Gov. Andrew M. Cuomo Tuesday appointed three first-time directors to a newly formed authority to oversee the administration of refinanced LIPA debt.
The Utility Debt Securitization Authority, created by Cuomo's LIPA reform act this summer, was established to restructure a portion of LIPA debt at lower interest rates.
The original plan was to refinance about half of LIPA's approximately $7 billion of debt, but at a trustees meeting last month, LIPA announced plans to restructure only around $1.5 billion, as interest rates rise. The debt won't be tax-exempt, as much of LIPA's current debt is, because LIPA is still awaiting a ruling from the Internal Revenue Service on its tax-exempt status. The bonds are to be low-interest because they are AAA rated.
Cuomo said the savings from the restructuring will allow LIPA to freeze its delivery charge over the next two years.
The three men who will serve director terms of up to six years are: Paul Francis, a distinguished senior fellow of the Guarini Center on Environmental and Land Use Law at New York University Law School and former state budget director under ex-Gov. Eliot Spitzer; Bruce Levy, principal and president of Oak Ridge Power, a power development firm; and Robert Gurman, chief financial officer of Pocono Manor Investors and principal of Gurman Capital Group, a financial adviser.
At a LIPA trustees meeting earlier this month, LIPA officials explained that only around $1.5 billion is likely to be refinanced under an expected new AAA rating, because interest rates are rising, and only a certain amount of the debt can be securitized favorably.
Once it happens, ratepayers will see a new securitization line item in their bills, representing the costs to refinance and related fees, administered by the new authority.
At the meeting, LIPA chief financial officer Michael Taunton said the per-kilowatt charge on bills will be about $1 a month for the average consumer. He noted that the refinancing is expected to provide savings that will offset those costs.