MuskogeePhoenix.com, Muskogee, OK

July 28, 2013

Review stirs fear of GRDA privatization

Fallin ordered review earlier this month

By D.E. Smoot
Phoenix Staff Writer

— A comprehensive review of the Grand River Dam Authority ordered by the governor stirred up people who fear the agency may be targeted for privatization.

Fallin issued an executive order earlier this month, creating the task force charged with undertaking “a full and thorough study” of the unappropriated state agency. The panel, which will be made up of 15 members “who have experience or an interest in energy issues” and two members of her Bold Ideas task force, is expected to “recommend potential changes to improve efficiencies.”

Alex Weintz, Fallin’s communications director, said privatizing the state agency is not the ultimate goal for the task force, whose members have yet to be identified. Weintz, however, said privatization is not outside the realm of possibilities.

“I think it’s an overall effort by the governor to look under the hood — not just GRDA, but all across state government — to make sure we’re operating as efficiently and effectively as possible,” Weintz said. “The governor is not for the wholesale privatization of GRDA, but there have been suggestions in the past that parts might be privatized.”

It’s that prospect of privatization, an idea for which the governor and state lawmakers “have a very strong interest,” that has spawned criticism and concern. Several municipalities across the state, including the cities of Wagoner and Tahlequah, buy and resell electricity generated by GRDA.

Wagoner Mayor James Jennings said he is “very concerned with what is going on right now.” The city of Wagoner — like several municipalities in northeastern Oklahoma that buy and resell GRDA electricity — relies heavily on that revenue stream to provide other core services.

“Any time you start messing with city hall’s pocketbook, it’s going to get everyone’s attention,” Jennings said about the governor’s top-to-bottom review of GRDA. “This is a major problem for everyone — GRDA ... services quite a few municipalities, industrial parks and rural cooperatives. If they privatize that, it would drive up the costs for everybody and threaten an important source of revenue for us.”

GRDA was created by state law nearly 75 years ago for the purpose of controlling, storing, preserving and distributing the waters of the Grand River and its tributaries. It allocates those resources to irrigation, power generation and other useful purposes.

The agency’s power generation assets include six generating facilities throughout Oklahoma. Those facilities consist of three hydroelectric generation projects, a coal-fired complex, a combined-cycle gas power plant and a wind energy project.

Tom Rider, general manager of Municipal Electric Systems of Oklahoma, said GRDA sells electricity to municipalities, industrial parks and rural cooperatives at reasonable costs. The reselling of that electricity by municipalities provides revenue to fund police and fire protection, street repairs and public parks for residents.

The association of municipally owned electric utilities Rider oversees is drumming up interest among its member cities to oppose efforts to privatize GRDA or any of its parts. Jennings said Wagoner city councilors will consider passing a resolution when it meets in August.

The resolution, which already has been approved by officials in several municipalities that would be affected by privatizing GRDA if it occurs, points out the state agency is self-supporting financially. It also cites the agency’s “affordable electric costs” that serve as economic incentives that spur development and create jobs.

“The customers it has funds GRDA — the state doesn’t fund GRDA at all,” said Jennings, who met with two local lawmakers Friday afternoon to share his concerns about the governor’s newest task force. “If GRDA is privatized it would most definitely affect our costs, and that will also affect our residents and many, many others.”

Weintz said the governor is initiating the GRDA study with no “preconceived notions” or “no specific end goal in mind.” He said the agency “does a lot of great work in a lot of areas,” and task force members will be looking at “what GRDA is doing right” and what can be done “more efficiently and effectively.”

“We are not teeing it up from the standpoint that our administration has already decided a direction to pursue,” Weintz said. “GRDA does a lot of great work in a lot of great areas, and we don’t want to throw a wrench into what they are doing.”

The idea behind the task force, Weintz said, is to “give the governor a menu of options” from which to choose. He said the governor’s team expects the task force “to address the issue of privatization, but that is not the primary goal.”

State Rep. Rousselot, a Democrat from Okay, said he shares Jennings’ concerns about the GRDA task force and what might be in store for the state agency. After he and Sen. Kim David, R-Porter, met with Jennings Friday, Rousselot said he could see where privatizing the agency’s generation and transmission assets could be “very detrimental.”

“The mayor is exactly right: It would be detrimental to Wagoner and many other communities in Oklahoma that buy and resell GRDA electricity,” Rousselot said. “The mayor would like for the governor to disband the task force — I understand that — but I think it will proceed.”

Rousselot said some of those concerns may stem from the task force membership. Of the 15 appointments Fallin will make, all but five members would come from the electric utilities sector. Others would include members connected to Grand Lake, state tourism, economic development and a task force Fallin created to explore “bold ideas.”

The governor’s Bold Ideas task force dedicated an entire section to the topic, bolstering support for privatizing state services. Among the task force’s recommendations was the creation of a central repository of best practices for privatization and surplus asset sales — that was accomplished this year when Fallin signed Senate Bill 1008.

Members of the Bold Ideas task force who addressed privatization of government services stated in their report “there are may opportunities to privatize Oklahoma government services.” The panel of five focused on the issue identified 14 areas that have been widely discussed and considered for privatization — GRDA’s generating assets was listed third among the 13 others.

Another reason that could raise concerns about the privatization of GRDA or its generating assets is the fact Fallin has benefited from campaign contributions flowing from energy and natural resources sector. Since 2002, Fallin has raked in nearly $1.02 million in campaign contributions from individual and corporate donors, and political action committees representing that business sector.

According to data compiled by the National Institute on Money in State Politics, donors with ties to the energy and natural resources sector contributed $617,000 to Fallin’s bids for lieutenant governor and governor. About $56,000 came from donors with ties to electric utilities.

The Center for Responsive Politics, which tracks contributions to congressional candidates and other federal offices, reported contributions to Fallin’s congressional campaigns totaling nearly $400,000. There was no breakdown for that data to show how much money flowed from donors with ties to electric utilities.

Weintz discounted assertions that there might be a connection between campaign contributions flowing from the energy sector to the GRDA task force. He said Fallin mounted one of the “largest and most expensive” gubernatorial campaigns in state history, and the financial support for her campaign flowed from many diverse interests.

“Who donates to the governor’s campaigns and how much they give does not drive or affect how we make policy — period,” Weintz said. “Supporters were drawn to her pro-growth and pro-business message, so I am not surprised the energy industry was attracted to her campaign.”

Weintz said the GRDA review “is not about picking a fight. It is the governor doing her due diligence.”

Rousselot, who said he opposes GRDA privatization because it is not in the city of Wagoner’s best interests, said the key to this issue will be to “keep the lines of communications open” with Fallin regarding the work of the GRDA task force. Rousselot said he has a good working relationship with the governor, and he pledged to share with Jennings and others updates about the task force’s progress.

Reach D.E. Smoot at (918) 684-2901 or dsmoot@muskogeephoenix.com.