FLORIDA MUNICIPAL POWER AGENCY Commodity Circle Orlando, Florida (407) Telecopy: (407) OFFICERS OF THE BOARD

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2 FLORIDA MUNICIPAL POWER AGENCY 8553 Commodity Circle Orlando, Florida (407) Telecopy: (407) OFFICERS OF THE BOARD AND OFFICERS OF THE EXECUTIVE COMMITTEE Dean G. Shaw, Chairman James C. Welsh, Vice Chairman Vicente R. Ruano, Secretary Elie J. Boudreaux III, Treasurer PARTICIPANTS IN THE PROJECT City of Alachua City of Clewiston City of Fort Meade Fort Pierce Utilities Authority City of Green Cove Springs City of Homestead City of Jacksonville Beach Kissimmee Utility Authority City of Lake Worth City of Leesburg City of Moore Haven City of Newberry Utilities Commission, City of New Smyrna Beach City of Starke City of Vero Beach MANAGEMENT Roger A. Fontes, General Manager and CEO Frederick M. Bryant, Esquire, General Counsel Mary Ann Davis, CGFM, Director of Finance and CFO Thomas E. Reedy, P.E., Director of Member and Administrative Services Robert C. Williams, P.E., Director of Engineering FINANCIAL ADVISOR Dunlap & Associates, Inc. Orlando, Florida BOND COUNSEL Nixon Peabody LLP New York, New York TRUSTEE SunTrust Bank Orlando, Florida INDEPENDENT ACCOUNTANTS PriceWaterhouseCoopers LLP Tampa, Florida AUCTION AGENT Deutsche Bank Trust Company Americas New York, New York

3 TABLE OF CONTENTS Page INTRODUCTION... 1 Florida Municipal Power Agency... 1 Authority for the Offered Securities... 1 The Project... 2 Purpose of the Offered Securities... 2 Outstanding Indebtedness... 2 Trustee... 2 Payments under the Power Sales Contracts and Project Support Contracts... 2 Security for the Offered Securities... 2 Substitution of Credit... 3 Additional Bonds... 3 Subordinated Debt... 3 Major Participants... 3 Bond Insurance... 3 Competition... 3 Project License... 3 DESCRIPTION OF THE OFFERED SECURITIES... 3 General Description... 4 Auction Agent... 5 Orders of Existing Owners and Potential Owners... 5 Change of Dutch Auction Period... 5 Redemption Provisions... 5 PLAN OF FINANCE... 6 ESTIMATED SOURCES AND USES OF FUNDS... 7 DEBT SERVICE REQUIREMENTS... 8 SECURITY AND SOURCES OF PAYMENT FOR THE OFFERED SECURITIES... 9 Pledge under the Resolution... 9 Power Sales Contracts and Project Support Contracts... 9 Rate Covenants... 9 Additional Bonds... 9 Subordinated Debt Flow of Funds under the Resolution Debt Service Reserve THE POWER SALES CONTRACTS AND PROJECT SUPPORT CONTRACTS Purchase and Sale Payments under Power Sales Contracts and Project Support Contracts Substitution of Credit AGREEMENTS WITH FLORIDA POWER & LIGHT COMPANY The Participation Agreement The Reliability Exchange Agreement The Replacement Power Agreement BOND INSURANCE General Payment Pursuant to Financial Guaranty Insurance Policy Ambac Assurance Corporation Available Information Incorporation of Certain Documents by Reference FLORIDA MUNICIPAL POWER AGENCY General Organization and Management THE PROJECT General St. Lucie Unit No St. Lucie Unit No Unit Performance Ownership of St. Lucie Unit No Ownership of St. Lucie Unit No Fuel Supply Spent Fuel Storage Low Level Radioactive Waste Water Permits and Licenses Plant Condition/Ongoing NRC Oversight Page Decommissioning Insurance Certain Other Nuclear Regulatory Matters Plant Security Power Marketing Contracts THE PROJECT PARTICIPANTS Description of the Participants Major Participants Historical Net Energy Requirements and Peak Demand Major Participants ADDITIONAL FMPA PROJECTS Introduction Stanton Project Stanton II Project Tri-City Project All-Requirements Project Pooled Loan Project Future Power Supply and Operations STATE REGULATION COMPETITION IN THE ELECTRIC UTILITY INDUSTRY General Florida Energy 2020 Study Commission Proposed Federal Deregulation Legislation Expected Effects of Retail Competition FMPA S COMPETITIVE POSITION COMPETITIVE POSITION OF FMPA S MEMBERS CERTAIN FACTORS AFFECTING THE ELECTRIC UTILITY INDUSTRY General Energy Policy Act of FERC Transmission Initiatives Environmental Recent Events SUBSTITUTION OF CREDIT UNDERWRITING FINANCIAL ADVISOR LITIGATION ENFORCEABILITY OF REMEDIES CREDIT RATINGS Offered Securities General TAX MATTERS Federal Income Taxes State Taxes Certain Federal Tax Information APPROVAL OF LEGAL PROCEEDINGS VALIDATION FMPA FINANCIAL STATEMENTS ADDITIONAL FMPA INFORMATION; CONTINUING DISCLOSURE ADDITIONAL INFORMATION REGARDING FPL DISCLOSURE REQUIRED BY FLORIDA BLUE SKY REGULATIONS MISCELLANEOUS APPENDIX A MEMBERS PARTICIPATION IN FMPA PROJECTS...A-1 APPENDIX B THE MAJOR PARTICIPANTS... B-1 APPENDIX C SUMMARY OF CERTAIN PROVISIONS OF THE RESOLUTION AND THE AGREEMENTS... C-1 APPENDIX D PROPOSED FORM OF OPINION OF BOND COUNSEL...D-1 APPENDIX E BOOK-ENTRY-ONLY SYSTEM... E-1 APPENDIX F SUMMARY OF CONTINUING DISCLOSURE UNDERTAKING...F-1 APPENDIX G FORM OF BOND INSURANCE POLICY...G-1 APPENDIX H DUTCH AUCTION PROCEDURES...H-1 i

4 No dealer or any other person has been authorized to give any information or to make any representation, other than the information and representations contained herein, in connection with the offering of the Offered Securities and, if given or made, such information or representations must not be relied upon. This Official Statement does not constitute an offer to sell or a solicitation of an offer to buy, nor shall there be any sale of the Offered Securities, to any person in any jurisdiction to whom it is unlawful to make such solicitation, offer or sale. The information and expressions of opinion herein are subject to change without notice, and neither the delivery of this Official Statement nor any sale made hereunder shall create, under any circumstances, any implication that there has been no change in the affairs of the Insurer, the Agency or the Participants since the date hereof. The information in this Official Statement has been furnished by FMPA, the Participants and the Insurer and includes information obtained from other sources, including publicly available information relating to Florida Power & Light Company, all of which are believed to be reliable. The purpose of this Official Statement is to provide information to prospective investors in the Offered Securities and is not to be used for any other purpose or relied on by any other person. This Official Statement contains statements which, to the extent they are not recitations of historical fact, constitute forward-looking statements. In this respect, the words estimate, project, anticipate, expect, intend, believe and similar expressions are intended to identify forward-looking statements. A number of factors affecting FMPA s, the Participants and the Insurer s business and financial results could cause actual results to differ materially from those stated in the forwardlooking statements. IN CONNECTION WITH THE OFFERING OF THE OFFERED SECURITIES, THE UNDERWRITERS MAY OVERALLOT OR EFFECT TRANSACTIONS THAT STABILIZE OR MAINTAIN THE MARKET PRICES OF SUCH OFFERED SECURITIES AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME. THE OFFERED SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 NOR HAS THE RESOLUTION BEEN QUALIFIED UNDER THE TRUST INDENTURE ACT OF 1939 IN RELIANCE UPON EXEMPTIONS CONTAINED IN SUCH ACTS. Certain materials filed with the Nationally Recognized Municipal Securities Information Repositories (each, a NRMSIR ) are included herein by reference. While such information is also available on the Agency s website, only the materials filed with the NRMSIRs are included by reference herein. Information appearing on the Agency s website and not otherwise appearing or included by reference from materials filed with the NRMSIRs herein is not a part of this Official Statement. See FMPA FINANCIAL STATEMENTS herein. The Underwriters have provided the following sentence for inclusion in this Official Statement: The Underwriters have reviewed the information in this Official Statement in accordance with, and as part of, their responsibilities to investors under the federal securities laws as applied to the facts and circumstances of this transaction, but the Underwriters do not guarantee the accuracy or completeness of such information. ii

5 OFFICIAL STATEMENT of the FLORIDA MUNICIPAL POWER AGENCY Relating to its $244,850,000 St. Lucie Project Refunding Revenue Bonds Series 2002 (Auction Rate Securities) consisting of $81,600,000 Series Bonds $81,600,000 Series Bonds $81,650,000 Series Bonds INTRODUCTION The purpose of this Official Statement (which includes the cover page and appendices and the information incorporated in this Official Statement by reference) of the Florida Municipal Power Agency ( FMPA or the Agency ) is to set forth information concerning FMPA and its $244,850,000 principal amount of St. Lucie Project Refunding Revenue Bonds, Series 2002 consisting of $81,600,000 Series Bonds, $81,600,000 Series Bonds and $81,650,000 Series Bonds (the Series Bonds, the Series Bonds, and the Series Bonds, respectively, and collectively, the Offered Securities ). This Introduction contains a summary of certain of the information contained in this Official Statement. In order to make an informed decision as to whether to invest in the Offered Securities, a potential investor must read this Official Statement in its entirety. Capitalized terms not otherwise defined in this Official Statement shall have the meanings set forth in the Appendices to this Official Statement. Florida Municipal Power Agency FMPA is a governmental legal entity, organized and existing under (i) Section , Part II of the Florida Statutes (the Florida Interlocal Cooperation Act ), (ii) Chapter 361, Part II of the Florida Statutes (the Joint Powers Act ), and (iii) an interlocal agreement creating FMPA among the 29 members of FMPA (the Members ) executed pursuant to the foregoing statutory authority (the Interlocal Agreement ). The Members of FMPA are twenty-nine Florida city commissions, city and town councils, utility commissions and utility authorities. Under Florida law, FMPA has authority to undertake and finance specified projects and, among other things, to plan, finance, acquire, construct, reconstruct, own, lease, operate, maintain, repair, improve, extend or otherwise participate jointly in those projects. FMPA has the authority to issue bonds or bond anticipation notes for the purpose of financing or refinancing the costs of these projects. See FLORIDA MUNICIPAL POWER AGENCY. Authority for the Offered Securities The Offered Securities are being issued pursuant to (i) the Florida Interlocal Cooperation Act, (ii) Chapter 166, Part II of the Florida Statutes (which, together with the Florida Interlocal Cooperation Act and the Joint Powers Act, is called the Act ), (iii) the St. Lucie Project Revenue Bond Resolution adopted on March 26, 1982, as amended and restated on April 10, 2002 (as supplemented and amended, the Bond Resolution ) and (iv) the Series , Series and Series Supplemental St. Lucie Project Revenue Bond Resolutions each adopted by FMPA on April 10, 2002 authorizing the Offered Securities (the Series Resolutions ). The Bond Resolution, as supplemented and amended, including as supplemented by the Series Resolutions, is called the Resolution.

6 The Project The St. Lucie Project (the Project ) includes a 8.806% undivided ownership interest of FMPA in St. Lucie Unit No. 2 and its site. St. Lucie Unit No. 2 is a nuclear generating unit ( St. Lucie Unit No. 2 ) that is part of the two-unit St. Lucie nuclear generating station of Florida Power & Light Company ( FPL ) located on Hutchinson Island, Florida. The Project also includes (i) FMPA s rights to receive power and energy from the other St. Lucie nuclear generating station unit, St. Lucie Unit No. 1 ( St. Lucie Unit No. 1 ) under a Reliability Exchange Agreement between FPL and FMPA (the Reliability Exchange Agreement ), (ii) FMPA s rights to receive replacement power and energy from FPL under a Replacement Power Agreement between FPL and FMPA (the Replacement Power Agreement ), and (iii) related agreements with FPL for the transmission of power and energy from the Project to the 15 Members listed on the inside cover page of this Official Statement that participate in the Project (the Participants ). FMPA purchased its ownership interest in St. Lucie Unit No. 2 from FPL, and FPL is responsible for the operation of St. Lucie Unit No. 2, pursuant to a participation agreement between FMPA and FPL entered into in 1982 (as amended, the Participation Agreement ). See THE PROJECT. Purpose of the Offered Securities The Offered Securities are being issued to pay a portion of the costs of refunding all of FMPA s St. Lucie Project Refunding Revenue Bonds, Series 1992 (the Refunded Bonds ) and to pay the costs of issuance of the Offered Securities. Outstanding Indebtedness Following the issuance of the Offered Securities, FMPA will have outstanding the Offered Securities and the St. Lucie Project Subordinated Refunding Revenue Bonds, Series 2000 (Auction Rate Securities) (the Series 2000 Bonds ) currently outstanding in the principal amount of $17,150,000 which will at that time become senior lien Bonds on a Parity with the Offered Securities. Trustee SunTrust Bank, Orlando, Florida is the Trustee under the Resolution for all debt issued under the Resolution. Payments under the Power Sales Contracts and Project Support Contracts The Power Sales Contracts and the Project Support Contracts between FMPA and the 15 Participants in the St. Lucie Project provide for payments by the Participants of amounts sufficient to pay debt service on all Bonds, including the Offered Securities, and all other payments required by the Resolution, operation and maintenance costs of the Project and deposits to reserves. See THE POWER SALES CONTRACTS AND PROJECT SUPPORT CONTRACTS. Security for the Offered Securities The Offered Securities are direct and special obligations of FMPA payable solely from and secured solely by a pledge and assignment of (a) the proceeds of the sale of the Offered Securities, (b) all right, title and interest of FMPA in, to and under the Power Sales Contracts and Project Support Contracts, (c) the Revenues (as defined in the Resolution), and (d) all funds established by the Resolution (other than the Decommissioning Fund) including investment income, if any, thereon, subject only to the provisions of the Resolution permitting the application thereof for the purposes and on the terms and conditions set forth in the Resolution. FMPA has covenanted in the Resolution to fix, charge and collect rates and charges for the sale of the output of the Project to generate revenues in each year in an amount (with other available funds of FMPA) sufficient to pay all of FMPA s costs and expenses of the Project for that year, including Project operation and maintenance costs and all debt service on all Bonds and Subordinated Debt for that year. Each Participant has agreed in its Power Sales Contract and its Project Support Contract to fix, charge and collect rates and charges for the services of its electric or integrated utility system in each year sufficient to pay costs and expenses of its utility system for that year, including all amounts payable to FMPA under its Power Sales Contract and Project Support Contract for that year. See SECURITY AND SOURCES OF PAYMENT FOR THE OFFERED SECURITIES. 2

7 Substitution of Credit Upon compliance with the conditions described under SUBSTITUTION OF SECURITY FMPA may, without the consent of the Holders of the Offered Securities, substantially change the security for the Offered Securities by consolidating the Project with the All-Requirements Project discussed under OTHER FMPA PROJECTS. Such a consolidation could result in the Holders of the Offered Securities becoming holders of bonds secured by a bond resolution pursuant to which debt service would be paid by the participants at that time in the All-Requirements Project. One of the conditions precedent to such a substitution would be a confirmation by the Rating Agencies then rating the Offered Securities that such a substitution would not have an adverse effect on the ratings on the Offered Securities. FMPA cannot predict the likelihood or timing of any such substitution. Additional Bonds FMPA may, upon compliance with certain terms and conditions set forth in the Resolution, issue additional senior lien bonds ( Additional Bonds ) in an unlimited amount for the purpose of paying all or a portion of the Cost of Acquisition and Construction of any Additional Facilities. While FMPA does not currently anticipate issuing any Additional Bonds for the Project, FPL has applied for a license extension on St. Lucie Unit No. 2. If the extension were granted and if FPL were to elect to upgrade St. Lucie Unit No. 2 to comply with the license extension, FMPA would be required to make additional capital payments for its share of the costs of upgrading St. Lucie Unit No. 2. It may choose to issue Additional Bonds to finance this expense. The Resolution also authorizes the issuance of Additional Bonds to refund outstanding Bonds under the conditions specified in the Resolution. Subordinated Debt The Resolution authorizes FMPA to incur subordinated indebtedness ( Subordinated Debt ) in an unlimited amount for any lawful purpose of FMPA related to the Project. Major Participants Attached hereto as Appendix B is certain information for the Participants having the six largest Power Entitlement Shares Fort Pierce, Homestead, Kissimmee, Lake Worth, New Smyrna Beach and Vero Beach. These six Participants are referred to in this Official Statement as the Major Participants. The Power Entitlement Shares of the Major Participants aggregate approximately 82.9 percent. Homestead has received an offer from FPL to purchase its distribution and transmission system. See APPENDIX B CITY OF HOMESTEAD. Bond Insurance Ambac Assurance Corporation (the Insurer or Ambac will issue a financial guaranty insurance policy (the Policy or the Financial Guaranty Insurance Policy ) guaranteeing the scheduled payment of the principal and interest on the Offered Securities. See BOND INSURANCE. Competition For a description of the competition FMPA and the Members are facing and will face in the future, and the actions they are taking to meet this competition, see COMPETITION IN THE ELECTRIC UTILITY INDUSTRY, FMPA S COMPETITIVE POSITION and COMPETITIVE POSITION OF FMPA S MEMBERS. Project License The Project operating license is scheduled to expire in FPL has applied for a 20-year renewal. See THE PROJECT-Permits and Licenses. DESCRIPTION OF THE OFFERED SECURITIES The following is a summary of certain provisions of the Offered Securities. Reference is made to the Offered Securities themselves for the complete text thereof and to the Resolution, and the discussion herein is qualified by such references. 3

8 Each Series of the Offered Securities will initially bear interest at a Dutch Auction Rate but may be converted at the option of FMPA, subject to certain restrictions, to Offered Securities which bear interest at different rates including a Daily Rate, Weekly Rate, Flexible Rate or Fixed Rate. On the date of any such conversion, the Offered Securities will be subject to mandatory tender at a purchase price equal to 100% of the principal amount thereof, plus accrued interest; provided, however, that in the event of a failed conversion, the Offered Securities will not be subject to mandatory tender, will be returned to their owners, will automatically be converted to a Standard Auction Period and will bear interest at the Maximum Dutch Auction Rate for such Auction Period. The following description applies separately to each Series of the Offered Securities. The Offered Securities will initially bear interest at Dutch Auction Rates for Standard Auction Periods of seven days. The following description applies to Offered Securities while bearing interest at Dutch Auction Rates only. General Description The Offered Securities are being issued in the form of Dutch Auction Rate bonds under the Series Resolutions. The Offered Securities will be dated their date of issuance and will be initially in a Standard Auction Period of seven days, subject to conversion in whole only to another Auction Period or in whole or in part to another Interest Mode as FMPA shall determine. The Offered Securities will mature on October 1, The Offered Securities are issuable only as fully registered Offered Securities in authorized denominations of $25,000 or any integral multiple thereof while in a Dutch Auction Mode. The Offered Securities will be registered in the name of Cede & Co., as Bondholder and Securities Depository Nominee of The Depository Trust Company, New York, New York. Individual purchases will be made in book-entry form only through DTC Participants. So long as the Offered Securities are registered in the name of Cede & Co. principal of, and interest on, the Offered Securities will be paid to Cede & Co. as the registered owner. See APPENDIX E- BOOK-ENTRY-ONLY SYSTEM. Interest on the Offered Securities in a Dutch Auction Mode will be computed on the basis of a 360-day year for the actual number of days elapsed. The initial Dutch Auction Rate for each of the Offered Securities for the period from the date of issuance of the Offered Securities through the first Auction Date for such Series will be determined by the Underwriter of such Series, prior to delivery of the Offered Securities. During any Dutch Auction Rate Period, the Offered Securities will bear interest at the Dutch Auction Rate. Except as otherwise provided with respect to the initial Auction Period, the Dutch Auction Period shall be the rate of interest per annum that results from implementation of the Dutch Auction Procedures as set forth in APPENDIX H; provided that such interest rate shall not exceed 10% per annum. The Dutch Auction Rate for the next succeeding Auction Period will be determined as follows: (A) if Sufficient Clearing Bids exist, then the Dutch Auction Rate for the next succeeding Auction Period therefor will be equal to the Winning Bid Rate so determined; (B) if Sufficient Clearing Bids do not exist (other than because all of the Offered Securities are the subject of Submitted Hold Orders), then the Dutch Auction Rate for the next succeeding Auction Period therefor will be equal to the Maximum Dutch Auction Rate; and (C) if all of the Offered Securities are subject to Submitted Hold Orders, then the Dutch Auction Rate for the next succeeding Auction Period therefor will be equal to the Minimum Dutch Auction Rate. If on any Auction Date for any reason an Auction is not held, the Dutch Auction Rate for the next succeeding Auction Period shall equal the Maximum Dutch Auction Rate on and as of such Auction Date. Determination of the Dutch Auction Rate pursuant to the Dutch Auction Procedures shall be suspended upon the occurrence of an Event of Default consisting of the failure to pay principal or interest on the Offered Securities. Upon the occurrence of such an Event of Default on any Auction Date, no Auction will be held and the Dutch Auction Rate shall be equal to the Overdue Rate as determined on and as of the immediately preceding Auction Date for each Auction Period, commencing after the occurrence of such Event of Default. Auction Date means for each Series of the Offered Securities the first auction date set forth on the cover page of this Official Statement for such series, and with respect to (i) the Series Bonds for each Auction Period thereafter the last Thursday of the immediately preceding Auction Period or, if such last Thursday is not a Business Day, the next preceding Business Day; (ii) the Series Bonds for each Auction Period thereafter the last Tuesday of the immediately preceding Auction Period or, if such last Tuesday is not a Business Day, the next preceding Business Day; and (iii) the Series Bonds for each Auction Period thereafter the last Wednesday of the immediately preceding Auction Period or, if such last Wednesday is not a Business Day, the next preceding Business Day. 4

9 Auction Period means, during a Dutch Auction Rate Period, each period from and including the dated date of the Offered Securities and, thereafter, the last Interest Payment Date for the immediately preceding Auction Period, to and including the earliest of (i) October 1, 2021, (ii) the day next preceding the last Interest Payment Date in respect of each Auction Period and (iii) the last day of such Dutch Auction Rate Period. Interest Payment Date means, as to any Offered Security in a Dutch Auction Mode, (1) for an Auction Period of 91 days or less, the Business Day immediately succeeding the last day of such Auction Period and (2) for an Auction Period of more than 91 days, each 13th Friday, Wednesday and Thursday with respect to the Series Bonds, the Series Bonds and the Series Bonds, respectively, (or if such day is not a Business Day, the next succeeding Business Day) after the first day of such Auction Period and the Business Day immediately succeeding the last day of such Auction Period. Auction Agent The Trustee will enter into the Auction Agreement initially with Deutsche Bank Trust Company Americas, pursuant to which Deutsche Bank Trust Company Americas, as Agent for the Trustee, will perform the duties of Auction Agent. The Auction Agreement will provide, among other things, that the Auction Agent will determine the Auction Rate for each Auction in accordance with the Auction Procedures. Orders of Existing Owners and Potential Owners The procedure for submitting orders prior to the Submission Deadline on each Auction Date is described in APPENDIX H, as are the particulars with regard to the determination of the Auction Rate and the allocation of Offered Securities bearing interest at Dutch Auction Rates. Change of Dutch Auction Period FMPA may change the length of an Auction Period or Standard Auction Period for all Offered Securities. On the change date, any Offered Securities which are not the subject of a specific Hold Order or Bid will be deemed to be subject to a Sell Order. Redemption Provisions Mandatory Redemption. Offered Securities bearing interest at a Dutch Auction Rate are not subject to redemption prior to maturity from mandatory Sinking Fund Installments. Optional Redemption. Offered Securities bearing interest at a Dutch Auction Rate are subject to redemption prior to maturity at the election of FMPA, as a whole or in part, on the Business Day immediately following an Auction Date. Such Offered Securities will be redeemed at a Redemption Price equal to 100% of the principal amount thereof, plus accrued interest thereon, if any. To effect such an optional redemption, FMPA must pay or cause to be paid to the Trustee, in advance of notice to the Holders of such redemption (which notice must be given to such Holders at least 12 days prior to the redemption date), amounts sufficient to pay 100% of the principal amount of the Offered Securities to be redeemed on the redemption date. Redemption Procedures. In the event of redemption of less than all of the Outstanding Offered Securities, the Trustee will select the Offered Securities to be redeemed in such manner as the Trustee deems fair and appropriate. The Trustee will mail any required notice of redemption to the registered Holders of any Offered Securities or portions thereof which are to be redeemed, but receipt of such notice will not be a condition precedent to such redemption, and failure to receive any such notice will not affect the validity of the proceedings for the redemption of Offered Securities. New Offered Securities representing the unredeemed balance of the principal amount of any such Offered Securities shall be issued to the registered owner thereof (which shall be Cede & Co., as Securities Depository Nominee of DTC, for so long as the system of registration described in APPENDIX E BOOK-ENTRY-ONLY SYSTEM shall be in effect), without charge therefor, in any authorized denominations in an aggregate unpaid principal amount equal to the unredeemed portion of the Offered Securities surrendered. If the Offered Securities are being held by DTC under the book-entry system and less than all of such Offered Securities within a maturity are being redeemed, DTC s current practice is to determine by lot the amount of the ownership interest of each DTC Participant in such maturity to be called for redemption, and each DTC Participant is to then select by lot the ownership interest in such maturity to be redeemed. See APPENDIX E BOOK-ENTRY-ONLY SYSTEM. 5

10 Notice of Redemption. In the event that any of the Offered Securities are called for redemption, the Trustee must give notice, in the name of FMPA, of the redemption of such Offered Securities, which notice must specify the date of redemption, the Redemption Price and the place or places where amounts due upon such redemption will be payable and, if less than all of the Offered Securities are to be redeemed, the numbers of such Offered Securities and the principal portions thereof to be redeemed. Such notice shall further state that on such date thereof there shall become due and payable upon such Offered Securities or portions thereof to be redeemed the Redemption Price, together with interest accrued to the redemption date, if such redemption date is not an Interest Payment Date, and that from and after the redemption date interest thereon shall cease to accrue and be payable. For so long as the Offered Securities are registered in the name of DTC or its nominee, notice of redemption of any Offered Securities will be given by the Trustee to DTC or such nominee only. See APPENDIX E- BOOK-ENTRY-ONLY SYSTEM. PLAN OF FINANCE A portion of the proceeds of the Offered Bonds together with other available funds of FMPA will be deposited into an escrow account (the Escrow Account ) established under an Escrow Agreement dated as of July 1, 2002 (the Escrow Agreement ) between SunTrust Bank, Orlando, Florida, as escrow agent (the Escrow Agent ) and FMPA. The funds in the Escrow Account will be invested in United States Government Securities which will mature and pay interest in amounts sufficient to pay the interest on the Refunded Bonds to but not including October 1, 2002 and to pay all of the Refunded Bonds maturing on October 1, 2002 at 100% and to redeem all other Refunded Bonds at 102% on October 1, The Escrow Agent will be given irrevocable instructions to call all of the Refunded Bonds for redemption on October 1, The Offered Securities are being issued to achieve debt service savings and to provide FMPA with greater financing flexibility. FMPA has entered into three swap agreements with Morgan Stanley Capital Services Inc. ("MSCS") and three swap agreements with Salomon Brothers Holding Company Inc ("Salomon"). Pursuant to the swap agreements, FMPA will be obligated to pay each counterparty weekly an amount equivalent to an annualized interest rate of 3.43%, 3.69% and 3.88% each on $27,200,000 for terms ending on July 1, 2005, July 1, 2006 and July1, 2007, respectively. Each counterparty will be obligated to pay FMPA weekly an amount equivalent to the annualized weighted BMA Index multiplied by $81,600,000. Pursuant to the swap agreements, only the net amounts due to either FMPA or the counterparty will be paid each week. Each swap agreement contains certain mandatory and optional termination provisions which could create an obligation on the part of FMPA to make a significant payment to a counterparty; the obligation of FMPA to make such payment is subordinate to FMPA's obligation to pay principal and interest on the Series 2002 Bonds. 6

11 ESTIMATED SOURCES AND USES OF FUNDS The following table sets forth the estimated sources and uses of funds: Sources Principal Amount of the Offered Securities $244,850,000 Other available FMPA funds (1) 20,010,502 Total $264,860,502 Uses Deposit to escrow for Refunded Bonds $262,563,637 Costs of Issuance (2) 2,296,865 Total $264,860,502 (1) Includes $10,746,331 released from the debt service reserve account and $9,264,171 released from the debt service account for the Refunded Bonds. (2) Including legal, accounting, advisory, printing and other expenses, the bond insurance premium and underwriter s discount. 7

12 DEBT SERVICE REQUIREMENTS The following schedule shows the debt service requirements for the Offered Securities and Series 2000 Bonds. Offered Securities Series 2000 Bonds Period Ending October 1, Principal Interest (1) Principal Interest (2) Aggregate Debt Service on Offered Securities and Series 2000 Bonds 2003 $10,236, $883, $11,120, ,315, , ,182, ,391, , ,258, ,218, , ,085, ,911, , ,778, ,457, , ,341, ,457, , ,324, ,457, , ,324, ,378, , ,245, ,378, , ,245, ,378, , ,245, ,457, , ,341, ,457, , ,324, ,457, , ,324, ,378, , ,245, ,378, , ,245, ,378, , ,245, ,537, , ,420, $244,850, ,491, $17,150, , ,363, Total: $244,850, $228,121, $17,150, $16,544, $506,666, (1) Assumes a rate of 3.43%, 3.69% and 3.88% on the Series Bonds and the Series Bonds under certain swap agreements until July 2005, July 2006 and July 2007, respectively, and a rate of 5.0% thereafter; and a rate of 5.0% on the Series Bonds. (2) Assumes a rate of 5.0% on these auction rate securities. 8

13 SECURITY AND SOURCES OF PAYMENT FOR THE OFFERED SECURITIES Pledge under the Resolution The Offered Securities will be payable solely from and secured as to the payment of the principal and redemption price thereof, and interest thereon, in accordance with their terms and the provisions of the Resolution solely by a pledge and assignment of (a) the proceeds of the sale of the Offered Securities, (b) all right, title and interest of FMPA in, to and under the Power Sales Contracts and Project Support Contracts, (c) the Revenues (as defined in the Resolution), and (iv) all funds established by the Resolution (other than the Decommissioning Fund) including investment income, if any, thereon, subject only to the provisions of the Resolution permitting the application thereof for the purposes and on the terms and conditions set forth in the Resolution. The Offered Securities are direct and special obligations of FMPA, payable out of the Revenues and other funds of the Project pledged thereto under the Resolution. Neither the State of Florida nor any political subdivision thereof, other than FMPA, nor any Member of FMPA is obligated to pay the Offered Securities. Neither the full faith and credit nor the taxing power of the State of Florida or any political subdivision thereof or any Member is pledged to the payment of the Offered Securities. FMPA has no taxing power. See APPENDIX C SUMMARY OF CERTAIN PROVISIONS OF THE RESOLUTION AND THE AGREEMENTS. Power Sales Contracts and Project Support Contracts The Power Sales Contracts and the Project Support Contracts provide for payments by the Participants of amounts sufficient to pay debt service on all Bonds, including the Offered Securities, and all other payments required by the Resolution, such as debt service on Subordinated Debt, operation and maintenance costs of the Project and deposits to reserves. See THE POWER SALES CONTRACTS AND PROJECT SUPPORT CONTRACTS. Rate Covenants FMPA has covenanted in the Resolution to fix, establish, maintain and collect rents, rates, fees and charges for the sale of the output, Electric Capacity, Electric Energy, use or service of the Project sufficient to provide Revenues in each fiscal year which, together with other amounts available therefor, shall equal the sum of: (i) the amount established by FMPA to be required to be paid during such fiscal year into the Operation and Maintenance Fund, (ii) the amounts, if any, required to be paid during such fiscal year into the Debt Service Fund (other than amounts which the annual budget anticipates will be transferred from other funds) established by the Resolution for the Bonds, (iii) the amounts, if any, to be paid during such fiscal year into any other Fund established under the Resolution, and (iv) all other charges or liens payable out of Revenues during such fiscal year. Each Participant is required by the terms of its Power Sales Contract and its Project Support Contract to establish, levy and collect rents, rates and other charges for the products and services provided by its electric or integrated utility system sufficient (i) to meet the operation and maintenance expenses of such electric or integrated utility system, (ii) to comply with all provisions of any resolution, trust indenture or other security agreement relating to any bonds or other evidences of indebtedness issued by the Participant, (iii) to fulfill the terms of all other contracts and agreements made by the Participant, including, without limitation, its Power Sales Contract and Project Support Contract, and (iv) to pay all other amounts payable from or constituting a lien or charge on the revenues of its electric or integrated utility system. Additional Bonds FMPA may, upon compliance with certain terms and conditions set forth in the Resolution, issue additional parity senior lien bonds ( Additional Bonds ) without limit as to amount for the purpose of paying all or a portion of the Cost of Acquisition and Construction of any Additional Facilities. While FMPA does not currently anticipate issuing any such Additional Bonds for the Project, FPL has applied for a license extension on St. Lucie Unit No. 2. If the extension were granted and if FPL were to elect to upgrade St. Lucie Unit No. 2 to comply with the license extension, FMPA would be required to make additional capital payments for its share of the costs of upgrading St. Lucie Unit No. 2. It may choose to issue Additional Bonds to finance this expense. The Resolution also authorizes the issuance of Additional Bonds to refund outstanding Bonds under the conditions specified in the Resolution. 9

14 Subordinated Debt The Resolution authorizes FMPA to incur Subordinated Debt without limit as to amount and for any lawful purpose of FMPA related to the Project. Flow of Funds under the Resolution Pursuant to the Resolution, all revenues are deposited with FMPA to the credit of the Revenue Fund established under the Bond Resolution. In each month, funds are to be first transferred from the Revenue Fund to the Operation and Maintenance Fund (i) for credit to the Operation and Maintenance Account in the amount, if any, required so that the balance credited to said Account shall equal the amount necessary for the payment of Operation and Maintenance Expenses for the succeeding month, (ii) for credit to the Working Capital Account in the amount budgeted therefor, and (iii) for credit to the Rate Stabilization Account in the amount, if any, budgeted therefor. After these transfers from the Revenue Fund, FMPA will make in each month the following deposits from the Revenue Fund in the order of priority set forth below: First, to the Debt Service Account held by the Trustee, the amount required so that the balance in such Account (excluding capitalized interest on deposit therein in excess of the amount thereof to be applied to pay interest accrued and to accrue on all outstanding Bonds to the end of the then current calendar month) shall equal the Accrued Aggregate Debt Service; Second, to the Debt Service Reserve Account held by the Trustee (and each subaccount therein), after giving effect to any surety bond, insurance policy, letter of credit or other obligation deposited therein pursuant to the terms of the Resolution, the amount required to be deposited into such Account in such month to make up any deficiency in the Debt Service Reserve Requirement, if any; Third, to the Subordinated Debt Fund held by FMPA for credit to the various accounts therein, the amount, if any, required to pay principal or sinking fund installments of and interest on each issue of Subordinated Debt and reserves therefor, as required by the supplemental resolution authorizing such issue of Subordinated Debt; Fourth, to the Reserve and Contingency Fund held by FMPA (a) for credit to the Renewal and Replacement Account, the amount budgeted therefor, and (b) for credit to the Contingency Account, the amount (but not in excess of 15% of the Aggregate Debt Service for such month) required for such account to equal the Contingency Requirement; Fifth, for deposit to the Decommissioning Fund (which is not pledged to the Offered Securities), the amount budgeted therefor; and Sixth, for credit to the General Reserve Fund held by FMPA, any remaining moneys in the Revenue Fund. Debt Service Reserve There is no current Debt Service Reserve Requirement for the Offered Securities. Purchase and Sale THE POWER SALES CONTRACTS AND PROJECT SUPPORT CONTRACTS Under the Power Sales Contract with a Participant, FMPA agrees to sell and such Participant agrees to purchase (i) such Participant s Power Entitlement Share of the generation capability of the Project and (ii) transmission services required to transmit such capability to the Participant s electric system. The following table sets forth the Power Entitlement Shares of the Participants as set forth in the original Power Sales Contracts at the time of their execution and delivery. 10

15 Participant Power Entitlement Share City of Lake Worth % Fort Pierce Utilities Authority City of Vero Beach Utilities Commission, City of New Smyrna Beach Kissimmee Utility Authority City of Homestead City of Jacksonville Beach City of Leesburg City of Starke City of Clewiston City of Green Cove Springs City of Alachua City of Moore Haven City of Fort Meade City of Newberry % Payments under Power Sales Contracts and Project Support Contracts A Power Sales Contract with a Participant requires payments only for any month during any portion of which both Electric Capacity and Electric Energy were made available to that Participant from the Project. Monthly payments made by a Participant under its Power Sales Contract equal (i) the Participant s Power Entitlement Share of FMPA s fixed costs relating to the Project, including debt service on all Bonds and Subordinated Debt, (ii) the Participant s share of the variable costs of providing to it its energy from the Project for this month and (iii) its share of the costs of transmitting Project capacity and energy to it for this month. In the event payments are not required to be made for any month by a Participant under its Power Sales Contract because no Electric Capacity or Electric Energy was made available to the Participant from the Project during such month, such Participant is required to make monthly payments under its Project Support Contract. The amount of this payment is the fixed cost portion of the amount it would have paid under its Power Sales Contract if capacity from the Project had been available. Payments under the Project Support Contracts are required to be made whether or not St. Lucie Unit No. 2 is operable or operating and notwithstanding the suspension, interruption, interference, reduction or curtailment of the output of the Project. Payments made under both the Power Sales Contracts and the Project Support Contracts are payable solely from the Participants electric or integrated utility system revenues. Payments by a Participant under its Power Sales Contract are operating expenses of the Participant s electric or integrated utility system, payable on a parity with the system s operation and maintenance expenses and before debt service on the system s senior and subordinated debt. However, payments under this Participant s Project Support Contract will be made only after payment of all of its systems current operating and maintenance expenses and current debt service on the system s senior and subordinated debt. If a Participant fails to make any payment due under its Power Sales Contract or its Project Support Contract, FMPA may terminate its Power Entitlement Share. If FMPA is then unable to sell such Participant s Power Entitlement Share, the remaining Participants not in default under their Power Sales Contract or their Project Support Contract are required to assume such Power Entitlement Share on a pro rata basis; however, no Participant is required to assume an additional Power Entitlement Share in excess of 25% of its original Power Entitlement Share. The Project Support Contract of a Participant does not prohibit the issuance of additional revenue bonds by such Participant which have a claim to payment prior to such Participant s obligation to make payments under its Project Support Contract. However, in connection with any financial tests or conditions for the issuance by such Participant of additional revenue bonds payable from the revenues of such Participant s electric or integrated utility system, the Project Support Contract does require such Participant to treat payments under its Project Support Contract and its Power Sales Contract as operating expenses for the purpose of computing the amount of net revenues available for the payment of outstanding revenue bonds and such additional revenue bonds. In its Project Support Contract, a Participant agrees not to enter into any contracts or agreements or incur any expenses payable from or secured by the revenues of its electric or integrated utility system prior in right of payment to its obligations 11

16 under the Project Support Contracts, except with respect to (i) operation, maintenance, renewal and replacement expenses of the Participant s electric or integrated utility system; (ii) bonds (as well as bond anticipation notes), notes or other obligations for money borrowed issued for electric or integrated utility system purposes; (iii) subordinated bonds, notes or other obligations for money borrowed for electric or integrated utility system purposes, but only if outstanding on the date of execution of the Project Support Contract by the Participant; and (iv) payments required to be made into or from funds established under ordinances or resolutions authorizing indebtedness referred to in clauses (ii) and (iii) above. The Power Sales Contracts and the Project Support Contracts may not be amended, terminated or modified in any manner which will materially adversely affect the security for the Offered Securities or impair the ability of FMPA to comply with FMPA s rate covenant established under the Resolution. See APPENDIX C - SUMMARY OF CERTAIN PROVISIONS OF THE RESOLUTION AND THE AGREEMENTS - Summary of Certain Provisions of the Power Sales Contracts and the Project Support Contracts. See also STATE REGULATION herein. Substitution of Credit If FMPA exercises its right of substitution of credit (see SUBSTITUTION OF CREDIT ), the Participants would enter into new power supply contracts for the All-Requirements Project similar to the existing Power Supply Contracts. The Offered Securities would then be paid from revenues under the bond resolution authorizing the All-Requirements Project bonds from payments made under each power supply contract with an All-Requirements Project participant on a parity with the other outstanding senior lien bonds issued for the All-Requirements Project. See SUBSTITUTION OF CREDIT. AGREEMENTS WITH FLORIDA POWER & LIGHT COMPANY The agreements between FPL and FMPA with respect to the St. Lucie Project include the Participation Agreement, the Reliability Exchange Agreements, and the Replacement Power Agreement, brief descriptions of which follow. For a more detailed summary of these agreements see APPENDIX C SUMMARY OF CERTAIN PROVISIONS OF THE RESOLUTION AND THE AGREEMENTS. The Participation Agreement The Participation Agreement provides for (i) the purchase by FMPA of an 8.806% ( MW) undivided ownership interest in St. Lucie Unit No. 2 and in the associated Unit Site; (ii) the appointment of FPL as FMPA s agent to perform, or cause to be performed, all work authorized or contemplated by the Participation Agreement; (iii) monthly payment to FPL by FMPA of its share of Participation Costs (as defined in the Participation Agreement); (iv) operation, maintenance, and fueling of St. Lucie Unit No. 2; (v) renewals, replacements, and capital additions to St. Lucie Unit No. 2; and (vi) the decommissioning and ultimate retirement of St. Lucie Unit No. 2 at the end of its useful life. See THE PROJECT Decommissioning herein. The Reliability Exchange Agreement The Reliability Exchange Agreement provides for FMPA s exchanging 50% of its share of the output from St. Lucie Unit No. 2 for a like amount for St. Lucie Unit No. 1. As a result of this exchange, FMPA will have the entitlement to capability and output of St. Lucie Unit No. 1 associated with 50% of its ownership interest and an entitlement to capability and output of St. Lucie Unit No. 2 associated with the remaining 50% of its ownership interest. This exchange commenced on the date of Firm Operation of St. Lucie Unit No. 2 and will continue until the earlier of (a) the retirement of both St. Lucie Units 1 and 2 or (b) October 1, Operating licenses for St. Lucie Unit No. 1 and St. Lucie Unit No. 2 currently expire on March 1, 2016 and April 6, 2023, respectively, and, therefore based on such dates, the Reliability Exchange Agreement will terminate on October 1, If the operating licenses for both St. Lucie Unit No. 1 and St. Lucie Unit No. 2 expire as currently scheduled, during the period from March 1, 2016 to October 1, 2017, FMPA will effectively be limited to receiving capability and output associated with 50% of its ownership entitlement in St. Lucie Unit No. 2 while no longer receiving any capability or output from St. Lucie Unit No. 1; thereafter and until St. Lucie Unit No. 2 is retired from service, FMPA will be entitled to capability and output associated with 100% of its ownership entitlement in St. Lucie Unit No. 2. As discussed herein under the heading THE PROJECT, FPL has applied for license extensions for St. Lucie Projects No. 1 and 2. The Reliability Exchange Agreement will not automatically extend if there is a license extension, and FPL and FMPA have not yet indicated whether they would be willing to extend the agreement. 12