Fitch Ratings yesterday upgraded the Long Island Power Authority’s $5.9 billion of revenue debt to A from A-minus. The rating agency also changed the outlook stable from negative.

The rating boost comes as LIPA prepares to issue $410 million of debt on May 4 and 5, according to authority spokeswoman Vanessa Baird-Streeter. The upcoming sales include $200 million of Series 2010A tax-exempt refunding bonds and $210 million of Series 2010B taxable Build America Bonds.

Fitch attributed the upgrade to the utility’s strong financial performance and fiscal management, and the board’s authority to change surcharges when needed.

“The upgrade reflects LIPA’s solid financial performance for the past five years and through the current economic recession, with improved cash flow, liquidity, and debt-service coverage, which are in line with A-rated retail electric systems,” a Fitch release said.

In addition, analysts cited the authority’s fuel and purchase power hedging practices, which has helped LIPA deal with sometimes volatile fuel prices and control its cash flow.

Credit challenges include high debt levels and relatively high rates for retail customers.

Fitch is also keeping an eye on state legislation that would give the New York Public Service Commission regulatory authority over LIPA’s rates. If the initiative were to become law, “it would represent an event risk that would likely trigger a rating action by Fitch,” the agency said.

Moody’s Investors Service assigns an A3 to the authority. The outlook is stable.

LIPA is a nonprofit energy provider, serving more than 1.1 million customers in Nassau and Suffolk counties. It is the second-largest municipal electric utility in the U.S., according to its website.

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