S&P affirms GRDA rating, improves outlook to stable
Vinita -- Citing the Grand River Dam Authority’s customer acceptance of rate increases that will improve finances and the utility’s low-cost power supply among the factors in its decision, Standard & Poor’s Rating Services (S&P) has affirmed GRDA’s “BBB+” credit rating and improved the rating outlook from negative to stable. S&P announced the outlook improvement March 24.
"The rating on GRDA is supported by its growing service territory, low cost supply, board willingness to raise rates and customer willingness to pay higher rates," stated an S&P press release. Recent GRDA rate increases include a 4.5 percent increase in July 2004 and another small increase (between 4 and 7 percent for most customers) which begins in April.
"We’ve had to make some tough decisions over the last couple of years, but these ratings are proof that our efforts have paid off," said GRDA Chief Executive Officer Kevin Easley. "Improved rating outlooks, like this from S&P, as well as the improved outlook Fitch gave us last year can mean more stability and opportunities for GRDA, which is good for everyone, including our customers, employees and the state of Oklahoma."
Easley also credited GRDA’s long-standing, beneficial customer partnerships, strong board leadership and employees as other reasons for the rate improvements.
"Our board’s foresight in approving these increases, our customers’ willingness to stand with us, and the efforts of our employees, day in and day out continue to improve this organization," he said.
The S&P report did express concerns about several of GRDA’s customer contracts, which expire prior to debt maturity and contain no step-up provisions. The report also noted GRDA’s dependence on its coal-fired complex and hydropower for electric generation. S&P cited the need for GRDA to continue to efficiently operate the generating units, crediting the generation as “the basis for GRDA’s competitive cost structure.
"We realize there is still work to be done in our efforts, particularly regarding our contracts and additional resources,” said GRDA Chief Financial Officer Carolyn Dougherty. “However, two credit rating outlook improvements within a year’s time (the Fitch improvement came in March 2005) give us much confidence that GRDA is on the right track to maintaining its reputation as Oklahoma’s low-cost, reliable power supplier. We are definitely moving the in the right direction.”
