Tahlequah Daily Press

August 21, 2013

TPWA welcomes suspension of task force

By TEDDYE SNELL
Staff Writer

TAHLEQUAH — srowley@tahlequahdailypress.com

Thanks to a recent decision by Gov. Mary Fallin, a bit of uncertainty has been removed from the planning and operations of the Tahlequah Public Works Authority.

Fallin recently suspended a task force set to study operations of the Grand River Dam Authority, from which TPWA purchases electricity.

“These sorts of things happen from time to time,” said Mike Doublehead, general manager for TPWA. “There has been talk about looking at every government agency, and we don’t have any problem with that, but we believe any dispersal of the GRDA could have cost our ratepayers a little more money.”

Doublehead said if the GRDA were sold, its operations would become more expensive.

“A privatization would result in an investor-owned enterprise that would want to pay off its debt,” he said. “It would also look for ways to make a profit. For the GRDA, as well as the TPWA, profit is not a motive. Our goals are to provide dependable electric service to customers at a low cost.”

Fallin created the task force through executive order July 8 to undertake a “full and thorough study” of the GRDA and recommend ways to improve its efficiency. The panel was to consider either privatizing the GRDA or splitting it into separate entities for lake and electric supply operations.

The GRDA board had been considering construction of a $300 million natural gas-powered electric plant and an $80 million upgrade to a coal-powered plant.

Many in the industry say the disquiet was not due to GRDA’s improvement plans, but rather because it wanted to issue $380 million in bonds to pay for them. There was little enthusiasm for the debt at the state capitol, though the authority will pay the bonds through the sale of electricity.

“I do believe one of the reasons the task force was formed is because the governor wants the state to pull back on the number of bonds being sold,” Doublehead said.

Task force has been suspended, for now

On Aug. 13, Fallin announced the suspension of the panel, saying she did not wish to “negatively affect the GRDA’s future bond ratings.”

“One of the things I consistently heard about the task force studying the GRDA is the timing is wrong,” Fallin said in a press release. “As GRDA CEO Dan Sullivan has told me, bond rating agencies will likely react negatively to the uncertainty created by an ongoing performance review like the one conducted by this task force. 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.”

Though the task force is suspended, Doublehead said its reconstitution “is a possibility.”

“She wanted to see if a sale of the GRDA was in the best interests of the state,” he said.

“I think she listened to the concerns of people in northeast Oklahoma. The GRDA has provided the TPWA with electricity since 1947. We have had a strong, productive relationship.”

During a meeting Aug. 11, the GRDA directors approved construction of a new plant near its Chouteau complex. Equipment is expected to cost $374 million. The GRDA will also spend up to $30 million to convert one of its two coal-fired plants to natural gas and $53 million to bring the other into compliance with federal standards for emissions.

The GRDA administers Grand Lake, Lake Hudson and the Holway Reservoir through licensing from the Federal Energy Regulatory Commission. It is a non-appropriated agency, receiving no tax revenue, which creates and markets electricity to rural co-ops and municipal utilities such as the TPWA.