In an effort to build two new natural gas units, refurbish a third facility and ultimately add hundreds of megawatts of electricity generation into its portfolio, the Grand River Dam Authority is asking the Oklahoma Legislature to approve a $1.6 billion increase to its bonding capacity.
Outlined in House Bill 1422, the request marks the second time in four years that the state-owned public power utility has sought a bonding capacity increase. In 2022, GRDA’s bonding capacity was hiked from $1.41 billion to $2 billion in conjunction with a massive incentive package aimed at luring a Panasonic battery plant to northeast Oklahoma. While the Japanese manufacturer ultimately selected other states for battery plants and no state incentive payments were triggered, the situation did authorize the nearly $600 million increase in GRDA’s bonding capacity, which the non-appropriated agency used to finance its new natural gas “Unit 4” currently under construction.
Now, three years later, GRDA leaders again say the public power utility again needs the ability to take out more loans, this time to decommission its final coal-fired unit — which has a 492-megawatt capacity — and spur future electricity generation growth by:
- building a new 450-megawatt single-cycle natural gas generation unit;
- building a 640-megawatt combined-cycle natural gas generation unit; and
- refurbishing the existing 260-megawatt pumped-storage project near Salina, Oklahoma.
While it was originally assigned to the House Rules Committee, HB 1422 is expected to be heard in the House Appropriations and Budget Committee late Wednesday afternoon, according to House Majority Floor Leader Josh West, who is carrying the bill.
“It’s easy for me,” said West (R-Grove). “I live up here.”
In terms of GRDA’s electricity services, “here” is northeast Oklahoma, which lacked a reliable electricity provider in 1935 when the Legislature created GRDA.
“In 2025, do I think the state of Oklahoma should own a power company? No, but in 1935, that is when GRDA came to be for the state of Oklahoma, so we’re never going to get rid of GRDA,” West said.
The public power agency has grown significantly over the last 90 years, operating three hydroelectric dams, two natural gas units and one remaining coal-fired generation facility. GRDA also buys renewable power from four wind farms, and it manages assets and law enforcement around Grand Lake and the Illinois River. In 2021, GRDA bought a shuttered Grand Lake resort in Grove with unspecified plans for its future.
In terms of its electricity customer base, GRDA sells power to 15 Oklahoma communities — including Stillwater, Claremore, Wagoner and Tahlequah — that can generate their own revenue by selling that electricity to residential and commercial customers. GRDA also provides reliable, low-cost power to companies located at Pryor’s MidAmerica Industrial Park, the Citizen Potawatomi Tribal Utility Authority, Western Electric Cooperative and 28 cities in Kansas, as well as other customers across a four-state region.
That massive and growing customer base has long spurred criticism from the private electric utilities that sell power in Oklahoma and from people — like former Senate President Pro Tempore Greg Treat (R-OKC) — who philosophically view competition from a state-owned electricity provider as bad for the broader market. The fact GRDA pays no state or local taxes has stuck in the craw of others, such as former House Appropriations and Budget Committee Chairman Kevin Wallace, who consistently advocated for requiring GRDA to make some sort of financial contribution to the state’s General Revenue Fund off of power it sells out of state.
While Treat was term limited out of the Senate last year and Wallace (R-Wellston) lost his final reelection bid in August, those concerns and ideas continue to flow through the State Capitol like water through a turbine.
“We’re weighing the pros and cons,” Senate President Pro Tempore Lonnie Paxton (R-Tuttle) said Thursday. “I look at it from the side that that is a state entity. The state owns that, so we are ultimately responsible for those bonds and those debts that are out there. They’re wanting to increase it by about $1.6 billion, so I’m just cautious about that if we’re allowing them to spend that much more money on stuff.”
House Speaker Kyle Hilbert (R-Bristow) said he has meetings set this week “to talk about” GRDA’s bond capacity request.
“We’ll negotiate and figure out what is best for Oklahoma taxpayers,” Hilbert said. “Obviously I was in the room for a lot of those conversations with Chairman Wallace, and GRDA of course always mentioned the various entities along the Illinois River and everything else where they provide (service) for the state. So we’ll look at it and see what makes sense and what’s fair. Those conversations will be happening in the coming weeks.”
‘There’s always been the rhetoric’
As West waits to present his bill Wednesday in committee, he knows a fight may be brewing over the unusual and complex nature of the state-owned power utility.
“There’s always been the rhetoric out here with GRDA,” West said. “It’s contentious anytime there’s anything to do with GRDA, and I just don’t see it. Maybe I have my northeast Oklahoma blinders on, but I don’t see the issue. I mean, we’re an energy-producing state, and we produce energy and sell it.”
To that end, the Petroleum Alliance of Oklahoma recently issued a letter to lawmakers supporting GRDA’s bonding capacity increase for the purpose of building the two new natural gas generation units. In a statement, GRDA CEO Dan Sullivan said HB 1422 is critical for the state of Oklahoma.
“To meet the expectations of our state, and the clear mandate from the Trump administration, it is critical to continue to invest in power generation to meet the growing demand we are facing in Oklahoma,” Sullivan said. “An investment in two new natural gas generation units will help keep Oklahoma competitive for providing affordable, reliable clean energy and bring additional jobs to our state.”
Sullivan, one of the top-paid state employees in Oklahoma, also said it is “critically important that we do not delay.”
“Time to market is a pivotal requirement for new investment in Oklahoma,” he said. “The lead times to get equipment ordered and in place dictate decisions be made now to serve our customers in the future. Oklahoma is on the radar of companies seeking to make investments, and that requires capital to support those investments and jobs.”
Despite Sullivan’s urgency, however, the issue is likely to face a methodical review by the Legislature, which features a joint task force on GRDA that is required to meet at least once this year.
Paxton, for instance, sees both sides to the argument over GRDA’s growth.
“They’re a trust, so they don’t pay the property taxes that the private companies do. So that’s part of the discussion,” Paxton said. “There was a [senator] who came to me and said, ‘Hey, if we’re going to do this, maybe the state can get something out of it?’ Maybe some kind of [General Revenue Fund] deposit. Something along that line. That discussion was something I didn’t come up with. It was a member (of the Legislature) who came up to me with that. So when we’re meeting about it, that is all part of the discussion. So I would say it is not definitive either way what’s going to happen or how it’s going to happen, but those discussions are happening.”
But Paxton said GRDA has “an incredible system” that is positioned as one of the state’s best recruiting tools for economic growth.
“The other side of that is with the concept of data centers and the energy demand coming in, they’re going to be adding lots of power to their system with some new turbines and refurbishing the other one, so it’s going to be able to generate much more power than they’re doing right now, which is needed for that part of the state,” Paxton said. “They service lots of areas. They service Stillwater, (…) their power goes to lots of areas where there’s going to be a large demand on that power. So from that standpoint, we can’t just hope somebody figures out how to create electricity and provide that service. We’re probably going to have to do something to do it. This is a way. It’s not state-appropriated dollars going into this. It’s them paying for it themselves. But ultimately, the state of Oklahoma would be responsible for that. So you try to think, what is that actual risk? In the real world, what is the risk of something like that?”
West, who is also running HB 1420 to exempt GRDA from requirements of the Long-Range Capital Planning Commission, argued that GRDA’s loans pose no risk to the state of Oklahoma, a talking point consistently objected to by representatives of private utility providers.
“I know when this bill runs on the floor, there will be a couple at least who say this is going to be a burden to the state of Oklahoma. But the state of Oklahoma has no financial burden to the bonding of GRDA,” West said. “These are specific projects, and we know we are going to see a need to produce more power in the near future, so this is a proactive approach. Don’t wait until it’s in front of us when it’s too late.”
Paxton said he simply wants to learn more about GRDA and the impact of its financial arrangements.
“If we ever had to sell it, I don’t think there’s any chance we’d ever lose money on it,” Paxton said. “But I just want to make sure it’s the right thing. They’re making the argument that they need to have that increased capacity. I believe that. I know that we do, so let’s make sure we’re doing it the right way.”
(Clarification: This article was updated at 5 p.m. Sunday, Feb. 23, to remove a small portion of a quote regarding Oklahoma ports, to which the Grand River Dam Authority provides no services.)
Read the Petroleum Alliance letter about GRDA
