Fitch Rates Platte River Power Auth $108.6MM Power Revs 'AA'.

NEW YORK -- Fitch assigns an 'AA' rating to Platte River Power Authority's (PRPA) $108.6 million series GG power revenue bonds. The series GG bonds rank on parity with first lien, $247.6 million outstanding power revenue bonds, which Fitch affirms at 'AA'. In addition, Fitch affirms PRPA's $77.7 million adjustable rate subordinate bonds at 'AA'. The Rating Outlook is Stable. Proceeds from the series GG bonds will economically refund portions of outstanding series DD and EE power revenue bonds. The fixed rate series GG bonds, with a final maturity of June 1, 2018, are secured by a pledge of PRPA's net revenues. The bonds are scheduled to price January 31, 2007 via negotiation, with Goldman Sachs as lead underwriter.

PRPA's strong credit rating reflects consistent and solid financial performance, its low-cost coal and hydro-based generating resources, competitive wholesale rates, and growing member energy sales reflecting the vibrancy of the member cities. Senior management's conservative fiscal nature has served the PRPA well, with financial ratios that compare favorably with municipal wholesale systems in the same rating category. Debt service coverage of senior and subordinate lien debt has comfortably ranged from 1.6 times (x) to 2.5x since 2001. Additionally, PRPA has built up sizeable cash reserves, totaling approximately $163 million, as of Nov. 30, 2006 equivalent to more than one year's operating expenses. The healthy liquidity is maintained in part to mitigate the variable interest rate and potential remarketing exposure associated with the $77.7 million in adjustable rate subordinate bonds (series S-1). PRPA's equity position is likewise very solid at 52% for fiscal year end 2005.

From a power supply perspective, PRPA's average 'all-in' cost of power has remained very competitive at approximately 3.1 cents per kwh for 2005 - among the lower cost power providers in the Rocky Mountain region. With the roll-off of PRPA's remaining contracted power sales to Public Service Company of Colorado in March 2008, and the addition of the new gas-fired peaking generating unit in May 2008, the Authority's member cities should be in relative load balance through 2016. Management expects its average cost of power to remain at less than 4.0 cents per kwh throughout that time period.

Given PRPA's typically conservative financial projections, the Authority anticipates maintaining fairly flat wholesale rates through 2010 - unlike many neighboring utilities that are in a rate increasing mode due to growing power supply requirements needed to meet load growth. PRPA does not anticipate a notable rate increase until 2011, of 6.1%. Given PRPA's funding of capital expenditures on a 50% debt/50% cash basis, total debt service coverage and unrestricted cash reserves should remain stable and in-line with historical levels throughout the five year forecast. Additionally, PRPA's credit rating is supported by court-validated, all requirements contracts with its members to 2040, and financially solid member retail systems with competitive retail rates.

Credit concerns center on the gradually increasing natural gas commodity exposure, moderate large commercial and industrial load concentration, and the somewhat liberal bond covenants. Between 2002 and 2004, PRPA installed three gas-fired peaking units (260 MW in aggregate) to mitigate electricity market exposure during peak periods. By June 2008, the Authority will be adding its 5th gas peaker (another 138 MW). From a capacity perspective, the gas-fired generating units could represent 45% of total winter capacity by 2008. Although, from an energy perspective, the gas-fired units will remain a very modest portion of total energy resources. While the natural gas exposure is a concern, the risk appears to be mitigated by PRPA's proximity to a Cheyenne natural gas hub, with ample supply and pipeline capacity, and the gas units' expected modest use.

The large commercial and industrial concentration is significant, accounting for 53% of the retail members' energy sales for 2005. However, the industrial base is well-diversified by business sector and size, with no single user representing more than 4.2% of retail members' energy sales.

Platte River is a joint action agency providing bulk power requirements to four member cities in north central Colorado: Fort Collins, Longmont, Loveland and Estes Park. The member cities provide retail electric service to over 137,500 customers, with residential, small commercial, large commercial and industrial users accounting for 35%, 11%, 25% and 29% of energy sales, respectively for 2005.

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