New York Power Authority (NYPA) has received high level credit ratings for bond issues from Fitch based on strong finances and low-cost hydro assets while the agency noted the Niagara relicensing cost more than US$0.5B.

The credit ratings agency said securing the new operating licence for Niagara, obtained in March from the Federal Energy Regulatory Commission (FERC), was expected by NYPA to have associated costs of at least US$545M. The outlay is seen as manageable as it would be recovered via rates but over 50 years, which is the period of the new licence.

Fitch said the wholesale utility – the largest US non-federal public producer – benefited from low cost power assets, which were mainly hydro power, and it had strong finances and good operational performance. Cashflow has been used to pay down debt related to less competitive assets while NYPA benefits from competitive wholesale rates.

While noting that there remains the matter of hydrological risk, Fitch said that the utility’s construction of gas-fired peaking plants also exposed it to gas market supply pressures. On delivery, there is little exposure to the spot market as more than 90% of its own generating capacity (total of 6846MW) was sold under long-term contracts.