Entergy New Orleans has secured a triple-A rating for its $98.73 million offerings of bonds backed by “storm recovery” fees.

Entergy New Orleans Storm Recovery Funding I LLC issued a single tranche of notes with a preliminary ‘AAA’ rating from Standard & Poor’s. The notes, which have an expedted average life of 4.98 years, pay 2.67%.

The utility has the authority to levy a storm recovery fee on power transmission and distribution customers. The fee is meant to cover the costs that it has incurred or will incur from severe weather.

Citigroup Global Markets is arranging the deal and Sidley Austin is a counsel to the issuer, according to SEC filings.

Louisiana state law has allowed electric utilities to levy storm recovery fees since 2006. But it was only in January of this year that ENOI was specifically authorized to recover costs, including the replenishment of storm reserves relating to damage caused by Hurricane Isaac in 2012. And the council finance order authorizing the issuance of up to $99 million of bonds only became final last month.

Proceeds from the deal will be used to reimburse approximately $31.7 million in storm recovery costs and $63.9 million in storm recovery reserves, and to cover $3.4 million in upfront financing costs, according to S&P’s presale report.

The storm recovery fees are adjusted semi-annually via a “true up” mechanism to ensure that sufficient funds are collected to service the bonds in the event that energy usage fluctuates.

As of Dec. 31, 2014, ENOI provided electric service to approximately 171,120 retail electric customers in Louisiana, including a mix of residential, commercial, and diversified industrial retail electric customers, according to S&P. During that period, it delivered approximately 5.2 billion kilowatt hours of electricity, resulting in $485.8 million of billed electric revenue.

The deal is expected to close July 22.

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