Higher GRDA rates are planned

01.12.2006
by Randy Krehbiel, Tulsa World

The increase, scheduled for April, is needed to improve the utility's finances, its chief says.

VINITA -- Grand River Dam Authority customers will see rate increases of 4 percent to 7 percent beginning April 1, the state-owned electric utility said Wednesday.

Chief Executive Officer Kevin Easley said the increase was necessary to offset increased operating costs and improve the GRDA's financial position.

"We're going to end (2005) with about $50 million in cash," Easley said. "That's better than it was, but it has been $80 million, and we think we need $100 million."

The increase is expected to generate an additional $13 million in revenue in its first full year, he said. The GRDA generates and markets electricity to 18 municipal utilities in Oklahoma, Kansas and Arkansas; Northeastern Oklahoma Rural Electric Cooperative; and industrial customers at the Mid-America Industrial Park south of Pryor. It also sells electricity under contract and on the spot market to other municipalities in Kansas, Missouri and Arkansas.

Rates for retail residential and commercial customers, except those in the industrial park, are set by their municipal or cooperative utilities but are affected by the underlying GRDA rates.

Judy Lambert and Michael Moore of the consulting firm CH Guernsey told the GRDA's directors that the GRDA would not be able to maintain the debt-service ratio required by its bond covenants without raising rates. Moore said that even with the increase, the GRDA's electricity would be cheaper than that from area investor-owned utilities.

"I have other clients who would be happy to buy energy at GRDA's rates," Moore said.

In addition to improving the utility's cash position, Easley said, the increase was necessary because of growing demand and limited generating capacity, escalating operating and maintenance costs, and the cost of relicensing the Markham Ferry Project -- Kerr Dam and Lake Hudson.

Easley said the increase was not related to the GRDA's interest in buying or building more generating capacity. Additional generating facilities, he said, would have to pay for themselves through increased electric sales.

Although all six directors present ultimately voted for the new rate schedule, their views ranged from Gerald Gay's concern that the increase was too steep to Mike Cantrell's opinion that it might not be steep enough.

"I understand this is very difficult," Easley said before the vote, "but we just felt like we couldn't wait any longer."