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MOODY'S INVESTORS SERVICE INFRASTRUCTURE AND PROJECT FINANCE <br /> MethodologyThe principal methodology used in this rating was US Municipal Joint Action Agencies published in October 2012/As depicted below,the <br /> grid indicated rating of A2 is one notch lower then the assigned rating.The grid indicated rating,however,reflects historical financial performance that is <br /> expected to improve going forward. <br /> Factor Subfactori Descri pti on Score Metric <br /> 1.Participant Credit Quality and Cost Recovery Framework a)Weighted Average A2 <br /> participant credit quality. <br /> Unregulated rate setting <br /> including participants.Cost <br /> recovery structure and <br /> governance. <br /> 2.Resource Risk Management a)Resource Diversity.Asset A <br /> quality and complexity. <br /> Resource supply contract <br /> terms and counterparty credit <br /> quality.Wholesale market <br /> purchase exposure <br /> 3.Competitiveness a)Cost competitiveness A <br /> relative to regional peers <br /> 4.Financial Strength and Liquidity a)Adjusted days liquidity on Aa 200 <br /> hand <br /> (3-year avg)(days) <br /> b)Debt ratio(3-year avg)(%) A 74% <br /> c)Fixed obligation charge A 1.38x <br /> coverage ratio <br /> (3-year avg)(x) <br /> 5.Willingness to Recover Costs with Sound Financial Metrics a)Rate Setting Record. A <br /> Timeliness of rate recovery. <br /> Stability and strength of <br /> financial metrics <br /> Notching Conventions Notch <br /> 1 -Contractual Structure and 0 <br /> Legal Environment <br /> 2-Participant Diversity and 0 <br /> Concentration <br /> 3-Construction Risk 0 <br /> 4-Debt Service Reserve,Debt 0 <br /> Structure and Financial <br /> Engineering_ <br /> 5-Unmitigated Exposure to 0 <br /> Wholesale Power Markets <br /> Scorecard Indicated Rating: A2 <br /> Source:Moody's Investors Service <br /> 4 1 August 2018 Minnesota Municipal Power Agency:Update following Moody's Upgrade to Al from A2;Outlook Stable <br /> 147 <br />