RELATIONSHIP WITH FEDERAL & STATE REGULATORY AUTHORITIES

FERC and other state and federal agencies have established rules and regulations which govern the way we do business in areas where OGE subsidiaries also do business. OGE complies with all such rules and regulations.

It is the policy of OGE to be honest and complete in reporting and responding to the various regulatory agencies that govern our business. Whenever a government agency submits a request for information, that request must first be sent to the Law Department.

It is in the best interest of OGE and its members that they exercise good judgment and exhibit the highest ethical behavior in any contact with commissioners or members of governmental authorities so that these individuals are not placed in a conflict of interest situation.

A number of federal, state and local laws govern the relationships of businesses with elected or appointed government officials. Giving gifts to officials, making political contributions and lobbying are all regulated.

Members are strictly prohibited from offering, promising or giving money, gifts, loans, rewards, favors or anything of value to any governmental official, employee, agent or other intermediary (either in or outside the United States), except where such action is authorized by state and federal guidelines.

When members are involved in a contested case before the federal or state commissions where OGE subsidiaries do business, they should not engage in any ex parte (private, off the record) conversation or communication concerning any substantive issue in the case, with any commissioner, or administrative law judge. If in doubt, discuss the matter with your supervisor or seek the advice of the Law Department.

Relationship with Government Authorities

Agreements between OGE and a government agency may involve special contracting and accounting requirements. Detailed laws and procedures regulate every stage of government contract work from contract proposal and negotiations to the performance of the contract and charging for the work OGE has completed.

Gifts and invitations offered with an expectation to receive favorable treatment in the award or performance of a contract is a serious violation of government laws and regulations and can result in heavy fines and imprisonment. Members are not to accept from or to provide or offer gifts or invitations to government customers or officials when the actions may result in a conflict of interest (or in an appearance of a conflict of interest), such as an attempt to influence a contract award, or a violation of the government member’s own rules.

Political Contributions and Activities

Except as authorized by state and federal guidelines, it is the policy of OGE to prohibit the use of OGE funds or assets, directly or indirectly to support political parties or political candidates.

Members are free to engage in political activities of their own choosing including making personal contributions in support of candidates or political organizations of their choice.

Members must keep their personal political activity separate from their employment since there are legal restrictions on corporate involvement in the election process. Accordingly, personal political activity, e.g., campaign work, speech making, fund raising, etc. must not be attributable to OGE. For example, the use of OGE stationery for personal political activity is prohibited.

OGE Energy Corp. has established a voluntary, non-partisan, non-profit political action committee (PAC) within the guidelines of federal and state tax and election regulations. The purpose of this committee is to provide our members with an opportunity to collectively support state and federal candidates who share OGE’s perspective on critical issues affecting our industry. OGE will neither favor nor disadvantage an employee based upon whether the employee makes a contribution or the amount of such contribution.

Bribes and Kickbacks

The Foreign Corrupt Practices Act of 1977 prohibits members and agents from making payments or offers of payments of anything of value to foreign officials, political parties or candidates for foreign political office in order to secure, retain or direct business, or to influence a person working in an official capacity. Payments made indirectly through an intermediary under circumstances indicating that such payments would be passed along for prohibited purposes are also illegal. This law also contains significant internal accounting control and record keeping requirements that apply to our domestic operations. The law’s intent, in requiring these records, is to ensure that a corporation maintains reasonable control over its assets and all transactions involving those assets.

It is unacceptable for any representative of OGE to make or receive bribes, kickbacks, or any other improper payment. These would generally be defined as payments or gifts made by a representative of OGE in order to obtain preferential consideration for OGE or any payment or gifts received by an OGE representative as a personal inducement to enter into a transaction on behalf of OGE.

Antitrust

We seek to outperform our competition fairly and honestly. We seek competitive advantages through superior performance, never through unethical or illegal business practices. The general purpose of the antitrust laws is to prohibit business conduct that weakens or destroys competition in the free marketplace. Generally stated, the antitrust laws prohibit agreements that unreasonably restrain trade or commerce. The phrase "unreasonably restrain trade or commerce" requires a careful analysis of the effect on competition of any given practice. Particular care must be taken so that these complex laws are not inadvertently violated. A brief description of some of the practices which are prohibited under the antitrust laws follows:

• Refusals to Deal
• Refusals to Deal involve an agreement (oral or written) between competitors not to buy from a supplier or vendor, or an agreement not to sell products or services to a particular customer. Special care must be exercised when you are engaged in industry trade organization activities. Members involved in a trade organization meeting could be in conflict with the antitrust laws if they engage in discussions that result in either formal or implicit consensus among a group of companies not to purchase some product or service from a particular vendor or to purchase a product or service only under certain terms and conditions. The key here is that decisions of this kind must be made by companies independently and not by group consensus.

Price Fixing

Without appropriate regulatory approval, any agreement, understanding or arrangement between competitors to raise, lower, fix or stabilize prices is illegal.

Allocation of Customers or Territories

Under the antitrust laws, it is illegal to make agreements with competitors for the purpose of dividing up service territories in which sales are made or allocating customers, unless appropriate regulatory approval is obtained.

Tying Agreements

Certain arrangements by which a customer is required to purchase unwanted products or services in order to obtain a desired product or service are illegal under antitrust laws.

Members are cautioned to avoid any of these practices which could violate the antitrust laws. If you suspect that such a practice may be developing, you must discuss the matter with your supervisor who should refer the matter to the Law Department.

Insider Trading

The Securities Exchange Act of 1934 prohibits insider trading. Insider trading generally refers to the buying or selling of a security (of OGE or any other company) by a person who is in possession of material, non-public information relating to the security. In addition, insider trading applies to any company about which confidential information is acquired, e.g., members who receive confidential information from clients must also refrain from trading or tipping based on such information. Insider trading violations also include providing such information to others ("tipping") and securities trading by the person "tipped."

Material information is any positive or negative information that a reasonable investor would likely consider important in arriving at a decision to buy or sell securities. In short, any information that is likely to affect the market price of securities. Some examples of information that will frequently be regarded as material are: projection of future earnings or losses; news of a pending or proposed merger, acquisition or tender offer; news of a significant sale of assets or the disposition of a subsidiary; changes in dividend policies or the declaration of a stock split; changes in management; impending financial liquidity problems; the gain or loss of a substantial customer; and news of regulatory or court actions.

Three basic rules to follow are: (1) do not buy or sell securities while in possession of material, non-public information; (2) do not pass such information on to others who may buy or sell securities and (3) if such information has been publicly disclosed, allow sufficient time for the information to be disseminated and absorbed by the marketplace before acting on it or passing that information on to others. If you have any questions or need additional information, contact the OGE Ethics Officer, or the Law Department.