Fitch Rates MEAG's Project One Bonds 'A+'; Project One Sub Bonds 'A'.

Business Editors

NEW YORK--(BUSINESS WIRE)--May 15, 2003

Fitch Ratings assigns an 'A+' rating to the Municipal Electric Authority of Georgia's (MEAG Power) $38 million Project One bonds, series 2003A, and an 'A' rating to $20 million Project One subordinated bonds, series 2003A. The Rating Outlook is Stable. Proceeds for the Project One bonds will refund certain Project One series EE bonds and a small portion of the Project One 1994A subordinate bonds. The bonds are scheduled to price May 16, 2003 via negotiation, with Bear Stearns as senior manager.

Important components of MEAG Power's ratings include its overall improving financial position, substantial cash balances and its competitive power costs. Cash balances are held in MEAG Power's Municipal Competitive Trust Account (MCTA) that was established in 1999, to help maintain competitive wholesale rates when retail access begins. As of April 30, 2003, the MCTA balance was approximately $610 million. The MCTA is expected to exceed management's original $770 million target. The original target balance would allow MEAG Power to reduce its annual costs in order to provide wholesale rates around 3.5 cents per kWh which would compete favorably with natural gas fired units paying a low natural gas fuel price of $2.30 per mmBtu.

Further enhancing MEAG Power's credit profile is the State's slow progress toward electric deregulation. The rating also reflects a sizable participant base with solid financial performance and takes into account the participants' strong growth and the need for additional capacity. MEAG Power recently funded the costs of its combustion turbine project (CT Project), which provides added fuel diversity to MEAG Power's existing resources (primarily coal and nuclear generation units). Although the original CT Project was comprised of a 300 MW portion of a 503 MW combined cycle facility and a 150 MW simple cycle facility, due to changing market conditions, MEAG Power management recently canceled the simple cycle unit.

Credit risks include the participants' high fixed costs related to considerable nuclear exposure (50% of total energy generated), and management's continued need to plan for the member systems' going power supply needs. MEAG Power's development of the CT Project represents the system's introduction to natural gas fired generation. While MEAG Power does not have much experience operating natural gas fired generation, this concern should be mitigated by MEAG Power's partnering with Coelectric Partners, Inc. and General Electric for the construction, management, and operation of the facility. In addition, MEAG Power will utilize The Energy Authority for fuel management services.

Additional credit factors include court-validated power sales contracts and solid plant performance with nuclear facilities operating above the industry average. MEAG Power's participation in The Energy Authority has improved scheduling of MEAG Power's resource resulting in increased margins on off-system sales.

MEAG Power is a joint action agency supplying wholesale power to 49 municipal distribution systems throughout Georgia. The bonds are secured by revenues under long-term take-or-pay power sales contracts and further secured by the member systems ability to assess and collect an ad valorem tax sufficient to meet the outstanding obligations.