Text

Annual Financial Report
	ML040980139
Person / Time
Site:	Fort Calhoun
Issue date:	04/02/2004
From:	Herman J; Omaha Public Power District
To:	; Document Control Desk, Office of Nuclear Reactor Regulation
References
	LIC-04-0044
	Download: ML040980139 (45)
	v • d • e

Omaha Public Power District 444 South 16th Street Mall Omaha NE 68102-2247 April 2, 2004 LIC-04-0044 U. S. Nuclear Regulatory Commission ATTN.: Document Control Desk Washington, DC 20555

Reference:

Docket No. 50-285

SUBJECT:

2003 Annual Financial Report In accordance with 10 CFR 50.71(b), enclosed please find one copy of the Omaha Public Power District's 2003 Annual Report.

If you should have any questions, please contact Dr. Richard Jaworski at (402) 533-6833. No commitments are made to the NRC in this letter.

Sincerely,

g. erman anager - Nuclear Licensing JBH/rrl

Enclosure:

Omaha Public Power District's 2003 Annual Report.

c: B. S. Mallett, NRC Regional Administrator, Region IV A. B. Wang, NRC Project Manager J. G. Kramer, NRC Senior Resident Inspector Employment with Equal Opportunity

A,

- Fort Calhoun Station e Nuclear plant, 476 megawatts Elk City Station ii North Omaha Station Landfill-gas plant, 3 megawatts

. Coal & natural-gas plant, 663 megawatts

& Jones Street Station

P Oil plant, 118 megawatts Valley Station - OPPO Headquarters Wind turbine, .66 megawatts Sarpy County Station Oil & natural-gas plant, 314 megawatts

Served at Retail Cass County Station Natural-gas plant, 320 megawatts A Served at Wholesale A Power Station

OPPD Headquarters I

- Nebraska City Station Coal plant, 646 megawatts Nebraska City Station 2 Coal plant, estimated 600 megawatts (2009 completion date)

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Electricity is a vital component of modern life. It gives people the power to live, the power to grow, the power to heal and the power to learn.

As a public power utility, OPPD takes measures to ensure its electricity is reliable and affordable. Strong strategic planning, solid financial management and aggressive maintenance programs remain priorities. OPPD also places great emphasis on understanding customers' wants and needs. It could be determining how much electricity the region will need in 10 years or knowing what a specific customer needs tomorrow. OPPD builds relationships with customer-owners so that the customers can do what they need - in the most efficient manner.

Customer Power - at OPPD, ours is based on customer service and customer satisfaction.

Chair and CEO Message ......................................... 2 Board of Directors .............................................. 4 Senior Management ............................................. 5 Operations Review .............................................. 6 Management's Discussion and Analysis ............................ 14 Report of Management ......................................... 24 Independent Auditors' Report ................................... 25 Balance Sheets .............................................. 26 Statements of Revenues, Expenses and Changes in Equity ............ 28 Statements of Cash Flows ....................................... 29 Notes to Financial Statements ................................... 30 Electric System Revenue Bonds Outstanding ....................... 38 Statistics ............................................... 40 Investor Relations and Corporate Officers .......................... 41 j

Providing safe, low-cost, reliable electricity for the customer-owners of this publicly owned utility remains the top priority at OPPD. We can proudly say that OPPD continued this tradition during 2003 by working toward the highest standards of customer service and providing other beneficial products and services to our customers. OPPD's accomplishments were significant last year, and we made some major decisions that will serve this utility and its customer-owners very well inthe future.

OPPD customers used a record amount of power in 2003, and our power supply and delivery systems kept

_ or .- = . n R. . - .- v kW 0 - President and CEO WtGary Gates pace. Exceptional performance by our generating

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and distribution systems - enabled OPPD to set annual generation records and achieve record capacity factors at its coal-fired plants in North Omaha

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and Nebraska City. Elk City Station, OPPD's landfill-gas plant, operated at nearly 100 percent

_ r . ., 3 ,, ffi L L ; A 6 r x, en = or Z w _ r o .q g = 5 t 4 S capacity. OPPD's Fort Calhoun Nuclear Power Station marked its 30th anniversary in 2003 with

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word from the Nuclear Regulatory Commission that its operating license was renewed for an

........ k a 1s additional 20 years - until 2033. The nuclear station's performance, safety record, maintenance J .. A. L. iEL history, planned upgrades and experienced personnel are responsible for the approval. Another

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320 megawatts of power for the busy summer air-conditioning season, helping OPPD's peaking

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$124.3 million. These record sales contributed to our increase in operating revenues, which were V _ 9 t ,,, _, , , - ;,; ,. _ S

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_ _ _ .d $588.5 million, an increase of $35.5 million over 2002. Electric energy sales were 13,359 million

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When OPPD issued $140 million in electric system revenue bonds for various construction

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Planned construction projects include a second coal-fired unit at Nebraska City Station, which will provide 600 megawatts of additional capacity by 2009, when itbecomes operational, T:- X n - a- j ESfl f 't. . a -- , . So

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20 years. Design, procurement and other preliminary activities also progressed on the $21 1-million steam-generator replacement project at Fort Calhoun Station. The new steam generators, scheduled for installation in 2006, will enable the plant to operate through its newly extended license period.

In anticipation of these additional capital expenditures, we implemented cost-control efforts across the company to cut $20 million from our operating budget by 2005. We also implemented our first general rate increase in 12 years, a modest 3.1 percent increase, effective January 1,2004. This necessary action isestimated to generate an additional $15.6 million in annual revenues needed to help fund the capital expenditures program.

While focusing on value and integrity in our financial dealings, we continued our emphasis on safety and customer service. On the work front, safety continues to be an important corporate performance measure, with an emphasis on decreasing the lost-time injury rate. In2003, one work group - Central Maintenance electricians - marked its 19th year without a lost-time injury.

We also received the J.D. Power and Associates award for customer satisfaction for the third consecutive year.

OPPD ranked highest in the medium-sized utility class and tied with another utility for the highest residential customer satisfaction index rating in the country. The award isbased on customer replies to survey questions related to price and value, billing and payment, power quality and reliability, customer service and the utility's image.

Last year also marked the end of an illustrious 40-year career for Fred Petersen, who spent the last 16 years as president and chief executive officer. Fred oversaw numerous capital improvements, developed a strong management team, prioritized safety and customer service programs, and left the utility in great shape. His legacy, combined with a team of dedicated employees, well-maintained equipment, a solid balance sheet and a strong board of directors, gives us exactly what we need to exceed our customers' expectations. After all, it's their power.

W.Gary Gates Anne L.McGuire President and Chief Executive Officer Chair of the Board 2003 OPPO Annual Report 3

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4 2003 OPPD Annual WePort

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Front, from the left: Back, from the left:

Charles N. Eldred Ross T. Ridenoure Vice President, Vice President Chief Financial Officer Timothy J. Burke IV.Gary Gates Vice President President, Chief Executive Officer Dale F.Widoe Vice President Adrian J. Minks Vice President Roger L. Sorenson Vice President 2003 OPPO Annual Report 5

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Apress operator keeps watchias a larg'rl of newsprinft automati~cally runs through the fast, -

-complex web press After both sides of the paper are ;

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a good corn'harvest and plans to maximize his

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profit. Gram dryers an'd graincnditiomng -

equipment - with powerful electic fans - allow him todry his own cropand bold'it unilgramprices -

become favorable,-typicallylmonths'after harvest.

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^Miles : ii:ow rates and reliable servicegive torort to customers1

-nurse tenderlytcaresses aaby sleeping in a;-t:-0 special: :--': ---:-Bee v ^-:s

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incubator, while connitedtoa sophisticated lights up; -

ventilator to preventtraumna tothe babys immature Electncitv iscritical to all these aspects of life,

- lungs and intravenous pumps-toregulate the ifant's

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intake, ;.-^;--i-- -- -powering technology that allows students to learn 7-7 :

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OPPDprovides power to more than 270,000 residentialcustomers. That number has grown by an average of4,000 per

'yearover the last decade, due to new housing developments in the service area.Springfield, Neb., population 1,450, is a

-quietcommunity, located20 minutes from downtown Omaha. City officials there are working with OPPD to preparefor growth. One new Springfield subdivision isnearly full and a second 51-lot subdivision is being developed..

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"Springfield isin a growth mode, not only naturally through residents moving here, but also because of.

being located on Highway 50 - which isgoing to be widened to four lanes - and its proximity to Highway 370.

The writing ison the wall that we are going to have huge upcoming growth. To prepare for this, we need to do some strategic planning and understand what our community wants. We checked into strategic planners to facilitate this process and, of course, they all wanted a-great deal of money. We don't have those kinds of-resources available to us, so OPPD helped us with planning efforts and with community surveys. Having this information isgoing to allow us to target our goals for infrastructure growth and set our financial goals so we can meet this extreme surge of growth. ;

- "Inaddition, we have 17 accounts with OPPD that stretch across seven departments. Our water, wastewater and streetlighting all depend upon electricity. Inacity that needs electricity to run its pumps in case of a fire -

or other emergency, it's very important to have that consistent, constant power to the city. OPPD's commitment to upgrade equipment and maintainefficiency and stability has been a real benefit to us."

- Sandia Powell

Springfield City Administrator

-Springfield, Nebraska . '

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elcrctand customers count on OPPD for safe, otreliable power. As a steward of public power lo fo7years, OPP knows the power belongs to its csoer-owners. Meeting customers' low-cost energy neds ~an'd ensuring their satisfaction remain top Esuring Reliability and Affordability For the third time in the last four operating cycles, FotCalhoun Nuclear Power Station operated cotinuously between refueling outages. Excellent inte at the plant--and at OPPs I yand peaking units - help ensure the 1-fiede L . valabrlily of power.

.. '5 intenance and enhancements to the power-

~ ~delvry systems are just as critical. In 2003, OPPD

csompleteda two-year project to replace circuit-breakers

>. o tria' nsmission lines and switching equipment in substations. As that project was completed, the utility Every year, about 1.4 million people visit the Henry Doorly Zoo, began o rotraa' tohiNspectall surface-mounted which received an awardftom OPPD in 2003 for innovative use of tran mers andothanerqipment every five years, energy. Zoo DirectorDr. Lee Simmons, center, shows OPPD Account wt all. cransfriticaldh equipmen ted every two years. Executives Jim Krist, left, and Adam Randalla newv exhibit.

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Miifly~i i11M11111I OPPDprovides electricity and other specialty services to more than 900 service locationsproviding educationalservices. The utility works with schools to improve their learningenivironients, using ener icit applications that Iave more money to spend on educaton: The Bellevrie.

PublicSchools isagood example. It serves more than 9,000 students in19 schools, occupying 1.6 million square feet of school and support facilities.'

iOPPD has done a great job of supporting the Bellevue Public Schools' mission. Our job isto champion children and provide the very best learning environment for the students. -.

"The level of service that we have received from OPPD has been excellent. On a scale of one to 10,1 would say the service that we have received from OPPD isa definite 10. Ican't imagine where we could receive a more cost-effective source of power.

"The staff at OPPD has worked eiessly with the Bllve

tirelsl ubicSco Belluue Public Schools in lookingngtth for innovative ways to become more cost-efficient and in providing classroom information for our students so they can understand their role in energygconservation.- -

-OPPD has conducted a number of studies for the school district that have assisted us in making more energy-efficient decisions.

We have installed energy-efficient lighting, autoimated flushers and faucets, a geothermal cooling and heating system, all of which have helped provide a more comfortable climate for our students and provided us with a cost savings that can be directed more to -

the learning program for students.

"We appreciate the commitment to excellence by the staff at OPPD. Electricity is a basic necessity in our business. Because of OPPD's commitment, we are able to provide the children of the Bellevue/Offutt community a quality education."

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. i' ,I 2003 OPPO Annual Report 9

F These measures greatly improve reliability, as does OPPD's tree-trimming program, which increased in importance last year. -

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~concluded that tree finterference played a role in threef owe-ine failu e' that ultimately led to t e

'~blackout that affected 50

milion people in eight -

Upper Midwestern and Eastern states anipart of

'Can adaIn a c ni u n r to tinmizne the 0PDaiso -eaboasts ahunique mix of industries, rningfm Ic ad otod manufacturing to transportaton,insuranceand telmareti probles, ae.-OP s treepn 2mPPDc ino terearnOPPD ;-' -~iwtM e )i tecen yant amost triming program follows attree-year cycle to trimro theEnrg Inormation Admini strto. PP p o s ti b aui lity intpto fi'tey 2i s ue c h-entoal'vae

'tblw msquaremileretail customers paidtan average of 5.46 cetsp&

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-thAreesa ong lones in its 000 e a.OPPDspent $6o. on P tr kilowatt-hour (kWh) in2002'the most recent yea-trim mi effoits i 2003 rstene O luj d a 27 hich com pre e sv d t i a forroffin'ci5.

wthceEnerp'ek~t w-w is ect rmtycnastmyeatorankamonthe firlstby autity in the -approximately 24 percentbelow thenational av.era ge United Sat toneducate m tbotM aproper of 7.21'cents per kw h hi fiu include allart ail p

-~te 6 a o dpower-m l i nii tefferen cea d u t mr c te oi s I 0 3 O rates averaged pinte iig -ffici nc Th~e MiJihcldes more ~~' *~~ 8cents per, k'A ~

~,i;b: -than 200 species -oftrees and shfubsi ~ > ,.K-OP Dkepsrte ou hcareful y

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itmeaffoiddble.'OPPDI ico fr petti biddi -.F i-Aaie fi y ai 6 tr d

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tyi~'~ i ii~i gih io wst n t e nil f r c al 'Idil'tra hsp __ttio -n'ai d irih ay miai fe a I~iiat~ii war edin 2003 wils~averm ;II fii 6 bfd611a ~ t ib e

Th Power, to row Farmingisbig business insoutheast Nebraska.Approximately 3,300 service locations use electricity for some type of agriculturalbusiness. The Wiles brothers are third-generationfarmers inCass County, and they operate abusiness that

dserves fanners in a50-mile radius. Situatedon the outskirts of the utility's service territory OPPDprovides service to the I

.- 4 Brothers expanding operation, which inclutdes agrin-handlingfacilityand a large fertilizerplant.--

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r"Wiles Brothers goes through quite a bit of electricity, and we continue to grow. We have a power cornpany

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. or two weeks. Timing is 90 percent of our battle in production agriculture. And, everything - including the-

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2008. The contracts underscore the wisdom of and downtown areas, where OPPD plays a supporting OPPD's purchase of a 56-mile rail line in 1997 for role. OPPD personnel worked behind the scenes to

$7million. The line, which runs from Lincoln, Neb., make sure all the electrical services were coordinated to OPPD's Nebraska City Station, enabled the utility smoothly, which was a complex job. For example, to seek competitive bids for coal transportation to on a new $291 million convention center and the station. OPPD estimates customers saved almost arena, OPPD professionals put in approximately

$63 million over the course of the last five-year 10,000 hours0 days <br />0 hours <br />0 weeks <br />0 months <br /> of labor and the utility invested contracts and anticipates similar benefits from the hundreds of thousands of dollars in materials.

new contracts. . - That included installing or relocating nearly A.

Understanding CustomerNeeds

-- .duct 400 streetlights, along with more than 20,000 feet of line andudrrudcbe 2003, work continued on more than $1.6-.-billion I dnd also startedcable-underground the participating in the A,:<'o-d'..el en'.6 ofI- Last year;OPPD piet.nth _-6rrot--~-

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promote greater energy efficiency and better comfort help high school students - our future energy in existing commercial buildings. Out of the 27 consumers - learn more about electro-technologies, customer projects OPPD has evaluated, seven have while designing and building light electric vehicles.

been approved for funding and are moving forward, Last year, 68 Nebraska and Iowa high schools and others appear likely in the not-too-distant future. participated in the program and showcased their This program was initiated with a grant from the U.S. vehicles in a series of rallies across the state. The Department of Energy via the Nebraska Energy Nebraska Public Power District partners with OPPD in Office. coordinating the effort statewide.

While looking for ways to help current customers Though power requirements vary from customer to improve their operations, the utility also helps customer, OPPD places importance on the needs of prospective customers. In2003, Site Selection each one. Whether it's a newborn on life support, a magazine honored OPPD for being one of the top 10 farmer using grain dryers or a press operator running utilities for economic development nationwide. The a high-speed press, electricity makes many things American Public Power Association also presented a possible. Customer Power goes a long way - OPPD community erviVvaward to OPPD for its Power makes sure of that.

Drive Progr m.OPPD began the program in 1998 to R -R.-Bran St ins, M:D'4.D., center, perfonns a life-saving kidney trans aaet 'Ne braska Medical Center.

Photo courtes - ediCal Center.

VT h .e.. Powe-r to ;Hea The Midwest ishome to some of the best medical professionals inthe nation. OPPDprovides service to more than 1,500 service locations related to hospital, health care and social-assistance customers. Among the largest isthe tUniversity ofNebraska Medical Center, which has established itselfas one of the country's leading centers incancer, transplantationbiology, bioterrorismpreparedness, neurodegenerative diseases, cardiovasallardiseases, genetics, 91X - ~biomedical technology and arthritis.It occi ies 5 illion'squ~arefeet ofspace, two-thirds of which isdedicated to research, the other third to teaching. Its hospitalpartner 7 The Nebraska Medical Center- covers an additional 2.5 million square feet. -

'Electricity isabsolutely critical. UNMC has a peak demand approaching nearly 20 megawatts. Virtually everything we do on campus istied to electricity in one way or another, be it research or medical treatment. We have literally thousands of man-years of research that would be at risk without good, reliable power; and the' lifesaving nature of electricity here isphenomenal. For example, we have 36 crib locations in neonatal intensive care. There's enough power in each one to power up a good-size office, just for one infant. Everything isset up for double redundancy - normal power andemergencypower.

'We're in a rather old part of the city. The infrastructure isnot as robust or as easy to build onto as ifwe were out west in a newer part of the city. It's critically important to keep OPPD advised of what our plans are and what our future loads may look like. We enjoy a very good working relationship with OPPD. We make use of virtually every service the utility offers, and we may have spearheaded or helped create some of them. The cooperative effort between UNMC and OPPD has saved the taxpayers a significant amount of money over the years."

-Nick Combs Manager of Maintenanceand Utilities, Facilities Management and Planning

'University of Nebraska Medical Center 2003 OPPD Annual Rehort 13

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'MANAGEMENTS DISCUSSION A1ND AiSISJ OVERVIEW OPPD is a fully integrated electric utility serving a 5,000-square-mile, 13-county region in eastern Nebraska. All corporate powers of OPPD are vested in a Board of Directors consisting of eight members representing specific areas of the service territory. OPPD generates revenues from a mix of retail sales, off-system sales and other sales of various products and services. The economy of the service territory is expanding and deregulation in Nebraska does not appear to be imminent at this time. Corporate headquarters is located in Omaha, Nebraska, with generating plants, service centers and customer service locations strategically located throughout our service territory. As OPPD embarks on several major construction projects, effective management of our resources, prudent cost management and maintaining our strong credit ratings will be critical to our future success.

The electric utility industry continues to change in many ways that were unimaginable in the past. Many of these changes present a great opportunity for OPPD and our customer-owners. As we manage through these changes, providing a safe

( working environment, a reliable source of power and effective customer service at low rates remain the priorities for OPPD.

g Exceeding Customer Expectations is our "MainThing." OPPD's success results from living the simple public power

$ ideals of satisfying our customer-owners with reliable power at low rates. We want our customer-owners and employees to S proudly refer to OPPD as "my company."

Strategic planning at OPPD is an ongoing process that is designed to evaluate future long-term opportunities, strengths and threats and develop strategies to manage the business accordingly. Our critical success factors address customer satisfaction,

~

.(e' revenue growth, excellence in operations, effective management of financial resources, being the "employer of choice" and developing positive relationships with the customers and communities we serve.

Putting the Strategic Plan into action on an operational basis, OPPD sets specific corporate performance measures and communicates these measures to employees to ensure that they focus on what is critical to our success. In order to maintain the public power advantage of low-cost and reliable energy, management uses a balanced scorecard approach to translate our Strategic Plan into results. Specific performance measures are established to ensure that OPPD stays on course and focuses on the critical success factors of the company. For 2003 and 2004, the corporate performance measures concentrate on the following - Return on the Business, Operating Ratio, Customer Satisfaction Rating and Lost-Time Incident Rate.

The Return on the Business is a measure that reflects the return generated by the company relative to its investment.

This measure is set at a rate to ensure the long-term financial strength of OPPD.

e The Operating Ratio is a measure that focuses on cost containment and supports OPPD's strategic goal of ensuring cost-effective and efficient business operations.

mThe Customer Satisfaction Rating is a measure that focuses on the level of overall satisfaction within all customer classes, based on ongoing surveys conducted by an independent organization.

@The Lost-Time Incident Rate is a measure that is commonly used in the industry to track safety. This measure focuses on the number of lost-time incidents relative to the number of hours worked.

The following unaudited Management's Discussion and Analysis should be read in conjunction with the financial statements and related notes. This document contains forward-looking statements based largely on OPPD's current plans.

14 2003 OPPD Annual RePort

2003 Compared to 2002 Total operating revenues were $588,541,000 for 2003, an increase of $35,517,000 or 6.4% over 2002 operating revenues of

$553,024,000.

APrior to the reductions for the Debt Retirement Account and Rate Stabilization Reserve, revenues from retail sales were

$487,738,000 for 2003, an increase of $8,827,000 or 1.8% over 2002 revenues of $478,911,000. The increase in revenues was due mainly to a 3.2% increase in energy sales to retail customers.

2003 was a record year for off-system sales. Revenues from off-system sales were $124,262,000 for 2003, an increase of

$51,006,000 or 69.6% over 2002 revenues of $73,256,000. Revenues for 2003 increased over 2002 due to a combination of greater energy sales and higher wholesale market prices. We recognize that off-system sales are volatile and OPPD uses conservative estimates of off-system sales for planning purposes. Off-system sales revenues include revenues related to joint marketing and other agreements. OPPD buys and sells power for other public power utilities through joint marketing agreements. Both OPPD and the other utilities benefit from these agreements.

2002 Compared to 2001 Total operating revenues were $553,024,000 for 2002, a decrease of $15,771,000 or 2.8% from 2001 operating revenues of

$568,795,000.

APrior to the reductions for the Rate Stabilization Reserve, revenues from retail sales were $478,911,000 for 2002, an increase of $10,892,000 or 2.3% over 2001 revenues of $468,019,000. The increase in revenues was due to a 0.5% increase in energy sales to retail customers and more energy sold at summer rates.

Revenues from off-system sales were $73,256,000 for 2002, a decrease of $17,789,000 or 19.5% from 2001 revenues of

$91,045,000. Revenues for 2002 decreased from 2001 due to a combination of lower energy prices and lower sales volume.

Operating Expenses 2003 Compared to 2002 0perating Expenses - 2003 Total operating expenses were $522,507,000 for 2003, an increase of g Es

$77,733,000 or 17.5% over 2002 operating expenses of $444,774,000. Customer &

The chart, shown at right, illustrates the percentage share of Transmission & Sales Administrative &General operating expenses for 2003 by expense classification. Distribution 6% 13%

Fuel expense increased $11,668,000 over 2002 due to a Maintenance combination of increased consumption for generation and higher Fuel 12%

natural gas prices.

Purchased power expense was $15,466,000 higher than in 2002 Depreciation due to additional purchases incurred in 2003 related to off- 16%

system sales opportunities. Purchased power expense includes Proucio 16%

expenses related to purchases for joint marketing and other Purchased of Taxes agreements. Power 4%

Production expense increased $6,878,000 due mainly to 9%

additional costs related to increased generation and the Fort Calhoun Station refueling outage completed in 2003.

Transmission expense was $2,892,000 higher than in 2002 partly due to awrite-off of deferred charges related to OPPD's participation in the formation of a for-profit transmission company which was disbanded in 2003.

Customer service and information expense was $7,479,000 higher than in 2002 due to the write-off of prior years' costs for the customer energy conservation program and a change in accounting policy in 2003 to expense these costs as they are incurred.

Administrative and general expense was $19,676,000 higher than in 2002 primarily due to increased employer contributions required for the retirement plan and increased health insurance costs.

Maintenance expense increased $6,355,000 due to additional production outage costs and changes in the capitalization policy.

Depreciation and amortization expense increased $5,833,000 over 2002 due to the inclusion of amortization expense for intangible assets and depreciation on the new Cass County Station.

2002 Compared to 2001 Total operating expenses were $444,774,000 for 2002, a decrease of $30,370,000 or 6.4% from 2001 operating expenses of

$475,144,000.

Production expense was $8,625,000 lower than in 2001 because more work was done on construction programs in 2002.

16 2003 OPPO Annual Reuort

FINANCIAL POSITION AND RESULTS OF OPERATIONS The following summarizes OPPD's financial position at December 31, 2003 and 2002 (inthousands).

Condensed Balance Sheels 2003 2002 Current Assets $ 243,655 $ 200,445 Capital Assets 1,913,721 1,832,300 Other Long-Term Assets 471,163 438,946 Total Assets $2,628,539 $2,471,691 Current Liabilities $ 159,792 $ 175,869 Long-Term Liabilities 1,209,613 1,062,566 Total Liabilities 1,369,405 1,238,435 Equity 1,259,134 1,233,256 Total Liabilities and Equity $2,628,539 $2,471,691 The following summarizes OPPD's operating results (inthousands).

operatlng Resuls 2003 2052 2001 Operating Revenues $588,541 $553,024 $568,795 Operating Expenses (522,507) (444,774) (475,144)

Operating Income 66,034 108,250 93,651 Other Income 5,230 12,380 15,956 Interest Expense (45,386) (40,009) (39,740)

Net Income $ 25,878 $ 80,621 $ 69,867 Accounting PolicY Changes In2002, OPPD completed a depreciation study, which was implemented for 2003. Inconnection with the implementation of new depreciation rates in 2003, OPPD changed its cost capitalization policies. The primary effect of these changes was to accelerate the recovery of these costs to the period in which they were incurred, rather than to defer recovery to future years. These changes included a reduction in the level of support costs being allocated to utility plant and an increase in the size of property units and the thresholds for capital expenditures. In addition, costs associated with the customer energy conservation program, which were previously deferred and amortized over 15 years, are now being expensed as incurred.

Operating Revenues The chart, below left, illustrates the mix of OPPD's operating revenues (inmillions). The chart, below right, illustrates the percentage share of revenues by customer class for 2003. Other revenues include connection charges, customers' forfeited discounts, rent from electric property and transmission wheeling fees.

Operating Revenues Operating Revenues - 2003 Commercial Industrial

$600 __ l ll lu/14%

$400 _Street &Highway Lighting 2%

$200_ __

Off-System 20%

2003 2002 2001 Residential 34% Other

Retail Sales

Off-System Sales U Other Revenues 2%

2003 OPPo Annual Report 15 M

a Administrative and general expense was $9,341,000 higher than in 2001 primarily due to increased employer contributions required for the retirement plan and increased costs for the supplemental retirement savings plan and health insurance.

Depredation expense was $20,462,000 lower than in 2001 due to the change in the depreciable life estimates of the Fort Calhoun Station as a result of application for license renewal with the Nuclear Regulatory Commission.

e Decommissioning expense was $3,581,000 lower than 2001 expense. Based on cost estimates, inflation rates and fund earnings projections, no funding was necessary for decommissioning expense for the year 2002.

Other Income Other income was $5,230,000 in 2003, a decrease of $7,150,000 or 57.8% from 2002 other income of $12,380,000. The decrease in 2003 isprimarily due to the write-off of $6,225,000 of costs related to the Fort Calhoun Station power uprate project. Due to revised load forecasts and the planned construction of the Nebraska City Station Unit 2,the additional power from this project will not be needed. Since OPPD does not plan to continue this project, costs related to the project were charged to expense in 2003.

OPPD offers a variety of products and services, which provide value both to the customer and OPPD. These offerings include such products as Performance Contracting, Energy Information Services, Energy Solutions, Ground Source Heat Pumps and Residential and Commercial Surge Protection. Offering these products and services isin line with our Strategic Plan and provides opportunities to build strong relationships with our customers by helping them efficiently meet their energy needs.

Income from products and services was $434,000 for 2003, an increase of $92,000 over 2002 income of $342,000.

Income from products and services was $342,000 for 2002, a decrease of $923,000 from 2001 income of $1,265,000. This decrease is primarily due to a reduction in revenues earned from a licensing contract agreement.

Interest Expense Interest expense was $45,386,000 for 2003, an increase of $5,377,000 or 13.4% over 2002 interest expense of $40,009,000, due to a combination of increased long-term debt and the accelerated amortization of losses on extinguished debt. In2003, OPPD made a decision to accelerate the write-off of certain costs related to losses on extinguished debt by charging these costs to expense over three years rather than over the life of the issues. These costs relate to bonds that have been repaid with operating funds and are no longer on OPPD's Balance Sheet.

Total interest expense was $40,009,000 for 2002, a slight increase over 2001 interest expense of $39,740,000.

Net Income Net income for 2003, 2002 and 2001 prior to revenue reductions for the Debt Retirement Account and Rate Stabilization Reserve was $60,878,000, $91,121,000 and $74,867,000, respectively. Operating Revenues reported for 2003, 2002 and 2001 were reduced by $35,000,000, $10,500,000 and $5,000,000, respectively, for additions made to the Debt Retirement Account (2003) and the Rate Stabilization Reserve (2002 and 2001).

Number of Customers OPPD has a stable customer base which continues to grow at a steady rate. The economy of our service territory is expanding, which we believe will support continued growth of our customer base.

OPPD served an average of 309,715 customers in 2003, an increase of 4,679 or 1.5% over the average number of customers for 2002 of 305,036.

OPPD served an average of 305,036 customers in 2002, an increase of 6,022 or 2.0% over the average number of customers for 2001 of 299,014.

The following table shows the average number of customers by customer class.

- 200 1e Residential 270,579 266,464 261,286 Commercial 38,525 37,807 37,008 Industrial 127 117 116 Street and Highway Lighting 436 594 555 Off-System 48 54 49 Total 309,715 305,036 299,014 2003 OPPD Annual Report 17

Cents per kWh OPPD is sensitive to the rates we charge and strives to maintain Retail Sales - Average Cents per kWh the public power advantage for our customers. 2003 was the eleventh consecutive year without a general rate increase.

Residential customers paid an average of 6.77, 6.80 and 6.62 cents per kWh in 2003, 2002 and 2001, respectively.

Retail customers paid an average of 5.38, 5.46 and 5.36 cents per kWh in 2003, 2002 and 2001, respectively.

The national average retail cents per kWh according to the Energy Information Administration, U.S. Department of Energy was 7.43 (preliminary for 2003 as of November 30) 2003 2002 2001 and 7.21 and 7.32 cents per kWh for 2002 and 2001, respectively. The chart on the right shows OPPD's average UOPPD UNational Average retail cents per kWh compared to the national average.

OPPD implemented a 3.1% general rate increase effective January 1,2004, to help fund the capital expenditures program.

Even with this increase, OPPD rates are expected to remain well below the national average.

E CASH AND LIQUIDITY OPPD has a high degree of liquidity as a result of maintaining strong credit ratings, expanding its Commercial Paper program, implementing cost-containment programs and investing in projects that provide returns in excess of our cost of capital.

OPPD relies on bond offerings as a significant source of liquidity for capital requirements not provided for by cash from operations. OPPD's ability to obtain required capital at low rates is important to its overall business plan and will be critical in the years to come to support the significant planned capital program expenditures.

Financing In May 2003, OPPD issued $140,000,000 of bonds, which were sold at interest rates ranging from 1.40% to 4.75%,

depending on the term. The proceeds from the sale of the bonds were used for the capital program, which included expenditures for the completion of the Cass County Station.

The chart, below left, illustrates OPPD's debt mix (inmillions). The chart, below right, shows OPPD's declining amount of current indebtedness (inmillions) and indicates OPPD has sufficient capacity to issue debt to fund the construction of Nebraska City Station Unit 2 and other capital programs.

Debt Mix Electric System Revenue Bonds Outstanding and Annual Debt Service

$1 0001 $800

$800O $700

$400 llll- $40°0 DlI20

$200$200 lI0 $300 2003 2002 2001 $100

Electric Revenue Minibonds and Subordinated Obligation e CX

Electric Revenue Notes - Commercial Paper Series Years

Electric System Revenue Bonds Ratings OPPD's excellent bond ratings allow us to borrow funds at low rates. Both quantitative (financial strength) and qualitative (business and operating characteristics) factors are considered by the bond-rating agencies in establishing a company's credit rating. The ratings given by Standard & Poor's Ratings Group (S&P) and Moody's Investors Service (Moody's), independent bond-rating agencies for the latest Electric System Revenue Bond issue, were among the highest ratings given to public power districts and indicate the agencies' assessment of OPPD's ability to pay interest and principal on its debt.

18 2003 OPPO Annual Repor

The following ratings at December 31, 2003, are indicative of OPPD's strong financial strength.

- Electric System - Commercial

- Revenue Bonds :Minibonds* Paper

-S&P AA AAA+

Moody's _ Aa2 -Aaa , P-1

Pam7nent of the principaland interest on the Minibonds when daue is insured by a financial guaranty bond insurance policy.

Cash Flows OPPD experienced a net increase in cash of $24,531,000 for 2003, a net decrease in cash of $18,780,000 for 2002 and a net increase in cash of $17,238,000 for 2001. The following table illustrates the cash flows by activities (inthousands).

[ C-- hFlW -- 7 7.:03 --X -2002 : -2001-Cash Flows from Operating Activities $193,303 $183,361 $239,748 Cash Flows from Capital and Financing Activities (126,443) (183,128) (248,956)

Cash Flows from Investing Activities (42,329) (19,013) 26,446 Increase (Decrease) in Cash $ $(18,780) $ 17238 Cash flows from operating activities consist of transactions involving changes in current assets, current liabilities and other transactions that affect operating income.

Cash flows for 2003 increased $9,942,000 over 2002 primarily due to an increase in cash receipts from off-system customers. This change was partially offset by an increase in cash payments to suppliers.

Cash flows for 2002 decreased $56,387,000 from 2001 primarily due to an increase in cash payments to operations and maintenance suppliers and a decline in cash receipts from off-system customers.

Cash flows from capital and related financing activities consist of transactions involving long-term debt and the acquisition and construction of capital assets.

a Cash flows used for 2003 decreased $56,685,000 from 2002 due mainly to less funds being spent on capital assets.

a Cash flows used for 2002 decreased $65,828,000 from 2001 due to the issuance of the 2002 Series Aand BBonds and additional commercial paper. These additional cash receipts were partially offset by an increase in cash expenditures for capital assets.

Cash flows from investing activities consist of transactions involving purchases and maturities of investment securities and interest income.

L Cash flows used for 2003 increased $23,316,000 over 2002 due to purchases of investment securities for special purpose funds.

Cash flows used for 2002 increased $45,459,000 over 2001 due to purchases of investment securities and a decrease in interest income.

Debt Service Coverage OPPD isrequired by its bond covenants to maintain a debt service coverage of 1.40 times. The following table reflects the calculation of debt service coverage, indicating OPPD's solid ability to make required debt service payments (inthousands).

LI Debt Service Coverage E

2003 2002 2001 Operating revenues $588,541 $553,024 $568,795 Operation and maintenance expenses (419,507) (347,121) (353,767)

Payments in lieu of taxes (18,067) (18,553) (18,234)

Net operating revenues 150,967 187,350 196,794 Investment income of related reserve fund 1,049 1,411 1,673 Net receipts $152,016 $188,761 $198,467 Total debt service* $ 78,839 $ 74,688 $ 73,466 Debt service coverage 1.92 2.52 2.70

Total debt service for Resolution No. 1788 Bonds is accrued on a calendar-yearbasis similar to the computation of net receipts. Interest finded from bondproceeds, when applicable, isnot included in total debt service.

2003 OPPD Annual Report 19

Debt Ratio The debt ratio is a measure of financial solvency and represents the share of OPPD's debt to its total capitalization (debt and equity). OPPD's debt ratio was 42.7% and 40.6% as of December 31, 2003 and 2002, respectively. The 2003 debt ratio increased slightly from 2002 due to the issuance of additional bonds in 2003.

Retirement Plan Employees contribute 4.0%/o of their covered pay to OPPD's defined-benefit Retirement Plan (the Pl'an"). OPPD is required to contribute the balance of the funds needed by the Plan as determined by our actuary. Due to declining investment returns and increasing liabilities, the funded ratio for the Plan declined to 109.0% as of January 1, 2003, from 128.0% and 138.3%,

as of January 1, 2002 and 2001, respectively.

In addition, due to the lower returns experienced in recent years, OPPD lowered the expected rate of return on assets used in computing the actuarial liability to 8.50% for 2003, from 8.75% in 2002 and 9.00% in 2001. The annual required employer contribution to the Plan was $17,505,000 and $5,625,000 for 2003 and 2002, respectively. No contributions were required in 2001. OPPD has budgeted $18,100,000 for employer pension contributions for 2004. Plan assets have significantly increased from $438,965,000 at December 31, 2002, to $509,618,000 at December 31, 2003, due to favorable market conditions.

g~ir Risk Management Practices Negotiating power marketing and fuel purchase activities are within the normal course of OPPD's business Because of this, OPPD is exposed to certain risks associated with these transactions. Risks associated with power marketing and fuel

Acontracting transactions are identified, quantified and managed within a risk management control framework that is consistent with OPPD's overall tolerance for risk. Fuel expense represents a significant portion of OPPD's generation costs and affects its ability to market competitively priced power. A Risk Management Committee is responsible for identifying, measuring and mitigating various risk exposures. Periodic reports are made to the Board of Directors regarding these activities.

OPPD competes in the wholesale marketplace with other electric utilities and power marketers for off-system sales. To successfully compete, OPPD must be able to offer energy at competitive prices and obtain transmission services. Energy market prices may fluctuate substantially in a short period of time due to changes in the demand and supply of electricity.

In the energy trading and marketing business, it is anticipated that these operations will continue to experience competition. In addition, there are other risks, such as counterparty credit risks, which are monitored closely on an ongoing basis.

A Rate Stabilization Reserve was established in 1999 to help OPI'D maintain stable customer electric rates. This funded reserve is intended to minimize the impact on rates from significant unforeseen occurrences such as major storm damage or the unscheduled outage of a major generating unit during a period of high replacement power costs. Additions are made to the reserve based on the achievement of specific financial performance measures. Based on operating results, no additions were made in 2003. Additions to the reserve were $10,500,000 and $5,000,000 for 2002 and 2001. This reserve balance was

$32,000,000 at December 31, 2003.

ADebt Retirement Account was established in 2003 to help manage the long-term risks associated with the significant additional capital expenditures and related debt issuances planned in future years. OPPD will use this funded reserve to meet future challenges in retiring debt and maintaining adequate debt service coverage ratios. This account balance was

$35,000,000 at December 31, 2003.

Other Reserves OPPD also maintains other reserves to recognize potential liabilities that arise in the normal course of business.

The Uncollectible Receivables Reserve is established for estimated bad debts from both retail and off-system sales. Accounts receivable is reported net of this reserve.

The Workers' Compensationand Public Liability Reserves are established for the estimated liability for current workers' compensation and public liability cases.

The Incurredbut not Presented Reserve is a funded insurance reserve that is required by law since OPIPD is self-insured. The reserve is based on health insurance claims that have been incurred but not yet presented for payment.

20 2003 OFPD linnual Heport

CAPITAL RESOURCES Generating Capabilitv Capahllity [EWI %Ot Total Coal OPPD owns and operates eight generating stations, Nebraska City Station 646.0 seven of which have a maximum summer net capability North Omaha Station 534.0 of 2,540.5 MW. (The net capability of the Valley Station Subtotal Coal 1,180.0 46.3 wind turbine isnot accredited.) Additionally, OPPD operates leased generation of 6.6 MW for a total Nuclear capability of 2,547.1 MW. OPPD's power requirements Fort Calhoun Station 476.0 18.7 are provided from these generating stations, from leased 01I/Natural Gas generation and from purchases of power. The table, at Cass County Station 320.0 right, illustrates the diverse fuel mix and maximum Jones Street Station 118.4 summer net accredited capability (inMW) of OPPD's North Omaha Station 128.8 generating facilities. Sarpy County Station 314.3 The chart, below left, illustrates OPPD's growing system Subtotal Oil/Natural Gas 881.5 34.6 peak load for the past three years, along with projections Other for the next two years (inMW), indicating that these Elk City Station (landfill gas) 3.0 0.1 increasing loads can be met by current generating Leased Generation 6.6 0.3 capability. The 2003 increase in generation capability Total 2,547.1 100.0 was due to the completion of the Cass County Station.

The chart, below right, represents the diversity of OPPD's generating capability by fuel type (inMW).

Generating Capability and System Peak Load (MW) Generating Capability (MW) 2,600 2,500 3,000 2,400 2,500 2,300 2,000 2,200 1,500 2,'100 1,000 2,000 500 1,900 2001 2002 2003 2004 20 zi 20) ZUJM

Generating Capability U Peak Load *Coal NNuclear U Oil/Natural Gas Capital Program OPPD continually evaluates electric system requirements and makes long-range recommendations for capital expenditures necessary to serve the growing load requirements with a reliable and economical power supply. The following table shows OPPD's actual capital program and nuclear fuel program expenditures for 2003, 2002 and 2001 and projected expenditures for 2004 and 2005 (inmillions). OPPD finances its capital and nuclear fuel programs with revenues from operations, financing proceeds, investment income and cash on hand.

Projected Actual Capital Program 2005 2004 2003 2002 2001 Transmission and Distribution Plant $ 60.7 $ 58.4 $ 57.4 $ 83.2 $ 64.2 General Plant 21.7 25.1 39.6 22.1 21.2 Production Plant 70.4 64.8 56.7 58.0 48.7 Additional Power Supply 63.3 50.1 18.2 70.1 38.8 Total Capital Program 216.1 198.4 171.9 233.4 172.9 Nuclear Fuel Program 19.3 6.4 21.4 18.3 9.2 Total $235.4 $204.8 $ 193.3 $251.7 $182.1 2003 OPPD Annual Report 21

Additional power supply expenditures include the Cass County Station, a second coal-fired power plant at the Nebraska City Station site and capital projects related to the renewal of the operating license for the Fort Calhoun Station.

The Cass County Station, located near Murray, Nebraska, became operational in May 2003. The plant includes two combustion turbine units with a total capacity of 320 MW. The plant burns natural gas and will be used primarily for peaking purposes.

OPPD is moving forward With plans for the construction of a 600-MW coal-fired power plant on the site of the Nebraska City Station. The unit isexpected to be operational in 2009. OPPD will use 300 MW to meet forecasted requirements for our customers and has secured 40-year contracts with other public power participants for the remaining 300 NM. OPPD will own the entire plant and be responsible to build, operate and maintain the plant. The construction costs for 300 NM will be recovered front the participants. OPPD will issue revenue bonds to finance the 300 MW intended for its customer-owners.

In November 2003, OPPD received a renewal of its operating license for the Fort Calhoun Station for an additional 20 years until 2033. With this renewal, OPPD has begun work on several major modifications, including the replacement of the current steam generator and several related projects. The major work is planned to be completed in the scheduled 2006 refueling and maintenance outage.

FACTORS AFFECTING OPPO AND THE ELECTRIC UTILITY INDUSTRY GENERALLY OPPD and the electric industry in general continue to be affected by a number of factors which could impact the competitiveness and financial condition of all electric utilities.

Central Interstate Low-Level Radioactive Waste Compact Under the federal Low-Level Radioactive Waste Policy Act, the state of Nebraska joined the states of Arkansas, Kansas, Louisiana and Oklahoma to form the Compact for the purpose of providing a low-level radioactive waste (LLRWV) disposal facility for member states. The Compact created the Central Interstate LLRW Commission to carry out the goals of the Compact. In 1998, the site-specific license application to the Nebraska Departments of Environmental Quality and Health was denied. Plaintiffs (including OPPD), which are owners and operators of nuclear power generating units within the Compact region, and which have provided funding for the activities of the Commission, filed suit against the state of Nebraska in federal court.

The Commission subsequently, with the court's approval, became a plaintiff with the utilities. In late 2001, OPPD withdrew from this lawsuit but has continued to monitor recovery of its share of expenses through the Commission's claim. In 2002, a federal district court awarded the Commission $151,000,000 in damages, including prejudgment interest. The state of Nebraska appealed this judgment. Athree-judge panel of the Eighth Circuit Court of Appeals upheld this judgment in a decision issued in February 2004. OPPD has expended approximately $12,100,000 to fund the activities of the Compact and has notified the Commission of its interest in any funds collected by the Commission.

High-Level Nuclear Waste Repository Under the federal Nuclear Waste Disposal Act of 1982, the federal government assumed responsibility for the permanent disposal of spent nuclear fuel. The Department of Energy facility isnot expected to be operational until at least 2010. OPPD remains responsible for the safe storage of spent nuclear fuel until the federal government takes delivery. In 1994, OPPD completed a re-rack project at the Fort Calhoun Station that will provide spent-fuel storage through 2005. InFebruary 2004, the Board approved the purchase of a dry-cask storage system. This new system will provide adequate spent-fuel storage capacity for continued operation of the Station to the year 2033.

Competitive Environment in Nebraska During the 2000 session, the Nebraska Legislature enacted Legislative Bill 901 (LB. 901), which implemented recommendations to determine whether retail competition would be beneficial for Nebraska ratepayers. LB. 901 directs the preparation of an annual report for the Governor and Legislature which monitors the conditions in the electric industry that may indicate whether retail competition would be beneficial for Nebraska's citizens. These conditions are as follows:

Whether a viable regional transmission organization and adequate transmission exist in Nebraska or in a region that includes Nebraska.

Whether a viable wholesale electricity market exists in a region that includes Nebraska.

W 22 2003 OFFO 4innual Report

To what extent retail rates have been unbundled in Nebraska.

A comparison of Nebraska's wholesale electricity prices to the prices in the region.

eAny other information the Nebraska Power Review Board believes to be beneficial to the Governor, the Legislature and Nebraska's citizens when considering whether retail electric competition would be beneficial.

The conditions have not been met based on the findings from the latest annual report published in October 2003. Five states have suspended or repealed retail choice since January 2001.

In December 1999, FERC issued Order 2000 requiring public utilities that own, operate or control interstate transmission facilities to provide open and equal access to their transmission facilities. Although OPPD is not subject to FERC jurisdiction, and therefore not required to comply with FERC Order 2000, OPPD is continuing to evaluate the implications of Order 2000 on its transmisson operations, as well as its wholesale energy trading activities.

Environmental Issues OPPD and other electric utilities are subject to numerous current and proposed environmental regulations in the normal course of their business. OPPD is in compliance with all current regulations and continues to both monitor and influence -

to the extent possible - the effects of proposed legislation and regulations, some of which could have a material financial effect on OPPD and most electric utilities.

Critical Accounting Policies The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that effect the reported amounts of assets and liabilities as of the date of the financial statements, the reported amounts of revenues and expenses during the reporting period, and the disclosure of contingent assets and liabilities as of the date of the financial statements. Actual results could differ from those estimates.

These judgments, in and of themselves, could materially impact the financial statements and disclosures based on varying assumptions, which may be appropriate to use. Inaddition, the financial and operating environment also may have a significant effect, not only on the operation of the business, but on the results reported through the application of accounting measures used in preparing the financial statements and related disclosures, even ifthe nature of the accounting policies have not changed.

The following is a list of accounting policies that are significant to the portrayal of OPPD's financial condition and results of operation, and require management's most difficult, subjective or complex judgments. Each of these has a higher likelihood of resulting in materially different reported amounts under different conditions or using different assumptions.

A-ccounting Policies Ii :- J dgi ertainUies Affecting Applicaoti lntscUn -

Regulatory Mechanisms and - External regulatory requirements'-

Cost Recovery - (SEAS No. 71) - ' Anticipated future regulatory decisions and their impact Nuclear Plant Decommissioning .* Costs of future decomissioning

- -* Availability of facilities for waste disposal Approved methods forwaste disposal

- -'Useful

life of nuclear power plant -

,Environmental Issues - Approved methods for'cleanup I

-- --- - Governmental regulations and standards -

Retirement Plan - Changes due to assumptions used incomputing the actuarial liability, including expected rate of return on Plan assets '-

Unbilled Revenue Estimates for customer energy use'-'

E Uncollectible Receivables - . Economic conditions affecting customers, suppliers and market prices

SUMMARY

OF THE FINANCIAL STATEMENTS The financial statements, related notes and management's discussion and analysis provide information about OPPD's financial position and activities. The balance sheets present OPPD's assets, liabilities and equity as of December 31, 2003 and 2002, with current and long-term portions of assets and liabilities separately identified. The Statements of Revenues, Expenses and Changes inEquity present OPPD's operating results and changes inequity for the three years ended December 31, 2003. The Statements of Cash Flows provide information about the flow of cash within OPPD by activities for the three years ended December 31, 2003. The Notes to Financial Statements provide additional detailed information.

2003 OPPD Annual levort 23

The management of OPPD is responsible for the preparation of the following financial statements and for their integrity and objectivity. These financial statements conform to generally accepted accounting principles and, where required, include amounts which represent management's best judgments and estimates. The Company's management also prepared the other information in this Annual Report and is responsible for its accuracy and consistency with the financial statements.

To fulfill its responsibility, management maintains a strong internal control structure, supported by formal policies and procedures that are communicated throughout OPPD. Management also maintains a staff of internal auditors who evaluate the adequacy of and investigate the adherence to these controls, policies and procedures. OPPD is deeply committed to conducting business with integrity, in accordance with the highest ethical standards, and in compliance with all applicable laws, rules and regulations. OPPD has adopted a Code of Ethics for the Senior Executive and Financial Officers and the Controller, stating our responsibilities and standards for professional and ethical conduct.

j Our independent public accountants have audited the financial statements and have rendered an unqualified opinion as to the statements' fairness of presentation, in all material respects, in conformity with generally accepted accounting principles. During the audit, they obtained an understanding of OPPD's internal control structure and performed tests and other procedures to the extent required by generally accepted auditing standards.

The Board of Directors pursues its oversight with respect to OPPD's financial statements through the Audit Committee, which is comprised solely of non-management directors. The committee meets periodically with the independent public accountants, internal auditors and management to ensure that all are properly discharging their responsibilities. The committee approves the scope of the annual audit and reviews the recommendations the independent public accountants have for improving the internal control structure. The Board of Directors, on the recommendation of the Audit Committee, engages the independent public accountants who have unrestricted access to the Audit Committee.

A -W WV. Gary Gates Charles N.Eldred President and Chief Executive Officer Vice President and Chief Financial Officer 24 2003 OIPPD Annual Report

Omaha Public Power District:

We have audited the accompanying balance sheets of the Omaha Public Power District (OPPD) as of December 31, 2003 and 2002, and the related statements of revenues, expenses and changes in equity and of cash flows for each of the three years in the period ended December 31, 2003. These financial statements are the responsibility of OPPD's management. Our responsibility isto express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with auditing standards generally accepted in the United States of America and standards applicable to financial audits contained in Government Auditing Standards issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

Inour opinion, such financial statements present fairly, in all material respects, the financial position of the Omaha Public Power District as of December 31, 2003 and 2002, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2003, in conformity with accounting principles generally accepted in the United States of America.

The Management's Discussion and Analysis isnot a required part of the basic financial statements, but is supplementary information required by the Governmental Accounting Standards Board. This supplementary information is the responsibility of OPPD's management. We have applied certain limited procedures, which consisted principally of inquiries of management regarding the methods of measurement and presentation of the required supplementary information. However, we did not audit such information, and we do not express an opinion on it.

Inaccordance with Government Auditing Standards, we have also issued a report dated February 27, 2004, on our consideration of OPPD's internal control over financial reporting and our tests of its compliance with certain provisions of laws, regulations, contracts and grants. That report isan integral part of an audit performed in accordance with Government Auditing Standards and should be read in conjunction with this report in considering the results of our audit.

7 eLAt LZP DELOITTE &TOUCHE LLP Omaha, Nebraska February 27, 2004 2003 PPD Annual Repon 25

Sheets; 7.-R enhber 31, 2003 and 2002

.1.. , .7A,.=

ASSETS 2003 2002 (thousands)

UTILITY PLANT - at cost (Notes 2 and 10)

Electric plant . ............................................... $3,196,552 $3,057,878 Less accumulated depreciation . ....................................... 1,311,130 1,248,773 Electric plant - net ............................................... 1,885,422 1,809,105 Nuclear fuel - at amortized cost ....................... ................ 28,299 23,195 Total utility plant - net ............................................. 1,913,721 1,832,300 SPECIAL PURPOSE FUNDS - primarily at fair value (Notes 3 and 4)

Construction fund ............................................... 117,697 101,084 Electric system revenue bond fund - net of current portion ....... .......... 34,291 31,656 Segregated fund - rate stabilization .................. .................. 32,000 21,500 Segregated fund - other .............................................. 20,620 16,975 Decommissioning funds ............................................. 240,533 230,347 Total special purpose funds . ........................................ 445,141 401,562 CURRENT ASSETS Cash and cash equivalents (Note 4).................................... 37,348 12,817 Electric system revenue bond fund - current portion ........ .............. 56,960 51,874 Accounts receivable - net ............................................ 72,912 63,491 Fossil fuels - at average cost .......................................... 17,804 13,803 Materials and supplies -at average cost .............. ................... 52,580 53,010 Other............................................................ 6,051 5,450 Total current assets................................................ 243,655 200,445 DEFERRED CHARGES (Note 5) ................... .................. 26,022 37,384 TOTAL............................................................ $2,628,539 $2,471,691 See notes to financial statements 26 2003 O'P0 WMnnual Report

LIABILITIES CL2003 20 (thousands)

LONG-TERM DEBT (Note 2)

Electric system revenue bonds -net of current portion Serial bonds, 1.40% to 5.50% due annually from 2004 to 2024 ...... ...... $ 589,395 $ 517,210 Term bonds, 4.25% to 5.50% due annually from 2011 to 2018 ................ 89,920 68,920 Total electric system revenue bonds .................... 679,315 586,130 Electric revenue notes -commercial paper series ................. 150,000 150,000 Electric revenue minibonds ............................................. 60,563 59,556 Subordinated obligation -net of currrent portion ............... 3,092 3,279 Total..892,970 Ttl...............................................................89977896

. 798,965 Unamortized discounts and premiums ..................................... 1,407 1,325 Unamortized loss on refunded debt '... (19,260) (22,310)

Total long-term debt -net ........................................... 875,117 777,980 CO MHITMIENTS AND CONTINGENCIES (Notes 10 and 11)

LIABILITIES PAYABLE FROM SEGREGATED FUNDS (Notes 3 and 9) .... 85,005 46,156 CURRENT LIABILIES Electric system revenue bonds -current portion (Note 2) ...................... 46,815 45,005 Subordinated obligation -current portion (Note 2) ........................... 187 171 Accounts payable ............................................... 57,820 69,875 Accrued payments in lieu of taxes ......................................... 17,190 17,497 Accrued interest ......................... ...................... 15,654 12,031 Accrued payroll ......................... ...................... 16,169 14,653 Accrued production outage costs .......................................... - 7,146 Other................................................................. 5 ,957 9,491 Total current liabilities.......................... 159,792 175,869 OTHER LIABILITIES Decommissioning costs ............................................. 240,533 230,347 Other (Note 8) ............................................... 8,958 8,083 Total other liabilities ............................................ 249,491 238,430 EQUITY Invested in capital assets, net of related debt ............. ............... 1,109,299 1,094,878 Restricted........................................................ 45,350 43,852 Unrestricted...................................................... 104,48 5 94,526 Total equity.................................................... 1,259,134 1,233,256 TOTAL........................................................... $2,628,539 $2,471,691 2003 OPPD Annual Renorl 27

itatementeIs of Revenues, Expenses and Chang W-- A=' ' - ';1 -i'<

= -' : - - 4; S C= -

` -, -e Al or the Three Years Ended December 31,-2003 2003 2002 2001 (thousands)

OPERATING REVENUES Retail sales............................................. $ 452,738 $ 468,411 $ 463,019 Off-system sales ........................................ 124,262 73,256 91,045 Other electric revenues ................................... 11,541 11,35 7 14,731 Total operating revenues ................ .............. 588,541 553,024 568,795 OPERATING EXPENSES Operation Fuel ........................................ 88,389 76,721 76,704 Purchased power ...................................... 49,218 33,752 37,247 Production ........................................... 87,751 80,873 89,498 Transmission......................................... 7,100 4,208 4,916 Distribution .......................................... 24,891 21,935 23,539 Customer accounts ................................. 1,119 5... 16,103 18,751 Customer service and information .......... .............. 16,549 9,070 9,394 Administrative and general ................ .............. 67,738 48,062 38,721 Maintenance........................................... 62,752 56,397 54,997 Total operation and maintenance ....................... 419,507 347,121 353,767 Depreciation and amortization ............................. 84,933 79,100 99,562 Decommissioning ....................................... - - 3,581 Payments in lieu of taxes ...................... ........... 18,067 18,553 18,234 Total operating expenses .............................. 522,507 444,774 475,144 OPERATING INCOME .................................. 66,034 108,250 93,651 OTHER INCOME (EXPENSES)

Interest income - all funds ................... ............. 15,366 17,756 22,031 Operating funds - net change in fair value ........ ........... (957) 26 881 Decommissioning funds - net change in fair value ...... ....... (437) 50 3,473 Decommissioning interest and change in fair value transfer ..... (10,186) (12,364) (16,890)

Allowances for funds used ................... ............. 6,040 5,806 4,674 Products and services - net ................... ............. 434 342 1,265 Other - net (Note 12) .................................... (5,030) 764 522 Total other income - net ............... .............. 5,230 12,380 15,956 INTEREST EXPENSE ................................... 45,386 40,009 39,740 NET INCOME ........................................ 25,878 80,621 69,867 EQUITY, BEGINNING OF YEAR ........... .............. 1,233,256 1,152,635 1,082,768 EQUITY, END OF YEAR ................... ............. $1,259,134 $1,233,256 $1,152,635 See notes to financial statements 28 2003 OFTO Annual Report

i enaf6t hNOwfifl Three Years fnded DSb iber3OO 03-t . .. :2 20013 (thousands)

CASH FLOWS FROM OPERATING ACTIVITIES Cash received from retail customers . ............................... 504,626 $497,355 $487,114 Cash received from off-system customers ............................ 117,149 68,085 92,411 Cash paid to operations and maintenance suppliers .................... (262,665) (238,626) (191,667)

Cash paid to off-system suppliers.................................. (42,346) (28,824) (34,245)

Cash paid to employees .......................................... (105,088) (96,390) (92,668)

Cash paid for in lieu of taxes and other taxes......................... (18,373) (18,239) (17,616)

Cash paid for nuclear decommissioning. (3,581 Net cash provided from operating activities. 193,303 83,361 239,748 CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES Proceeds from long-term borrowings.............................. 140,000 146,050 25,000 Principal reduction of long-term debt ............................... (44,590) (43,968) (60,605)

Interest paid on long-term debt .................................... (34,608) (39,043) (37,017)

Acquisition and construction of capital assets .( 170,681) (231,596) (171,181)

Acquisition of nuclear fuel ........................................ (16,564) (14,571 (5,153)

Net cash used for capital and related financing activities . 126,443) (183,128) (248,956)

CASH FLOWS FROM INVESTING ACTIVITIES Purchase of special purpose funds - investment securities ............... 560,148) (556,807) (437,964)

Maturities and sales of special purpose funds -investment securities . 519,045 533,836 438,492 Net change in electric system revenue bond fund -current . (5,086) (1,027) 17,970 Interest income on investments. 3,860 4,985 7,948 Net cash provided from (used for) investing activities. (42,329) (19,013) 26,446 INCREASE (DECREASE) INCASH AND CASH EQUIVALENTS. 24,531 (18,780) 17,238 CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR . 12,817 14,359 CASH AND CASH EQUIVALENTS, END OF YEAR ................. $ 37,348 $ 12,817 $31,597 RECONCILIATION OF OPERATING INCOME TO NET CASH PROVIDED FROM OPERATING ACTIVITIES Operating income. ...................................... $ 66,034 $108,250 $ 93,651 Adjustments to reconcile operating income to net cash provided from operating activities Depreciation and amortizaton ................................... 84,933 79,100 99,562 Amortization of nuclear fuel .................................... 11,582 13,472 13,411 Change in other liabilities ...................................... 37,182 6,062 2,147 Other ....................................................... 18,513 (10,881) 12,960 Changes in current assets and liabilities Accounts receivable ........................................... (9,421) (2,722) 606 Fossil fuels .................................................. (4,001) (3,046) (2,683)

Materials and supplies ......................................... 430 (5,198) (489)

Accounts payable...................................... (1,342) (3,088) 18,408 Accrued payments in lieu of taxes.................................... (307) 314 619 Accrued payroll ................................................... 1,516 1,623 1,057 Accrued production outage costs..................................... (7,146) (4,645) (88)

Other ........................................................... (4,670) 4.120 587 Net cash provided from operating activities .......................... $193,303 $183,361 $239R748 See notes to financial statements 2003 OPPOAnnual RePort 29

I Financial Statements for the Three fears Ended December 31, 2OO3J

1. SUM MARY OF SIGNIFICANT ACCOUNTING POLICIES Organization and Business - The Omaha Public Power District (OPPD), a political subdivision of the state of Nebraska, is a public utility engaged in the generation, transmission and distribution of electric power and energy and other related activities. The Board of Directors is authorized to establish rates. OPPD isgenerally not liable for federal and state income or ad valorem taxes on property; however, payments in lieu of taxes are made to various local governments.

Basis of Accounting - The financial statements of OPPD are presented in accordance with generally accepted accounting principles for proprietary funds of governmental entities. Accounting records are maintained generally in accordance with the Uniform System of Accounts prescribed by the Federal Energy Regulatory Commission (FERC) and all applicable pronouncements of the Governmental Accounting Standards Board (GASB). In accordance with GASB Statement No. 20, Accounting and Financial Reporting for ProprietaryFnilds and OtherGovernmental Entities That Use ProprietaryFund Accounting, OPPD has elected not to follow the pronouncements of the Financial Accounting Standards Board (FASB) issued after November 30, 1989.

OPPD applies the accounting policies established in Statement of Financial Accounting Standards (SFAS) No. 71, Accounting for the Effects of Certain Types of Regulation (SFAS No. 71). In general, SFAS No. 71 permits an entity with cost-based rates to defer certain costs if it is probable that these costs will be recovered through the rates charged.

SFAS No. 71 also permits an entity to defer revenues by recognizing liabilities to cover future expenditures.

If,as a result of changes in regulation or competition, OPPD's ability to recover these assets and liabilities would not be assured, then pursuant to SFAS No. 101, Accounting for the DisconitiniutationofApplicatio (ofSFAS No. 71 tSFAS No. 101) and SFAS No. 90, Regulated Enterprises --Accounting for Abandonments and Disallowancesof Plant Costs (SFAS No. 90), OPPD would be required to write off or write down such regulatory assets and liabilities, unless some form of transition cost recovery continues through established rates. In addition, OPPD would be required to determine any impairment to the carrying costs of deregulated plant and inventory assets. To reduce exposure to costs related to potentially stranded assets, OPPD's Board of Directors approved additional depreciation expense of

$15,000,000 for the year ended December 31, 2001, based on an asset evaluation study performed by an independ-ent consulting firm. There was no additional depreciation expense for the years ended December 31, 2003 and 2002.

Revenue Recognition - Meters are read and bills are rendered on a cycle basis. Revenues earned after meters are read are estimated and accrued as unbilled revenues at the end of each accounting period. Accounts receivable includes $25,299,000 and $21,213,000 in unbilled revenues as of December 31, 2003 and 2002, respectively.

Cash and Cash Equivalents - OPPD considers highly liquid investments of the Revenue Fund purchased with an original maturity of three months or less to be cash equivalents.

Accounts Receivable - An estimate is made for the provision for uncollectible accounts based on an analysis of the aging of accounts receivable and historical write-offs, net of recoveries for retail customers. Additional amounts may be included based on the credit risks of significant parties. Included in the provision is the greater of

$5,000,000 or an estimate based on the previous year's accounts receivable for off-system sales customers.

Accounts receivable is reported net of the provision for uncollectible accounts of $5,781,000 and $6,017,000, as of December 31, 2003 and 2002, respectively.

Utility Plant - The costs of property additions, replacements of units of property and betterments are charged to electric plant. Maintenance and replacement of minor items are charged to operating expenses. Costs of depreciable units of electric plant retired are eliminated from electric plant accounts by charges, less salvage plus removal expenses, to the accumulated depreciation account.

In 2002, OPPD completed a depreciation study, which was implemented for 2003. In connection with the implementation of new depreciation rates in 2003, OPPD revised its capitalization policy. The primary effect of these changes was to accelerate the recovery of these costs to the period in which they were incurred, rather than to defer recovery to future years. Changes to OPPD's capitalization policy include the establishment of larger property units, the implementation of higher dollar thresholds for capitalization and a reduction in the capitalization of support costs.

30 2003 OPPO Annual Report

Electric plant includes both tangible and intangible assets. Intangible assets include the costs of software and licenses.

In 2003, the Nuclear Regulatory Commission (NRC) approved OPPD's application for license renewal of an additional 20 years for the Fort Calhoun Station until 2033. Accordingly, costs associated with license renewal of $5,824,000 were included as an intangible asset in electric plant in 2003 and will be amortized over the life of the license.

Electric plant includes construction work in progress of $142,278,000 and $274,790,000, as of December 31, 2003 and 2002, respectively. Electric plant activity for the year ended December 31, 2003, was as follows (in thousands):

2002 Additions Retirements 2003 Electric plant $3,057,878 $158,689 $(20,015) $3,196,552 Less accumulated depreciation and amortization 1,248,773 82,399 (20,042) 1,311,130 Total $1,809,105 $ 76,290 $ 27 $1,885,422 Allowances for funds used, approximating OPPD's current weighted average cost of debt, are capitalized as a component of the cost of utility plant. These allowances were computed at 4.1%, 3.2% and 4.1% for both construction work in progress and nuclear fuel for the years ended December 31, 2003, 2002 and 2001, respectively.

Depreciation and Amortization - Depreciation for most assets is computed on the straight-line basis at rates based on the estimated useful lives of the various classes of property. Depreciation expense has averaged approximately 3.0%, 3.0% and 4.0% of depreciable property for the years ended December 31, 2003, 2002 and 2001, respectively. New depreciation rates were implemented in 2003 in accordance with the recommendations from the depreciation study.

Amortization of nuclear fuel is based upon the cost thereof, which is prorated by fuel assembly in accordance with the thermal energy that each assembly produces.

Intangible assets are amortized over their expected useful life. Prior to 2003, intangible assets were amortized to various accounts. Amortization of intangible assets was $2,496,000 for the year ended December 31, 2003, and was included with depreciation expense in the financial statements. The amount of amortization to various accounts was

$2,825,000 and $8,448,000 for the years ended December 31, 2002 and 2001, respectively.

Nuclear Fuel Disposal Costs - Permanent disposal of spent nuclear fuel is the responsibility of the Federal Government under an agreement entered into with the United States Department of Energy (DOE). Under the I---

agreement, OPPD is subject to a fee of one mill per net kilowatt-hour paid quarterly to the DOE on all nuclear energy generation. The spent nuclear fuel disposal costs are included in OPPD's nuclear fuel amortization and are collected from customers as part of fuel costs. Nuclear fuel disposal costs were $3,748,000, $3,629,000 and $3,051,000 for the years ended December 31, 2003, 2002 and 2001, respectively. OPPD's contract required the Federal Government to begin accepting high-level nuclear waste by January 1998; however, the DOE's facility is not expected to be operational until at least 2010. In May 1998, the U.S. Court of Appeals confirmed DOE's statutory obligation to accept spent fuel by 1998, but rejected the request that a move-fuel order be issued. In March 2001, OPPD along with a number of other utilities filed suit against the DOE in the United States Court of Federal Claims alleging breach of contract. In February 2004, OPPD's Board of Directors approved the purchase of a dry-cask storage system. This new system will provide adequate spent-fuel storage capacity for continued operation of the Fort Calhoun Station to the year 2033.

Nuclear Decommissioning - OPPD's Board of Directors has approved the collection of nuclear decommissioning costs based on an independent engineering study of the costs to decommission the Fort Calhoun Station. The decommissioning estimates accepted by OPPD's Board of Directors (which exceed the Nuclear Regulatory Commission's minimum funding requirements) totaled $423,257,000, $400,445,000 and $391,257,000 for the fiscal years ending June 30, 2004, 2003 and 2002, respectively. Based on cost estimates, inflation rates and fund earnings projection, no funding was necessary for decommissioning expense for the fiscal years ending June 30, 2004, 2003 and 2002. Astudy is under way to determine the impact on the liability for nuclear decommissioning as a result of the approval by the NRC of the license renewal for the Fort Calhoun Station. Management believes the results of this study will not adversely impact the liability for decommissioning.

Regulatory Assets and Liabilities - OPPD is regulated by Nebraska State Law and the Nuclear Regulatory Commission (NRC). As a result, OPPD is subject to the provisions of SFAS No. 71. Under this statement, regulatory 2003 OPPF Annual RePort 31

-Notes to Financial Statements for the Thr eaeV rs Ended December 1,2003 assets are deferred expenses which are expected to be recovered over some future period, and regulatory liabilities are reductions in earnings (or costs recovered) to cover future expenditures.

Regulatory assets, which are included in deferred charges (Note 5), consist of deferred expenditures for customer energy conservation programs and unamortized loss on extinguished debt. In 2003, OPPD's Board of Directors approved the acceleration of the write-off of these regulatory assets over a three-year period. The balance of deferred expenditures for customer energy conservation programs was $8,557,000 and $12,827,000 as of December 31, 2003 and 2002, respectively. The balance of unamortized loss on extinguished debt was $9,095,000 and $13,643,000 as of December 31, 2003 and 2002, respectively.

Regulatory liabilities consist of reserves for uncollectible accounts from off-system sales, rate stabilization and debt retirement. The reserve for uncollectible accounts from off-system sales was established to recognize a loss contingency for bad debts from off-system sales customers. Accounts receivable is reported net of this reserve. The Rate Stabilization Reserve was established to help maintain stability in OPPD's long-term rate structure. The Debt Retirement Account was established in 2003 to be used for the retirement of outstanding debt and to help maintain debt service coverage ratios at appropriate levels.

Retail sales were reduced for the establishment of and/or addition to regulatory liabilities reserves by $35,000,000, a, ~>? $10,500,000 and $5,000,000 for the years ended December 31, 2003, 2002 and 2001, respectively. The balance of the reserve for uncollectible accounts from off-system sales was $5,000,000 as of December 31, 2003 and 2002. The balance of the Rate Stabilization Reserve was $32,000,000 as of December 31, 2003 and 2002. The balance of the Debt Retirement Account was $35,000,000 as of December 31, 2003.

Accrued Production Outage Costs - For major planned production outages, estimated incremental operation and maintenance expenses of $5,000,000 or more are accrued prior to the outage. The next major planned production outage is scheduled to begin in March 2005 at the Fort Calhoun Station.

Natural Gas Inventories and Contracts - Natural gas is one of the fuels used by OPI'I) in the generation of electricity. Prior to the placement of the Cass County Station in commercial operation in 2003, natural gas for all of OPPD's generation needs was obtained from a local distribution company (LDC). OPPD is not able to use a LDC to obtain fuel for this Station. As a result, natural gas inventories are maintained for the Cass County Station and the weighted average cost of natural gas consumed is used to expense natural gas from inventories.

OPPD is exposed to market price fluctuations on its purchases of natural gas. To protect itself from increases in market prices of natural gas, OPPD uses natural gas futures contracts. These transactions are hedges of acquisitions and anticipated acquisitions of natural gas and any gains or losses on these contracts are offset against the cost of natural gas. As a result of hedging contracts, there was a reduction in fuel expense of $28,000 and an increase in fuel expense of $375,000 for the years ended December 31, 2003 and 2001, respectively. OPPD did not enter into any natural gas hedging contracts for 2002.

During the months of August and September of 2003. OPPD purchased New York Mercantile Exchange natural gas futures contracts with payments based on the notional amount of 300,000 mmBtu of natural gas. These contracts will expire between the months of May and September of 2004. These futures contracts had an unrealized gain of

$117,000 based on quoted market prices at December 31, 2003.

Fair Value of Financial Instruments - Unless otherwise specified, the carrying amount of financial instruments approximates their fair value.

Use of Estimates - The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Recent Accounting Pronouncements - In March 2003, GASB issued Statement No. 40, Deposit andl hnestnient Risk Disclosure. This statement amends Statement No. 3, Deposits wlitl Financial Institutions, Investinents (including RepurchaseAgreements) and Reverse Repurchase Agreements, and will require OPPD to disclose credit-risk information, 32 2003 UI'PO Annual Report

interest rate information, bases for sensitivity of investments that are highly sensitive to changes in interest rates and policies related to disclosed risk. This statement is effective for fiscal years beginning after June 15, 2004.

InJune 2003, GASB issued Technical Bulletin 2003-1, DisclosureRequirements for Derivatives Not Presentedat Fair Value on the Statement of Net Assets, which requires note disclosure for derivatives outstanding as of the end of the fiscal period that are not reported at fair value on the Balance Sheet. The provisions of this technical bulletin are effective for financial statements for periods ending after June 15, 2003. As a result, additional disclosure for natural gas derivatives is presented in these Notes to Financial Statements.

In November 2003, GASB issued Statement No. 42, Accounting and FinancialReporting for Impainnent of CapitalAssets and Insurance Recoveries. This statement requires the effects of capital asset impairments to be recorded in the financial statements when the impairment occurs. Guidance is also provided for the appropriate treatment of insurance recoveries. This statement is effective for fiscal years beginning after December 15, 2004.

Reclassifications - Certain amounts in the prior year's financial statements have been reclassified to conform to the 2003 presentation. These reclassifications had no effect on net income.

2. LONG-TERM DEBT OPPD utilizes proceeds of debt issues primarily in financing its construction program. Long-term debt activity, including the current portion, for the year ended December 31, 2003, was as follows (inthousands):

2002 Additions Reductions 2003 Electric system revenue bonds $631,135 $140,000 $(45,005) $726,130 Electric revenue notes - commercial paper series 150,000 - - 150,000 Electric revenue minibonds 59,556 1,140 (133) 60,563 Subordinated obligation 3,450 - (171) 3,279 Total $844,141 $141,140 $(45,309) $939,972 Electric System Revenue Bonds - Electric System Revenue Bond payments are as follows (inthousands):

Principal Interest 2004 $ 46,815 $ 32,582 2005 56,105 30,214 2006 58,200 27,637 2007 57,140 25,004 2008 56,620 22,362 2009-2013 189,780 84,259 2014-2018 189,470 35,989 2019-2024 72,000 11,324 Total $726,130 $269,371 OPPD's bond indenture provides for certain restrictions, the most significant of which are:

Additional bonds may not be issued unless estimated net receipts (as defined) for each future year will equal or exceed 1.4 times the debt service on all bonds outstanding, including the additional bonds being issued or to be issued in the case of a power plant (as defined) being financed in increments.

In any three-year period, at least 7.5% of general business income (as defined) must be spent for replacements, renewals or additions to the electric system. Any deficiency is to be spent within two years thereafter for such purposes or, if not so spent, is to be used for bond retirements in advance of maturity.

The average borrowing rates were 4.6%, 4.9% and 5.2% for the years ended December 31, 2003, 2002 and 2001, respectively.

The 1993 Series C 2017 Term Bonds and the 1993 Series D 2013 and 2016 Term Bonds were refunded with proceeds from the 2002 Series BBonds. The advance refunding reduced total debt service payments over the next 15 years by

$18,813,000 and resulted in an economic gain (difference between the present values of the old and new debt 2003 OPPO Annual Report 33

- - rr-.

to Financial Statements for the Three Years Ended December 31, 2003i service payments) of $13,198,000. The following Electric System Revenue Bonds, with outstanding principal amounts of $336,425,000 and $522,660,000 as of December 31, 2003 and 2002, respectively, were legally defeased: 1973, 1986 Series A,1992 Series B,1993 Series BTerm, 1993 Series C 2017 Term and 1993 Series D2013 and 2016 Term Bonds. The 1993 Series C 2017 Term and 1993 Series D2013 and 2016 Term Bonds were called and the last payment was made on the 1973 Bonds in 2003. Defeased bonds are funded by Government securities deposited by OPPD in irrevocable escrow accounts. Accordingly, the bonds and the related Government securities escrow accounts have been removed from OPPD's balance sheets.

Electric Revenue Notes - Commercial Paper Series - OPPD has a Commercial Paper Program supported by a credit agreement for $150,000,000 which expires on October 1,2004. OPPD has the intent and the ability to refinance this obligation on a long-term basis. The average borrowing rates were 1.5%Y,, 2.0% and 2.9% for the years ended December 31, 2003, 2002 and 2001, respectively.

Electric Revenue Minibonds - The minibonds consist of current interest-bearing and capital appreciation minibonds, which are payable on a parity with OPPD's Electric Revenue Notes - Commercial Paper Series, both of which are subordinated to the Electric System Revenue Bonds. The outstanding balances at December 31 were as follows (inthousands):

2003 2002 I-I . : ,

Principal 1992 minibonds, due 2007 (6.00%) S 9,252 $ 9,314 1993 minibonds, due 2008 (5.3561) 9,353 9,377 1994 minibonds, due 2009 (5.95%$) 9,560 9,587 2001 minibonds, due 2021 (5.05%$) 24,90 24,928 Subtotal 53,072 53,206 Accreted interest on capital appreciation minibonds __ 32i 6,350 Total $60,563 559,556 Subordinated Obligation - The subordinated obligation is payable in annual installments of $481,815, including interest at 9.0%, through 2014.

Fair Value Disclosure - The aggregate carrying amount and fair value of OPPD's long-term debt, including current portion, at December 31 were as follows (inthousands):

2003 2002 Carrying Fair Carrying Fair Amount Value Amount Value

$941,379 $990,520 $845,466 $890,626 The estimated fair value amounts were determined using rates that are currently available for issuance of debt with similar credit ratings and maturities. As market interest rates decline in relation to the issuer's outstanding debt, the fair value of outstanding debt financial instruments with fixed interest rates and maturities will tend to rise. Conversely, as market interest rates increase, the fair value of outstanding debt financial instruments will tend to decline. Fair value will normally approximate carrying amount as the debt financial instrument nears its maturity date. The use of different market assumptions may have an effect on the estimated fair value amount. Accordingly, the estimates presented herein are not necessarily indicative of the amounts that bondholders could realize in a current market exchange.

3. SPECIAL PURPOSE FUNDS Special purpose funds of OPPD are as follows:

The Construction Fund is to be used for capital improvements, additions and betterments to and extensions of OPPD's electric system, or for payment of principal and interest on Electric System Revenue Bonds.

The Electric System Revenue Bond Fund is to be used for the retirement of term and serial bonds and the payment of the related interest.

34 2003 O1PPO lnhlual Report

Segregated Fund - Rate Stabilization is to be used to help stabilize rates over future periods through the transfer of funds to operations as necessary for significant unforeseen occurrences, such as major storm damage or unscheduled outages. The balance of the Rate Stabilization Fund was $32,000,000 and $21,500,000 as of December 31, 2003 and 2002, respectively.

Segregated Fund - Debt Retirement is to be used for the retirement of outstanding debt and to help maintain debt service coverage ratios at appropriate levels. In February 2004, $35,000,000 was funded based on 2003 operating results.

Segregated Fund - Other represents assets held for payment of customer deposits, refundable advances, certain other liabilities and funds set aside as part of OPPD's self-insured health insurance plans (see Note 9). The balances of the funds at December 31 were as follows (inthousands):

2003 2002 Segregated Fund - self-insurance $ 6,363 $ 5,116 Segregated Fund - other 14,257 11,859 Total $20,620 $16,975 The Decommissioning Funds are for the cost to decommission the Fort Calhoun Station when its operating license expires. The Decommissioning Funds are held by outside trustees in compliance with the decommissioning funding plans approved by OPPD's Board of Directors (see Note 1). The 1990 Plan was established in accordance with NRC regulations, for the purpose of discharging OPPD's obligation to decommission, as defined by the NRC, the Fort Calhoun Station. The 1992 Plan was established to retain funds in excess of NRC minimum funding requirements based on an independent engineering study which indicated that decommissioning costs would exceed the NRC minimum requirements. The balances of the funds at December 31 were as follows (in thousands):

2003 2002 Decommissioning Trust - 1990 Plan $184,611 $176,650 Decommissioning Trust - 1992 Plan 55,922 53,697 Total $240,533 $230,347

4. DEPOSITS AND INVESTMENTS Bank Deposits - OPPD's bank deposits at December 31, 2003 and 2002, were entirely insured or collateralized with securities held by OPPD or by its agent in OPPD's name.

Investments - OPPD's cash equivalents and investments included in the Construction Fund, Electric System Revenue Bond Fund, Rate Stabilization Fund, Segregated Funds and Decommissioning Funds are held by OPPD's agents in OPPD's name in trust in accordance with OPPD's bond covenants and Nebraska state statutes. OPPD does not invest in securities such as mortgage-backed investments and reverse repurchase agreements. The investments, which are primarily recorded at fair market value, consist of U.S. Government and Agency Securities, Investment Grade Corporate Bonds and Secured Investments collateralized by U.S. Government Securities. Fair values were determined based upon quotes received from the trustee's market valuation service.

5. DEFERRED CHARGES The composition of deferred charges at December 31 was as follows (in thousands):

2003 2002 Deferred financing costs $12,318 $15,920 Customer energy conservation programs 8,557 12,827 Other 5,147 8,637 Total $26,022 $37,384 2003 OPPO Annual RePort 35

'Not¶rur Nt FA Statements ot the. ears Ended December- 31,20031 rnr

6. RETIREMENT PLAN Substantially all employees are covered by OPPD's Retirement Plan (the "Plan'). It is a single-employer defined benefit plan which provides retirement and death benefits. Generally, employees at the normal retirement age of 65 are entitled to annual pension benefits equal to 2.25% of their average compensation (as defined) times years of credited service (as defined). The Plan was established and may be amended under the direction of OPPD's Board of Directors, and is administered by OPPD. Cost-of-living adjustments are provided to retirees and beneficiaries at the discretion of the Board of Directors. The Board of Directors approved ad hoc cost-of-living adjustments of 1.251%),

2.00%) and 3.50% as of January 1,2003, 2002 and 2001, respectively.

The Plan information as of January I based on the actuarial valuation was as follows:

Over Funded AAL Actuarial value Actuarial Accrued Over as a Percentage of of Asets Liability (tAL) Funded N U. Funded Ratio Covered Payroll Covered Payroll fiM) la1MW (a-bi fe-(thousands) (thousands) 2003 $519,723 $476,951 $ 42,772 109.01% 5136,488 31.3%

2002 $544,184 $425,267 $118.917 128.0% $126,587 93.9%

2001 $533,668 $385,747 $147,921 138.3% $121,200 122.0%

Contribution requirements are actuarially determined, using the Frozen Attained Age (level percent of pay) Method.

The actuarial accrued liability shown in the table above is based on the present value of accrued plan benefits, since the Frozen Attained Age Method does not compute an AAL each year. Employees contribute 4.0%Y, of their covered pay to the Plan. OPPD is obligated to contribute the balance of the funds needed on an actuarially-determined basis. The annual pension cost and required contribution by OPPD was $17,505,000 and $5,625,000 for the years ended December 31, 2003 and December 31, 2002, respectively. There was no net pension obligation for the years ended December 31, 2003 and December 31, 2002. For the year ended December 31, 2001, there was no annual pension cost, net pension obligation or OPPD contribution made to the Plan. Plan contributions by OPPD employees were $5,704,000, $5,483,000 and $5,063,000 for the years ended December 31, 2003, 2002 and 2001, respectively.

The following was used in computing the actuarial liability for each year:

2003 2002 2001 Investment return (discount rate) 8.50% 8.75'M 9.001%

Average rate of compensation increase 5.20% 5.20'% 5.20%Yo Cost-of-living adjustment 1.25% 2.00% 3.50%

Audited financial statements for the Retirement Plan may be reviewed by contacting the Pension Administrator at OPPD's Corporate Headquarters, Omaha, Nebraska.

OPPD provides for other employee benefit obligations to allow certain current and former employees to retain the benefits to which they would have been entitled under OPPD's Retirement Plan except for federally mandated limits and to provide supplemental pension benefits. The related pension expense, fund balance and employee benefit obligation are not material for the years ended December 31, 2003, 2002 and 2001.

7. SUPPLEMENTAL RETIREMENT SAVINGS PLAN OPPD sponsors a Defined Contribution Supplemental Retirement Savings Plan - 401 (k)and a Defined Contribution Supplemental Retirement Savings Plan - 457. Both plans cover all full-time employees, and allow contributions by employees that are partially matched by OPPD. Each Plan's assets and income are held in an external trust account in the employee's name. OPPD's matching share of contributions was $6,581,000, $6,258,000 and $5,327,000 for the years ended December 31, 2003, 2002 and 2001, respectively 36 2003 0FPP Annual Report

8. OTHER LIABILITIES The composition of other liabilities at December 31 was as follows (in thousands):

2003 2002 Nuclear enrichment fee $2,997 $4,408 Other insurance reserves 1,573 1,426 Deferred revenues 1,572 1,778 Other 2,816 471 Total $8,958 $8083

9. SELF-INSURANCE HEALTH PROGRAM AND POST-RETIREMENT BENEFITS OPPD provides employee health care and life insurance benefits to substantially all active and retired employees. An Administrative Services Only (ASO) Health Insurance Program is used to account for the health insurance claims.

With respect to the ASO program, reserves sufficient to satisfy both statutory and OPPD-directed requirements have been established to provide risk protection (see Note 3). Additionally, private insurance covering claims in excess of 120% of expected levels has been purchased. Actual net claim payments, which did not exceed 120% of the expected claims level during 2003, 2002 and 2001, were $26,513,000, $23,080,000 and $18,833,000, respectively. As of December 31, 2003, 2,324 active employees and 1,018 retirees and beneficiaries had health care coverage from OPPD.

10. COMMITMENTS OPPD's Construction Budget provides for expenditures of $198,396,000 during 2004 and $710,333,000 for 2005 through 2013, of which approximately $72,694,000 was under contract at December 31, 2003.

OPPD has power sales commitments which extend through 2027 of $54,537,000. OPPD has power purchase commitments which extend through 2020 of $45,656,000.

OPPD has coal supply contracts which extend through 2008 with minimum future payments of $110,600,000.

OPPD also has coal transportation contracts which extend through 2008 with minimum future payments of

$111,700,000. These contracts are subject to price escalation adjustments.

Contracts are in effect through 2005 with estimated future payments of $12,520,000 for the purchase, conversion and enrichment of nuclear fuel. Additionally, OPPD has contracts through 2005 for the fabrication of nuclear fuel assemblies with estimated future payments of $3,415,000.

11. CONTINGENCIES Under the provisions of the Price-Anderson Act, OPPD and all other licensed nuclear power plant operators could each be assessed for claims and legal costs in the event of a nuclear incident in amounts not to exceed a total of

$100,590,000 per reactor per incident with a maximum of $10,000,000 per incident in any one calendar year. These amounts are subject to adjustment every five years in accordance with the Consumer Price Index.

OPPD is engaged in routine litigation incidental to the conduct of its business and, in the opinion of Management, based upon the advice of its General Counsel, the aggregate amounts recoverable from OPPD, taking into account estimated amounts provided in the financial statements and insurance coverage, are not material.

12. OTHER - NET In 2003, $6,225,000 of expenses was reported in Other - Net for costs to initiate the process to obtain authorization from the NRC for the option to move forward with a major uprate to Fort Calhoun Station's accredited output.

These costs were written-off to expense since the uprate will not be pursued because OPPD will be able to meet its energy needs with other sources of generation.

2003 OPPD Annuul Repon 37

Electric. Sisfem Revenue Bonds Outstandinsi asso December 31, 2003 [in thousandslill'jlj 1993 ISSUE 1993 ISSUE 1993 ISSUE 1993 ISSUE 1993 ISSUE SERIES A SERIES B SERIES C SERIES D SERIES E Maturity Date Interest Interest Interest Interest Interest February 1 Rate Amount Rate Amount Rate Amount Rate Amount Rate Amount 2004 5.25 18,220 5.00 4,670 4.75 6,960 4.50 9,820

2005 5.30 18,780 5.10 5,710 4.80 7,110 4.50 10,360 2006 5.40 20,150 5.20 5,710 4.90 7,280 4.60 10,930 N 2007 5.50 21,330 5.30 6,230 5.00 10,080 2008 5.40 9,340 5.40 13,230 5.10 11,000

A 2009 5.40 14,020 2010 5.50 14,860 2011 5.50* 15,750 2012 5.50* 16,700 2013 5.50* 17,700 2014 5.50* 18,770 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 Total Outstanding 78,480 31,660 111,030 42,430 31,110 Bonds Redeemed to 12/31/03 106,220 132,540 63,330 159,970 73,990 Original Issue 184,700 164,200 174,360 202,400 105,100

Term Bonds

'The 1986 Series AIssue was defeased to maturity with final maturity on February 1,2015. The 1993 Series BTerm Bonds were defeased to maturity with final maturity on February 1 20 The 1992 Series BIssue was defeased to maturity with final maturity on February 1,2017. OPPD has expressly and absolutely retained its right to call and redeem these bonds prior to their stated maturity.

38 2003 CPPH Annual heport

1998 ISSUE I 2002 ISSUE 2002 ISSUE 2003 ISSUE V SERIES A -: SERIES A .SERIES B SERIES A F .

Total Principal Annualized Interest Interest interest Interest Maturities Debt

RtAout1 Rate Amount "Rate Amount Rate Amount Febnry 1 Service 405 7,145 V . 46,815 86,975

[ 4110 7145 -1.40 7,000 56,105 87,205

.180 7,000 1420 58,200 83,753 4 7,130 3.45 12,500 2.25 7,000 57,140 80,586 4.'50 16,050 2.65 7,000 56620, 55,707;

' 4.50 -A11,430 , s' 2.95 7,000 32,450 53,379 tc* 4.50 11,970 3 25 7,000 33,830 53,303 4.50 12,590 3.55 7,000 '35,340 64,708

- ' 4.30 12,500 4.50 13,270 3.70 7,000 49,470 53,745 i __________________ 5.00 13,990 3.80 7,000 38,690 52,535 5.00 144730 3.90 7,000 40,500 52,404 4.25 35,410 - 400 7,000 42,410 53,314 I425 38,200 4.25* 7,000 45,200 60,034 '

5.00 25,000 4.25 -22,360 4.25* 7,000 54,360 14,934

- ; 4.25* 7,000 7,000 10,506 4.35 7,000 7,000 ; 10,202-4.45 7,000 7,000 9891 4.55 7,000 7,000 37,0748

' 5.20 30,000 4.65 7,000 37,000 10,319

_ _ _ - _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ [___ 4.70 7,000 7,000 7,360 a

.;..+

D V

0 ;.. j j

4.75 7,000 7,000 X- 611

* :, S Q f t - 2t

. . A .: . X j A L; , = ' - : E z . ;

21.420 i 80.000 I -- 190,0007 ¢ 28.580 -:-

, .I 7 - - I8

-50,000 80,000 [ - 6190,000 .i 140,000 . 1,290,760 -'

2003 OPPD Annual RePonr 39

Total Utility Plant (at vear end)

(in thousands of dollars).. 3,224,851 3,081,073 2,876,799 2,735,437 2,621,444 2,455,004 2,360,495 2,3(0,733 2,235,631 2,188,106 Bonded Indebtedness (at year end)

(in thousands of dollars).. 726,130 631,135 577,010 637,235 696,040 745,630 813,860 761,020 947,390 974,510 Operating Revenues (in thousands of dollars)

Residential ................. 208,426 214,447 202,984 196,923 188,187 192,481 183,178 17(0,021 171,687 165,813 Commercial ................. 176,664 177,063 176,145 166,441 161,901 159,844 157,406 15(),388 145,096 147,669 Industrial ................. 85,406 75,946 76,197 75,976 76,513 79,359 76,806 75,016 73,395 75,483 Street and Highway Lighting 13,156 12,723 12,589 12,270 11,936 11,687 11,356 10,937 8,577 10,626 Off-System Sales ........ 124,262 73,256 91,045 110,3100 78,741 62,550 44,484 39,908 29,170 4,211 Accrued Unbilled Revenues 4,086 (1,268) 104 2,541 1,650 282 1,554 (161) 998 (279)

Provision for Rate Stabilization - (10,5w) (5,000) (I1,500) (5,0(0) - - - - -

Provision for Debt Retirement (35,000) - - - - - - - - -

Other Electric Revenues 11,541 11,357 14,731 14,238 9,802 8,747 9,169 7,413 6,424 6,173 Total .588,541 553,024 568,795 567,189 523,730 514,950 483,953 453,522 435,347 409,696 Operation &Maintenance Expenses (in thousands of dollars).. 419,507 347,121 353,767 345,378 329,323 306,864 283,307 278,251 261,981 229,976 Payments in Lieu of Taxes (in thousands of dollars).. 18,067 18,553 18,234 17,645 16,852 16,638 16,447 15,499 15,263 15,515 Net Operating Revenues before Depreciation and Decommissioning (inthousands of dollars).. 150,967 187,350 196,794 204,166 177,555 191,448 184,199 159,772 158,103 164,205 Net Income (inthousands of dollars).. 25,878 80,621 69,867 70,850 49,014 63,993 47,152 39,339 47,835 52,115 Energy Sales (in megawatt-hours)

Residential .3,079,589 3,151,895 3,065,377 2,880,289 2,718,585 2,796,585 2,688,951 2,577,624 2,571,881 2,467,405 Commercial .3,264,369 3,272,028 3,279,890 3,097,835 3,014,202 2,971,390 2,894,595 2,787,471 2,657,948 2,580,258 Industrial .2,561,569 2,290,368 2,302,311 2,287,566 2,304,441 2,443,625 2,323,253 2,3(15,328 2,124,023 1,930,664 Street and Highway lighting 82,845 81,593 82,775 81,268 80,868 80,286 79,572 78,710 79,732 80,906 Off-System Sales . 4,309,719 3,613,340 3,952,632 4,208,943 3,318,409 3,105,942 2,544,5(18 2,492,385 1,855,154 177,489 Accrued Unbilled MWi... 61,165 123,697) (5,268) 52,739 23,168 9,369 54,222 7,358 23,161 7,707 Total .13,359,256 12,385,527 12,677,717 12,609,040 11,459,673 11,407,197 10,585,101 10,248,876 9,311,899 7,244,429 Number of Customers (average per year)

Residential ...... 270,579 266,464 261,286 256,541 251,057 245,890 241,626 237,584 233,879 230,391 Commercial ...... 38,525 37,807 37,008 36,(188 35,553 34,932 34,555 33,993 33,137 32,438 Industrial ...... 127 117 116 110 105 103 99 99 97 95 Street and Highway Lighting 436 594 555 543 560 567 551 555 542 516 Other Electric Utilities 48 54 49 49 45 40 36 34 31 7 Total .309,715 305,036 299,014 293,331 287,320 281,532 276,867 272,265 267,686 263,447 Residential Statistics (average) kWh/Customer .11,381 11,829 11,732 11,227 10,829 11,373 11,129 1(0,849 10,997 10,710 Dollar Revenue/Customer 770.30 804.79 776.87 767.61 749.58 782.79 758.11 715.62 734.0)8 719.70 Cents/kWh .6.77 6.80 6.62 6.84 6.92 6.88 6.81 6.65 6.76 6.72 Generating Capability at vear end)

'in megawatts) .2,547.1 2,227.1 2,211.6 2,209.6 2,100.0 2,()89.5 2,067.0 2,033.1 1,924.2 1,924.2 System Peak Load iin megawvatts) .2,144.8 2,037.4 1,994.1 1,976.9 1,965.6 1,914.0 1,851.8 1,813.9 1,827.9 1,645.9 Net System Requirements iin megawatt-hours)

Generated .12,000,873 11,428,893 11,516,924 11,760,938 10,724,976 10,679,310 9,698,231 9,260,923 9,(73,968 8,876,535 Purchased and Net Interchanged . (2,557,981) (2,122,701) (2,557,704) (2,833,243) (2,190,252) (1,960,844) 11,281,496) (1,0)96,996) (1,206,817) (1,418,694)

Net .9,442,892 9,306,192 8,959,220 8,927,695 8,534,724 8,718,466 8,416,735 8,163,927 7,867,151 7,457,841 Certain amonoiots hive beeim reclassified to coform with 1he 2003 presentation.

40 2003 OPPH Annual Report

OPPO Investor Relations Mlinibond Administrator OPPO Corporate Officers Corporate Headquarters Finance &Capital Managemient Anne L. McGuire Energy Plaza Omaha Public PowerDistrict Chair of the Board 444 South 16th Street Mall 444 South 16th Street Mall Omnahia, NE 68102-2247 Omaha, NE 68102-2247 Del D. Weber Omaha, Nebraska area 402-636-3286 Vice Chairof the Board Trustee Outside Nebraska 800-428-5584 Frederick J. Ulrich IP Morgan Trust Company Chicago, Illinois Treasurer Other OPPD Debtholders Paying Agents You may contact OPPD with Kirk E. Brumbaugh JP Morgan Trust Company questions about other OPPD debt at Secretary Chicago, Illinois the following address and telephone New York, New York number: WV. Gary Gates President, Wells FargoBank, NA. Finance& CapitalManagement ChiefExecutive Officer Omaha, Nebraska Omahla PublicPower District 444 South 16th Street Mall Charles N. Eldred General Counsel Omaha, NE 68102-2247 Vice President, Fraser, Stryker, Meusey, Olson, Boyer &

e-mail: finfo@oppd.com Chief FinancialOfficer Bloch, P.C.

402-636-2000 Assistant Treasurer Omaha, Nebraska Assistant Secretary OPPD MAinibonds The Trustee and Paying Agent on Timothy J. Burke OPPD is the Paying Agent, Transfer OPPD's Senior Lien Debt is JP Morgan Trust Company. You may contact Vice President Agent and Registrar on OPPD's Minibonds. OPPD Minibond JP Morgan Trust Company directly at Ross T. Ridenoure Administration provides information the following address and telephone Vice President and assistance to Minibond holders number:

Adrian J. Minks regarding: IP Morgan Trust Company Vice President

Interest Payments Attn: Corporate Trust Operations Interest on Current Interest-Bearing 227 West Monroe, 1st Floor - Suite 190 Roger L. Sorenson Minibonds is paid on April 1 and Chicago, IL 60606 Vice President October 1 of each year. Investor Relations 800-275-2048 Dale F. Wfidoe

Owvnership Transfer Vice President Available Financial Information Minibond Transfer Information In compliance with Securities and Charles P. Moriarty Forms can be obtained via Exchange Commission Rule 15c2-12, Senior FinancialOfficer wwvw.oppd.com or by contacting the information regarding OPPD is Assistant Treasurer Minibond Administrator, listed available at any nationally recognized Assistant Secretary below.

municipal security information

Optional Early Redemption repository. Copies of its most recent

Replacement of Lost Minibond annual reports, quarterly reports and Certificate official statement also are available upon request at finfo~oppd.com or Please contact the Minibond through the following address:

Administrator to request a Minibond Transfer Information Form or to Otnaha Public Power District change your Minibond holder FinanceDivision address. You may contact the 444 South 16th Street Mall Minibond Administrator via e-mail at Omaha, NE 68102-2247 minibonds@oppd.com, at OPPD's Financial information in the annual website www.oppd.com (click on Who report also is available at We Are, FinancialInformation and www.oppd.com Minibonds) or through the address and telephone numbers listed at right.

2003OPPDlAnnua~l~enort 41

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