Vinita – A recent credit rating update from Moody’s Investor Service is being viewed as positive step in the right financial direction by the Grand River Dam Authority.
Of course, “positive” is a key word; Moody’s affirmed GRDA’s A2 credit rating on Monday, March 11, and moved the rating to positive from a previous stable outlook.
“This is very good news for GRDA,” said GRDA Chief Executive Officer/Director Investments Dan Sullivan. “We feel the positive outlook is the result of a lot of hard work by our staff, as well as key decisions made by our board.”
Moody’s agreed with that assessment, stating in their news release that the change of outlook “reflects a number of improvements to credit quality including the stronger financial performance achieved over the last three years.”
GRDA’s recent proposal to calculate its power cost adjustment (PCA) on a monthly basis was one of the items Moody’s viewed favorably. The PCA is an adjustment GRDA makes to its base rate to reflect the actual costs of fuel used for generation. Since implementing it in the early 1980s GRDA had calculated the PCA twice a year. However, after its January 2013 meetings with its customers, the utility asked the GRDA Board to consider the monthly schedule.
“We wanted to get customer input because the PCA issue is so important to them,” said Chief Financial Officer Carolyn Dougherty. “More frequent calculations should reduce the volatility, which is a plus for our customers. In turn, it can make GRDA financially stronger. That’s something the financial community has recognized.”
GRDA’s location in Oklahoma, along with its contracts for electricity sales to industries, rural electric cooperatives and municipals were also important factors in the assessment.
“We think that the economic strength of the region will support power demand growth from municipal customers over the next few years,” state Moody’s.
According to Sullivan, that demand growth will be met with GRDA’s diverse generation portfolio which includes coal, natural gas, hydroelectricity and wind power. Maintaining the benefits of that portfolio, while also planning for future generation needs, is a top priority today at GRDA.
“Moody’s pointed to our diverse portfolio as a strength, and we certainly see it that way,” said Sullivan. “So we are working not only to preserve that strength but also planning for ways to be even stronger tomorrow.”
That plan must include a way to ensure regulatory compliance as future Environmental Protection Agency regulations impact operations of the GRDA Coal Fired Complex. However, the Authority has already discussed this issue with its customers, as well as the different options for additional generation in the future. Moody’s noted in its assessment that GRDA’s funding strategy for this issue is still being developed.
“It is no secret that we are coming to a crossroads in terms of our future generation mix,” said Sullivan. “However, with our ongoing communications with customers and stakeholders, the efforts of our dedicated workforce and the leadership the board has shown on critical issues, we feel well-prepared for tomorrow and feel like this Moody’s outlook reflects that.”
Headquartered in Vinita, GRDA is Oklahoma’s state-owned electric utility; fully funded by revenues from electric and water sales instead of taxes. Directly or indirectly, GRDA’s low-cost, reliable; electricity touches 75 of 77 Oklahoma counties. At no cost to Oklahoma taxpayers, GRDA also manages 70,000 surface acres of lakes in the state, including Grand Lake, Lake Hudson and the W.R. Holway Reservoir.
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