Fitch Rates 2 New FL Muni Pwr Projs/Lwrs Stanton II's Jr Bond Rtg.

Business Editors

NEW YORK--(BUSINESS WIRE)--July 6, 2000

Fitch lowered its rating on $53 million of outstanding Florida Municipal Power Agency (FMPA) Stanton II Project subordinate refunding revenue bonds to 'A-' from 'A'.

The downgrade primarily reflects FMPA's additional use of the project's subordinate lien and the increased amount of variable rate debt. Initial ratings of 'A' and 'A-' were assigned to the outstanding $47 million of Tri-City Project senior bonds and the outstanding $274 million of St. Lucie Project senior bonds, respectively.

Additionally, Fitch affirmed the following outstanding ratings:

-- $179 million of All-Requirements Power Supply Project senior

lien revenue bonds at 'A+'.

-- $109 million of Stanton II project senior lien revenue bonds

at 'A'.

-- $86 million of Stanton Project senior lien revenue bonds at

'A'.

FMPA is a nonprofit, joint-action agency with five separate power supply projects and one pooled financing project. The agency's 29 members may join more than one project, however each project is independently financed and separately secured.

All of FMPA's ratings reflect the following credit characteristics: good management, court-validated power supply contracts and Florida's slow transition to deregulation -- allowing FMPA and its members time to position themselves for competition.

Reasonable retail rates and a very small industrial customer base, at the member level, provide further credit support. In addition, FMPA recently received a favorable transmission ruling providing the agency with about $38 million in cash, transmission rate reductions and power supply benefits.

This, together with management's modest debt reduction plan and historically stable financial performance, are credit strengths for each project.

While FMPA enjoys some of the lowest wholesale rates in the state, and is actively attempting to lower them further, member system retail rates are slightly above-average due to high general fund transfers. If not addressed, these higher retail rates could adversely affect FMPA in a more competitive environment.

In addition, as the electric industry transitions to competition, the member systems' ability to reduce transfers and lower retail rates is an important tool in competing with investor-owned utilities. FMPA's increasing use of variable rate debt and each project's direct and indirect exposure to interest rate risk, are additional concerns.

FMPA recently issued subordinate refunding revenue bonds series 2000 and plans to issue about $70 million of All-Requirements subordinate bonds in August. With these issues, subordinate lien debt comprises approximately 38%, 13%, 56%, 6% and 6% of the All-Requirements, Stanton, Stanton II, Tri-City and St. Lucie projects total debt, respectively.

All-Requirements: Senior lien rated 'A+'.

The All-Requirements project has 11 participants and one more will join during this summer. The project was originally designed for non-generating systems, however FMPA's Integrated Dispatch and Operations (IDO) program expanded the project to include systems that own generation. IDO allows FMPA participants to pool their resources and utilize generation more efficiently. FMPA expects additional members to join the All-Requirements project over time.

The 'A+' rating reflects a diverse resource mix of 40% owned generation and 60% purchased power and strong sales and demand growth. Additional strengths include a competitive wholesale rate of about 4.6 cents/kwh, a favorable mix of power resources, improved flexibility in planning for future power resources and a growing member base.

The All-Requirements project also enjoys higher debt service coverage than the other projects, about 2.60 times (x) (before rebates to member systems).

Stanton II Project: Senior lien rated 'A', Junior lien rated 'A-'.

The seven Stanton II participants have a 23.2% (99.6 megawatt) ownership interest in Stanton Unit No. 2, a coal-fired generating facility. The rating reflects a competitive wholesale rate of 4.2 cents/kwh, the unit's and above-average performance record.

The project benefits from strong participants with historically sound financial performance, good customer mix and above-average sales growth of about 3.5% annually. Project-specific concerns include risks associated with a single generating unit, above-average fixed costs and an increasing amount of variable rate debt.

Stanton Project: Senior lien rated 'A'.

The six Stanton participants (five also participate in the Stanton II Project) have a 14.8% (63.3 mw) ownership interest in Stanton Unit No. 1, a 425 mw coal-fired generating facility with an above-average performance record. The wholesale rate is competitive at about 3.8 cents/kwh. Project-specific concerns include a reliance on one generating unit, a need to reduce fixed costs and exposure to interest rate risk related to variable rate debt.

Tri-City: Senior lien rated 'A'.

The three Tri-City participants (two also participate in the Stanton and Stanton II Project) have a 5.3% (23 mw) ownership interest in Stanton Unit No. 1.

Tri-City's credit strengths include a competitive wholesale rate of 4.75 cents/kwh, solid operating performance and financially sound participants. Concerns center on the project's above-average fixed costs, single unit risk and a small participant base.

St. Lucie: Senior lien rated 'A-'.

The project consists of an 8.8% ownership interest in the St. Lucie Unit 2 Nuclear generating facility (operated by Florida Power & Light).

The project's rating reflects the unit's strong operating performance with a lifetime capacity factor of 81%, a favorable participant base (15 members, 10 of which participate in other FMPA projects) with revenues derived mostly from residential customers and very low energy costs. Concerns center on the project's very high fixed costs, uncertainties associated with future capital costs and above-average wholesale rates (6.3 cents/kwh).

Fitch is an international rating agency that provides global capital market investors with the highest quality ratings and research. Dual-headquartered in New York and London with a major office in Chicago, Fitch rates entities in 75 countries and has some 1,100 employees in more than 40 local offices worldwide. The agency, which is a combination of Fitch IBCA and Duff & Phelps Credit Rating Co., provides ratings for Financial Institutions, Insurance, Corporates, Structured Finance, Sovereigns and Public Finance Markets worldwide.