The state legislature passed a bill this week allowing LIPA to increase its debt burden to $ 8 billion. Utilities say they can save more than $ 600 million in customers, and lawmakers say this will provide a new layer of financial oversight for LIPA borrowings.
The bill, which will be signed by Governor Andrew M. Cuomo, relates to debt under a state agency called the Utility Debt Securitization Authority, which was established under the LIPA Reform Act of 2013. At that time, LIPA said it would refinance over $ 4.5 billion in old debt at a fairly low interest rate to save over $ 400 million.
The 2013 Reform Act set a borrowing limit of $ 4.5 billion. The new bill raises the cap to $ 8 billion and requires LIPA to remand it to Congress for approval if it wants to exceed that amount, lawmakers said. Parliament said the new bill also included some level of oversight by the State Department to ensure that new debt could save interest payers’ money. Together with State Senator Todd Kaminsky (Long Beach). Fred Thiele (I-Sag Harbor) submitted.
A spokeswoman for Mr Cuomo asked for comment but did not respond immediately. Mr Cuomo had sought another bill as part of the state budget, but Mr Thire said lawmakers rejected it.
The bill “allows additional investment in storm resistance and resilience, saving customers more than $ 600 million in funding costs,” LIPA said in a statement.
Asked if the law could reduce customer rates, LIPA said, “All reductions in interest payments will reduce utility revenue requirements and thus lower customer electricity rates.” It was. However, utilities pointed out that interest payments account for only about 10% of customers’ invoices.
Thire said the bill would allow LIPA to use new debt caps to improve resilience “at current low interest rates,” but he said LIPA’s borrowing was “hard aggregate.” He said it was under the “cap” and not the “movement target”. [Cuomo’s] A rotating cap is created. ”
The law gives LIPA the flexibility to issue new bonds under UDSA and refinance existing bonds, limiting new debt to approximately $ 3.5 billion.
Borrowing costs under UDSA are due to stronger bond clauses and guaranteed payments to bondholders under almost all circumstances, including the unlikely event of LIPA filing for bankruptcy protection.
Kaminsky said he supported the bill as the level of surveillance was renewed.
Kaminsky, who voted in favor of the bill, said, “We want you to know that we are watching them carefully, and we are very concerned that they appear to be lacking. “I want LIPA to know if I want to exceed the limit and answer questions about numbers.”
According to a financial report at the end of 2020, LIPA’s long-term debt at the end of 2020 was $ 8.75 billion (LIPA debt of $ 4,695 million, UDSA’s $ 4,061 million), up from $ 8.45 billion in the previous year. did.
Legislators approve state bill to increase LIPA’s debt
Source link Legislators approve state bill to increase LIPA’s debt