In response to a mandate by New York Gov. George E. Pataki, a Long Island Power Authority (LIPA) advisory team has developed a proposal to dismantle the Long Island Lighting Co. (LILCO), hoping to reduce electric rates by as much as 12 percent. In response, Moody's Investors Service has changed the direction of its review of LILCO's credit ratings from negative to uncertain.
LIPA intends to create a LIPA "wire company" that would buy LILCO's transmission and distribution assets, including some payment for the Shoreham plant. LILCO's gas business would be
sold to a private owner. LILCO's fossil-fuel assets would be sold
to four or five private owners. LIPA finds disposition of LILCO's 18-percent ownership interest in the Nine Mile Point 2 nuclear plant "problematic," because the plant's electricity is about 13 cents per kilowatt-hour (¢/Kwh), compared to a current market price of about 4¢/Kwh.
LIPA would finance its plans with a $4.5-billion bond sale (em the largest ever in the municipal bond market. LIPA would also attempt to settle pending litigation under which LILCO is seeking to recover about $500 million, excluding interest, for tax overassessments by Suffolk County.
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