Fitch Rates NPPD's General Rev Bonds 2005, Series A, 'A+'.

NEW YORK -- Fitch Ratings assigns an 'A+' to Nebraska Public Power District's (NPPD) $110 million general revenue bonds, 2005 series A. The Rating Outlook is Stable. The 2005A bonds are scheduled to price the week of Jan. 10, 2005 with Lehman Brothers as senior manager. Bond proceeds will be used to finance the cost of constructing a 60 mw wind generation project and additional capital expenditures for one of its existing coal fired units (Gerald Gentlemen Station).

NPPD's credit fundamentals remain sound. Listed below are NPPD's primary credit strengths and concerns. For additional information, see Fitch's Nov. 11, 2004 credit report, available on the Fitch Ratings web site at 'www.fitchratings.com'.

Credit strengths include the following:

-- Low cost generating resources;

-- Flexible future power supply alternatives;

-- Stable financial profile;

-- New extended wholesale contracts with more flexible terms;

-- Continued progress with remediation of its Cooper Nuclear Station (CNS) operations and Nuclear Regulatory Commission (NRC) compliance.

Credits concerns include the following:

-- CNS operational and compliance issues;

-- Ongoing litigation and regulatory issues that could affect CNS' operations (see below).

Recent developments include the continued progress in completing the compliance remediation steps outlined by the NRC for CNS in the confirmatory action letter (CAL) issued in January 2003, although formal closure of the CAL is still pending NRC approval. Following an NRC review in October 2004 that was intended to confirm NPPD's completion of agreed-upon remediation steps, the NRC stated that additional reviews were necessary before final closure could be made. NPPD believes the additional review and closure confirmation will occur in early 2005. The remediation review process has taken longer than projected, but Fitch recognizes progress has been made and the continued delay is not a material concern. A component of the progress of CNS operations involves NPPD's bringing in Entergy Nuclear Inc. (Entergy) to manage the operations at CNS.

Another recent development is the finalization of power sale contracts for NPPD's excess CNS capacity. NPPD's strategy historically has been to keep approximately 50% of CNS' 758 mw capacity and sell the rest through various off-system intermediate-term contracts. In the past year, NPPD has executed four power sale contracts maturing from 2009-2014, which account for 50% of the output of CNS through 2009 and approximately 20% of the output from 2010-2013. The most recent contract was signed in December 2004 with Aquila Inc. (rated 'B-') for 75 mw. Fitch views the completion of its CNS marketing efforts as a positive development and considers the risk of Aquila's failure to perform as being overly significant. Helping to mitigate these concerns are credit protection provisions in the Aquila power sales contract (e.g. monthly prepayments and NPPD's ability to require a letter of credit or other collateral security upon certain conditions) and the wholesale power supply sale options in the Midwest.

NPPD is also involved in ongoing litigation and regulatory reviews that could affect the operations of CNS. The first involves water flow regulation priorities of the Missouri River (managed by the U.S. Army Corps of Engineers). An outcome against NPPD's interest could result in reduced generation levels in certain seasons and most likely in higher replacement power costs for NPPD. The second litigation case involves a claim filed by a third party regarding the validity of certain provisions in NPPD's management services contract with Entergy. It is too early to assess the ultimate risk of the legal dispute, and Fitch will monitor the development of this case. Fitch believes NPPD's existing financial strength and cost competitiveness, as well as contractual and management strategy options regarding the Entergy contract, partially mitigate the risk of a negative outcome from these lawsuits.

NPPD is a public corporation that serves most of rural Nebraska on a retail and wholesale basis. In 2003, NPPD's revenues consisted of 27% retail sales, 43% wholesale sales, 27% off-system sales, and 3% other sales.