Vinita - The Grand River Dam Authority, the wholesale electricity supplier for Miami, is announcing that Standard & Poor's (S&P) Rating Services has upgraded GRDA's credit rating. Last week, S&P announced it was changing GRDA's credit rating from “BBB+ to “A-, and improving the outlook from stable to positive. While GRDA has received three rating outlook improvement from rating agencies in recent years, S&P's announcement is historic, marking the first rating upgrade in GRDA's history.
“Similar to the three outlook improvements we've received since March 2005, this upgrade is proof that the financial community believes GRDA is growing more financially stable, said GRDA Chief Executive Officer Kevin Easley. “However, this news is historic.
Moving the rating from “BBB+ to “A- adds even more stability to the financial foundation this agency will rest on in the future, according to GRDA officials.
According to an S&P statement, “the willingness of (GRDA) board members to strengthen the authority's financial profile was a chief factor in the upgrade decision, as were new, 35-year all requirements contracts with municipal customers. Those contracts, already signed by some GRDA municipal customers and currently under consideration by others, will allow GRDA to plan for future capacity requirements. The partnership between Miami and GRDA first began in 1947.
“We are very pleased that our municipal customers - representing almost half a million Oklahomans who receive electricity indirectly from GRDA - have chosen to partner with us for the next 35 years, said Easley. “We feel the decisions we've made to improve GRDA financial stability have strengthened our customer partnerships.
Of course, the impact this upgrade has on all those Oklahomans will show up in savings, Easley said. “For those who may be asking why does this matter to me?' GRDA would respond that it believes this upgrade will save our customers millions of dollars in finance and insurance charges as we continue to grow and plan a safe, reliable and affordable electric future.
According to S&P Credit Analyst Judith Waite, GRDA's relationship with municipals, representing those half a million Oklahomans, was an important component in the rating upgrade. “The success in winning agreement for the new, standard long-term contract as well as the acceptance of the two rate increases indicates solid support from wholesale customers, said Waite in the S&P statement.
The S&P release also said that “terms of the new contracts ensure solid debt service coverage for at least 27 years. According to GRDA Chief Financial Officer Carolyn Dougherty, that coverage will allow GRDA to commit funding to building or buying additional generation capacity which would be necessary to meet future load growth.
Dougherty said GRDA worked closely with all its municipal customers to arrive at the new contract and “its really been a team effort throughout. We discussed our strengths and challenges as well as their strengths and challenges, and in the end we were able to arrive at a long term solution that benefits all.
According to Easley, the upgrade could not have come at a better time for GRDA, which is entering an extensive growth mode. “GRDA is a progressive agency focused on meeting our customers' needs while always retaining our reputation as Oklahoma's low-cost, reliable electric supplier. An excellent workforce, solid customer partnerships and recognition like this from the financial community will help us achieve those goals.
In March 2005, Fitch Ratings reaffirmed GRDA's “A- rating and upgraded its outlook of the utility's bonds from stable to positive. In March 2006, S&P cited GRDA customers' acceptance of rate increases and GRDA's low-cost power supply as factors in its decision to, at the time, affirm the “BBB+ credit rating and improve the outlook from negative to stable. Then, in January 2007, Moody's Investor Services affirmed an “A2 rating on GRDA's outstanding electric revenue bonds and announced it would also change GRDA's rating outlook from negative to stable.
“These improvements by the rating agencies give us confidence that GRDA is on the right track with the financial decisions we've made, Easley said, “and I certainly want to commend the GRDA Board of Directors, for the role it has played in this effort. The rating agencies thought that leadership was noteworthy.
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 more than 1,900 miles of transmission line. GRDA sells wholesale electricity to three customer classes: municipals, electric cooperatives, and industries.