New York Gov. Andrew Cuomo may be backtracking from a commitment to privatize the Long Island Power Authority, which holds $6.9 billion in short-term notes and long-term bonds.
The authority is a public utility that provides electricity to Long Island.
On Jan. 7 a body appointed by Cuomo, the Moreland Commission, released a recommendation for LIPA to be privatized. On Jan. 9 in his annual State of the State speech Cuomo endorsed the recommendation.
“The Moreland Commission has recommended the option of privatization, but the administration does not want this to be a top-down process and will be discussing a range of options with local stakeholders and ratepayers,” a Cuomo administration official told The Bond Buyer Thursday.
“After LIPA’s failure to perform, particularly during Superstorm Sandy, Gov. Cuomo committed to abolish the current authority and replace it with a new structure that protects rate payers, improves services and is ready to handle future natural disasters,” the official said.
“The governor is now deploying his top aide, secretary to the governor Larry Schwartz, to engage elected officials and business and community leaders to form a consensus around the best option for replacing LIPA,” he said.
In one version of LIPA privatization, a new body would be set up that would sell bonds to replace more than half LIPA’s debt. The new body could get lower interest rates than LIPA has for the existing debt, the governor believes.
Electricity customers would pay off this debt through a separate fee on their bills in addition to their electrical use charge.
By reducing LIPA’s debt, a major obstacle to LIPA’s sale would be removed.
This is just one LIPA option Cuomo is currently considering.
