LIPA refinanced $1 billion in old debt Thursday by issuing that amount in new bonds at lower interest rates in a transaction the utility said will save $128 million.

The bond sale was the first of three transactions aimed at slicing $172 million from LIPA and PSEG Long Island's three-year rate hike that is expected to go into effect next year. Even with those savings, the utility still needs to raise $325.4 million in new revenue from ratepayers between 2016 and 2018.

Tom Falcone, LIPA's chief of staff and finance chief, said the savings were "a little ahead of where we expected to be." But he said the higher savings could provide a "cushion" in case next year's bond offerings come in below expectations. In any case, he said, it was too early to tell whether the planned rate increases of 1.5 percent, 3.8 percent and 3.8 percent over the next three years could be lower as a result.

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LIPA's overall debt level, which stood at $7.6 billion at the end of 2014, is expected to rise by year's end to $7.8 billion due to borrowing for infrastructure projects. Its debt is expected to surpass $8.2 billion by the end of 2018.

The Utility Debt Securitization Authority, created by Gov. Andrew M. Cuomo's LIPA Reform Act, issued the $1 billion in new bonds. The bonds are repaid through a charge on customer bills.

The new bonds have an average interest rate of 3.4 percent, compared with the LIPA bond's 5.54 percent.

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The new bonds have a higher AAA rating because all customers connected to the LIPA grid will pay off the bonds until they reach final maturity in 2035.

LIPA, which according to Bloomberg has a lower credit rating than any other U.S. public power provider, is shifting some debt to the new securitization authority as part of a plan to raise its own credit rating. That plan includes paying for more long-term expenses out of a larger pot of funds collected from ratepayers as part of the pending rate increase.

The UDSA debt offering marked the first time that a U.S. municipal utility used a special-purpose entity to issue tax-exempt bonds backed by customer charges that can't be revoked or altered, Bloomberg reported. LIPA said the savings allowed it to freeze rates between 2013 and 2015.In a separate development Thursday, LIPA said it was preparing to release a rebuttal to a July report by state Comptroller Thomas DiNapoli that raised questions about LIPA's planned rate hike, higher debt levels and its budget expenses.

The rebuttal, which has been circulated to LIPA board members and will be discussed at a LIPA trustee meeting Monday, is aimed at correcting "factual inaccuracies" and other "unsupported statements" in the comptroller's report.