A reading of Moody’s report on LIPA issued in July, 2011 reveals much about LIPA’s poor financial condition.
For one thing, it shows the utility’s bond rating may be more influenced by a tight cash situation and poor liquidity than the prospect of future regulatory oversight by the PSC. It also sets the record straight on LIPA’s total debt, which is over $10 billion instead of the commonly publicized $6.9 billion number, when $3 billion in capital leases are taken into account.
In this light, it is important to note that Consolidated Edison, an investor owned utility with many challenges and regulated by the PSC, actually has a bond rating superior to LIPA’s. Obviously this suggests there is more to a utility’s financial rating than whether or not it is subject to regulatory oversight.
The ultimate determinant is really management capability and performance. If LIPA had been under PSC scrutiny previously most likely it would not be in the fix it is today. Hopefully, the Governor will recognize this and approve the legislation before him calling for PSC regulation of LIPA.