For immediate release: 10/14/09

GRDA Announces Rate Increase To Begin In 2010

Vinita – While it plans to roll out an 11.95 percent base rate increase on January 1, 2010, the Grand River Dam Authority remains optimistic the increase can also be rolled back in the future.

“It is possible this can be adjusted down in the future,” said GRDA Chief Financial Officer Carolyn Dougherty. “Based on our ongoing financial condition and rate requirements, things could certainly change.”

The GRDA Board of Directors approved the increase during its October 14 meeting, after reviewing the findings of recent rate analysis conducted by C.H. Guernsey and Company. Those findings pointed to 2010 as the year when the rate adjustment would be most needed. However, because the older GRDA debt is scheduled to be paid off in 2014, the increase is considered temporary, and would not last beyond May 2014.

“We are going to be in a belt-tightening period for the next few years,” said GRDA Chief Executive Officer Kevin Easley. “Like many other organizations, we are seeing the results of a slowing economy, where growth projections did not materialize. However, the future remains very bright for GRDA past 2013.”

Because GRDA is cost-of-service utility, it does not have to build in a profit component into its rate structure, and “as we continue to analyze our rate requirements each month we may see that a roll back is possible before 2014,” added Easley. “Our requirements are based on costs to provide service and costs to cover debt. When this increase is not required, we will roll it back.”

Dougherty also noted that, while the increase is nearly 12 percent, the overall cost to the average GRDA customer will likely be lower. GRDA has three major components to their rates: capacity and energy charges, and a power cost adjustment (PCA). “That means this 11.95 percent increase in base rates will translate into an overall increase of approximately 10 percent, since only the first two components are impacted by a base rate increase.”

“Much of our costs have been shifted to this increase and away from our PCA. Purchased power costs that previously automatically flowed through the PCA twice a year were replaced with debt costs on additional generation, and have to be recovered through the base capacity and energy rates,” she said.

Meanwhile despite the overall rate increase, GRDA rates remains among the lowest in the region, added Easley.

“No one likes a rate increase, but we do believe this is necessary to keep GRDA on secure financial footing over the next few years,” he said, “and even with the increase in place, our cost-of-service rates still help us to maintain the reputation one of Oklahoma’s lowest-cost electricity suppliers.”  

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 over 1,900 miles of transmission line. GRDA sells wholesale electricity to three customer classes: municipals, electric cooperatives, and industries.