New York, November 26, 2012 -- Moody's Ratings

Issue: Power Revenue Bonds, Series 2012A; Rating: A2; Sale Amount: $465,590,000; Expected Sale Date: 11/28/2012; Rating Description: Revenue: Government Enterprise

Issue: Power Revenue Bonds, Series 2012B; Rating: A2; Sale Amount: $71,000,000; Expected Sale Date: 11/28/2012; Rating Description: Revenue: Government Enterprise

Issue: Power Revenue Bonds, Series 2012C (Federally Taxable); Rating: A2; Sale Amount: $80,000,000; Expected Sale Date: 11/28/2012; Rating Description: Revenue: Government Enterprise

Opinion

Moody's Investors Service has assigned an A2 rating on the North Carolina Municipal Power Agency No.1's sale of $616 million Power Revenue bonds including $465 million Series 2012A; $71 million Series 2012 B and $80 million Series 2012 C (Federally Taxable). The outlook is stable.

RATINGS RATIONALE

The A2 rating incorporates the A1 average credit quality of NCMPA 1's participants; the satisfactory market position the agency has with its ownership in well run nuclear assets; and the agency's favorable financial and debt position with almost 80% of debt retired in seven years. Also factored into the rating are the agency's strong take-or-pay contracts and the role of the state Local Government Commission in contract compliance. The dominance of nuclear generation as percentage of fuel mix; potential future capital additions including potential post Fukushima safety-related costs; and the agency participants above average retail rates are also considered in the credit rating assigned.

NCMPA 1 is making several amendments to the bond resolution including permitting NCMPA 1 to sell a portion of its ownership interest in Catawba Nuclear Station; allowing bullet debt maturities; and to eliminate monthly deposits to the debt service payments fund. While several of the amendments are weaker provisions than previously covenanted, Moody's doesn't believe, in this case, the amendments are sufficient enough at this time to have credit impact.NCMPA No.1 believes the changes will provide it with more flexibility to manage its generation assets and debt.

Outlook

Moody's has a stable credit outlook on NCMPA1 bonds given ElectriCities' management record, LGC oversight, and NCMPA1's satisfactory financial and debt position. Implementation of NRC post Fukushima safety regulations and the agency's above average rates pose potential credit pressures.

What Could Change the Rating UP:

The rating would be upgraded if NCMPA1's competitive position were substantially improved and wholesale rates charged to the agency's municipal utility participants were significantly less than the local investor-owned-utility (Duke). The rating could also go up if the credit quality of the agency's participants improved.

What Could Change the Rating DOWN:

An inability or unwillingness to raise rates to fully recover costs with recurring revenues, as would be reflected in debt service coverage below 1.0x; decline in liquidity levels below current targets of 150 to 175 days cash on hand could result in downward rating action. In addition, the rating would be lowered if the agency's wholesale rates become less competitive in relation to the local investor-owned-utility, or if operating or capital costs increase significantly at the Catawba Nuclear Station.

STRENGTHS:

*Debt service reserve is funded at maximum annual debt service

*About 80% of the NCMPA1 debt is retired in seven years

*Weighted average credit quality of participants' electric revenue pledge is approximately A1

*North Carolina'sLocal Government Commission (LGC) plays a major role in the oversight of the finances of the participants and in ensuring take-or-pay contract compliance

*NCMPA1 and ElectriCities have improved the competitiveness of municipal utility participants by rate restructuring, customer-service strategies, and establishing a reserve for customer-retention

*NCMPA 1's forecasted 220 days liquidity on hand and the internal financial liquidity of many individual participant city-owned utilities

*Duke Energy has demonstrated strong management of the operating units in which NCMPA 1 has ownership, with low forced outages, strong Nuclear Regulatory Commission (NRC) safety records; and low incremental cost of the energy generated

*Catawba operating license was extended to 2043

*Reliability exchange protects against the financial impact of an unexpected forced outage of Catawba Unit 2 by providing an exchange for capacity and associated output of Catawba Unit 1 and the McGuire Nuclear Units 1 and 2

CHALLENGES:

*Average retail rates are above-average

*While reliability exchanges provide unit diversity and the generation units have had good operating records, the agency has significant nuclear ownership exposure

*Potential (not-yet fully identified) capital additions to nuclear units as they age beyond current industry experience. Potential new NRC safety regulations post Fukushima

*Uncertain long-term decommissioning costs

*Weakened bond security provisions including elimination of monthly deposits to debt service fund. But participants are required to pay monthly to NCMPA1 payments that include debt service.

RATING METHODOLOGY

The principal methodology used in this rating was US Municipal Joint Action Agencies published in October 2012. Please see the Credit Policy page on www.moodys.com for a copy of this methodology.

REGULATORY DISCLOSURES

The Global Scale Credit Ratings on this press release that are issued by one of Moody's affiliates outside the EU are endorsed by Moody's Investors Service Ltd., One Canada Square, Canary Wharf, London E 14 5FA, UK, in accordance with Art.4 paragraph 3 of the Regulation (EC) No 1060/2009 on Credit Rating Agencies. Further information on the EU endorsement status and on the Moody's office that has issued a particular Credit Rating is available on www.moodys.com.

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Dan Aschenbach Senior Vice President Public Finance Group Moody'sInvestors Service, Inc.250 Greenwich StreetNew York, NY 10007 U.S.A. JOURNALISTS: 212-553-0376 SUBSCRIBERS: 212-553-1653Kurt Krummenacker VP - Senior Credit Officer Public Finance Group JOURNALISTS: 212-553-0376 SUBSCRIBERS: 212-553-1653 Releasing Office: Moody's Investors Service, Inc.250 Greenwich StreetNew York, NY 10007 U.S.A. JOURNALISTS: 212-553-0376 SUBSCRIBERS: 212-553-1653(C) 2012 Moody's Investors Service, Inc. and/or its licensors and affiliates (collectively, "MOODY'S"). All rights reserved.

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