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LIPA OKs $2.5 billion debt refinancing

LIPA trustees Friday authorized the refinancing of $2.5 billion more in old utility debt, and extended LIPA's participation in a partnership to build a wind farm off Long Island's South Shore.

Both measures passed unanimously at the meeting in LIPA headquarters in Uniondale.

The debt plan allows another state authority to refinance up to $2.5 billion in debt by issuing new bonds at lower interest rates. LIPA finance chief Tom Falcone said the transaction's projected $155 million in savings over three years will help moderate an average 3.2 percent rate hike planned for 2016-18.

Two ratepayers took issue with saddling ratepayers with unavoidable long-term obligations.

"Current LIPA ratepayers, their children, and grandchildren will be debt-slaves shackled for many years to investment banker slave-masters," said energy activist Peter Maniscalco of Manorville. The new debt will be repaid by all ratepayers connected to the grid, and the debt can't be discharged through bankruptcy.

Falcone assured trustees that the new bonds wouldn't extend the life of the old debt. The refinancing was initiated by Gov. Andrew M. Cuomo's 2015 budget bill, which also included terms that said new debt couldn't extend beyond the current debt. Cuomo's LIPA Reform Act of 2013 authorized the first refinancing. Wall Street firms received about $10.4 million to handle those transactions.

Falcone said half the new debt will be repaid over the next 12 years, the remainder over the following 23 "just like the existing bonds."

"It's the interest cost that's going down," he said, noting the new average interest rate is 3.5 percent compared with the old bonds' average 5 percent.

Trustees also approved a measure to authorize LIPA to continue in an offshore wind collaborative with Con Edison and New York Power Authority that seeks to put a 105-square-mile wind farm in waters 11 miles off the South Shore, from Far Rockaway to the Suffolk border.

The collaborative effort, begun in 2010, has been stalled because other private developers are seeking the same water-right lease that LIPA and its partners are seeking. LIPA has set aside $1.25 million for the effort but has spent only $103,000.

Peter Gollon of the Sierra Club Long Island said he was "a little perplexed" by the lack of progress on the wind farm. "It's still a paper project. It's still a study." He urged LIPA to expedite it.

Board member Thomas McAteer Jr. pressed Michael Deering, director of customer service and program oversight at LIPA, on when the five-year initiative would result in a wind farm. Deering said the leasing process might take another two years for federal authorities to conclude, and "I would imagine you are looking at three years after that," suggesting a possible project date of 2020.

In other news at the meeting, PSEG Long Island will move forward with a $1.8 million plan to build a communications network for smart meters this year, while installing around 5,000 more of the devices at a cost of $2.1 million in homes and businesses across Long Island.

The devices use Wi-Fi radio networks to send customer usage data back to the utility, eliminating the need for meter readers and estimated bills.

LIPA already has around 8,000 such meters installed, on Fire Island, at Stony Brook University and the Route 110 Corridor in Farmingdale.

PSEG as part of its rate-hike request wants to install another 180,000 of the meters over the next three years.

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