OREANDA-NEWS. S&P Global Ratings has assigned its 'A-' rating to the Long Island Power Authority (LIPA), N. Y.'s $175 million electric system general revenue bonds, series 2016A (Municipal Market Data Floating Rate Note). At the same time, S&P Global Ratings affirmed its 'A-' rating on the utility's parity senior-lien revenue bonds. The outlook is stable.

"The authority benefits from the stable revenue stream that its approximately 1.1 million customers provide," said S&P Global Ratings credit analyst David Bodek.

LIPA will apply proceeds to refinancing its series 2012C variable-rate demand bonds.

The utility derives 53% of its revenues from residential customers and the balance from commercial and governmental customers. LIPA principally serves customers in New York's Nassau and Suffolk counties, where income levels in 2015 were 160% and 150% of the national household effective buying income, respectively, which we consider very strong.

The stable outlook reflects a rate decision that removes some of the uncertainty that overshadowed the first time application of DPS rate oversight to a public power utility in New York State. The outlook also reflects the availability of adjustment mechanisms that can limit the effects of volatile variable revenues and costs and our expectation that the interplay of rate increases and additional securitization financings could stabilize and possibly strengthen fixed charge coverage.

We could raise the rating if fixed charge coverage materially strengthens because of rate increases and the use of securitizations. However, capital spending needs, related debt financings, and ratepayer resistance to further rate increases could constrain the ratings.

We could lower the ratings if capital spending needs materially add to unsecuritized debt or resistance to rate increases pressure fixed charge coverage ratios.