The Internal Revenue Service approved tax exemption for bonds issued by the PSEG-run Long Island Public Authority.

Following complaints about high rates and poor service, New York's government this summer approved the takeover of LIPA's operations by Public Service Enterprise Group.

The takeover was dependent on several approvals. The last of these approvals was by the IRS of the continued tax-exempt nature of LIPA's bonds.

"Today's formal approval of the PSEG-LI contract from the IRS is a win-win for Long Island ratepayers," said New York Gov. Andrew Cuomo. "Long Islanders will finally benefit from a privatized utility operation with improved disaster response and customer service, that maintains tax-exempt benefits such as financing infrastructure upgrades and preserving eligibility for federal reimbursement related to major storms. This IRS ruling means better service and cost savings for ratepayers and is a victory for the residents and businesses of Long Island."

The IRS decision is "certainly good news as we prepare to assume responsibility for the LIPA system in just five days," PSEG Long Island president David Daly said.

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