The New York Senate and Assembly passed Gov. Andrew Cuomo’s plan for restructuring the Long Island Power Authority.

The plan passed early Friday morning includes the securitization of almost half of LIPA’s $6.7 billion in debt.

In the plan PSEG will take over most of the responsibility of providing electricity to Long Island. LIPA would become a holding company, allowing for continued tax exempt issuance.

Electric rates will be frozen through 2015.

The new securitization will lead to some debt service savings and this is a positive, said Fitch Ratings managing director Dennis Pidherny.

Fitch’s primary concern about the plan is that it may lead to less flexibility to set rates. This will certainly be the case in the first two years, Pidherny said.

Pidherny is also concerned about the involvement of the New York Department of Public Service after two years. Their political goals may impede necessary rate increases, Pidherny said.

Subscribe Now

Independent and authoritative analysis and perspective for the bond buying industry.

14-Day Free Trial

No credit card required. Complete access to articles, breaking news and industry data.