Correction: Fitch Rates Modesto Irrigation District, CA's $117MM COPs 'A+'.

Business Editors

SAN FRANCISCO--(BUSINESS WIRE)--Feb. 23, 2004

(This is an amended version of a press release originally issued on Nov. 7, 2003 and contains revised information on the dollar amount and sale date of the COPs in the first and third paragraphs, respectively.)

Fitch Ratings assigns an 'A+' rating to the Modesto Irrigation District's (MID) $50 million series 2004A (junior lien) and $66.6 million 2004B (auction-rate, junior lien) certificates of participation (COPs). Additionally, outstanding debt is affirmed by Fitch as follows:

-- $99.5 million senior lien project revenue bonds (Woodland and

Geysers generating stations) 'A+';

-- $298 million junior lien certificates of participation 'A+';

and

-- domestic water revenue bonds 'A'.

The Rating Outlook is Stable.

The outstanding series 1992 Woodland generation station revenue bonds and series 1996A Geysers refunding revenue bonds were originally issued by the Modesto Irrigation District Financing Authority (MIDFA). Via leasing agreements, MID is the ultimate obligor on the MIDFA-issued debt.

The 2004A & B transactions are structured as a lease financing between MID and the Electric Infrastructure Leasing Corporation, pursuant to a lease agreement dated March 1, 2004. The certificates represent the certificate holders' proportionate interest in rental payments, which include debt service, to be paid by MID to the corporation. The rental payments are secured by net revenues of the electric system, subordinate to MID's senior lien revenue bonds and prior lien (off-balance sheet) contractual obligations with joint action agencies. Proceeds from the certificates will finance the construction of a 95MW natural gas fired power plant (Ripon) and capital improvements to MID's electric facilities. The 2004A certificates are scheduled to price Feb. 24, and the 2004B auction rate certificates are scheduled to price on March 15, with Bear, Stearns & Co. as lead underwriter.

MID's credit rating reflects a fiscally conservative, yet proactive management team, regionally competitive rates, a strong financial position, and diversified power supply position. Total debt service coverage (senior and junior lien) has been solid at 1.4 times (x) - 2.3x on MID's electric system debt since 1997. Despite the volatility in purchased power costs resulting from the California energy crisis in 2000-2001, MID still maintains substantial cash reserves, currently at $131 million or roughly 87% of annual operating expenses. MID's owned generating resources are modest (10% of total energy), with an additional ownership of 25% (San Juan Unit No. 4) through a joint power agency, and purchased power accounting for the majority of energy requirements at 65% for 2003. Power supply strategy going forward is to firm up 80% of capacity requirements, as opposed to 50% historically, to limit spot market exposure, particularly during periods of extreme price volatility.

Credit concerns include the increasing commodity exposure to natural gas prices, rising projected retail rates and significant off-balance sheet obligations with two joint power agencies (JPA) totaling $366 million. Given the completion of the gas-fired Woodland Generating unit and the construction of the Ripon Generating Units in 2006, natural gas will become the dominant fuel source, from a capacity perspective, by 2005. MID intends to hedge up to 80% of its total natural gas exposure in 2004.

MID's retail rates are currently 20%-40% below PG&E's and comparable with respect to other munis in the area, but the projected annual rise in rates may narrow their rate advantage going forward, particularly once Pacific Gas and Electric's (PG&E) bankruptcy proceedings are completed. Offsetting the above concern is that MID's most vulnerable larger loads are frequently under contracts of 1-5 years in duration. Additionally, while total leverage is rising going forward, primarily for major capital expenditures, the projected continued strength in unrestricted cash reserves and strengthening credit protection measures help to mitigate that risk.

MID is an integrated electric system providing electric service to over 100,000 customers, mostly residential and commercial users, in rural central CA (90 miles east of San Francisco). Industrial users accounted for a relatively moderate 22% of operating revenues in 2002. The largest user, E&J Gallo wines, accounts for 7.5% of operating revenues, and is under a long term contract with MID through 2004. The service area is agricultural based with an energy sales growth averaging 2% per year since 1998. MID also provides water for irrigation use to approximately 3,400 users in Stanislaus County.

For additional information on MID's credit strengths, please see Fitch Ratings' report dated May 2, 2003 available on the Fitch Ratings web site at 'www.fitchratings.com'.