? –DPR as an Energy Efficiency program which would possibly require a modification to the DPR? –Next rate case? Program Options Focus Groups conducted October 1 st, 2012