Oklahoma Governor Drops Utility Probe

DALLAS — Oklahoma Gov. Mary Fallin halted a performance review of the Grand River Dam Authority to avoid damaging the power utility's credit rating as it prepares a $380 million revenue bond offering.

Fallin created a 15-member task force in July to look into the authority's plan to upgrade its generating facilities with bond proceeds, but dissolved the panel Tuesday before any members were appointed.

The probe was suspended, Fallin said, because GRDA CEO Dan Sullivan convinced her that bond rating agencies would be concerned about an on-going performance review of the agency.

"That, in turn, could negatively impact GRDA's bond rating, dramatically increasing the total cost of a new power plant, and ultimately raising utility rates for Oklahomans," Fallin said. "That is not an outcome any of us can support."

GRDA's $912 million of outstanding revenue bonds are rated A by Fitch and Standard & Poor's, and A2 with a positive outlook by Moody's Investors Service.

GRDA wants to use the bond proceeds to replace a coal-fired plant with a $300 million generating plant that burns natural gas. The agency also wants to spend $80 million to upgrade the environmental control systems at an existing coal-fired plant.

"One of the things I consistently heard about the taskforce studying the GRDA is the timing is wrong," Fallin said. "If the GRDA does decide to move forward to build a new natural gas plant, it will need to fund that project with bonds."

Sullivan said he was relieved at Fallin's decision. The new facilities are needed to comply with tougher federal pollution standards, he said.

"As we work on a plan for future generation and begin a process to issue bonds, we do believe a performance review, conducted simultaneously with that bond process, could have a negative impact on our ratings which could lead to higher costs for our ratepayer," he said.

GRDA generates and sells electricity to more than 100 client, mostly municipally owned utilities and rural electric cooperatives in northeast Oklahoma. It receives no state appropriations and supports its debt through sales of electricity.

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