VINITA, OK - The Grand River Dam Authority took another major step towards the realization of its long-term generation plan last week when its board of directors approved much of the preliminary steps needed for a $450 million bond issue, which will likely take place later this fall.
GRDA will use the majority of the proceeds from this bond issue to construct a new, combined-cycle gas fired generation plant at the Grand River Energy Center (formerly Coal Fired Complex). Other proceeds will be used to complete emissions control upgrades on Unit 2, one of the existing coal fired generators at the facility.
A combined cycle unit produces electricity in two ways: natural gas is first used to fuel a combustion turbine-generator and then heat from that process will be recaptured and used to produce steam to turn another steam turbine-generator.
The new unit, designed by Mitsubishi Hitachi Power Systems Americas, will be powered by Oklahoma natural gas and will be the first of its kind in the western hemisphere. Once complete, it will have the potential to be the most efficient combined cycle unit in the United States.
"This is an exciting time for GRDA, as it prepares for this new bond issue and the construction of this new unit," said GRDA Chief Executive Officer/Director of Investments Dan Sullivan. "I want to commend our board for making these decisions and allowing GRDA to move forward with this very important step towards our future goals."
At its August meeting, the board approved the necessary resolutions related to the bond issue, which included the preliminary official statement and bond purchase agreement. GRDA expects the issue to take place in October.
Historically, the Authority's bonds are very popular in Oklahoma. Prior to August 2012, when GRDA paid off $200 million in bonds, Oklahoma residents in 76 of 77 counties held a combined $272 million worth of GRDA bonds. A $550 million GRDA bond issue in 2008 was, at the time, the state's largest, in terms of retail sales to in-state investors.
"These bonds are very well received by Oklahomans," said Sullivan, "and we view that as a vote of confidence in GRDA and the important mission it fulfills everyday for the state. We anticipate the same kind of reception for this next issue."
In March 2013, Moody's Investor Services affirmed its "A2" rating for GRDA and moved its outlook from "stable" to "positive" status. In April 2014, Standard and Poor's Rating Service took similar action; reaffirming GRDA's "A" rating and moving the outlook from stable to positive. According to Sullivan, these revisions can mean lower interest rates when bonds are issued; something that will benefit GRDA's ratepayers. Higher ratings can also enable GRDA to save money on natural gas hedging in the future.
All three rating agencies: Moody's, S&P and Fitch will update their GRDA ratings prior to the bond issue later this year.
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 serves nearly 500,000 homes in Oklahoma and stretches into 75 of 77 counties in the state. 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. Today, GRDA's 500 employees continue to produce the same "power for progress" that has benefited the state for 75 years.