Fitch Rates NCMPA #1 $149.7MM Catawba Rev Rfdg Bonds 'BBB+'.

Business Editors

NEW YORK--(BUSINESS WIRE)--April 10, 2003

North Carolina Municipal Power Agency No. 1's (NCMPA1) $149.7 million series 2003C-1 and C-2 Catawba electric revenue refunding bonds are rated 'BBB+' by Fitch Ratings. The 'BBB+' rating on the 2003C bonds reflects an underlying rating as the periodic auction rate securities (PARs) will be insured by AMBAC and MBIA, both rated 'AAA' for insurer financial strength by Fitch. In addition, $2 billion outstanding, parity Catawba project bonds are rated 'BBB+'. The Rating Outlook is Positive. The 2003C bond proceeds will current refund portions of series 1993 outstanding Catawba bonds. The 2003C-1 and C-2 bonds, with a final maturity of 2015 and 2018, respectively, are scheduled to price on April 16, with Goldman, Sachs & Company as underwriter.

The 2003C bonds will refund existing fixed-rate securities with floating-rate securities, roughly doubling NCMPA1's net variable-rate exposure from 9% of total debt to 18%. The higher level of variable rate exposure is mitigated by NCMPA1's solid liquidity (unrestricted cash reserves of approximately $300 million). In addition, NCMPA1 expects to modify all or a part of its existing $200 million fixed-to-variable interest rate swap agreement with Goldman Sachs, which would provide for an earlier possible termination in 2005, returning NCMPA1 to its historic 9% net variable-rate exposure level. Lastly, from an asset-to-liability matching perspective, the 18% level of variable-rate exposure on liabilities more closely matches the level of short term interest rate exposure on assets.

NCMPA1's Rating Outlook was recently improved to Positive from Stable on Feb. 5, 2003. The improvement in the Rating Outlook stems from the considerable delay in the state of North Carolina's (the state) electric restructuring efforts, improved supplemental power supply cost arrangements, and continued maintenance of sizeable cash reserves. Other favorable credit factors include long term, take-or-pay contracts with its 19 member cities, the state Local Government Commission's fiscal oversight authority over municipal entities in the state, and the member cities' stable financial performance, with declining electric system transfers to city coffers.

Credit weaknesses include above average wholesale rates (currently 5.9 cents per kwh and forecast to rise to 7 cents by 2011), nuclear operating exposure (100% of baseload), revenue concentration among the five largest members (representing 67% of NCMPA1's operating revenues), and a recent economic slowdown in the state. In addition, NCMPA1's (the Agency) rates do not fully recover costs, as the Agency has historically and will prospectively utilize unrestricted cash reserves along with rate increases to gradually bring rates to cost. Current projections anticipate cash reserves will last until 2013, which is longer than prior year projections. Similarly, the forecast for average wholesale rate increases has improved compared to prior year projections, to an increase of 2% or less per year through 2013.

The move to a Positive Outlook acknowledges that should electric deregulation remain dormant in the state, the economic recession prove to be manageable, and actual financial performance be in-line with projections over the next 12-18 months, then NCMPA1's rating could be upgraded to 'A-'.

NCMPA1 is a joint action agency providing wholesale electric service to 19 member municipal distribution systems located in central and western North Carolina. The members provide retail electric service to approximately 154,000 customers.

A new issue report on NCMPA1, dated Feb. 28, 2003, is available on the Fitch Ratings web site at 'www.fitchratings.com'.