The former: all NPCs in a Mutants & Masterminds game have their power level determined by what traits they have. Re: Mutants and Masterminds 3e Attack vs Damage As a quick aside as well for you, since you asked and I don't think I answered, high toughness vs low damage Power Attack is good.
Power Level of a Feat or Skill equals its rank. The Power Level of your Life equals (Life -2)*2.5. Exception: The Power Level for Feats that habitually increase the bonuses of specific Traits or Attacks stack for Power Level purposes. For example, if you have Strength +5 and two ranks of Improved Grapple, your Grappling Power Level=9.