For immediate release: 1/05/07

Third rating upgrade in 24 months ...
Moody’s affirms GRDA’s A2, moves outlook to stable

Vinita – Taking into account a tradition of competitive rates and several other factors, Moody’s Investor Service affirmed an "A2" rating on the Grand River Dam Authority’s outstanding electric revenue bonds on January 4. Moody’s also announced it would change GRDA’s rating outlook from negative to stable.

“This is great news for GRDA and reaffirms many of the decisions we’ve made over the last three years to make this agency more financially stable,” said GRDA Chief Executive Officer Kevin Easley. “Our board, and all our employees are to be commended for helping to make this possible.”

Since March 2005, all three major bond rating agencies have upgraded GRDA’s rating outlook.

In March 2005, Fitch Rating Services reaffirmed GRDA’s “A-” (investment grade) rating while also upgrading the outlook from stable to positive. It marked the first improvement in GRDA’s outlook ever by Fitch, which cited “recent initiatives undertaken by GRDA’s new management (with board support) that strengthen its credit profile” as a factor in the decision. Then in March 2006, Standard & Poor’s Rating Services also affirmed GRDA’s “BBB+” credit rating and improved the outlook from negative to stable. S&P cited GRDA’s customer acceptance of rate increases that will improve finances and the utility’s low-cost power supply among the factors in its decision.

According to the recent Moody’s news release, “the change in rating outlook primarily reflects the Authority’s improved debt service coverage after a period of very narrow margins.” Moody’s also listed GRDA’s history of successfully operating within a competitive environment among its strengths, as well as the Authority’s stable and strong liquidity position. The report also acknowledged that GRDA’s focus continues to be “on supplying the native load of its Oklahoma customers.”

“Good ratings translate to lower financing costs ,” said Easley, “and this news comes at a great time for GRDA, considering we are moving forward with the generation upgrade at our Robert S. Kerr Dam and other projects to better prepare our system to meet growing future customer needs.”

According to Easley, changes and improvements made over the last three years have been good for business, which really means good for GRDA customers. “It gives us a lot of confidence to know that today’s efforts continue to put us in a better position to meet the long-term needs of our native load tomorrow,” he said.

The Moody’s report did note some challenges for GRDA, including meeting contracted demand with purchased power or the development of new resources, and continued competition. However, it also added that its rating “has historically recognized GRDA’s success at operating within a very competitive environment.”

GRDA’s reliable supply and low prices were also underscored in a January 2, Standard and Poor’s rating affirmation for a wholesale customer. According to the customer rating analysis, “The electric system’s role as a power distributor of competitively priced Grand River Dam Authority … greatly reduces operating and financial risk to the city.”

“Most of GRDA’s partnerships with its wholesale municipal customers go back over half a century,” said GRDA Chief Financial Officer Carolyn Dougherty. “And as we build this stability for our customers’ futures, we also see it as an opportunity to build on the ideals of public power. City fathers in these communities decided they wanted municipally-owned electric systems for their hometowns. What GRDA is doing today helps reinforce those decisions for generations to come.”

“The most important point is that a stronger GRDA can provide more reliability and security,” added Dougherty. “We are pleased that the financial community has given us a good evaluation on our ability to repay our outstanding debt while continuing to focus on and meet customers’ long-term needs.”

Headquartered in Vinita, GRDA is a self-supporting state agency, funded by the revenues from the sale of electricity instead of taxes. GRDA transmits and delivers electricity across its 24-county service area via a sophisticated energy delivery system that includes over 1,900 miles of transmission line. GRDA sells wholesale electricity to three customer classes: municipals, electric cooperatives, and industries. Indirectly, GRDA serves an estimated 500,000 customers in Oklahoma.

RobertSKerrDam Aerial: An aerial view of GRDA's Robert S. Kerr Dam (Locust Grove) and Lake Hudson. GRDA will soon be moving forward with plans to began a major upgrade of the facility's four hydroelectric turbine-generators. An announcement that Moody's Investor Service has improved GRDA's credit rating outlook, as well as GRDA's efforts to reinvest in its generation resources like Kerr, are among the ways the Authority is preparing to meet the long-term needs of its customers.