ML17122A276

Transmittal of 2016 Annual Report

ML17122A276
Person / Time
Site:	Fort Calhoun
Issue date:	05/02/2017
From:	Blome B Omaha Public Power District
To:	Document Control Desk, Office of Nuclear Reactor Regulation
References
LlC-17-0023
Download: ML17122A276 (69)

Text

10 CFR 50.71(b)

May 2, 2017 Ll C-17-0023 U.S. Nuclear Regulatory Commission ATTN: Document Control Desk Washington, DC 20555 Fort Calhoun Station, Unit No. 1 Renewed Facility Operating License No. DPR-40 NRC Docket No. 50-285

Subject:

2016 Annual Report

References:

None In accordance with 10 CFR 50.71(b), the 2016 Omaha Public Power District (OPPD) Annual Report is enclosed.

If you should have any questions, please contact Mr. Bradley H. Blome at 402-533-7270.

No commitments to the NRC are made in this letter.

Respectfully, Bradley H. Blome Director, Licensing and Regulatory Assurance BHB/epm

Enclosure:

OPPD 2016 Annual Report c: K. M. Kennedy, NRC Regional Administrator, Region IV J. S. Kim, NRC Senior Project Manager R. S. Browder, NRC Senior Health Physicist, Region IV 444 SOUTH 16TH STREET MALL

• OMAHA, NE 68102-2247

/

• Served at Retail OPPD Service Territory A Served at Wholesale

.. Power Station e Wind Generation OPPD Headquarters Fort Calhoun Station Nuclear plant (ceased operations in October 2016)

Elk City Station Landfill-gas plant, 6.3 megawatts North Omaha Station

~...._-OPPD Headquarters Jones Street Station Oil plant, 122.6 megawatts Sarpy County Station 0 Oil & natural-gas plant, 316.5 megawatts County Station Natural-gas plant, 322.8 megawatts

1. Ainsworth Wind Farm 10-megawatt participation agreement

2. Broken Bow I Wind Farm 18-megawatt participation agreement Nebraska City Station Unit 1 Broken Bow II Wind Farm Coal plant, 655.9 megawatts 43.9-megawatt participation agreement

3. Petersburg Wind Farm 40.5-megawatt participation agreement

4. Elkhorn Ridge Wind Farm

.tilt Nebraska City Station Unit 2 Coal plant, 664.2 megawatts Jahnson 25-megawatt participation agreement

5. Crofton Bluffs Wind Farm TICIIIIIII A 13.6-megawatt participation agreement

6. Prairie Breeze Wind Farm 8lC111U .

200.6-megawatt participation agreement

7. Flat Water Wind Farm 60-megawatt participation agreement

8. Grande Prairie Wind Farm 8111:1.

400-megawatt participation agreement (2017)

About OPPD Omaha Public Power District is a publicly owned electric utility that serves an estimated population of 820,000 people, more than any other electric utility in the state.

Operating since 1946, the public utility is governed by an elected board of eight directors.

While its headquarters is located in Omaha, Neb., OPPD has several other locations in its 13-county, 5,000-square-mile service area in southeast Nebraska.

OPPD operates baseload power facilities fueled by coal and natural gas, peaking units fueled by natural gas and oil, and renewable energy resources, including wind turbines and landfill-gas units.

After years of planning, OPPD launched the first phase of its Smart Grid project.

Here, Bob Loges, line technician, and josh Bernasek, automation technician, install communications equipment on lines in north Omaha.

Engineers Rick Stava, Videgla Sekpe and lim Heimberger review plans for the smart grid technology installation.

Board Chair and CEO Message ......................................................... ............... 2 Board of Directors ........................................................................................... 3 Senior Management ........................................................................................ 3 Operations Review ........................................................................................... 4 Management's Discussion and Analysis (Unaudited) ...................................... 14 Report of Management.................................................................................. 26 Independent Auditors' Report ........................................................................ 28 Statements of Net Position ............................................................................ 30 Statements of Revenues, Expenses and Changes in Net Position .................... 32 Statements of Cash Flows .............................................................................. 33 Notes to Financial Statements ........................................................................ 34 In 2016, Grande Prairie wind farm construction was completed. OPPD will purchase all 400 megawatts Required Supplementary Information ............................................................ 62 from the wind farm in 2017.

Notes to Required Supplementary Information .............................................. 63 On the cover Statistics (Unaudited) ..................................................................................... 64 Troubleshooter jon White works through a snowstorm to restore service to a customer.

Investor Relations and Corporate Information ......................... Inside Back Cover OPPD ANNUAL REPORT 2016 1

Board Chair and The year 2016 was more eventful than any other year in Omaha Public Power District's history. It was a year that saw both the decisions to decommission the Fort Calhoun CEO Message Nuclear Station and the implementation of a modified residential rate structure. This new rate structure helps ensure all customers contribute proportionately to the costs involved in producing and distributing electricity. Although difficult, these decisions

-along with other cost-saving measures- strengthened OPPD's position as an industry leader.

What drove those decisions? Our Strategic Directives. Everything we do and every decision we make is dictated by the clear path laid out by the 15 directives.

Our Strategic Directives were developed through a series of public meetings President and CEO Timothy J. Burke and workshops between our senior management team and board of directors. They were (left) and Board Chair Tim W. Gay adopted in November 2015. The directives provide a clear path for our organization and align everyone at OPPD to best serve our customer-owners both now and in the future.

We are proud of how we performed in 2016 and excited for what lies ahead. Through our Strategic Directives, we set our sights high, striving for no less than best-in-class status, and we're hitting our mark. Take safety for example. OPPD just had its safest year ever, thanks to a lot of hard work, training and mindfulness by our entire organization. At OPPD, each and every meeting and every job begins with a safety briefing. This makes sure safety is foremost on our minds and that we're all aligned around safety.

Another example is reliability, where we are again projected to rank in the top quartile of all utilities, thanks to initiatives such as our Ground Line Inspection and Treatment program and projects like the recently completed Midwest Transmission Project, which was a partnership with Kansas City Power & Light.

These tenets guide us to be good public power stewards. OPPD continues with its lean efforts and through 2016 has been able to save $30.7 million through new processes that have been implemented across the company.

OPPD is transitioning to a supply chain structure to reduce the amount of money spent on materials and services, a move that will save millions in the coming years. In order to provide reliable electricity to our customers, obtaining the proper materials and equipment in a cost-effective manner is essential. The better OPPD can do in procurement, managing inventory and anticipating our needs, the more competitive we can be with rates.

It's no coincidence that our Strategic Directives begin with our mission: To provide affordable, reliable and environmentally sensitive energy services to our customers, and with our vision, Leading the way we power the future.

Everything we do at OPPD starts there. Our mission and vision is as true today, as it was yesterday, as it will be tomorrow.

~

Timothy J. Burke TimW.Gay/

President and CEO Chair of the Board 2 OPPD ANNUAL REPORT 2016

Board of Directors TimW. Gay Thomas S. Barrett Rich L. Hurley Michael j. Cavanaugh Chair of the Board Vice Chair of the Treasurer Board Member Governmental Advisor Board Real Estate Broker Omaha Police Attorney at law lieutenant (retired)

Real Estate Investor -

Manager

\ j'

'\~~

Anne l. McGuire Michael A. Mines Craig C. Moody Rick M. Yoder Board Member Board Member Board Member Board Member Nurse Educator Governmental Business Owner Consultant (retired) Advisor Senior Management l~

/~

I-*

• Timothy J. Burke Kathleen W. Brown juli A. Comstock Mohamad I. Doghman jon T. Hansen President & Vice President - Vice President - Vice President - Energy Vice President -

Chief Executive Officer Business Technology Customer Service Delivery & Chief Energy Production

& Building Services Assistant Secretary Compliance Officer & Marketing Assistant Secretary Assistant Secretary Assistant Secretary OPPD is currently recruiting for the CFO position.

lisa A. Olson Martha l. Sedky Mary J. Fisher Scott M. Focht Vice President - Vice President - Senior Director - Director - Business Public Affairs Human Capital Fort Calhoun Station Strategy & Development Assistant Secretary Assistant Secretary Decommissioning OPPD ANNUAL REPORT 2016 3

Mission Operations Review

& Vision MISSION

& VISION To provide affordable, reliable and environmentally sensitive energy services to our customers. This is OPPD's mission statement, and it drives our Strategic Directives.

Everything we do at OPPD starts with this and our vision, Leading the Way We Power the Future. As public power providers, these statements serve as guideposts for our responsibility to our customer-owners. It's a role we fill with pride. From the very earliest roots of public power - making sure Nebraska's rural areas had access to the same quality of life through electrifica-tion- to present-day decisions, we are strengthening our financial position and incorporating new and innovative technologies.

Our decisions are dictated by our mission and vision, and the rest of our Strategic Directives grow from there.

OPPD is leading the way, driven by the energy and commitment of our employees to provide affordable, reliable and environmentally sensitive energy services to our customers.

Those are the tenets OPPD strives to achieve each and every day. Our customers and stake-holders can count on us to bring our best and live our core values: we have a passion to serve, we honor our community, and we care about each other.

The following pages highlight some of the ways we are working for our customer-owners.

4 OPPD ANNUAL REPORT 201 6

Above, downtown Omaha is just a small portion of the 5,000-square miles that OPPD serves.

In fact, 4,570 miles cover rural areas. At left, OPPD began using drone technology to conduct aerial transmission line inspections to improve safety, bolster reliability and save money.

Mark Gorseth, line maintenance technician, is one of three employees who completed training to earn a commercial operating license to operate the unmanned craft.

OPPD ANNUAL REPORT 201 6 5

COMPETITIVE Competitive RATES OPPD's commitment to our custom-Rates ers is to provide affordable electricity.

It is one of the main advantages of public power. Our Strategic Directive that addresses rates actually goes a step further to illustrate just how competitive our rates should be. It calls for OPPD's retail rates to be 20 percent below the West North Central Regional average.

That rate directive played a part in the difficult decision to cease opera-tions at OPPD's nuclear facility, Fort Calhoun Station. Economics were one of the main factors in that decision and doing so enabled OPPD officials and the board of directors to announce there would be no general rate increase for the next five years.

For 2016, OPPD was already at 6.6 percent below the regional average.

After safely defueling OPPD's nuclear plant, personnel have shifted to the long-term decommissioning work.

6 OPPD ANNUAL REPORT 201 6

As part of being good stewards of customer-owner resources, OPPD executed a cost-effective plan for its 45-mile portion of the Midwest Transmission Project.

The cost of OPPD's portion came in below the national average per mile of line.

Shown above is rebar for one of 267 transmission tower footings. The Southwest Power Pool will reimburse approximately 95 percent of the cost over 30 years.

OPPD ANNUAL REPORT 2016 7

RELIABILITY Another area highlighted by OPPD's mission statement is reliability. It's one of the main things our customers value about our company. They expect us to be there when they need us - whether they've been with us for decades or are potential Reliability customers looking for the best place to locate their business. People depend on electricity to fuel their busy lives. Reliability has long been one of OPPD's highest priorities and an area of pride.

We measure our reliability through the System Average Interruption Duration Index (SAIDI), which is the total minutes an average customer is without power during the year. Our SAIDI number again outperformed our year-end goal and is projected to put us in the top quartile nationally for reliability.

One of the largest projects OPPD has undertaken in the last 10 years, the Midwest Transmission Project (MTP), was completed in late 2016. The 180-mile line will help ease congestion and increase capacity in the region. The 345-kilovolt transmission line was built in partnership with Kansas City Power & Light and was a priority project for the Southwest Power Pool, of which both utilities are members.

The first phase of smart grid and distribu-tion automation began in the spring with the installation of infrastructure in a section of Omaha. Smart grid technologies will be able to rapidly communicate back and forth and allow quicker rerouting of power during outages. Other efforts to maintain reliability, such as the Ground Line The Midwest Transmission Project was energized in Inspection and Treatment Program (GLIT) December 2016. The 180-mile, 345-kilovolt transmission and tree trimming program, continued in line will relieve energy flow congestion in the region.

2016. Starting in 2017, OPPD will be using a drone to help inspect lines, allowing for better views of the transmission system Trimming keeps trees healthy and the transmission than what was previously available with and distribution system reliable. At right, OPPD helicopters. Forester Andy Clark conducts annual training for those who maintain the trees for the utility.

8 OPPD ANNUAL REPORT 201 6

STAKEHOLDER Outreach and Communication As a public power provider, OPPD values and seeks input from those we serve. Our stakeholder process is one we've used in recent years to gauge what our customer-owners want. In 2014, it was used to help determine what OPPD's fuel mix should look like and helped foster more renewables in the mix.

The process was used again this year for the Integrated Resource Plan. This allows OPPD the flexibility to adjust as new technologies and new opportunities arise.

That's not the only way OPPD engages with customer-owners. We reach out and interact with the public through our Speakers Bureau.

In 2016, OPPD engaged the public with more than 125 such Speakers Bureau events, mostly with schools, communities, and city and county governmental organizations. Also, OPPD's numerous employee resource groups are involved in the community through mentoring and volunteering efforts throughout the year.

OPPD also works to connect with tomor-row's employees through programs that encourage math, science and technical skills.

One example was a partnership with Creighton University where energy technology students built an "EnergiPlant" charging station on the campus. Another example is the annual Marsh-mallow Challenge, where fifth-grade students in our service territory use marshmallows, spaghetti, masking tape and string to build the tallest, free-standing structure possible during National Engineer's Week. The event Stakeholder sparks creativity from young imaginations and encourages young people to consider a career Outreach and in the energy field. Middle-schoolers get a hands-on look at how Communication OPPD also connects with customers online. OPPD makes electricity with a little help from Through our various websites - oppd.com, Engineer Tevi Lawson .

oppdlistens.com, oppdthewire.com and stormandoutage.com - there were more than 4 million page views in 2016. Through these sites, customers can do everything from pay bills, be updated on outages and stay informed about the company and issues surrounding the industry. 10 OPPD ANNUAL REPORT 2016

OPPD safety personnel spread the message of electrical safety to those who protect our communities, here to first responders from Sarpy County.

OPPD ANNUAL REPORT 201 6 11

CORE VALUES OPPD's core values are woven into each Strategic Directive. In 2016, a team of employees pinpointed our core values, common threads that have connected generations of OPPD employees. Today's employees continue to embody and exemplify these values: We have a passion to serve, we honor our community and we care about each other.

Sometimes they are obvious, like when Lori Lepine, a customer service represen-tative, and Gabe Galas, a Securitas security officer, helped save a customer's life with their CPR training. Another example was the commitment to employees after the difficult decision to cease operations at Fort Calhoun Station. OPPD set up a 60-day program to help those employees find jobs outside the organization through training, coaching and job fairs.

Other times it is subtle but still evident, as with the hundreds of employees who volunteer their time and expertise in the community or help raise money for the Energy Assistance Program (EAP). This program provides assistance to customers struggling to pay their energy bills.

At OPPD, our core values are on display every day as they have been for the past 70 years. It has been through those values that we have, and will continue to fulfill our vision. Leading the way we power the future. 12 OPPD ANNUAL REPORT 201 6

At left, Central Maintenance celebrated its 40th anniversary in 2016.

The group includes workers from different crafts- steamfitters, general maintenance mechanics, machinists, electricians and more-tasked with maintaining all of OPPD's generation facilities. This group shares a passion to serve and some remarkable safety records.

Machinists, for example, have gone 17 years without a safety incident that caused time away.

journeyman Cable Splicer Erick York, left, advises Apprentice Cable Splicer Travis O'Dell on the next steps for completing a lead joint, as part of O'Dell's second-year apprentice test.

OPPD ANNUAL REPORT 2016 13

Management's Discussion and Analysis (Unaudited)

USING THIS FINANCIAL REPORT The Finandal Report for the Omaha Public Power District (OPPD or Company) includes the Management's Discussion and Analysis, Financial Statements, Notes to Financial Statements, Required Supplementary Information and Notes to Required Supplementary Information. The Financial Statements consist of the Statement of Net Position; the Statement of Revenues, Expenses and Changes in Net Position; and the Statement of Cash Flows. The Financial Statements have been prepared in accordance with generally accepted accounting principles (GAAP) for proprietary funds of governmental entities. Questions concerning any of the information provided in this report should be directed to Investor Relations, 402-636-3286.

Management's Discussion and Analysis (MD&A) -This unaudited information provides an objective and easily readable analysis of OPPD's financial activities based on currently known facts, decisions or conditions. In the MD&A, financial managers present both short-term and long-term analyses of the Company's activities. The MD&A should be read in conjunction with the Financial Statements, Required Supplementary Information and related Notes. This document contains forward-looking statements based on current plans.

Statement of Net Position- This statement reports resources with service capacity (assets) and obligations to sacrifice resources Oiabilities). Deferrals result from outflows and inflows of resources that have already taken place but are not recognized in the financial statements as expenses and revenues because they relate to future periods. Net Position is the residual interest in the Company. On the Statement of Net Position, the sum of assets and deferred outflows equals the sum of liabilities, deferred inflows and net position. This statement facilitates the assessment and evaluation of liquidity, financial flexibility and capital structure.

Statement of Revenues, Expenses and Changes fn Net Position -All revenues and expenses are accounted for in this statement.

This statement measures the activities for the year and can be used to determine whether the revenues, rates, fees and other charges are adequate to recover expenses.

Statement of Cash Flows -This statement reports all cash receipts and payments summarized by net changes in cash from operating, capital and related financing, and investing activities.

Notes to Financial Statements (Notes) -These notes provide additional detailed information to support the Financial Statements.

Required Supplementary Information and Notes to Required Supplementary Information - This information provides additional detailed disclosures as required by the Governmental Accounting Standards Board.

ORGANIZATION OPPD is a fully integrated, publicly owned electric utility governed by an elected board of eight directors. The Company serves an estimated population of 820,000 in a 13-county, 5,000-square-mile service area in southeast Nebraska.

FINANCIAL POSITION As discussed in Note 3 to the financial statements, in 2016 OPPD elected to change its method of accounting related to ash landfills and the closure and postclosure care costs to be incurred in the future. This resulted in the application of GASB Statement No. 18, Accounting for Municipal Solid Waste Landfill Closure and Postclosure Care Costs (GASB 18), by recognizing the cumulative effect of adoption as of January 1, 2015.

The following table summarizes the financial position as of December 31 (in thousands).

Condensed Statements of Net Position 2016 2015 Current Assets $ 921,231 $ 839,274 Other Long-Term Assets and Special-Purpose Funds 1,692,455 1,007,537 Capital Assets 2,561,394 3,389,679 Total Assets 5,175,080 5,236,490 Deferred Outflows of Resources 265,988 192,677 Total Assets and Deferred Outflows $5,441,068 $ 5,429,167 Current Liabilities $ 371,957 $ 257,466 Long-Term Liabilities 4,013,641 3,208,379 Total Liabilities 4,385,598 3,465,845 Deferred Inflows of Resources 42,141 16,168 Net Position 1,013,329 1,947,154 Total Liabilities, Deferred Inflows and Net Position $5,441,068 $5,429,167 14 OPPD ANNUAL REPORT 2016

Total Assets and Deferred Outflows Total Assets in 2016 decreased $61,410,000 or 1.2% from 2015, primarily due to a decision by the Board of Directors in June 2016 to cease operations at the Fort Calhoun Station (FCS). Capital assets decreased $828,285,000 or 24.4% from 2015 due to the FCS decision, which resulted in an impairment of the FCS-related assets. Other Long-Term Assets and Special Purpose Funds increased $684,918,000 or 68.0% over 2015, primarily due to the addition of a Board-approved regulatory asset for decommissioning costs.

Deferred Outflows of Resources in 2016 increased $73,311,000 or 38.0% over 2015, primarily due to the change in the expected earnings on the pension plan.

Total liabilities, Deferred Inflows and Net Position Total liabilities in 2016 increased $919,753,000 or 26.5% over 2015, primarily due to the additional decommissioning cost liability related to the dedsion to cease operations at FCS.

Deferred Inflows of Resources in 2016 increased $25,973,000 or 160.6% over 2015, primarily due to an increase in the Rate Stabilization Reserve.

Net Position in 2016 decreased $933,825,000 or 48.0% from 2015, primarily due to the decision to cease operations at FCS, which resulted in an impairment of the FCS-related assets.

RESULTS OF OPERATIONS The following table summarizes the operating results for the years ended December 31 (in thousands).

0 eratin Results 2016 2015 Operating Revenues $ 1,126,476 $1,131,235 Operating Expenses (1,025,117) (1,030,374)

Operating Income 101,359 100,861 Other Income 12,305 22,929 Interest Expense (87,914) (91,468)

Net Income Before Spedal Item 25,750 32,322 Special Item (959,575)

Net Income (Loss) $ (933,825) $ 32,322 Operating Revenues The following chart illustrates 2016 operating revenues by category and percentage of the total.

2016 Operating Revenues Commercial 28%

• Off-System 15%

Other 3%

2016 Compared to 2015- Total operating revenues were $1,126,476,000 for 2016, a decrease of $4,759,000 or 0.4% from 2015 operating revenues of $1,131,235,000.

• Revenues from retail sales were $921,052,000 for 2016, an increase of $16,259,000 or 1.8% over 2015 revenues of $904,793,000. The increase in retail revenues was primarily due to warmer than normal summer weather, which was partially offset by a transfer to the Rate Stabilization Reserve.

OPPD ANNUAL REPORT 201 6 15

• Revenues from off-system sales were $175,506,000 for 2016, a decrease of $20,006,000 or 10.2% from 2015 revenues of $195,512,000. The decrease was primarily due to lower sales volumes and prices in the off-system marketplace.

• Other Electric Revenues include connection charges, late payment charges, rent from electric property, wheeling fees and miscellaneous revenues. These revenues were $29,918,000 for 2016, a decrease of $1,012,000 or 3.3% from 2015 revenues of $30,930,000.

Operating Expenses The following chart illustrates 2016 operating expenses by expense classification and percentage of the total.

2016 Operating Expenses Fuel 18%

Transmission

& Distribution 8% Customer 3%

Depreciation &

Amortization Administrative 14%

& General 15%

Purchased Power Payments in Lieu ofTaxes 12% 3%

2016 Compared to 2015- Total operating expenses were $1,025,117,000 for 2016, a decrease of $5,257,000 or 0.5% from 2015 operating expenses of $1,030,374,000.

• Fuel expense decreased $10,313,000 or 5.2% from 2015, primarily due to reduced generation at the North Omaha Station and Nebraska City Station Unit 1 (NC1), partially offset by increased generation at Nebraska City Station Unit 2 (NC2).

• Purchased Power expense increased $11,839,000 or 11.0% over 2015, primarily due to additional renewable energy purchases.

• Production expenses decreased $29,837,000 or 10.6% from 2015, due to reduced operations and maintenance expenses at FCS.

• Transmission expense increased $2,686,000 or 8.1% over 2015, primarily due to increased outside service costs and increased transmission fees.

• Distribution expense increased $1,835,000 or 4.3% over 2015, primarily due to increased payroll costs.

• Customer Accounts expense increased $1,329,000 or 8.6% over 2015, primarily due to adjustments for the provision for uncollectible accounts.

• Customer Service and Information decreased $1,191,000 or 7.3% from 2015, primarily due to decreased outside service costs.

• Administrative and General expense increased $5,570,000 or 3.8%, primarily due to the increased outside service costs and increased employee benefit costs.

• Depreciation and Amortization expense decreased $1,487,000 or 1.0%, primarily due to ceasing operations at FCS in October 2016.

• Decommissioning expense increased $12,415,000 or 240.6% due to the transitioning of FCS to decommissioning.

• Payments in Lieu of Taxes expense increased $1,897,000 or 5.9%, primarily due to higher retail revenues.

Other Income (Expenses)

Other income (expenses) totaled $12,305,000 in 2016, a decrease of $10,624,000 from 2015 income (expenses) of $22,929,000.

Other- Net totaled $2,229,000 in 2016, a decrease of $6,113,000 from 2015, primarily due to a reduction of grants from the Federal Emergency Management Agency.

Allowances for Funds Used During Construction (AFUDC) totaled $7,380,000 in 2016, a decrease of $1,094,000 from 2015, due to lower construction balances subject to AFUDC.

Avariety of products and services are offered to provide value both to the customer and the Company. These products and services totaled $3,739,000 in 2016, a decrease of $548,000 from 2015. These products include Geothermal Loop Heat Exchangers, ECO 24/7 services and Residential Surge Protection.

16 OPPD ANNUAL REPORT 2016

Interest Expense Interest expense was $87,914,000 for 2016, a decrease of $3,554,000 from 2015, primarily due to lower interest payments related to debt refunding activity in 2016 and 2015.

Net Income Before Special Item Net income before the Special Item was $25,750,000 or $6,572,000 lower than 2015, primarily due to Rate Stabilization Reserve adjustments.

Changes to the Rate Stabilization Reserve resulted in operating revenues and net income decreasing $26,000,000 in 2016 and increasing

$25,000,000 in 2015.

Special Item The Board decision to cease operations at FCS resulted in an impairment and the recognition of a Special Item. This includes the write-off of FCS-related assets and related contract termination fees in the amount of $959,575,000.

Net Income (Loss)

Net loss after the Special Item was $933,825,000, primarily due to the Board decision to cease operations at FCS.

CAPITAL PROGRAM The Company's utility plant assets include production, transmission and distribution (T&D), and general plant facilities. As a result of the Board of Directors' decision in June 2016 to cease operations at FCS, the related assets were determined to be impaired as of June 30, 2016.

The following table summarizes the balance of capital assets as of December 31 (in thousands).

Ca ita I Assets 2016 2015 Electric plant $4,305,055 $5,487,554 Nuclear fuel - at amortized cost 87,387 Accumulated depreciation and amortization (1,743,661) (2,185,262)

Total utility plant- net $2,561,394 $3,389,679 Electric system requirements, including the identification of future capital investments, are reviewed annually to ensure current and future load requirements are serviced by a reliable and diverse power supply. Capital investments are financed with revenues from operations, bond proceeds, investment income and cash on hand.

The following table shows actual capital program expenditures, including allowances for funds used during construction, for the last two years and budgeted expenditures for 2017 (in thousands).

Budget Actual Ca ital Pro ram 2017 2016 2015 Transmission and distribution $ 80,000 $ 82,145 $ 80,862 Production 35,000 48,723 115,398 General 20,000 11,782 12,509 Total $135,000 $142,650 $208,769 Actual and budgeted expenditures for 2015 through 2017 include the following:

• Transmission and distribution expenditures include a new 345-kilovolt transmission line from a substation near the Nebraska City Station to the Nebraska border as part of the Midwest Transmission Project. In addition, expenditures include a transmission system upgrade as part of the Elkhorn River Valley Transmission Project. T&D expenditures also include the installation of substation and distribution facilities to maintain system reliability, enhance efficiency and respond to load growth.

• Production expenditures include equipment to maintain reliability, enhance efficiency and comply with increasing environmental regulations. Budgeted expenditures include additional ash disposal facilities at the Nebraska City Station and replacement of the turbine rotor at NC2. Production expenditures at FCS through June 2016 include reinforcing beams that support equipment inside the reactor containment building and equipment for remote monitoring of the spent fuel pool. Due to the impairment of capital assets and the transition to decommissioning FCS beginning in November 2016, no additional FCS expenditures will be eligible for capitalization at FCS.

OPPD ANN UAL REPORT 20 16 17

' General plant expenditures include facility upgrades and fleet vehicle purchases. Additional budgeted expenditures include telecommunications equipment and information technology upgrades for cyber security and the outage and field service management systems.

Details of the Company's capital asset balances and activity are included in Note 1 in the Notes to Financial Statements.

CASH AND LIQUIDITY Cash Flows There was an increase in cash and cash equivalents of $5,802,000 during 2016 and a decrease of $6,062,000 during 2015.

The following table illustrates the cash flows by activities for the years ended December 31 (in thousands).

Cash Flows 2016 2015 Cash flows from Operating Activities $301,851 $262,088 Cash flows from Capital and Related Financing Activities (271,220) (226,865)

Cash flows from Investing Activities (24,829) (41,285)

Change in Cash and Cash Equivalents $ 5,802 $ (6,062)

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 2016 increased $39,763,000 over 2015, primarily as the result of an increase in cash received from retail customers.

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

• Cash flows used for 2016 increased $44,355,000 over 2015, primarily due to a decrease in proceeds from long-term borrowing, partially offset by decreased debt principal payments and a decrease in the cash used for acquisition and construction of capital assets.

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

• Cash flows used for 2016 decreased $16,456,000 over 2015, primarily due to decreased investment purchases and an increase in investment income.

Financing Sufficient liquidity is maintained to ensure working capital is available for normal operational needs and unexpected but predictable risk events. OPPD's liquidity includes cash, marketable securities and a line of credit. Bond offerings also provide a significant source of liquidity for capital investments not funded by revenues from operations.

The financing plan optimizes the debt structure to ensure capital needs are financed, liquidity needs are achieved and the Company's strong financial position is maintained. The 2017 financing plan does not include any bond issues. The Company will continue to monitor refunding opportunities to achieve any potential interest cost savings for customer-owners.

One Electric System Revenue Bond issue totaling $183,340,000 was completed in 2016. The proceeds from the bond were used for the refunding of previously issued Electric System Revenue Bonds. The lower interest rates on the new debt decreased the debt service payments.

Repayments of $43,065,000 of Electric System Revenue Bonds and $127,000 of Minibonds were made in 2016.

The Company issued $103,685,000 of NC2 Separate Electric System Revenue Bonds in 2016. The bonds were used for the refunding of previously issued NC2 Separate Electric Revenue Bonds. There was a principal payment of $3,190,000 made on February 1, 2016, for NC2 Separate Electric System Revenue Bonds.

Three Electric System Revenue Bond issues totaling $447,200,000 were completed in 2015. The proceeds from these bonds were used for refunding $364,840,000 of previously issued Electric System Revenue Bonds and financing $82,360,000 in new capital expenditures.

Repayments of $40,465,000 of Electric System Revenue Bonds and $135,000 of Minibonds were made in 2015.

18 OPPD ANNUAL REPORT 2016

The Company issued $114,245,000 of NC2 Separate Electric System Revenue Bonds in 2015. The bonds were used for the refunding of previously issued NC2 Separate Electric System Revenue Bonds. There was a principal payment of $3,080,000 made on February 2, 2015, for NC2 Separate Electric System Revenue Bonds.

The Company renewed a Credit Agreement for $250,000,000 in 2015 that expires on October 1, 2018. The Credit Agreement supports the Commercial Paper Program in addition to providing another source of working capital, if needed. There were no amounts outstanding under this Credit Agreement as of December 31, 2016 or 2015. There was $150,000,000 of commercial paper outstanding as of December 31, 2016 and 2015.

The following chart illustrates the debt structure and percentage of the total as of December 31, 2016.

2016 Debt Structure Electric System Revenue Bonds 67% Electric System Subordinated Revenue Bonds 15%

Electric Revenue Notes -

Commercial Paper Series 7%

NC2 Separate Electric System Minibonds Revenue Bonds 1% 10%

Details of the Company's debt balances and activity are included in Note 6 in the Notes to Financial Statements.

Debt Service Coverage for Electric System Revenue Bonds Debt service coverage for the Electric System Revenue Bonds was 2.20 and 2.14 in 2016 and 2015, respectively. OPPD's senior lien bond indenture provides that additional bonds may not be issued unless estimated net receipts for each future year shall equal or exceed 1.4 times the debt service on all Electric System Revenue Bonds outstanding, including the additional bonds being issued. Transactions in 2016 and 2015 for the NC2 Separate Electric System were not included in the calculation because the Electric System Revenue Bonds are not secured by the revenues from the NC2 Separate System. The Company is in compliance with all debt covenants.

Debt Ratio The debt ratio is a measure of fmandal solvency and represents the share of debt to total capitalization (debt and net position). This ratio does not include the NC2 Separate Electric System Revenue Bonds since this debt is secured by revenues of the NC2 Participation Power Agreements.

The debt ratio was 66.1% and 51.0% at December 31, 2016 and 2015, respectively. The increase in the debt ratio is attributable to the write-off of the FCS assets.

Ratings High credit ratings allow the Company to borrow funds at more favorable interest rates. Both quantitative (financial strength) and qualitative (business and operating characteristics) factors are considered by the credit rating agencies in establishing a company's credit rating. The ratings received from Standard &Poor's Ratings Services (S&P) and Moody's Investors Service (Moody's), independent bond rating agencies for the latest bond issues, were among the highest ratings granted to electric utilities and confirm the agencies' assessment of the Company's strong ability to meet its debt service requirements. Moody's and S&P affirmed OPPD's senior lien debt and subordinated ratings, and both have stable outlooks for OPPD's credit ratings.

The following table summarizes credit ratings in effect on December 31, 2016.

S&P Moody's Electric System Revenue Bonds A.A. Aa2 Electric System Subordinated Revenue Bonds AA.- Aa3 Electric System Revenue Notes - Commercial Paper Series A-1+ P-1 Minibonds* A.A.- Aa3 NC2 Separate Electric System Revenue Bonds (2006A)* A+ Al NC2 Separate Electric System Revenue Bonds (2008A, 201SA, 2016A) A+ Al

• Payment of theprincipal and interest on the Minibonds and the NC2 Separate Electric System Revenue Bonds 2006 Series A, when due, is insured by ~nancial guaranty bond insurance policies.

OPPD ANNUAL REPORT 2016 19

ELECTRIC RATES The Company strives to manage costs to align with the mission of providing affordable, reliable and environmentally sensitive energy services to our customers. Residential customers paid an average of 11.47 and 11.07 cents per kilowatt-hour (kWh) in 2016 and 2015, respectively. The national average residential cents per kWh according to the Energy Information Administration (EIA),

U.S. Department of Energy, was 12.55 for 2016 (preliminary year-to-date December 2016) and 12.65 cents per kWh for 2015. Based on the preliminary EIA data for 2016, OPPD residential rates were 8.6% below the national average.

The following chart illustrates the Company's average residential cents per kWh compared to the national average.

Average Residential Cents per kWh ll.SS IZ.65 11.07 2016 2015 National Average OPPD Retail customers paid an average of 8.94 and 8.66 cents per kWh in 2016 and 2015, respectively. The national average retail cents per kWh, according to the EIA, was 10.28 for 2016 (preliminary year-to-date December 2016) and 10.41 cents per kWh for 2015. Based on the preliminary EIA data for 2016, OPPD retail rates were 13.0% below the national average.

The following chart illustrates the Company's average retail cents per kWh compared to the national average.

Average Retail Cents per kWh 10.28 10.41 2016 National Average OPPD There was a general rate adjustment of 4.0% implemented in January 2016 and 1.6% implemented in january 2015. There was a 0.6%decrease to the FPPA rate in January 2016 and no adjustment to the FPPA rate in 2015. The Board approved a rate restructuring plan that was implemented in June 2016. The restructuring plan included an increase to the fixed service charge and a reduction to the variable charge for energy usage. This plan is revenue neutral to OPPD. There were no general rate or FPPA adjustments in January 2017. The Company has committed to no general rate increases through 2021.

RISK MANAGEMENT Risk-Management Practices An Enterprise Risk Management (ERM) program ensures the Company's objectives are met by specifying risk-management standards, management responsibilities, and controls to help ensure risk exposures are properly identified and managed within agreed upon risk tolerance levels. Spedfic risk-mitigation plans and procedures are maintained and periodically reviewed to provide focused and consistent efforts to mitigate various risk exposures. Several cross-functional risk committees and an Executive ERM Committee, which includes the senior management team and legal counsel, are utilized to discuss and analyze the potential risks that could hinder the achievement of the Compa,,y's objectives. Additionally, the Company has established criteria for risk escalation and 20 OPPD ANNUAL REPORT 2016

oversight. The risks are evaluated periodically and will be escalated to the appropriate oversight levels up to and including the Board of Directors, when applicable. An overview of the ERM program is provided to the Board of Directors on an annual basis.

OPPD participates in the wholesale marketplace with other electric utilities and power marketers. The Company must be able to offer energy at competitive prices and maintain reliability to successfully compete in this market. Energy market prices may fluctuate substantially in a short period of time due to changes in the supply and demand of electricity, fuel and environmental-related commodities. Policies provide guidelines for transacting in the marketplace with the intent to mitigate price changes. ACross-Functional Risk Committee is responsible for identifying, measuring and mitigating various risk exposures related to power marketing and fuel purchase activities.

Fuel expense represents a significant cost and affects the ability to generate and market competitively priced power. To maintain a diverse portfolio of power supply, OPPD uses various fuel types for generation. Fuel policies were established to mitigate volumetric risk associated \\oi th the forecasted use of fuel for OPPD's generation. This also mitigates price fluctuations in the cost of fuels by having an adequate supply.

ARate Stabilization Reserve was established in 1999 to assist in stabilizing retail electric rates. The Company added an additional $26,000,000 to the reserve in December 2016. The balance of the reserve was $42,000,000 and $16,000,000 as of December 31, 2016 and 2015, respectively. The balance of the fund was $33,000,000 and $16,000,000 as of December 31, 2016 and 2015, respectively.

The Company promotes ethical business practices and the highest standards in the reporting and disclosure of financial information. The Sarbanes-Oxley Act (Act) is intended to strengthen corporate governance of publicly traded companies. As a public utility, the Company is not required to comply with the Act, but the application of these requirements, where appropriate, ensures continued public trust in OPPD, protects the interest of its stakeholders and is a sound business practice. One of the most significant requirements of the Act pertains to management's documentation and assessment of internal controls. The Company's management assesses internal controls for significant business processes that impact financial reporting. This assessment includes documenting procedures, risks and controls for these processes, and assessing the effectiveness and operation of the internal controls. In addition, the Company contracts with an independent third party to administer the receipt, communication and retention of employee concerns regarding business and financial practices.

Other Reserves Other reserves are maintained to recognize potential liabilities that arise in the normal course of business. Additional information about other reserves follows.

• The Workers' Compensation and Public Liability Reserves are established for the estimated liability for current workers' compensation and public liability claims.

• The Incurred But Not Presented Reserve is an insurance reserve that is required by state law because the Company is self-insured for health care costs. The reserve is based on health insurance claims that have been incurred but not yet presented for payment.

• The Uncollectible Accounts Reserve was established for estimated uncollectible accounts from retail sales and property claims.

REGULATORY AND ENVIRONMENTAL UPDATES Southwest Power Pool (SPP) Integrated Marketplace and Transmission Access OPPD became a transmission-owning member of SPP on April1, 2009, and all of the Company's transmission facilities were placed under the SPP Open Access Transmission Tariff (OATT). In addition to tariff administration services, SPP also provides reliability coordination services, generation reserve sharing, energy market services, balancing authority services and planning authority services.

The SPP Real-Time Energy Imbalance Market (Day 1 Market) was expanded into a Day 2 Market in 2014. The SPP Day 2 Market, also known as the Integrated Marketplace (IM), includes the Day-Ahead Market, Real-Time Market, Ancillary Services Market and Transmission Congestion Rights Market. OPPD actively participates in the IM. It provides a more transparent market by which load is served by the most efficient and economical generation while maintaining the reliability of the grid. The market mechanism rewards low-cost, flexible and reliable providers of electricity. OPPD's generation is in competition with other generation owners to serve load across the SPP footprint.

As the regional transmission expansion planning authority, SPP determines which transmission projects are needed in the footprint to meet the reliability, economic and public policy needs. One of SPP's regional transmission priority projects was the 180-mile, 345-kilovolt power line (Midwest Transmission Project) built by OPPD and Kansas City Power&. Light that runs from an OPPD substation near the Nebraska City Station to Sibley, Missouri. This project is expected to relieve congestion on the region's transmission system, improve reliability on the nation's energy grid, and improve opportunities for wind energy interconnection. Construction was completed in December of 2016.

The Elkhorn River Valley Transmission Project is a joint effort between OPPD and the Fremont Department of Utilities to connect an OPPD substation in Blair with a substation in Fremont. The line route was announced in 2015 and will be in service by October 2018. The purpose of this SPP project is to support the growing demand for electricity and improve reliability. Aportion of the project will receive funding under the SPP OATT.

OPPD ANNUAL REPORT 2016 21

Environmental Matters Environmental matters can have a significant impact on operations and financial results. OPPD complies with all applicable local, state and federal environmental rules and regulations. The items mentioned below include proposed, enacted or enforceable Jaws, rules and regulations.

The Environmental Protection Agency (EPA) published the Cross-State Air Pollution Rule (CSAPR) requiring designated states, including Nebraska, to significantly improve air quality by reducing generating station emissions contributing to ozone and fine particle pollution in other states. Spedfically, the rule requires significant reductions in sulfur dioxide (S02) and nitrous oxide (NOx) emissions crossing state lines.

The final CSAPR rule established a cap-and-trade system with state- and unit-spedfic allowance allocations to achieve the desired emission reductions for S02 and NOx. Implementation of Phase I of the final rule began in 2015, and implementation of Phase II begins in 2017. In June 2014, the Board of Directors approved changes to its generation portfolio to comply with existing and future environmental regulations. This included the retirement of the coal-fired generation at North Omaha Station Units 1, 2, and 3 (NOl, N02 and N03). The Board of Directors' authorization in June 2016 to cease operations at FCS resulted in the decision to continue to utilize NOl, N02 and N03 on natural gas for capacity purposes. In 2016, OPPD complied with the CSAPR rule with allocated allowances and did not have to purchase any additional allowances. The CSAPR Phase II that becomes effective in 201 i will not impact OPPD.

The EPA issued regulations under Section 316(b) Rule of the Clean Water Act (316(b) Rule). The 316(b) Rule is designed to reduce fish mortality associated with the use of once-through cooling by power generating stations. Facilities are required to choose one of seven options to reduce fish impingement. The cost impact of the final rule is being assessed. Facilities will need to study the effects of entrainment and develop compliance strategies. OPPD has begun various studies; however, the cost in not expected to be material at this time.

The EPA issued the Mercury and Air Taxies Standard (MATS), which places strict limitations on emissions of mercury, non-mercury metallic hazardous air pollutants and acid gases. Compliance with the new rule was necessary by April16, 2015, for NC2 and April16, 2016, for North Omaha Station Units 4 and 5 (N04 and NOS) and NCl. N01, N02, and N03 were repurposed from coal to natural gas prior to April16, 2016, which results in this standard no longer applying to these units. No new emissions-control equipment was required to comply with the new requirements for NC2 although a new mercury-monitoring system was installed.

OPPD retrofitted N04, NOS and NCl with basic emission controls. Dry Sorbent Injection (DSI) and Activated Carbon Injection (ACI) are being used on all of these units to comply with the MATS rule.

In October 2015, the EPA published two final rules regulating the emission of carbon dioxide (C02) from new, modified, reconstructed or existing fossil-fuel-fired electric generating units under section 111 of the Clean Air Act. These regulations are known as the Clean Power Plan (CPP). The CPP requires states to meet interim and final emissions targets on a state-wide basis starting in 2022. The goal is to reduce C0 2 emissions from electric generating units by 32% below 2005 levels by the year 2030. Numerous legal challenges to the CPP have been filed and consolidated in the United States Court of Appeals for the District of Columbia Circuit.

On February 9, 2016, the U.S. Supreme Court entered an order staying the implementation of the CPP pending further proceedings.

On March 28, 2017, the President issued an Executive Order directing the EPA to start the process of re-evaluating and rewriting the CPP. On April3, 2017, the EPA published in the Federal register a notice that stated it is withdrawing proposed rules it issued in 2015 in conjunction with the CPP. The EPA explained that it was withdrawing the proposed rules in light of the March 28 Executive Order. The cost of compliance will not be known until judicial proceedings have been concluded and OPPD can evaluate the final regulatory requirements and its options related thereto.

OPPD has received and responded to requests for information from the EPA relating to compliance with the Clean Air Act at the North Omaha and NCl stations. OPPD received a Notice of Violation (NOV) from the EPA in August 2014 alleging a violation of the Clean Air Act by undertaking certain projects at NCl. The Company believes it has complied with all regulations relative to the projects in question and has discussed the matters with the EPA. The EPA would have to establish the allegations in the NOV in court. If the EPA establishes a Clean Air Act violation in court, and subject to possible appellate court review, remedies can include civil penalties and a requirement to install pollution-control equipment. OPPD cannot determine at this time whether it will have any future financial obligation with respect to the NOV.

22 OPPD ANNUAL REPORT 2016

Renewable Capability including Purchased Power Contracts Renewable portfolio standards are currently mandated in several states but not in Nebraska. The Board of Directors established a long-term goal of providing at least 30 percent of retail energy sales from renewable energy sources. The addition of the Grande Prairie wind facility in 2017 will add an additional400 megawatts (MW) of capability and will further the progress of meeting this goal by 2018.

The following table shows the renewable generation owned or purchased and future capability (in MW).

Capability OPPD-Owned Generation Elk City Station Qandfill-gas) 6.3 Subtotal OPPD-Owned Generation 6.3 Purchased Wind Generation*

Ainsworth 10.0 Elkhorn Ridge 25.0 Flat Water 60.0 Petersburg 40.5 Crofton Bluffs 13.6 Broken Bow I 18.0 Broken Bow II 43.9 Prairie Breeze 200.6 Subtotal Purchased Wind Generation 411.6 Total Renewable Generation as of December 31, 2016 417.9 2017 Purchased Wind Generation Grande Prairie 400.0 Total Expected Renewable Generation as of December 31, 2017 817.9

• Wind generation listed in ascending order of contract year signing.

Federal Energy Legislation The 114th Congress completed its two-year legislative session in December 2016, and some legislation important to the electric industry was enacted into law. Legislative language addressing cybersecurity information sharing was completed. This language provides a framework to facilitate timely and actionable information sharing, on a voluntary basis, between the federal government and electric utilities in regards to cyber threats. Additional language addressing the regulation of coal-combustion residuals (CCR) was included in the Water Infrastructure Improvements for the Nation Act. The Act's CCR provisions allow for implementation of the federal CCR rule through a state- or federal-based permit program instead of having enforcement by citizen suits.

Comprehensive energy legislation was also introduced, but it was not enacted. This included provisions that addressed energy efficiency, vegetation management, energy workforce, hydropower and various other areas. Congress also continued its oversight of the U.S. Environmental Protection Agency (EPA) and other federal agencies regarding energy and environmental issues.

Lastly, 2016 ended with the election of a new president, and both chambers of Congress kept their current majority party for another two years.

There likely will be a focus on energy and environmental policy in 2017. OPPD continues to monitor the status of energy and environmental legislation in Congress and provides input through public power industry groups and the Nebraska Congressional Delegation.

State of Nebraska Energy Legislation The Nebraska Legislature enacted Legislative Bill824 (L.B. 824) during the 2016 session. This bill removes the requirements of a certified renewable export facility (CREF) and the power purchase agreement requirements. Aprivately developed renewable energy generation facility is exempt from the Power Review Board requirements and regulations. The private entity has no eminent domain rights, and the facility cannot be condemned by another entity under eminent domain. The private entity will comply with any decommissioning requirements by the local governmental entity having jurisdiction and all costs of decommissioning will be paid by the private entity.

Fort Calhoun Station Update The Nuclear Regulatory Commission (NRC) placed FCS into a special category of its inspection manual, Chapter 0350, in December 2011. This Chapter is for nuclear stations that are in extended shutdowns with performance issues. OPPD contracted with Exelon Generation Company, OPPD ANNUAL REPORT 2016 23

LLC (Exelon) to provide operating and managerial support services. Station operations resumed in December 2013, and the station was removed from Chapter 0350 status in March 2015. In June 2016, the OPPD Board of Directors approved a recommendation by management to cease operations at FCS by December 31, 2016, and begin the decommissioning process using the safe storage

("SAFSTOR") methodology. The decision was made after a review of the Company's generation resource portfolio and resulted in an impairment of FCS-related assets. The station ceased operations on October 24, 2016, and notice was provided to Exelon in December 2016 to terminate the Operating Services Agreement. Upon completion of a third-party, site-specific cost study, OPPD recorded an increase to the decommissioning liability. The Board of Directors also approved a regulatory asset to match the decommissioning expense with the decommissioning funding amounts collected through retail rates. Ceasing FCS operations will result in an improved competitive position, stable debt service coverage and reduced financial risks.

SIGNIFICANT ACCOUNTING POLICIES The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions. These estimates and assumptions could affect 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 estimates could materially impact the financial statements and disclosures based on varying assumptions that could be used.

The financial and operating environment may have a significant effect on the operation of the business and on the results reported through the application of accounting measures used in preparing the financial statements and related disclosures, even if the nature of the accounting policies has not changed.

The following is a list of accounting policies that are significant to OPPD's financial condition and results of operation and require management's most significant, 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.

24 OPPD ANNUAL REPORT 2016

Accounting Policies judgments/Uncertainties Affecting Application Nuclear Decommissioning

• Cost estimates for future decommissioning

• Availability of facilities for waste disposal

• Approved methods for waste disposal Environmental Matters

• Approved methods for cleanup

• Governmental regulations and standards

• Cost estimates for future remediation options Regulatory Mechanisms and

• External regulatory requirements Cost Recovery

• Anticipated future regulatory dedsions and their impact Retirement Plan and Other

• Assumptions used in computing the Net Pension Liability Postemployrnent Benefits (OPEB) and OPEB actuarial liability, including discount rate, health care trend rates and expected rate of return on Plan assets

• Plan design Self-Insurance Reserves for Claims for

• Cost estimates for claims Employee-related Health Care Benefits,

• Assumptions used in computing the liabilities Workers' Compensation and Public Liability Uncollectible Accounts Reserve

• Economic conditions affecting customers

• Assumptions used in computing the reserve Unbilled Revenue

• Estimates for customer energy use and prices Depreciation and Amortization Rates of Assets

• Estimates for approximate useful lives OPPD ANNUAL REPORT 2016 25

Report of Management The management of Omaha Public Power District (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. OPPD'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 strong internal controls, supported by formal policies and procedures that are communicated throughout the company. 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 committed to conducting business with integrity, in accordance with the highest ethical standards, and in compliance with all applicable laws, rules and regulations. ACode of Ethics has been adopted for the Senior Executive and Financial Officers and the Controller, stating their responsibilities and standards for professional and ethical conduct.

Our independent auditors have audited the financial statements and have rendered an unmodified opinion as to the statements' fairness of presentation, in all material respects, in conformity with accounting principles generally accepted in the United States of America. During the audit, they considered internal controls over financial reporting as 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 auditors, internal auditors and management to ensure that all are properly discharging their responsibilities. The committee reviews the annual audit plan and any recommendations the independent auditors have related to the internal control structure.

The Board of Directors, on the recommendation of the Audit Committee, engages the independent auditors who have umestricted access to the Audit Committee.

!27~

President and Chief Executive Officer 26 OPPD ANNUAL REPORT 201 6

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Independent Auditors' Report To the Board of Directors Omaha Public Power District Omaha, Nebraska We have audited the accompanying financial statements of Omaha Public Power District (OPPD), which comprise the statements of net position as of December 31, 2016 and 2015, and the related statements of revenues, expenses and changes in net position, and cash flows for the years then ended, and the related notes to the financial statements, which collectively comprise OPPD's financial statements.

Management's Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error.

Auditors' Responsibility Our responsibility is to 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. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditors' judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to OPPD's preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of OPPD's internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Opinion In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of OPPD as of December 31, 2016 and 2015, and the results of its operations and its cash flows for the years then ended in accordance with accounting principles generally accepted in the United States of America.

Emphasis of Matters As discussed in Note 3 to the financial statements, in 2016 OPPD elected to change its method of accounting related to ash landfills maintained by OPPD and the closure and postclosure care costs to be incurred in the future. This resulted in the application of GASB Statement No. 18, Accounting for Municipal Solid Waste Landfill Closure and Postclosure Care Costs, by recognizing the cumulative effect of adoption as of January 1, 2015. Our opinion is not modified with respect to this matter.

As discussed in Note 13 to the financial statements, in June 2016 OPPD's Board of Directors approved a recommendation by management to cease operations at Fort Calhoun Station, OPPD's nuclear generation facility, by December 31, 2016.

This approval was a triggering event resulting in an impairment charge and contract termination fees being recorded in the statement of revenues, expenses and changes in net position as a "Special Item" for the year ended December 31, 2016. Our opinion is not modified with respect to this matter.

28 OPPD AN NUAL REPORT 201 6

Other Matter Required Supplementary Information Accounting principles generally accepted in the United States of America require that the Management's Discussion and Analysis on pages 14 through 25 and the schedule of changes in net pension liability and related ratios, schedule of contributions, and related notes within the Required Supplementary Information section on pages 62 and 63 be presented to supplement the financial statements. Such information, although not a part of the financial statements, is required by the Governmental Accounting Standards Board who considers it to be an essential part of financial reporting for placing the financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management's responses to our inquiries, the financial statements, and other knowledge we obtained during our audits of the financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance.

DELOITIE & TOUCHE LLP Omaha, Nebraska April28,2017 OPPD ANNUAL REPORT 2016 29

Omaha Public Power District Statements of Net Position as of December 31, 2016 and 2015 ASSETS 2016 2015 (thousands)

CURRENT ASSETS Cash and cash equivalents ....... ...... ... .. . .. . . ..... .. . . .. ..... . . ... . . s 13,649 $ 7,847 Electric system revenue fund ... . . .. . . . . . . ... . . . . ... . ... .. ... . . . .. . . .. . . . 114,116 99,636 Electric system revenue bond fund . .... .. ... . . . . . . . . .. . .. . .. . ... . .. .. .. . . . 97,814 92,667 Electric system subordinated revenue bond fund . . .. . . ... .. .. . ... . . .. . . . . . . . 5,666 5,683 Electric system construction fund ........ . ...... . . . . ... ... .. .... . .. ... . . . . 221,247 257,077 NC2 separate electric system revenue fund .. . .. . .. . ... .. . . .... ... . . . . ... . . . 14,080 12,563 NC2 separate electric system revenue bond fund ...... .. . ... .. ... ....... . . . . 18,013 13,076 NC2 separate electric system capital costs fund ..... ...... . . . ..... . . .. ...... . 9,486 1,925 Accounts receivable - net .. . ... ... . . .. ..... .. . . ..... .. ... . . . ..... . . . ... . 131,425 116,376 Fossil fuels - at average cost .... .. .. ..... . .. . . . . . . . ..... . ... . .... .. .. .. . . 28,328 31,661 Nuclear fuel held for sale .. . . ....... ... ..... . . . . .. .. .. ..... . ..... .. ... .. 12,453 Materials and supplies - at average cost . .. . . .. . . .. . . ... . ... . .. . .. . ....... . . 77,896 143,319 Regulatory asset - FCS decommissioning . . ... . . . . ..... . . .. ............... . . 147,000 Other (Note 2) .... .. ........... . ... . .. ... .... . .... . .. . . .. . . .. .. . . . ... . 30,058 57!444 Total current assets ......... ... ... . . .... . .... . . . .. ... . . . .. .. ... . . .. . . 921,231 839,274 SPECIAL PURPOSE FUNDS - at fair value Electric system revenue bond fund - net of current ..... .. . . .. .. . .. . .... . ... . 41,083 48,783 Segregated fund - rate stabilization (Note 4) ... ... . .. . . .. . . . ... . . ...... .. .. . 33,000 16,000 Segregated fund- other (Note 4) ....... . ..... .. . .. . . . .... . . . . . . . . . .... . . . 36,317 34,945 Electric system construction fund - net of current ... . . ..... . .. . . . . . .... .... . 20,481 Decommissioning funds (Note 4) ... . ..... . . .. . .. .. ...... . .. . .. ..... ... . . . 382,134 373,334 Total special purpose funds .. .. ... .. ..... .. ........ . .. . .... . . .. ..... . . 513,015 473,062 UTILITY PLANT- at cost Electric plant ............... . ................ . . .. . ... . . . . ..... .. . . . . . . 4,305,055 5,487,554 Less accumulated depreciation and amortization . .. ... . ....... . . . .... . . .. .. . 1,743,661 2,185,262 Electric plant - net ........... . . ..... .... . ... . ................ . ... . ... . 2,561,394 3,302,292 Nuclear fuel- at amortized cost ... . .. .. .. . ....... . . .. . . . ... . . ...... .. . .. . 87,387 Total utility plant - net ....... . .. .. . ... .. . . . . . . . .. .. . .. . . . ..... .. ... . 2,561,394 3,389,679 OTHER LONG-TERM ASSETS Regulatory assets (Note 2) ... . . .. .. .. . .. .. . . ... . . .. . .. . . .... . . ..... . .... . 1,173,653 525,729 Other assets (Note 2) .... . . . . . ... ..... .. ..... .. . ..... . . . . ... .......... . 5,787 8,746 Total other long-term assets . .. .... .. .. . .. . ..... .. . ... . .. . . . ....... . .. . 1,179,440 534,475 TOTAL ASSETS .......... . . .... . . . .... .. .. . . . . ........ . . . ......... . . . 5,175,080 5,236,490 DEFERRED OUTFLOWS OF RESOURCES Unamortized loss on refunded debt ...... . .. .. .. .. . . ......... .. . . .. . .. ... . 90,333 71,931 Unrealized pension contributions and (gain)/loss (Note 7) ........ . .. . . . ... . . . . 172,695 117,074 Ash landfill (Note 3) ...... .. . . ....... . . ... .. .. .... .... . ... .. . . . . . .. . . . . 2,960 3,672 Total deferred outflows of resources .. . .. . .. . . . . . . ... .. . .... ..... .... ... . 265,988 192,677 TOTAL ASSETS AND DEFERRED OUTFLOWS ... ... . .. . ... . . ... . . . . .. . . . . . $5,441,068 $5!429,167 See notes to finandal statements 30 OPPD ANNUAL REPORT 2016

Omaha 'Public Power District Statements of Net Position as of December 31, 2016 and 2015 LIABILITIES 2016 2015 (thousands)

CURRENT LIABILITIES Electric system revenue bonds (Note 6) ............... . .......... . .. . .... .. . $ 45,595 $ 43,065 Electric system subordinated revenue bonds (Note 6) . . ................... .. .. . 95 95 NC2 separate electric system revenue bonds (Note 6) ................... . ........ . . 3,245 3,190 Accounts payable .............. ...... . . . .. . ......... . . ... . ..... .. . .. ....... . 82,624 95,218 Accrued payments in lieu of taxes .. . ... . .................. . . ....... .. . . . ..... . 33,022 31,185 Accrued interest . ... .. . . . .... . .... .. . . .......... . . . . .. . . .. .... .... .... . .. . . . 39,376 41,214 Accrued payroll ..... . ... ....... . ... . .. . .. . . . . ...... . .... ...... . .. ... . ... . .. . 25,471 26,597 NC2 participant deposits . ....... . ... .. .... . . . .. . .... . . . .. . . .... ... ..... . .. .. . 9,343 9,342 Decommissioning ... . ... ....... . .. .. . .... . .. . ...... .. ................. . .... . 124,685 Ot'ler (Note 2) . ... .. . ... ... . ..... .. .. .. . . .. . . .... . .... . .... ..... . . ... .. .. .. . 8,501 7,560 Total current liabilities ........ . ...... . .. .. . .... .. . . . . . . .. ....... .. . . .. ... . 371,957 257,466 LIABILITIES PAYABLE FROM SEGREGATED FUNDS (Note 2) .... . ... ..... . 35,626 30,495 LONG-TERM DEBT (Note 6)

Electric system revenue bonds - net of current ... .. ......... . .. ..... . ....... . 1,412,770 1,470,660 Electric system subordinated revenue bonds - net of current . ........... . . . .. . . . .. . 337,185 337,280 Electric revenue notes - commercial paper series ....................... ......... . 150,000 150,000 Minibonds ....... . .................................. . . ..... . . . ..... ... .. .. . 29,816 29,338 NC2 separate electric system revenue bonds - net of current .. . . .............. . ... . 215,215 222,720 Total long-term debt .......... ... ................... ....... .. . ...... . .. . . 2,144,986 2,209,998 Unamortized discounts and premiums .. . . ......... ....... . . . . . . .......... . . . . . 193,225 163,421 Total long-term debt - net ........ .... ... .. ... ....... . ..... . ....... ... ... . 2,338,211 2,373,419 OTHER LIABILITIES Decommissioning - net of current .. . ..... . . . . .. . ......... ... ..... .. ..... . . 1,124,912 375,915 Net pension liability (Note 7) ..................... ...... .... .... . . . ...... . 487,177 407,174 Other (Note 2) ................................ . . ...... ... ..... ... ..... . 27,715 21,376 Total other liabilities ......................... ...... .. . . . .... . . . . . . .. . 1,639,804 804,465 COMMITMENTS AND CONTINGENCIES (Note 15)

TOTAL LIABILITffiS ................ . .. .. . .. . .. .. ... . ........... . . . . . . 4,385,598 3,465,845 DEFERRED INFLOWS OF RESOURCES Rate stabilization reserve (Note 8) ... .. . ... ... . ....... . ... ........ . . .... . .. . 42,000 16,000 Unamortized gain on refunded debt. . .................... . . ..... . . .. ... . .. . 141 168 Total deferred inflows of resources . ........ .. . .......... . . . ...... ..... . . . 42,141 16,168 NET POSITION Net investment in capital assets .. . . . ..... . . . . ........ ... . .. . ...... ..... . . . 595,498 1,378,685 Restricted .......... .......... . .. .. . . . ... . ........ ... . . . . . .... . . ..... . . 50,183 50,069 Unrestricted ........ .......... . .. .. . ..... . . .......... ...... ... . ..... . . . 367,648 518,400 Total net position .... ..... .. .. .. . ... ... . .. . ..... ... . . ... . . . . ..... .. . 1,013,329 1,947,154 TOTAL LIABILITIES, DEFERRED INFLOWS AND NET POSITION ... .... .... . $5,441,068 $5,429,167 See notes to ~nandal statements OPPD ANNUAL REPORT 2016 31

Omaha Public Power District Statements of Revenues, Ex:penses and Changes in Net Position for the Years Ended December 31, 2016 and 2015 2016 2015 OPERATING REVENUES (thousands)

Retail sales .... ... .. . ... . .. ... . . ... . .. . .. . . . . . . . . .... .. . . . . ... . . ..... . . . . . . . $ 921,052 $ 904,793 Off-system sales .. ........ . . . . . .. ... . . . . ... .. . . . .. . . .... ... ... . . ... . . . .. . ... . 175,506 195,512 Other electric revenues ...... .. . . . .. . .. ... .. ... . ... . . . . .. . .. ... . .. .. . ...... .. . 29,918 30,930 Total operating revenues .. . ..... . . .. . . . .. ... . .. .. . . . . . ... .. . ... . . .. .. .... . 1,126,476 1,131,235 OPERATING EXPENSES Operations and maintenance Fuel ....... . ........... ... .. .. ....... .... .. .. .... . . . . . ... . .. . . . .. .. . . . . . 186,766 197,079 Purchased power .. . ...... . . ...... ... . ... . ... . . .. . .. ..... . .... . .... . . . ... . . 119,511 107,672 Production . ...... . .. . . .. . . .. . . . . .. .... . ... . . . .. .... . .. . . ... .. .. . .. . . . . . . . 252,312 282,149 Transmission . .... . . . . .. ..... . . . . . . . . . . . . .. ... . .. . . .. . ... ... . . .. . . ... . . .. . 35,681 32,995 Distribution ............ ....... ... . . . . . ...... .. . . . .. . . . .. . . . . .. . . . . ... .. . . 44,750 42,915 Customer accounts . . . . .. .. ... ......... . . . .. ... . . . .. . ... . . . .. . . . . . .. . . .... . 16,718 15,389 Customer service and information . . .. . . . . . ... . . . . ..... . . . ... . .. .. ..... . . ... . . 15,205 16,396 Administrative and general .. .... ..... . . .... . . .. .. ..... . . . ....... . .......... . 152,914 147,344 Total operations and maintenance . ... ...... . . . . . ..... . .. .. .. .... ...... .. .. . 823,857 841,939 Depredation and amortization . ... . . . ........ . .. .. . . ...... . ............ ... ... . 149,546 151,033 Decommissioning . . . . . ..... . .. . . .. .. . . . .. ....... . ... . . .. . . .. . ... .. . .... . ... . 17,576 5,161 Payments in lieu of taxes .... . . . . . . . . . . . . . . . . . .. . . . .. . . ..... ... .. . .. . ... .. . .. . 34,138 32,241 Total operating expenses . .. .. .. . ... . .. .. .. .. ....... . .. .... ..... . ..... .... . 1,025,117 1,030,374 OPERATING INCOME . . .. . . ...... . . . . . .. .... . . . . . . .. .. . . .......... . ... .... . 101,359 100,861 OTHER INCOME (EXPENSES)

Contributions in aid of construction .......... . . .. ........... . ............. . . . . . 17,918 15,063 Reduction of plant costs recovered through contributions in aid of construction .. . . . . . . (17,918) (15,063)

Decommissioning funds - investment income ......... . .. . . ... . . .. ..... . . . . . ... . . 9,374 4,078 Decommissioning funds - reinvestment ..... ... . ..... . ...... . ... . ....... . ...... . (13,929) (4,078)

Investment income ...................... .. ... . .... . .... .. . .. .. .. . .. . . ...... . 3,512 1,826 Allowances for funds used during construction ... .... . . . . . ...... .. . .. . ... .. . .... . 7,380 8,474 Products and services - net. . . ... ....... . ... .. . .. ... . .. . . ... . ...... . ...... . ... . 3,739 4,287 Other- net (Note 11) ........ ........... . . .. . . . . .. . ... . ... ... ...... . . ..... .. . 2,229 8,342 Total other income - net. ...... . . ................. . . . . . .... .... . ... . . ..... . 12,305 22,929 INTEREST EXPENSE . .... . . ...... . .. .. . . . . ..... ... . . . . ... . ........... ..... . 87,914 91,468 NET INCOME BEFORE SPECIAL ITEM . . . . . . ......... . . .. . . ..... . . . . . . . ..... . 25,750 32,322 SPECIAL ITEM (Note 13) . .. .. . . . . . . .. .. . ... . . ... ..... .. . . . . . . . . . ......... . . {959,575)

NET INCOME (LOSS) . ................ .. . .. . .. .. . .... . . . . . . .. ... . ..... . . . . . . {933,825) 32,322 NET POSITION, BEGINNIN'G OF YEAR . ........ .. .. ... . . . . ...... . ... . . ..... . 1,947,154 1,914,832 NET POSITION, END OF YEAR ... . . ... ... ..... .. . . ...... . ... .. . . ... .. . .. . . . $1,013,329 $1,947,154 See notes to financial statements 32 OPPD ANNUAL REPORT 2016

Omaha Public Power District Statements of Cash Flows for the Years Ended December 31, 2016 and 2015 2016 2015 CASH FLOWS FROM OPERATING ACTMTIES (thousands)

Cash received from retail customers . . .. .... .. .. . ... . ......... ... . ....... .... ... . . . . . . . $ 984,598 $ 948,559 Cash received from off-system counterparties ... .. . ... . .. . .... ... . . . ....... . ....... .. ... . 149,706 167,704 Cash received from insurance companies .. ... .... . . . . . . .. . . .. ... . .. ...... . . ......... .. . 2,500 Cash received from sale of nuclear fuel. . .... ..... ... .. . .. ..... .. . ... ..... . ............ . 787 Cash paid to operations and maintenance suppliers .... . ... . .. . ... . ... ...... . ........ . . . . (542,825) (556,105)

Cash paid to off-system counterparties . . . .... . ....... . ... . . .. . . . .. . ................ . . . . (102,470) (90,994)

Cash paid to employees .... ... . .. . .... . . . .. .. .. . . . . ... . . . . . . ... . . . .............. . . . . (155,644) (177,926)

Cash paid for in lieu of taxes and other taxes . ... ...... ... . . .. . ... . .. . . .......... . ...... . (32!301) {31,650)

Net cash provided from operating activities .. . .. ............ . ...... . .. .... .. . . .. ..... . . . 301,851 262,088 CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTMTIES Proceeds from long-term borrowings ....... . ....... ... . . . ...... ....... . . ... . . . ...... . . . 343,220 634,169 Principal reduction of debt. . ...... . . .. ... .. .... . . ..... . .. ....... . ... ..... . .. ...... . . . (3SO,OS7) (530,500)

Interest paid on debt . ... . . ....... . ... .. .. ..... .. . .. . . .. . .......... ... ... . . . ...... . . (132,127) (135A97)

Acquisition and construction of capital assets . .... . .... . . . . . . . . ...... . ..... .. . . . .... .. . . (14S,4S1) (202,760)

Proceeds from NC2 participants ......... . ... ...... ...... . .... ..... . . ....... . ........ . . 10,400 4,384 Contributions in aid of construction and other reimbursements .... ...... . ... ... . . . .. ...... . 19,973 12J82 Acquisition of nuclear fuel ........ . .. . ... .. . . . . .. .... . .. ........... ... . .. . . ... .. .... . (17!178) (9,443)

Net cash used for capital and related financing activities .. ....... . . .......... . .. .. ........ . (271,220) (226,865)

CASH FLOWS FROM INVFSTING ACTMTIES Purchases of investments ............ .. . .. ...... .... . . ... ................. . . . ..... . . . (1,245,734) (1,255m9J Maturities and sales of investments .... ... ........ . .................. . ........ ..... .. . . 1,217,839 1,216,779 Purchases of investments for decommissioning funds ... . . ... .... . . . .... . ... . .... . ...... . . (308,730) (236,039)

Maturities and sales of investments in decommissioning funds .. ..... ... .. . .. . .... . ....... . 299,949 230,879 Investment income ... . ................. . ... . ....... .. . . . .. . . ... . . . .. . . .. .. .. . . ... . . 11,847 2,115 Net cash used for investing activities ...................... .. .. . . . . . .. . . ....... .. . .... . . (24,829) (41,285)

CHANGE IN CASH AND CASH EQUIVALENTS ......... .. . ... . . ... . . . ... . . ... . ...... . 5,802 (6,062)

CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR ............ . ... . .... .. . . .. . . 7,847 13,909 CASH AND CASH EQUIVALENTS, END OF YEAR ...... . .. . ... . . ... . . . . .. .. . ...... . . . $ 13,649 $ 7,847 RECONCILIATION OF OPERATING INCOME TO NET CASH PROVIDED FROM OPERATING ACTMTIES Operating income . . .. .. .... . ...... ... ........... . .. . ... .. .......... . . .. . . ... ...... . $ 101,359 $ 100,861 Adjustments to reconcile operating income to net cash provided from operating activities Depreciation, amortization and decommissioning ............. . .. . ... . . . ....... . ..... . 147,691 156,194 Amortization of nuclear fuel ... ... . ... .. .. . ... . .............. ... . .. .. . . ....... . ..... . 21,693 21,048 Changes in assets and liabilities Accounts receivable ... .. . . . . ... ... . ... ..... .. ... . .. .. .. . ... .... . .. .............. . (33,233) 2,225 Fossil fuels . .. .. . ... . ..... . ... . ... . ....... . .. . .. .. . ... .. .. . .. ... .. . ..... .. . .. ... . 3,333 5,257 Materials and supplies ..... .. ...... . ... . ... . ... . ... . ..... .. . ....... .. .... ... . .. .. . S94 (5,734)

Accounts payable .. ... . .. . . . ..... .. .. . .... ... . . .. .. . ... . . .... ..... ... . . .... . . . .. . (17,237) (8,960)

Accrued payments in lieu of taxes .. . ... ... . .. . ... . ... . . . ..... .. . .... . . .. .. . .... . . . .. . 1,837 592 Accrued payroll ... .. . . ... .. . .. . . .... ..... ...... . . ... ....... ..... . . ....... .. .. ........ . (1,125) (9,445)

SPP deposit. ....... . . .. .. .. . .... . ... . . . ................... .. ... ..... .... .. . ... ....... . 1,000 zmo Rate stabilization reserve .. . .. . .. . ..... ...... ........ .................. ...... ... . ....... . 26,000 (25,000)

Regulatory asset- FPPA . .... .. ........ ...... .. ......... . .. ....... .. . . ... . . ... ... . . .... . . 6,115 19,166 Regulatory asset - FCS decommissioning ......... ... ...... ...... . ........ .. . .. ..... . ... .. . (4,985) (2,580)

Regulatory asset- FCS recovery costs ... . . .. ..... ... ....... . . . . ........... . . ... . ..... . .. . . 12,363 12,433 Regulatory asset - FCS outage costs ... .. . .. ..... ... ... ... . . . . . ....... .. .. .. . . .... .. ... . .. . 12,087 (21,110)

Other . .......... .... . .. . . .. . . . ....... .... . ...... .. ..... ................ . .. . ..... ...... . 24,359 15)41 Net cash provided from operating activities .. .. . ... . ............... .. .. .. ... .. . .... . . . . . $ 301,851 $ 262,088 NONCASH CAPITAL ACTMTIES Utility plant additions from outstanding liabilities . .. . ....... . ... . .... . .. .. ..... . .. .. . .. . . $ 11,216 $ 21,373 OPPD ANNUAL REPORT 2016 33 See notes to ~nancial statements

Notes to Financial Statements as of and for the Years Ended December 31, 2016 and 2015

1.

SUMMARY

OF SIGNIFICANT ACCOUNTING POLICIES Organization and Business - The Omaha Public Power District (OPPD or Company), 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 is generally 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 are presented in accordance with generally accepted accounting principles (GAAP) 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).

OPPD applies the accounting policies established in the GASB Codification Section RelO, Regulated Operations. This guidance permits an entity with cost-based rates to include costs in a period other than the period in which the costs would be charged to expense by an unregulated entity if it is probable that these costs will be recovered through rates charged to customers. This guidance also permits an entity to defer revenues by recognizing liabilities to cover future expenditures. The guidance applies to OPPD because the rates of the Company's regulated operations are established and approved by the governing board.

If, as a result of changes in regulation or competition, the ability to recover these assets and to satisfy these liabilities would not be assured, 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, any impairment to the carrying costs of deregulated plant and inventory assets would be determined. As a result of the Board decision in June 2016 to cease operations at Fort Calhoun Station (FCS), the related assets were determined to be impaired and the regulatory assets for outage and depreciation costs were written off. There were no other write-downs of remaining regulatory assets for the year ended December 31, 2016. There were no write-downs of regulatory assets for the year ended December 31, 2015. See Utility Plant and Regulatory Assets and Liabilities sections of Note 1 and Note 13.

Oassification of Revenues and Expenses- Revenues and expenses related to providing energy services in connection with the Company's principal ongoing operations are classified as operating. All other revenues and expenses are classified as non-operating and reported as other income (expenses) in the Statements of Revenues, Expenses and Changes in Net Position.

Revenue Recognition - Electric operating revenues are recognized as earned. 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.

Cash and Cash Equivalents- The operating fund account is called the Electric System Revenue Fund (Note 4). Highly liquid investments for the Electric System Revenue Fund with an original maturity of three months or less are considered to be cash equivalents. Restricted cash and cash equivalents, if any, are included in the Special Purpose Fund balances.

Accounts Receivable- Accounts Receivable includes outstanding amounts from customers and an estimate for unbilled revenues.

An estimate is made for the Reserve for Uncollectible Accounts for retail customers based on an analysis of Accounts Receivable, economic conditions affecting customers and historical write-offs net of recoveries. Additional amounts may be included based on the credit risks of significant parties. Accounts Receivable includes $49,881,000 and $43,129,000 in unbilled revenues as of December 31, 2016 and 2015, respectively. Accounts Receivable was reported net of the Reserve for Uncollectible Accounts of $1,500,000 and

$900,000 as of December 31, 2016 and 2015, respectively.

Nuclear Fuel Held for Sale- The Company maintains nuclear fuel held for sale which is valued at fair value (Note 13).

Materials and Supplies -The Company maintains inventories that are valued at average cost. FCS materials and supplies are valued at t1e lower of cost or fair value (Note 13).

Utility Plant- Utility plant is stated at cost, which includes property additions, replacements of property units and betterments.

Maintenance and replacement of minor items are charged to operating expenses. Costs of depreciable units of electric plant retirements are eliminated from electric plant accounts by charges, less salvage plus removal expenses, to the accumulated depreciation account.

Electric plant includes both tangible and intangible assets. Intangible assets include costs related to regulatory licenses, software licenses and other rights to use property. Electric plant includes construction work in progress of $25,617,000 and $400,270,000 as of December 31, 2016 and 2015, respectively.

34 OPPD ANNUAL REPORT 2016

The following table summarizes electric plant balances as of December 31, 2015, activity for 2016 and balances as of December 31, 2016 (in thousands).

2015 Additions Retirements Impairments 2016 Electric plant $5,487,554 $139,821 $(29,644) $ (1,292,676) $ 4,305,055 Less accumulated depreciation and amortization 2,185,262 153,974 (31,573) (564,002) 1,743,661 Electric plant - net $313021292 $(141153) $ 11929 $ (7281674) $ 215611394 Allowances for funds used during construction (AFUDC) approximates OPPD's current weighted average cost of debt. AFUDC was capitalized as a component of the cost of utility plant. These allowances for both construction work in progress and nuclear fuel were computed at 3.4% for both years ended December 31, 2016 and 2015.

Long-lived assets, such as property, plant and equipment are periodically reviewed for impairment or whenever changes in circumstances indicate that the carrying amount of an asset may not be recoverable. When the magnitude of the decline in service utility is significant and not part of the asset's normal life cycle, the asset is considered impaired.

As a result of the Board decision in June 2016 to cease operations at FCS, the Electric Plant in Service in the amount of $852,237,000 and the Accumulated Depreciation Reserve in the amount of $564,002,000 were written off as of December 31, 2016, in accordance with GAAP, and recorded to the Special Item in the Statements of Revenues, Expenses and Changes in Net Position. There were no other write-downs for impairments for both years ended December 31, 2016 and 2015 (Note 13).

Contributions in Aid of Construction (CIAC) - Payments are received from customers for construction costs, primarily relating to the expansion of the electric system. FERC guidelines are followed in recording CIAC. These guidelines direct the reduction of utility plant assets by the amount of contributions received toward the construction of utility plant. CIAC is recorded as other income and offset by an expense in the same amount representing the recovery of plant costs. ClAC primarily includes payments for transmission, distribution and generating station assets. This allows for compliance with GASB Codification Section N50, Nonexchange Transactions, while continuing to follow FERC guidelines.

The following table summarizes the sources of CIAC as of December 31 (in thousands).

2016 2015 Transmission and distribution $ 14,678 $ 9,082 Nebraska City Station Unit 2 (NC2) turbine replacement 1,769 NC2 participants 1,495 5,981 FCS dry cask storage _______@)

Total $ 17,918 Depreciation and Amortization- Depreciation for assets is computed on the straight-line basis at rates based on the estimated useful lives of the various classes of property. Depreciation expense for depreciable property averaged approximately 3.3% and 3.1% for the years ended December 31, 2016 and 2015, respectively. Depreciation is calculated using the following estimated lives:

• Generation 40 to 70 years

• Transmission and Distribution 15 to 75 years

• General 6 to 25 years Amortization of nuclear fuel is based on the cost thereof, and is recorded as nuclear fuel expense of $21,771,000 and $21,048,000 for the years ended December 31, 2016 and 2015, respectively. Amortization was prorated by fuel assembly in accordance with the thermal energy that each assembly produced through October 2016 when FCS ceased operations (Note 13).

The FCS regulatory asset for recovery costs incurred in 2012 and 2013 were deferred as a regulatory asset based on Board approval. These recovery costs were not included in the impairment, but will continue to be amortized (and collected through rates) through 2023 as these costs benefit current and future ratepayers. The amortization was $1,854,000 and $0 for the years ended December 31, 2016 and 2015, respectively. Prior to the transition to decommission FCS in November 2016, this expense was amortized as an operating expense (Note 13).

Intangible assets are amortized over their expected useful life. Amortization of intangible assets is included with depreciation and amortization expense in these financial statements. The amortization was $5,855,000 and $5,971,000 for the years ended December 31, 2016 and 2015, respectively.

NC2 was placed in commercial operation in 2009. Half of the unit's output is sold under 40-year Participation Power Agreements (PPAs). Certain participants funded their share of construction costs with NC2 Separate Electric System Revenue Bonds. These participants are billed for the debt OPPD ANNUAL REPORT 2016 35

Notes to Financial Statements as of and fo r the Years Ended December 31, 201 6 and 2015 service related to these bonds. The amounts recovered for debt service for the electric plant construction and other costs are included in off-system sales revenues. The revenues related to principal repayment will equal related depreciation and other deferred NC2 expenses over the 40-year term of the PPAs. Aregulatory asset was established to equate expenses and the amount included in off-system sales revenues for principal repayment in order to maintain revenue neutrality in the interim years. This regulatory asset will increase annually until 2030 when principal repayments begin exceeding depreciation and other deferred expenses. After 2030, the regulatory asset will be reduced annually by recognizing deferred depreciation and other deferred expenses until its elimination in 2049, which is the end of the initial term of the PPAs.

In 2004, the Board of Directors approved a change in the depreciation estimate for FCS production plant assets to 2043. This estimate was 10 years beyond the term of FCS's operating license. Aregulatory asset was established for the difference in depreciation expense resulting from the use of the estimated economic life of the asset versus the license term. The reduction in depreciation expense was recorded each year as a regulatory asset in deferred charges until June 30, 2016. The Regulatory Asset for FCS Deferred Depreciation in the amount of $79,793,000 was written off as ofDecember 31, 2016, as a result of the Board decision to cease operations at FCS and recorded to the Special Item in the Statements of Revenues, Expenses and Changes in Net Position (Note 13).

Also as a result of the Board decision in June 2016 to cease operations at FCS, there was a write-off of the accumulated depreciation reserve related to FCS assets. The write-off was $564,002,000 as of December 31, 2016, and recorded to the Special Item in the Statements of Revenues, Expenses and Changes in Net Position (Note 13).

The Board of Directors approved a resolution in June 2014 for the Future Power Generation Plan (Plan). The Plan included changes to the generation portfolio, including the retirement in 2016 of North Omaha Station Units 1, 2 and 3 (NOl, N02, N03), to comply with existing and future environmental regulations. The estimated useful lives of NOl, N02 and N03 were reduced as a result of the planned future retirement. This change in estimate resulted in additional depreciation expense of $2,629,000 and $9,923,000 for the years ended December 31, 2016 and 2015, respectively (Note 14).

N01, N02 and N03 will be utilized for capacity purposes on natural gas through 2018 as a result of the Board decision in June 2016 to cease operations at FCS. NO! and N02 have been fully depreciated as of April2016. The useful life of N03 was extended through 2018 beginning in July 2016 (Note 14).

Nuclear Fuel Disposal Costs- Permanent disposal of spent nuclear fuel is the responsibility of the federal government under an agreement entered into with the Department of Energy (DOE). Under the agreement, there was a fee of one mill per kilowatt-hour on net electricity generated and sold from FCS. The collection of this fee was suspended in May 2014 until the DOE completes a fee adequacy study that complies with the Nuclear Waste Policy Act or until Congress enacts an alternative fuel-management plan. As a result of the suspension, there were no nuclear fuel disposal fees paid in 2016 or 2015.

The agreement required the federal government to begin accepting high-level nuclear waste by January 1998; however, the DOE does not have a storage facility. In May 1998, the United States Court of Appeals confirmed the 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 2006, the DOE agreed to reimburse OPPD for allowable costs for managing and storing spent nuclear fuel and high-level waste incurred due to the DOE's delay in accepting waste. Applications are submitted periodically to the DOE for reimbursement of costs incurred for the storage of high-level nuclear waste.

Nuclear Decommissioning- Based on the decommissioning plan established in 1983, the Board of Directors approved the collection of nuclear decommissioning costs using an independent engineering study of the costs to decommission FCS. The Company established a Decommissioning Funding Plan for FCS in 1990 in compliance with Nuclear Regulatory Commission (NRC) regulations. Its purpose is to accumulate funds to decommission the radiated portions of FCS as defined by the NRC. The NRC's funding requirement is based on a defined cost formula and adjusted annually. The Company established a Supplemental Decommissioning Funding Plan for FCS in 1992 to accumulate funds to fully decommission FCS. This includes funds for additional costs beyond the NRC minimum that are needed to decommission the radiated plant, the fuel facility and the non-radiated plant.

Based on cost estimates, inflation rates and fund earnings projections, no funding was necessary from 2001 through 2013 for either plan.

However, an analysis by the Company and an outside consultant determined that additional funding was needed for the Supplemental Decommissioning Fund beginning in 2014 to meet the estimated cost to fully decommission FCS. OPPD temporarily suspended funding for the Supplemental Decommissioning Fund in September 2015 to reduce expenditures and the related impact on rates. In December 36 OPPD ANNUAL REPORT 201 6

2015, the Board of Directors authorized the use of regulatory accounting to match the decommissioning expense to the amount funded. The annual funding amount was $0 and $5,161,000 for the years ended December 31,2016 and 2015, respectively (Note 13). Funding resumed in january 2017.

The Supplemental Decommissioning Fund was reduced by $575,000 for the 2016 expenditures incurred after ceasing operations and beginning the decommissioning process at FCS.

The estimated current cost to decommission the plant for the NRC-required obligations is $1,249,597,000 as of December 31, 2016. This estimated cost is based upon a third-party, site-specific cost study completed in February 2017 (Note 13). The decommissioning cost liability, which includes a current and long-term portion in the Statements of Net Position, will be adjusted annually for inflation and any significant changes in the cost estimate.

Decommissioning funds are reported at fair value. Investment income was $9,374,000 and $4,078,000 for the years ended December 31, 2016 and 2015, respectively. The fair value of the decommissioning funds increased $99,000 and decreased $4,594,000 for the years ended December 31, 2016 and 2015, respectively.

Pension- Information about the fiduciary net position of the OPPD Retirement Plan and additions to/deductions from the fiduciary net position have been determined on the same basis as they are reported for purposes of measuring the net pension liability, deferred outflows of resources, deferred inflows of resources and pension expense. Benefit payments are recognized when distributed in accordance with the benefit terms.

Investments are reported at fair value (Note 7).

Regulatory Assets and liabilities - Rates for regulated operations are established and approved by the Board of Directors. The provisions of GASB Codification Section Re10, Regulated Operations, are applied. This guidance provides that regulatory assets are rights to additional revenues or deferred expenses, which are expected to be recovered through customer rates over some future period. Regulatory liabilities are reductions in earnings (or costs recovered) to cover future expenditures.

The Company adopted the GASB accounting standards for the financial accounting and reporting of pension plans in 2015. These standards required the Company to recognize a liability for the net pension obligation on the Statement of Net Position. In December 2014, the Board of Directors authorized the use of regulatory accounting for pension costs to establish a regulatory asset to match the pension expense to the amounts funded and the cost recovery through rates.

The Board of Directors authorized the use of regulatory accounting in 2012 for significant, unplanned operations and maintenance costs at FCS incurred to address concerns from the NRC and enhance operations. These recovery costs are being amortized over a ten-year period which commenced in 2013 with FCS's return to service as they continue to benefit future ratepayers (Note 13).

In 2004, the Board of Directors approved a change in the depreciation estimate for FCS production assets to 2043. This estimate was ten years be-yond the term of the operating license. The regulatory asset for FCS depreciation was written off as a result of the Board decision to cease operations at FCS and recorded to the Special Item in the Statements of Revenues, Expenses and Changes in Net Position (Note 13).

As previously noted, an NC2 regulatory asset was established to maintain revenue neutrality for transactions with participants who funded their share of construction costs with NC2 Separate Electric System Revenue Bonds. NC2 depreciation and other deferred expenses will equal the amount included in off-system sales revenue for principal repayments.

APlanned Nuclear Refueling Outage (Outage), as defined by OPPD, is a regularly scheduled refueling outage at FCS. These Outages were periodically completed to maintain and enhance the performance and efficiency of station operations, which benefited the station over the next operating cycle of production. The Board of Directors authorized regulatory accounting treatment for qualifying Outage costs to allow the use of the defer-and-amortize method. Eligible Outage costs were deferred as a regulatory asset and amortized to expense over the subsequent operating cycle. There was an outage at FCS in April2015 and the remaining balance of this FCS outage deferral was fully amortized to expense in 2016.

The Board of Directors also authorized the use of regulatory accounting for debt issuance costs in 2012 because of new accounting standards which would have required these costs to be expensed in the period incurred. These costs are amortized over the life of the associated bond issues consistent with the rate methodology.

AFuel and Purchased Power Adjustment (FPPA) was implemented in the retail rate structure in 2010. The Board of Directors authorized the use of regulatory accounting to maintain revenue neutrality by matching retail revenues attributed to fuel and purchased power costs with the actual costs incurred. This regulatory asset represents the rights to additional revenues based on incurred expenses due to under-recoveries of fuel and purchased power costs. This regulatory asset or FPPA, included in Other Current Assets, was $2,118,000 and $8,233,000 as ofDecember 31, 2016 and 2015, respectively (Note 2). The FPPA regulatory assets were reduced for customer collections of $8,233,000 and $27,399,000 for the years ended December 31, 2016 and 2015, respectively.

OPPD ANNUAL REPORT 201 6 37

Notes to Financial Statements as of and for the Years Ended December 31, 2016 and 2015 The Board of Directors authorized the use of regulatory accounting for the unfunded supplemental decommissioning costs in December 2015. The use of regulatory accounting allows the matching of decommissioning expense to the amounts funded.

The unfunded portion of the liability based on NRC-required obligations was recorded as a Deferred Decommissioning Regulatory Asset. Upon completion of a third-party, site-specific cost study, the decommissioning liability increased, which resulted in an increase to the regulatory asset (Note 13).

The following table summarizes the balances of regulatory assets as of December 31, 2015, activity for 2016 and balances as of December 31, 2016 (in thousands) (Note 13).

2015 Additions Reductions 2016 Regulatory asset - pension $290,100 $ 39,383 s (15,001) $ 314,482 Regulatory asset - FCS recovery costs 117,449 (14,835) 102,614 Regulatory asset - FCS depreciation 74,628 5,165 (79,793)

Regulatory asset - NC2 45,650 4,449 (4,169) 45,930 Regulatory asset - FCS outage costs 21,110 1,986 (23,096)

Regulatory asset - financing costs 10,812 1,542 (3,382) 8,972 Regulatory asset- FPPA 8,233 2,118 (8,233) 2,118 Regulatory asset - FCS decommissioning 2,580 896,989 (35,476) 864,093 Total $570,562 $951,632 $ (183,985) $1,338,209 Regulatory liabilities are deferred inflows of resources and include the Rate Stabilization Reserve. This reserve was established to help maintain stability in OPPD's long-term rate structure (Note 8). In December 2016, there was a transfer of $26,000,000 to the reserve and a transfer of $25,000,000 from the reserve in 2015. The balance of the Rate Stabilization Reserve was $42,000,000 and $16,000,000 as of December 31, 2016 and 2015, respectively.

Special Item- As a result of the june 2016 Board decision to cease operations at FCS, the related assets were considered impaired and recorded as a Special Item. ASpecial Item is defined as a significant transaction or other event within the control of management that is either unusual in nature or infrequent in occurrence. This event qualifies as a Special Item as the transaction was deemed to be infrequent in occurrence.

Net Position - Net position is reported in three separate components on the Statements of Net Position. Net Investment in Capital Assets is the net position share attributable to net utility plant assets reduced by outstanding related debt. Restricted is the share of net position that has usage restraints imposed by law or by debt covenants, such as certain revenue bond funds and segregated funds, net of related liabilities. Unrestricted is the share of net position that is neither restricted nor invested in capital assets.

Use of Estimates- The preparation of financial statements in conformity with GAAP 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.

Environmental Matters- OPPD operates ash landfills at the North Omaha Power Station and the Nebraska City Power Station locations. Closure and postclosure care financial assurance information is provided to the Nebraska Department of Environmental Quality on an annual basis as required by law. There is no current or proposed GASB statement providing accounting treatment for closure and postclosure care costs of these ash landfills. In connection with the adoption of GASB Statement No. 76, The Hierarchy of Generally Accepted Accounting Principles for State and Local Governments (GASB 76), the Company reassessed its accounting treatment related to ash landfills and the closure and postclosure care costs to be incurred in the future. The Company concluded the application of analogous authoritative literature within GASB Statement No. 18, Accounting for Municipal Solid Waste Landfill Closure and Postclosure Care Costs (GASB 18), was appropriate to this situation as the accounting treatment for this situation is not specified in authoritative GAAP. As a result, effective January 1, 2016, the Company changed its method of accounting for this situation to apply the provisions of GASB 18, which requires retrospective application upon adoption to the earliest year presented in the financial statements.

38 OPPD ANNUAL REPORT 2016

The adoption of the statement resulted in OPPD recognizing a liability for closure and postclosure care costs while amortizing those costs to match the expense and benefit from the use of the landfill. This will allow OPPD to align better with industry practices (Note 3).

There were no pollution remediation obligations identified as of December 31, 2016 and 2015.

Recent Accounting Pronouncements, adopted- GASB issued Statement No. 82, Pension Issues- an amendment of GASB Statements No. 67, No. 68 and No. 73 (GASB 82), in March 2016. This statement addresses issues regarding the presentation of payroll-related measures in required supplementary information, the selection of assumptions and the treatment of deviations from the guidance in an Actuarial Standard of Practice for financial reporting purposes, and the classification of payments made by employers to satisfy employee (plan member) contribution requirements. The Company early adopted this statement effective January 1, 2015. The adoption affected the presentation of the Required Supplementary Information, but did not affect OPPD's financial position, results of operations or cash flows.

In 2016, the Company adopted the provisions of GASB Statement No. 72, Fair Value Measurement and Application (GASB 72), issued in February 2015 effective for reporting periods beginning after June 15, 2015. The implementation of this statement enhanced the financial statement note disclosures. This statement had no impact on OPPD's financial position, results of operations or cash flows (Notes 4, 5).

GASB issued Statement No. 76, The Hierarchy of Generally Accepted Accounting Principles for State and Local Governments, in June 2015. The provisions of this statement increase the consistency in how GAAP is applied. It has three main purposes: (1) raising the category of GASB Implementation Guides in the GAAP hierarchy, thus providing the opportunity for broader public input on implementation guidance; (2) emphasizing the importance of analogies to authoritative literature when the accounting treatment for an event is not specified in authoritative GAAP; and (3) requiring the consideration of consistency with the GASB Concepts Statements when evaluating accounting treatments specified in non-authoritative literature.

The implementation of this pronouncement resulted in the Company applying the clarified GAAP hierarchy as it considered relevant accounting literature to apply to various events during the year ended December 31, 2016. The Company adopted GASB 76 effective January 1, 2016 (Note 3).

Recent Accounting Pronouncements, not yet adopted- GASB issued Statement No. 75, Accounting and Financial Reporting for Postemploy-ment Benefits Other Than Pensions, in June 2015. The objective of this statement is to improve accounting and financial reporting by state and local governments for postemployment benefits other than pensions. This statement is effective for reporting periods beginning after June 15, 2017. The impact to OPPD's financial statements is being evaluated.

GASB issued Statement No. 83, Certain Asset Retirement Obligations (GASB 83), in November 2016, effective for reporting periods beginning after June 15, 2018. The objective of this statement is to provide guidance on the recognition and measurement of certain Asset Retirement Obligations (AROs), including obligations that may not have been previously reported. This statement establishes criteria for determining the timing and pattern of recognition of a liability and a corresponding deferred outflow of resources for AROs. GASB 83 excludes ash landfills from this guidance. This statement requires that recognition occur when the liability is both incurred and can be reasonably estimated. The impact to OPPD's financial statements is being evaluated.

2. OTHER ASSETS AND OTHER LIABILITIES DETAil BAlANCES Current Assets - Other The composition as of December 31 was as follows (in thousands):

2016 2015 Regulatory asset - FCS recovery costs $ 14,836 $ 14,836 Prepayments 8,779 7,530 Deposit with SPP 3,000 4,000 Regulatory asset- FPPA 2,118 8,233 Regulatory asset - financing costs 602 654 Interest receivable 570 602 Sulfur dioxide allowance inventory 134 378 Transmission congestion rights (Note 9) 19 97 Regulatory asset- FCS outage costs 21,110 Other 4 Total $ 30,058 $ 57,444 OPPD ANNUAL REPORT 2016 39

Notes to Financial Statements as of and for the Years Ended December 31, 201 6 and 2015 Other Long-Term Assets - Regulatory Assets The composition as of December 31 was as follows (in thousands):

2016 2015 Regulatory asset- FCS decommissioning (net of current) $ 717,093 $ 2,580 Regulatory asset - pension 314,482 290,100 Regulatory asset- FCS recovery costs (net of current) 87,778 102,613 Regulatory asset- NC2 45,930 45,650 Regulatory asset- financing costs (net of current) 8,370 10,158 Regulatory asset - FCS depreciation 74,628 Total $1,173,653 $525,729 Other Long-Term Assets - Other The composition as of December 31 was as follows (in thousands):

2016 2015 Job orders $ 3,439 $ 4,766 Other 2,348 3,980 Total s 5,787 $ 8,746 Current Liabilities - Other The composition as of December 31 was as follows (in thousands):

2016 2015 Unearned revenues $ 2,278 $ 2,307 Ash landfill (Note 3) 2,211 349 Auction revenue rights (Note 9) 1,236 766 Deposits 572 501 Payroll taxes and other employee liabilities 338 361 Other 1,866 3,276 Total $ 8,501 $ 7,560 Liabilities Payable from Segregated Funds The composition as of December 31 was as follows (in thousands):

2016 2015 Customer deposits $21,608 $21,982 Transmission project 3,620 Incurred but not presented (IBNP) reserve 3,483 3,574 Customer advances for construction 2,668 2,439 Other 4,247 2,500 Total $35,626 $30,495 Other Liabilities - Other The composition as of December 31 was as follows (in thousands):

2016 2015 Unearned revenues (net of current) $ 15,062 $ 6,463 Ash landfill (net of current) (Note 3) 7,884 9,960 Workers' compensation reserve 1,399 1,545 Capital purchase agreement 1,209 1,469 Public liability reserve 308 121 Other 1,853 1,818 Total $ 27,715 $21,376 40 OPPD ANNUAL REPORT 20 16

3. ACCOUNTING PRINCIPLE CHANGE OPPD operates ash landfills at the North Omaha Power Station and the Nebraska City Station locations. Closure and postclosure care financial assurance information is provided to the Nebraska Department of Environmental Quality on an annual basis as required by law. In connection with the adoption of GASB 76, as discussed in Note 1, the Company reassessed its accounting treatment related to ash landfills maintained by the Company and the closure and postclosure care costs to be incurred in the future. The Company concluded the application of analogous authoritative literature within GASB 18 was appropriate for this situation as the accounting treatment for this situation is not specified in authoritative GAAP. As a result, effective January 1, 2016, the Company changed its method of accounting for this situation to apply the provisions of GASB 18, which requires retrospective application upon adoption to the earliest year presented in the financial statements.

Assumptions used in determining the liability for the ash landfill are as follows:

• Landfill profiles based on periodic state provided surveys completed every 5 years

• Escalation factors used in interim reporting periods

• Top area and side slope area closure costs per acre The adoption of the statement resulted in OPPD recognizing a liability for closure and postclosure care costs while amortizing those costs to match the expense and benefit from the use of the landfill. This will allow OPPD to align better with industry practices.

Charges for ash landfill depletion for years prior to 2015 are reflected in the 2015 beginning net position balance. The adjustment to the January 1, 2015 Net Position for prior years' depletion was SM81,000. The result of adopting GASB 18 is presented below for OPPD's 2015 financial statements.

(As originally Statements of Net Position (As reported) reported) 2015 2015 Utility Plant (thousands)

Accumulated depreciation and amortization $(2J85,262) $ (2,183,267)

Total utility plant - net 3,389,679 3,391,674 Deferred Outflow of Resources Ash landfill 3,672 Total deferred outflows of resources 192,677 189,005 Current Liabilities Ash landfill 349 Total current liabilities 257,466 257,117 Other Liabilities Ash landfill 9,960 Total other liabilities 804,465 794,505 Net Position Net investment in capital assets 1,378,685 U80,680 Umestricted 518,400 525,037 Total net position $1,947,154 $1,955,786 (As originally Statements of Revenues, Expenses and Changes in Net Position (As reported) reported) 2015 1th d)

, ousan s 2015 1

Operating Expenses Fuel $ 197,079 $ 195,128 Total operations and maintenance 841,939 839,988 Change in Net Position Net income 32,322 34,273 Net position, beginning of year $1,914,832 $1,921,513 Net position, end of year $1,947,154 $1,955,786 OPPD ANNUAL REPORT 2016 41

Notes to Financial Statements as of and for the Years Ended December 31, 201 6 and 2015 (As originally Statements of Cash Flows (As reported) reported) 2015 2015 (thousands)

Cash Flows From Operating Activities Cash paid to operations and maintenance suppliers s(556,105) $(554,110)

Net cash provided from operating activities 262,088 264,083 Cash Flows From Capital and Related Financing Activities Acquisition and construction of capital assets (202,760) (204,755)

Net cash used for capital and related financing activities (226,865) (228,860)

Reconciliation of Operating Income to Net Cash Provided From Operating Activities Operating income 100,861 102,812 Other 15,141 15,185 Net cash provided from operating activities $262,088 $264,083

4. FUNDS AND INVESTMENTS Funds of OPPD were as follows:

Electric System Revenue Fund and NC2 Separate Electric System Revenue Fund - These funds are to be used for operating activities for their respective electric system. Cash and cash equivalents in the Electric System Revenue Fund are shown separately from investments on the Statements of Net Position.

Electric System Revenue Bond Fund, Electric System Subordinated Revenue Bond Fund and NC2 Separate Electric System Revenue Bond Fund- These funds are to be used for the retirement of their respective revenue bonds and the payment of the related interest and reserves as required. Investments with maturity dates within the next year are designated as current.

Electric System Construction Fund and NC2 Separate Electric System Capital Costs Fund - These funds are to be used for capital improvements, additions and betterments to and extensions of their respective electric system.

Segregated Fund - Rate Stabilization -This fund is to be used to help stabilize rates through the transfer of funds to operations as necessary. Since there is no funding requirement for the Rate Stabilization Reserve, this fund also may be used to provide additional liquidity for operations as necessary (Note 8).

Segregated Fund - Other- This fund represents assets held for payment of customer deposits, refundable advances, OPPD's self-insured health insurance plans (Note 7), and certain other liabilities.

The following table summarizes the balances of the Segregated Fund* Other as of December 31 (in thousands).

2016 2015 Customer deposits and advances $ 24,384 $ 24,699 Self-insurance 6,711 6,577 Other 5,222 3,669 Total $ 36.317 $ 34,945 Decommissioning Funds- These funds are for the costs to decommission FCS. The Decommissioning Funds are held by an outside trustee in compliance with the decommissioning funding plans approved by the Board of Directors. The 1990 Plan was established in accordance with NRC regulations for the purpose of discharging the obligation to decommission FCS. 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.

42 OPPD ANNUAL REPO RT 2016

The following table summarizes the balances of the Decommissioning Funds as of December 31 (in thousands).

2016 2015 Decommissioning Trust - 1990 Plan $285,838 $278,674 Decommissioning Trust -1992 Plan 96,296 94,660 Total $382,134 $373,334 The above table includes interest receivables of $536,000 and $666,000 for December 31, 2016 and 2015, respectively.

Fair Value of Investments -Fair values in most cases are externally provided by the trustees that manage the funds. The trustees frequently utilize third-party pricing services to assist in their valuations (Note 5). The fair value of investments was as follows as of December 31 (in thousands).

2016 2015 Weighted Average Weighted Average Investment Type Fair Value Maturity (Years) Fair Value Maturity (Years)

Money market funds $ 66,472 $ 39,686 U.S. government securities 579,195 0.9 661,255 1.6 Mutual funds 207,444 198,764 Commercial paper 69,272 0.1 506 0.5 Corporate bonds and other debentures 70,518 1.7 54,812 0.4 Total $992,901 $955,023 Portfolio weighted average maturity 0.7 1.2 The above table excludes interest receivables related to the Decommissioning Trusts of $536,000 and $666,000 for December 31, 2016 and 2015, respectively.

Interest Rate Risk- The investment in relatively short-term securities reduces interest rate risk, as evidenced by its portfolio weighted average maturity of 0.7 and 1.2 years as of December 31, 2016 and 2015, respectively. In addition, OPPD is a buy-and-hold investor, which minimizes interest rate risk.

Credit Risk - OPPD's investment policy complies with bond covenants and state statutes for governmental entities, which limit investments to investment-grade fixed income obligations. The Company was in full compliance with bond covenants and state statutes as of December 31, 2016 and 2015.

Custodial Credit Risk- Bank deposits were entirely insured or collateralized with securities held by OPPD or by its agent in OPPD's name at December 31, 2016 and 2015. All investment securities are delivered under contractual trust agreements.

5. FAIR VALUE MEASUREMENTS OPPD accounts for fair value in accordance with GASB 72, which defines fair value, establishes methods for measuring fair value by applying one of three observable valuation approaches (market approach, income approach and cost approach) and establishes required disclosures about fair measurements.

Fair value is the exchange price that would be received to sell an asset or paid to transfer a liability in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants at the measurement date.

GASB 72 establishes a fair value hierarchy that prioritizes the inputs used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in an active market for identical assets or liabilities and the lowest priority to unobservable inputs. Financial assets and liabilities are classified in their entirety based on the lowest level input that is significant to the fair value measurement. The three levels of fair value hierarchy defined in GASB 72 are as follows:

Levell: Quoted prices are available in active markets for identical assets or liabilities as of the reporting date. Active markets are those in which transactions for the asset or liability occur in sufficient frequency and volume to provide pricing information on an ongoing basis.

OPPD ANNUAL REPORT 2016 43

Notes to Financial Statements as of and fo r the Years Ended December 31, 201 6 and 2015 Level 2: Inputs are other than quoted market prices in the active markets included in Levell, which are either directly or indirectly observable for the asset or liability as of the reporting date. Level 2 inputs include the following:

• quoted prices for similar assets or liabilities in active markets;

• quoted prices for identical assets or liabilities in inactive markets;

• inputs other than quoted prices that are observable for the asset or liability;

• inputs that are derived principally from or corroborated by observable market data by correlation or other means.

Level 3: Pricing inputs include significant inputs that are unobservable and cannot be corroborated by market data. Level 3 assets and liabilities are valued based on internally developed models and assumptions or methodologies using significant unobservable inputs.

The fair value of investments in most cases is externally provided by the trustees that manage the funds. The trustees frequently utilize third-party pricing services to assist in their valuations.

The following tables summarize in accordance with the fair value hierarchy the Company's assets that are accounted for and reported at fair value on a recurring basis by level as of December 31, 2016 and 2015 (in thousands):

2016 Total Levell Level2 Level3 Money market funds $ 66,473 $ $ 66,473 $

Mutual funds 107,532 107,532 U.S. government securities 579,195 579,195 Corporate bonds and other debentures 70,518 70,518 Commercial paper 69,272 69,272 Total fair value measurement by level $892,990 $107,532 $785,458 $

Investments measured at net asset value (NAV)

Mutual funds 99,911 Total Investments measured at fair value s 992,901 2015 Total Levell Level2 Level3 Money market funds $ 39,686 $ $ 39,686 s Mutual funds 103,272 103,272 U.S. government securities 661,255 661,255 Corporate bonds 54,812 54,812 Commercial paper 506 506 Total fair value measurement by level $859,531 $103,272 s 756,259 s Investment measured at NAV Mutual funds 95,492 Total Investments measured at fair value $955,023 VALUATION METHODOLOGIES Money Market Funds: The fair value of shares in money market funds are valued with an NAV of $1, which approximates fair value.

They are priced based on inputs obtained from Bloomberg, a pricing service whose prices are obtained from direct feeds from exchanges that are either directly or indirectly observable. The Fund's investment in money market are included as Level 2 assets.

44 OPPD ANNUAL REPORT 2016

Mutual Funds Measured at Fair Value: Mutual funds are priced using active market exchanges, and sources include Interactive Data Pricing and Reference Data LLC. The fair values of shares in mutual funds are based on inputs that are quoted prices in active markets for identical assets and; therefore, have been categorized as Level 1 assets.

U.S. Government Securities: The fair value of U.S. government securities is derived from quoted prices on similar assets in active or non-active markets, from other observable inputs such as interest rates, yield curves, or credit spreads, and inputs that are derived from or corroborated by observable market data. U.S. treasury and other federal agency securities held in the Fund are included as Level2 assets.

Corporate Bonds and Other Debentures: For fixed-income securities, multiple prices and price types are obtained from pricing vendors whenever possible, which enables cross-provider validation in addition to checks for unusual daily movements. The fair values of fixed-income securities are based on evaluated prices that reflect observable market information, such as actual trade information of similar securities, adjusted for observable differences. Corporate bonds held in the Fund are included as Level 2 assets.

Commercial Paper: The fair value of commercial paper is priced according to recent transactions, as the carrying value of the commerdal paper approximated its fair value due to the short maturity. Commercial Paper is included as a Level 2 asset.

Investments Measured at NAV -The following tables summarize the fair value measurement of investments calculated at NAV per share (or its equivalent) as of December 31 (in thousands).

2016 Fair Unfunded Redemption Redemption Value Commitments Frequency Notice Period Mutual Funds $ 99,911 none Daily N/A Total investments $ 99,911 measured at NAV 2015 Fair Unfunded Redemption Redemption Value Commitments Frequency Notice Period Mutual Funds $ 95,492 none Daily N/A Total investments $ 95,492 measured at NAV Mutual Funds: This investment includes one mutual fund that invests in fixed income securities, including treasuries, agencies, corporate debt, mortgage-backed securities and some non-U.S. debt. The fair value of these investments has been determined using NAV per share (or its equivalent) of the investment.

6. DEBT The proceeds of debt issued are utilized primarily to finance the construction program. Favorable market conditions in 2016 and 2015 resulted in multiple refinancing activities. The Company is in compliance with all debt covenants.

The following table summarizes the debt balances as of December 31, 2015, activity for 2016 and balances as of December 31, 2016 (in thousands).

2015 Additions Retirements 2016 Electric system revenue bonds $1,513,725 $183,340 $(238,700) $1,458,365 Electric system subordinated revenue bonds 337,375 (95) 337,280 Electric revenue notes - commercial paper series 150,000 150,000 Minibonds 29,338 605 (127) 29,816 NC2 separate electric system revenue bonds 225,910 103,685 (111,135) 218,460 Total $2,256,348 $287,630 $(350,057) $2,193,921 OPPD ANNUAL REPORT 2016 45

Notes to Financial Statements as of and for the Years Ended December 31, 2016 and 2015 Lien Structure -In the event of a default, subject to the terms and conditions of debt covenants, OPPD is required to satisfy all Electric System Revenue Bond obligations before paying second-tier bonds and notes, which are Electric System Subordinated Revenue Bonds, Electric Revenue Notes - Commercial Paper Series and Minibonds.

Electric System Revenue Bonds -These bonds are payable from and secured by a pledge of and lien upon the revenues of the Electric System, subject to the prior payment therefrom of the operations and maintenance expenses of the Electric System. The Electric System Revenue Bonds are Senior Bonds.

Moody's Investors Service and Standard & Poor's Rating Services rated the Electric System Revenue Bonds as Aa2 and AA, respectively in both 2016 and 2015.

The following table summarizes outstanding Electric System Revenue Bonds as of December 31, 2016 (in thousands).

Issue Maturity Dates Type Interest Rates Amount 2008 Series A 2018 Serial 4.6% $ 2,900 2010 Series A 2022-2041 Term 5.431% 120,000 2011 Series A 2017- 2024 Serial 3.125%- 5.0% 59,095 2011 Series B 2029 Serial 3.625% 350 2011 Series B 2030-2042 Term 4.0% - 5.0o/o 103,360 2011 Series C 2017 - 2030 Serial 2.5%-5.0% 119,165 2012 Series A 2030 - 2034 Serial 4.0% 63,065 2012 Series A 2035-2042 Term 5.0% 133,175 2012 Series B 2017-2034 Serial 3.0% - 5.0% 141,295 2012 Series B 2038-2046 Term 3. 75% - 5.0% 85,420 2015 Series A 2022-2034 Serial 2.85%-5.0% 38,630 2015 Series A 2035 - 2045 Term 4.0%- 5.0% 54,375 2015 Series B 2017 - 2034 Serial 2.0%-5.0% 223,495 2015 Series B 2035-2039 Term 4.0% 36,555 2015 Series C 2032-2043 Serial 3.5%- 5.0o/o 94,145 2016 Series A 2023-2039 Serial 3.0%-5.0% 183,340 Total $1,458,365 The following table summarizes outstanding Electric System Revenue Bonds as of December 31, 2015 (in thousands).

Issue Maturity Dates Type Interest Rates Amount 2008 Series A 2018 Serial 4.6% $ 2,900 2009 Series A 2023-2029 Serial 4.0%-4.75% 25,700 2009 Series A 2030-2039 Term 5.0% 59,300 2010 Series A 2022-2041 Term 5.431% 120,000 2011 Series A 2016-2024 Serial 3.125% - 5.0% 95,360 2011 Series B 2023 - 2029 Serial 3.25%-5.0% 34,570 2011 Series B 2030-2042 Term 4.0%- 5.0% 103,360 2011 Series C 2016-2030 Serial 2.5%-5.0% 125,965 2012 Series A 2023 - 2034 Serial 4.0%-5.0% 139,480 2012 Series A 2035 - 2042 Term 5.0% 133,175 2012 Series B 2017-2034 Serial 3.0%-5.0% 141,295 2012 Series B 2038-2046 Term 3.75%-5.0% 85,420 2015 Series A 2022-2034 Serial 2.85%-5.0% 38,630 2015 Series A 2035-2045 Term 4.0%- 5.0% 54,375 2015 Series B 2017-2034 Serial 2.0%- 5.0% 223,495 2015 Series B 2035-2039 Term 4.0% 36,555 2015 Series C 2032-2043 Serial 3.5% - 5.0% 94,145 Total $1,513,725 46 OPPD ANNUAL REPORT 2016

OPPD issued $183,340,000 of Electric System Revenue Bonds, 2016 Series A, on August 24, 2016. The 2016 Series ABonds were used to refund all of the 2009 Series ABonds, a portion of the 2011 Series BBonds and a portion of the 2012 Series ABonds. The refunding reduced total debt service payments over the life of the bonds by $30,353,000 and resulted in an economic gain (difference between the present values of the old and new debt service payments) of $22,094,000. Aprincipal payment of $43,065,000 was made on February 1, 2016, for the Electric System Revenue Bonds.

OPPD issued $93,005,000 of Electric System Revenue Bonds, 2015 Series A, and $260,050,000 of Electric System Revenue Bonds, 2015 Series B, on January 7, 2015. The 2015 Series Aand BBonds were used to finance new capital expenditures and refund the remaining 2005 Series BBonds, a portion of the 2007 Series Aand a portion of the 2008 Series ABonds. The refunding reduced total debt service payments over the life of the bonds by $35,777,000 and resulted in an economic gain (difference between the present values of the old and new debt service payments) of $25,377,000.

The Company issued $94,145,000 of Electric System Revenue Bonds, 2015 Series C, on February 26, 2015. The bonds were used for the refunding of all of the remaining 2007 Series ABonds. The refunding reduced total debt service payments over the life of the bonds by S12,275,000 and resulted in an economic gain of $7,321,000. Aprincipal payment of $40,465,000 was made on February 2, 2015, for the Electric System Revenue Bonds.

Electric System Revenue Bonds from the following series, with outstanding principal in the amount of $568,785,000 as of December 31, 2016, were legally defeased: 1992 Series B, 1993 Series B, 2005 Series B, 2007 Series A, 2008 Series A, 2009 Series A, 2011 Series Band 2012 Series A. Electric Sys-tem Revenue Bonds from the following series, with outstanding principal amounts of $392,410,000 as of December 31, 2015, were legally defeased:

1992 Series B, 1993 Series B, 2005 Series B, 2007 Series Aand 2008 Series A. Defeased bonds are funded by government securities in irrevocable escrow accounts. Accordingly, the bonds and the related government securities escrow accounts are not included in the Statements of Net Position.

OPPD's bond indenture, amended effective February 6, 2015, 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 equal or exceed 1.4 times the debt service on all Electric System Revenue 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.

• The Electric System is required to be maintained by the Company in good condition.

The following table summarizes Electric System Revenue Bond payments (in thousands).

Principal Interest 2017 $ 45,595 $ 71,514 2018 47,495 69,545 2019 49,720 67,328 2020 51,980 64,947 2021 55,445 62,371 2022-2026 208,895 365,978 2027- 2031 274,350 262,212 2032-2036 263,165 166,252 2037- 2041 321,330 81,265 2042-2046 140,390 12,887 Total $1,458,365 $1,224,299 Electric System Subordinated Revenue Bonds -These bonds are payable from and secured by a pledge of revenues of the Electric System, subject to the prior payment of the operations and maintenance expenses of the Electric System and the prior payment of the Electric System Revenue Bonds.

Moody's Investors Service and Standard & Poor's Rating Services rated the Electric System Subordinated Revenue Bonds as Aa3 and AA-, respectively in both 2016 and 2015.

The following table summarizes outstanding Electric System Subordinated Revenue Bonds as of December 31, 2016 (in thousands).

Issue Maturity Dates Type Interest Rates Amount 2014 Series AA 2017-2032 Serial 2.0%-5.0% $ 57,175 2014 Series AA 2028-2036 Term 2.25% - 5.25% 98,275 2014 Series BB 2041-2042 Term 4.0% 49,205 2014 Series CC 2031-2035 Serial 4.0o/o 29,280 2014 Series CC 2036-2038 Term 4.0o/o 79,115 2014 Series DD 2040 Serial 3.625% 24,230 Total $3371280 OPPD ANNUAL REPORT 2016 47

Notes to Financial Stateme1nts as of and fo r the Years Ended December 31, 2016 and 2015 The following table summarizes outstanding Electric System Subordinated Revenue Bonds as of December 31, 2015 (in thousands).

Issue Maturity Dates Type Interest Rates Amount 2014 Series M 2016-2032 Serial 2.0%-5.0% $ 57,270 2014 Series AA 2028-2036 Term 2.25%- 5.25% 98,275 2014 Series BB 2041-2042 Term 4.0% 49,205 2014 Series CC 2031-2035 Serial 4.0% 29,280 2014 Series CC 2036-2038 Term 4.0% 79,115 2014 Series DD 2040 Serial 3.625% 24,230 Total $337,375 On February 1, 2016, a principal payment of $95,000 was made for the Electric System Subordinated Revenue Bonds. There were no principal payments due for the Electric System Subordinated Revenue Bonds in 2015.

At December 31, 2016, OPPD had no outstanding defeased Electric System Subordinated Revenue Bonds. Electric System Subordinated Revenue Bonds, 2006 Series B, with an outstanding principal amount of $25,000,000 as of December 31, 2015, were legally defeased.

Defeased bonds are funded by government securities in irrevocable escrow accounts. Accordingly, the bonds and the related government securities escrow accounts are not included in the Statements of Net Position.

The following table summarizes Electric System Subordinated Revenue Bonds payments (in thousands).

Principal Interest 2017 $ 95 $ 13,385 2018 1,095 13,368 2019 1,090 13,330 2020 825 13,833 2021 13,817 2022-2026 23,840 66,961 2027- 2031 46,040 58,558 2032-2036 136,335 41,163 2037- 2041 103,315 14,161 2042 24,645 493 Total $337,280 $249,069 Electric Revenue Notes- Commercial Paper Series- The outstanding balance of Commercial Paper was $150,000,000 as of December 31, 2016 and 2015. The average borrowing rate was 0.5% and 0.1%for the years ended December 31, 2016 and 2015, respectively. ACredit Agreement with Bank of America, N.A., includes a covenant to retain drawing capacity at least equal to the issued and outstanding amount of Commercial Paper Notes. The Credit Agreement will expire on October 1, 2018. Commercial Paper is classified as Long-Term Debt due to the existence of this Credit Agreement and OPPD's intent and ability to refinance Commercial Paper on a long-term basis.

Minibonds- Minibonds consist of current interest-bearing and capital appreciation Minibonds. The Minibonds may be redeemed prior to their maturity dates at the request of a holder, subject to certain conditions as outlined in the Minibond Official Statement.

There were no Minibond maturities in 2016 other than redemptions for the annual put option. The principal and interest on these bonds is insured by a municipal bond insurance policy.

48 OP PD ANNUAL REPO RT 201 6

The following table summarizes outstanding Minibond balances at December 31 (in thousands).

Principal 2016 201S 2001 Minibonds, due 2021 $23,055 $23,182 Accreted interest on capital appreciation Minibonds 6,761 6,156 Total $29,816 $29,338 Credit Agreement- OPPD has a Credit Agreement with the Bank of America, N.A., for $250,000,000, which will expire on October 1, 2018. The Credit Agreement includes a financial covenant to retain drawing capacity at least equal to the issued and outstanding amount of Commercial Paper Notes. There were no amounts outstanding under this Credit Agreement as of December 31, 2016 and 2015.

NC2 Separate Electric System Revenue Bonds -Participation Power Agreements were executed with seven public power and municipal utilities for half of the output of NC2. The participants' rights to receive, and obligations to pay costs related to, half of the output is the "Separate System."

Moody's Investors Service rated the NC2 Separate Electric System Revenue Bonds as AI in 2016 and 2015. Standard & Poor's Rating Services rated the NC2 Separate Electric System Revenue Bonds as A+ and Ain 2016 and 2015, respectively.

The following table summarizes outstanding NC2 Separate Electric System Revenue Bonds as of December 31, 2016 (in thousands).

Issue Maturity Dates Type Interest Rates Amount 2006 Series A 2017 Serial 3.85% $ 1,130 2008 Series A 2017-2018 Serial 4.25%- 4.45% 1,020 2015 Series A 2017-2035 Serial 2.0%-5.0% 58,450 2015 Series A 2036-2046 Term 3.5%-5.25% 54,175 2016 Series A 2018-2036 Serial 3.0% - 5.0% 33,530 2016 Series A 2037-2049 Term 5.0% 70,155 Total $218,460 The following table summarizes outstanding NC2 Separate Electric System Revenue Bonds as of December 31, 2015 (in thousands).

Issue Maturity Dates Type Interest Rates Amount 2006 Series A 2016-2026 Serial 3.8%-4.2% $ 15,050 2006 Series A 2027-2049 Term 4.25%- 5.0o/o 95,110 2008 Series A 2016-2018 Serial 4.05% - 4.45% 1,505 2015 Series A 2016-2035 Serial 2.0o/o- 5.0% 60,070 2015 Series A 2036 - 2046 Term 3.5%-5.25% 54,175 Total $225,910 OPPD issued $103,685,000 of NC2 Separate Electric System Revenue Bonds, 2016 Series A, on Apri113, 2016. These bonds were used for refunding a portion of the 2006 Series ABonds. The refunding reduced total debt service payments over the life of the bonds by $8,076,000 and resulted in an economic gain of $9,474,000. Aprincipal payment of $3,190,000 was made on February 1, 2016, for the NC2 Separate Electric System Revenue Bonds.

OPPD issued $114,245,000 of NC2 Separate Electric System Revenue Bonds, 2015 Series A, on March 11, 2015. These bonds were used for the refunding of all of the 2005 Series ABonds, and a portion of the 2008 Series ABonds. The refunding reduced total debt service payments over the life of the bonds by $15,510,000 and resulted in an economic gain of $13,691,000. Aprindpal payment of $3,080,000 was made on February 2, 2015, for the NC2 Separate Electric System Revenue Bonds.

The NC2 Separate Electric System Revenue Bonds, 2006 Series Aand 2008 Series A, with outstanding principal amounts of $125,190,000 as of December 31, 2016, were legally defeased. The NC2 Separate Electric System Revenue Bonds, 2008 Series A, with an outstanding principal amount of $17,245,000 as of December 31, 2015, were legally defeased. Defeased bonds are funded by government securities in irrevocable escrow accounts.

Accordingly, the bonds and the related government securities escrow accounts are not included in the Statements of Net Position.

OPPD AN N UAL REPORT 2016 49

Notes to Financial Statements as of and for the Years Ended December 31, 2016 and 2015 The following table summarizes NC2 Separate Electric System Revenue Bond payments (in thousands).

Principal Interest 2017 $ 3,245 $ 10,602 2018 3,220 10,493 2019 3,350 10,354 2020 3,495 10,199 2021 3,655 10,044 2022- 2026 21,060 47,292 2027- 2031 26,880 41,343 2032- 2036 33,810 34,323 2037 - 2041 39,910 25,381 2042-2046 46,745 14,515 2047- 2049 33,090 2,418 Total $218,460 $216,964 Fair Value Disclosure- The following table summarizes the aggregate carrying amount and fair value of long-term debt, including the current portion and excluding unamortized gain or loss on refunded debt at December 31 (in thousands).

2016 2015 Carrying Fair Carrying Fair Amount Value Amount Value

$2,387,146 $2,533,075 $2,419,769 $2,710,514 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.

7. BENEFIT PLANS FOR EMPlOYEES AND RETIREES RETIREMENT PLAN The Company adopted and implemented the provisions of GASB 68 and GASB 82 in 2015.

Plan Description and Benefits Provided- The Omaha Public Power District Retirement Plan (Retirement Plan) is a single-employer, defined benefit plan, which provides retirement and death benefits to Plan members and their beneficiaries. The Retirement Plan covers all full-time employees, as they are not covered by Social Security. The Retirement Plan was established and may be amended at the direction of OPPD's Board of Directors and is administered by the Company. Ad-hoc cost-of-living adjustments may be provided to retirees and beneficiaries at the discretion of the Board of Directors.

Generally, employees at the normal retirement age of 65 are entitled to annual pension benefits equal to 2.25% of their average compensa-tion (as defined) times years of credited service (as defined) under the Traditional provision (as defined). Employees have the option to retire before the age of 65 if they meet eligibility requirements based on age and years of service. The Retirement Plan was amended as of January 1, 2008, to add a Cash Balance provision (as defined) to allow members the choice between the Traditional and Cash Balance provision for calculating benefits. Under the Cash Balance provision, members can receive the total vested value of their Cash Balance Account at separation from employment with OPPD. Employees were initially allowed to make a one-time irrevocable election to have benefits determined based on the Cash Balance provision instead of the Traditional provision. Effective January 1, 2013, all new employees are only eligible for the Cash Balance provision.

50 OPPD ANNUAL REP O RT 201 6

The following table summarizes the membership in the Retirement Plan as of]anuary 1.

2016 2015 Retirees and beneficiaries receiving benefits 1,992 1,915 Terminated Retirement Plan members entitled to, but not receiving, benefits 382 406 Active Retirement Plan members* 2,200 2,237 Total 4,574 4,558 There were 341 and 320 members with the Cash Balance provision at January 1, 2016 and 2015, respectively.

Contributions- Employees contributed 6.2% of their covered payroll to the Retirement Plan for the years ended December 31, 2016 and 2015.

The contribution rate for employees is scheduled to remain at 6.2% unless the funded ratio (as defined) is 110% or more, in which case the contribution rate will be decreased in accordance with the Retirement Plan schedule. Employee contributions are immediately 100% vested. An employee's deferred retirement allowance is 100% vested after five years of continuous service (as defined). The Company is obligated to contribute the balance of the funds needed on an actuarially determined basis and has met this funding requirement. The annual required contribution (ARC) was fully funded in the amount of $50,711,000 and $46,568,000 for the years ended December 31, 2016 and 2015, respectively.

Actuarial Assumptions- The total pension liability in the January 1, 2016 actuarial valuation was determined using the following actuarial assumptions applied to all periods included in the measurement.

The total pension liability must be determined using the Entry Age Normal (Level Percent of Pay) cost method per GASB 68. Under this actuarial method, an allocation to past service and future service is made by spreading the costs over an employee's career as a level percentage of pay. The actuarial value of Retirement Plan assets was determined using a method, which smooths the effect of short-term volatility in the market value of investments over approximately five years. Ad-hoc cost-of-living adjustments are provided to retirees and beneficiaries at the discretion of the Board of Directors and are amortized in the year for which the increase is authorized. Except for the liability associated with cost-of-living adjustments, if any, the unfunded actuarial accrued liability was amortized on a level basis (closed group) over 20 years for 2016. The amortization period of the unfunded actuarial accrued liability was changed from 15 years to a 20-year fresh start in 2015. The mortality table used for healthy participants was the RP-2014 Aggregate table projected back to 2006 using Scale MP-2014 and projected forward using Scale MP-2015 with generational projection for 2016, and the RP-2014 Aggregate table with generational projection using Scale MP-2014 for 2015.

The other actuarial assumptions for the valuations as of]anuary 1, 2016 and 2015, were as follows:

• The method used for the asset valuation for the actuarially determined contribution was to blend the expected actuarial value of assets with the market value of assets using an 80:20 ratio.

• The average rate of compensation increase varies by age.

• There were no ad-hoc cost-of-living adjustments.

• The average rate of inflation was 3.0%.

The actuarial assumptions are based on a study of the experience of the covered group. The last actuarial experience study was performed during 2016 and resulted in a reduction of the discount rate from 7.75% to 7.0%. For purposes of GASB 68 disclosure in this report, the discount rate change will be incorporated into the january 1, 2017 measurement date and will be reported as of December 31, 2017.

Discount Rate- The discount rate used to determine the required funding contributions was 7.0% and 7.75% for 2016 and 2015, respectively. In accordance with the provisions of GASB 68, the discount rate used to measure the total pension liability was 7.75% for 2016 and 2015. The discount rate is determined using the expected long-term rate of return of each asset class, including inflation and additional yields due to active investment management. The projection of cash flows used to determine the discount rate assumed that employee contributions will be made at the current contribution rate and that OPPD contributions will be made at rates equal to the difference between actuarially determined contribution rates and the employee rate. Based on those assumptions, the pension plan's fiduciary net position was projected to be available to make all projected future benefit payments of current active and inactive employees. Therefore, the long-term expected rate of return on pension plan investments was applied to all periods of projected benefit payments to determine the total pension liability.

OPPD ANNUAL REPORT 2016 51

Notes to Financial Statements as of and for the Years Ended December 31, 2016 and 201 5 The following table summarizes the Target Allocation and Long-Term Expected Real Rate of Return, presented in geometric means, for each major Asset Class.

Target Long-Term Expected Asset Class Allocation Real Rate of Return*

Domestic equity 28.0% 5.2%

International developed equity 14.0 5.5 Emerging markets equity 10.0 7.4 Domestic core fixed income 23.0 1.6 Global fixed income 7.5 0.9 High yield 3.0 4.2 Treasury inflation protected securities 2.0 1.3 Emerging markets debt 5.0 4.6 Private real estate 7.5 3.9 Total 100%

• Based on 2016 forward looking capital market assumptions.

Total Pension Liability, Plan Fiduciary Net Position and Net Pension Liability- The total pension liability, plan fiduciary net position and net pension liability are determined in accordance with GASB 68. The amounts are based on the results of an actuarial valuation measurement date of]anuary 1, 2016.

The following table shows the Total Pension Liability, Plan Fidudary Net Position, and Net Pension Liability for the Measurement Period from January 1, 2015, to January 1, 2016, and the changes for the year ended December 31, 2016 (in thousands).

Increase (Decrease)

Total Pension Plan Fiduciary Net Pension Liability Net Position Liability (a) (b) (a-b)

Balance recognized at 12/31/2015 $1,310,737 $903,563 $407,174 (Based on 1/1/2015 measurement date)

Changes recognized for the fiscal year:

Service cost 23,224 23,224 Interest on total pension liability 100,285 100,285 Changes in benefit terms 1,268 1,268 Difference between expected and actual experience 2,593 2,593 Contributions from employer 46,568 (46,568)

Contributions from employee 12,375 (12,375)

Net investment income (11,465) 11,465 Benefit payments, including refunds of employee contributions (81,441) (81,441)

Administrative expense (111) 111 Net Changes 45,929 (34,074) 80,003 Balance recognized at 12/31/2016 $1,356,666 $869,489 $487,177 (Based on 1/1/2016 measurement date}

2016 2015 Plan fiduciary net position as a percentage of the total pension liability 64.09% 68.94%

Actuarially determined contributions $50,711 $46,568 52 OPPD ANNUAL REPORT 201 6

Sensitivity- The following table illustrates the impact of interest rate sensitivity on the Net Pension Liability for the year ending December 31, 2016, (in thousands). The information provided below is calculated based on the applicable governmental accounting standards, which require the presentation of the discount rate at the rate in effect as of the measurement date (l/1/2016).

1% Decrease Discount Rate 1% Increase 6.75% 7.75% 8.75%

Total pension liability $1,512,714 $1,356,666 $1,224,990 Plan fiduciary net position 869,489 869,489 869,489 Net pension liability $ 643,225 $ 487,177 $ 355,501 Pension Plan Fiduciary Net Position - Detailed information about the pension plan's fiduciary net position is available in the separately issued Retirement Plan financial report and can be reviewed by contacting the Pension Administrator at Corporate Headquarters.

Pension Expense, Deferred Outflows of Resources and Deferred Inflows of Resources Related to Pensions - For the year ended December 31, 2016, OPPD recognized pension expense of $50,711,000.

The following table summarizes the reported deferred outflows of resources and deferred inflows of resources related to pension from the following sources for the year ended December 31, 2016 (in thousands).

Deferred Deferred Outflows Inflows Difference between actual and expected experience

• Measurement date 1/1/2015 $ 33,831

• Measurement date 1/1/2016 1,974 Net difference between expected and actual earnings on pension plan investments

• Measurement date 1/1/2015 21,674

• Measurement date 1/1/2016 64,505 Contribution made in fiscal year ending December 31, 2016 50,711 Total $172,695 The Company reported $50,711,000 as deferred outflows of resources related to pensions resulting from the contributions made subsequent to the measurement date. This amount will be recognized as pension expense in the year ended December 31, 2017. Other amounts reported as deferred outflows of resources and deferred inflows of resources related to pensions will be recognized in pension expense or as a reduction of the Net Pension Liability as follows (in thousands):

Year Amount 2017 $31,747 2018 $31,747 2019 $31,746 2020 $24,021 2021 $ 2,722 Thereafter $

Other employee benefit obligations are provided to allow certain current and former employees to retain the benefits to which they would have been entitled under the Retirement Plan, except for federally mandated limits and to provide supplemental pension benefits. The related pension expense, fund balance and employee benefit obligation were not material for the years ended December 31, 2016 and 2015.

Additional information is available in the Required Supplementary Information section following the notes.

OPPD ANNUAL REPORT 2016 53

Notes to financial Statements as of and fo1'the Years Ended December 31, 2016 and 201 5 DEFINED CONTRIBUTION RETIREMENT SAVINGS PLAN- 401(k)/4S7 OPPD sponsors a Defined Contribution Retirement Savings Plan- 401(k) (401k Plan) and a Defined Contribution Retirement Savings Plan- 457 (457 Plan). Both the 401k Plan and 457 Plan cover all full-time employees and allow contributions by employees that are partially matched by the Company. The Defined Contribution plans were established and may be amended at the direction of OPPD's Board of Directors and is administered by the Company. The 401k Plan's and 457 Plan's assets and income are held in an external trust account in each employee's name. The matching share of contributions was $5,989,000 and $6,210,000 for the years ended December 31, 2016 and 2015, respectively. The employer maximum annual match on employee contributions was $3,500 per employee for the years ended December 31, 2016 and 2015.

POSTEMPLOYMENT BENEFITS OTHER THAN PENSIONS There are two separate plans for Other Postemployment Benefits (OPEB). OPEB Plan Aprovides postemployment health care and life in-surance benefits to qualifying members. OPEB Plan Bprovides postemployment health care premium coverage for the Company's share to qualifying members who were hired after December 31, 2007. The OPEB Plans were established and may be amended at the direction of OPPD's Board of Directors and is administered by the Company.

Actuarial calculations reflect a long-term perspective. Consistent with that perspective, actuarial methods and assumptions used include techniques that are designed to reduce short-term volatility in actuarial accrued liabilities and the actuarial value of assets. Actuarially determined amounts are subject to continual revision as results are compared to past expectations and new estimates are made about the future.

OPEBPlanA Plan Description- OPEB Plan A(Plan A) provides postemployment health care benefits to retirees, surviving spouses, and employees on long-term disability and their dependents and life insurance benefits to retirees and employees on long term disability. Health care benefits are based on the coverage elected by Plan Amembers. When members are retired and eligible for Medicare benefits, coverage moves from OPPD's Medical Plans to OPPD's Group Medicare Supplement and Part DPlans. As of January 1, 2016, 1,810 of the 4,010 total members were receiving benefits.

Funded Status and Funding Progress- Plan Amembers are required to pay a monthly premium based on the elected coverage and the respective premium cost share. The Company contributes the balance of the funds needed on an actuarially determined basis.

The Actuarial Accrued Liability (AAL) is the present value of benefits attributable to past accounting periods.

The following table summarizes AAL and other OPEB Plan Ainformation based on the actuarial valuation as of January 1 (in thousands).

Unfunded UAL Actuarial Value Actuarial Al:crued Accrued Percentage of of Assets Liability (AAL) Liability (UAL) Funded Ratio Covered Payroll Covered Payroll

.w .(b) !l!:ru Wbl. Kl ((b:a)LQ 2016 $125,241 $389,489 $264,248 32.2% $200,905 131.5%

2015 $114,122 $372,894 $258,772 30.6% $196,344 131.8%

2014 $100,580 $350,049 $249,469 28.7% $194,100 128.5%

Annual OPED Cost and Actuarial Assumptions- The annual OPEB cost and ARC for OPEB Plan Awas $21,842,000, $23,228,000 and $22,088,000 for the years ended December 31, 2016, 2015 and 2014, respectively. The decrease in 2016 was due to changes in assumptions. The increase in 2015 was due to higher trending health care costs. Accounting standards require recognition of an OPEB liability on the Statements of Net Position for the amount of any unfunded ARC. Since the entire ARC was funded, there was no net OPEB obligation as of December 31, 2016, 2015 and 2014. Contributions by Plan Amembers were $3,709,000, $3,439,000 and

$3,187,000 for the years ended December 31, 2016, 2015 and 2014, respectively.

The actuarial assumptions and methods used for the valuations on January 1, 2016, 2015 and 2014, were as follows:

• The pre-Medicare health care trend rates ranged from 7.5%immediate to 4.5% ultimate in 2016, from 7.25% immediate to 5.0%

ultimate in 2015, and from 7.5% immediate to 5.0% ultimate in 2014.

54 OPPD ANNUAL REPORT 2016

• The post-Medicare health care trend rates ranged from 8.4% immediate to 4.5% ultimate in 2016, and from 6.5% immediate to 5.0% ultimate in 2015 and 2014.

• The investment return (discount rate) used was 7.0% in 2016 and 7.5% in 2015 and 2014, which was based on OPPD's expected long-term return on assets used to finance the payment of plan benefits.

• The average rate of compensation increase used varies by age.

• The actuarial cost method used was the Projected Unit Credit.

• Amortization for the initial unfunded AAL and OPEB Plan changes was determined using a period of 30 years and the increasing method at a rate of 3.0% per year.

• Amortization for all changes (including gains/losses, assumption and plan provisions) after the initial year were determined using a closed period of 15 years and the level-dollar method.

• The mortality table used for healthy participants was the RP-2014 Aggregate table projected back to 2006 using Scale MP-2014 and projected forward using Scale MP-2015 with generational projection for 2016, RP-2014 Aggregate table with generational projection using Scale MP-2014 for 2015 and the Static Mortality Table for Annuitants and Non-Annuitants for 2014.

OPED Plan B Plan Description - OPEB Plan B(Plan B) provides postemployment health care premium coverage for the Company's share for retirees and surviving spouses and their dependents to qualifying members who were hired after December 31, 2007. Benefits are based on the coverage elected by the Plan Bmembers and the balance in the member's hypothetical account, which is a bookkeeping account. The hypothetical accounts are credited with $10,000 upon commencement of full-time employment, $1,000 annually on the member's anniversary date and interest income at 5.00Al annually. Plan Bbenefits are for the payment of OPPD's share of the members' health care premiums. Plan benefits will continue until the member and eligible spouse cease to be covered under the Company's Medical Plan, the member's hypothetical account is depleted or Plan Bterminates, whichever occurs first. Benefits are forfeited for any member who fails to retire or who retires but does not immediately commence payments. As of January 1, 2016, only one of the 813 Plan Bmembers was receiving benefits.

Funded Status and Funding Progress- Funds are contributed, as needed, on an actuarially determined basis. Members do not contribute to Plan B.

The following table summarizes AAL and other OPEB Plan Binformation based on the actuarial valuations as of January 1 (in thousands).

Overfunded OAL Actuarial Value Actuarial Accrued Accrued Percentage of of Assets liability (AAL) Uability (OAL) Funded Ratio Covered PayroU Covered Payroll w .(11} Wll Will w ((a:blli}

2016 $3,614 $1,544 $2,070 234.1% $61,761 3.4%

2015 $3,670 $2,244 $1,426 163.5% $63,914 2.2%

2014 $3,509 s1,526 $1,983 230.00!6 $50,727 3.9%

Annual OPEB Cost and Actuarial Assumptions- The OPEB Plan BARC was $29,000, $297,000 and $145,000 for the years ended December 31, 2016, 2015 and 2014, respectively. The annual OPEB cost was $127,000, $402,000 and $250,000 for the years ended December 31, 2016, 2015 and 2014, respectively. There was an OPEB net asset of $740,000, $867,000 and $1,269,000 as of December 31, 2016, 2015 and 2014, respectively.

Company contributions were $0 for the years ended December 31, 2016, 2015 and 2014.

The actuarial assumptions and methods used for the valuations on January 1, 2016, 2015 and 2014 were as follows:

• The investment return (discount rate) used was 5.25% in 2016, and 5.5% in 2015 and 2014, which was based on OPPD's expected long-term return on assets used to finance the payment of plan benefits.

• The actuarial cost method used was Projected Unit Credit.

• Amortization for gains/losses was determined using a closed period of 15 years and the level-dollar method.

• The mortality table for healthy participants was the RP-2014 Aggregate table projected back to 2006 using Scale MP-2014 and projected forward using Scale MP-2015 with generational projection for 2016, RP-2014 Aggregate table with generational projection using Scale MP-2014 for 2015 and the Static Mortality Table for Annuitants and Non-Annuitants for 2014.

OPPD ANNUAL REPORT 2016 SS

Notes to Financial Statements as of an ci tor the Years Ended December 31 , 201 6 and 2015 SELF-INSURANCE HEALTH PROGRAM Employee health care and life insurance benefits are provided to substantially all full-time employees. There were 1,824 and 2,039 full-time employees wit'I medical coverage as of December 31, 2016 and 2015, respectively. 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 (Note 4).

Additionally, private insurance has been purchased to cover claims in excess of 125% of expected aggregate levels and

$450,000 per member.

Health care expenses for full-time employees (reduced by premium payments from participants) were $27,315,000 and $27,892,000 for the years ended December 31, 2016 and 2015, respectively.

The total cost of life and long-term disability insurance for full-time employees was $1,550,000 and $1,140,000 for the years ended December 31, 2016 and 2015, respectively.

The balance of the Incurred but Not Presented Reserve was $3,483,000 and $3,574,000 as of December 31, 2016 and 2015, respectively (Note 2).

Audited financial statements for the Defined Contribution Retirement Savings Plans and OPEB Plans may be reviewed by contacting the Pension Administrator at Corporate Headquarters.

8. ADDITIONS TO AND UTILIZATIONS OF RESERVES The Rate Stabilization Reserve was increased by $26,000,000 for the year ended December 31, 2016. In 2015, the Board authorized the use of the Rate Stabilization Reserve to provide additional revenues for operations. There was a transfer of $25,000,000 from the reserve in December 2015. The balance of the reserve was $42,000,000 and $16,000,000 as of December 31, 2016 and 2015, respectively.

9. DERIVATIVES AND FINANCIAL INSTRUMENTS Auction Revenue Rights (ARRs) - ARRs are financial instruments that entitle the owner to a share of the revenues generated in the applicable Transmission Congestion Rights (TCR) auctions. ARRs are allocated during annual and/or incremental monthly auctions and have the option of being converted into a TCR. OPPD is entitled to these financial payments as a substitute for firm (physical) transmission service. ARRs are accounted for at cost as they are not readily convertible to cash and therefore do not meet the definition of a derivative. The balance of ARRs, reported in other current liabilities, was $1,236,000 and $766,000 as of December 31, 2016 and 2015, respectively (Note 2).

Transmission Congestion Rights- TCRs are financial instruments that entitle the holder to an offset to congestion charges on the transmission grid that take place in the day-ahead market. The Company utilizes TCRs to hedge against congestion differentials between OPPD generators and OPPD load in the SPP Integrated Marketplace (IM).

TCRs qualify for the normal purchases and normal sales exception under GASB guidance and are reported on a cost basis on the Statements of Net Position. The total notional amount ofTCRs outstanding as of December 31, 2016, was 4,135,250 megawatt-hours.

The balance of TCRs reported in other current assets was $19,000 and $97,000 as of December 31, 2016 and 2015, respectively (Note 2).

10. REGIONAL TRANSMISSION ORGANIZATION OPPD became a transmission-owning member of SPP, and all of the Company's transmission facilities were placed under the SPP open access transmission tariff (OATT) on April1, 2009. In addition to tariff administration services, SPP also provides reliability coordination services, generation reserve sharing, energy market services, balancing authority services and planning authority services.

The SPP Real-Time Energy Imbalance Market (Day 1 Market) was expanded into a Day 2 Market in 2014. The SPP Day 2 Market, also known as the IM, includes the Day-Ahead Market, Real-Time Market, Ancillary Services Market and Transmission Congestion Rights Market. OPPD actively participates in the IM. It provides a more transparent market by which load is served by the most efficient and economical generation while maintaining the reliability of the grid. The market mechanism rewards low-cost, flexible and reliable providers of electricity. OPPD's generation is in competition with other generation owners to serve load across the SPP footprint.

56 OPPD ANNUAL REPORT 201 6

A345-kilovolt power line identified by the SPP planning process was built by OPPD and Kansas City Power & Light (Midwest Transmission Project) running from a substation near the Nebraska City Station to Sibley, Missouri. This project was one of several priority projects as determined by SPP and is expected to relieve congestion on the region's transmission system and improve reliability on the nation's energy grid. Construction on the project was completed in December 2016. The project received funding under the SPP OATT.

The Elkhorn River Valley Transmission Project is a joint effort between OPPD and the Fremont Department of Utilities to connect an OPPD substation in Blair with a substation in Fremont. The line route was announced in 2015 and will be in service by October 2018. The purpose of this SPP reliability project is to support the growing demand for electridty and improve reliability. Aportion of the project will receive funding under the SPP OATT.

11. OTHER- NET The following table summarizes the composition of Other - Net for the years ended December 31 (in thousands).

2016 2015 Interest subsidies from the federal government $2,040 $2,113 Grants from FEMA 245 6,000 Other ~) 229 Total $2,229 $8,342

12. RISK MITIGATION AND RECOVERIES OPPD is exposed to various risks of loss related to general liability and property. The Company procures commerdal insurance, subject to certain limits and deductibles, to reduce the financial impact for claims arising from such matters. In 2016, the nuclear property insurance limits were reduced from $1,500,000,000 to $1,060,000,000, the minimum allowed by the NRC, and the nuclear accidental outage insurance was eliminated.

There have been no other significant reductions in insurance coverage. Claims have not exceeded the limits of property or liability insurance in any of the three preceding years.

The following table summarizes the total claims liability, comprising claims received and medical claims incurred but not presented, at December 31, 2016, 2015 and 2014 (in thousands).

2016 2015 2014 IBNP reserve $ 3,483 $ 3,574 $ 3,012 Workers' compensation reserve 1,399 1,545 1,484 Public liability reserve 308 121 73 Total

$ 5,190 $ 5,240 L..1JQ2 The following table summarizes the changes in the total claims liability during 2016, 2015 and 2014 (in thousands).

2016 2015 2014 Claims liability, beginning of year s 5,240 $ 4,569 $ 4,122 Payments on claims (2,046) (2,001) (1,891)

Provision for claims 1,996 2,672 2,338 Claims liability, end of year $ 5,190 $ 5,240 $ 4,569 OPPD is eligible for disaster assistance from the Federal Emergency Management Agency (FEMA) when a disaster is declared for damage in the Company's service area. The Missouri River flood (Flood Event) of 2011 was declared a disaster, and the Company was eligible for disaster assistance. The balance of the receivable from the Flood Event was $0 and $9,181,000 as of December 31, 2016 and 2015, respectively. FEMA also declared disasters for storms during 2015 and 2014. The receivable for those disasters was $2,579,000 and $2,334,000 at December 31, 2016 and 2015, respectively.

The Company is entitled to insurance recoveries in connection with a turbine outage at NC2. The outage began in November 2014 and continued until March 2015. The Company is seeking damages from its insurance carrier. The Company has an outstanding receivable of $3,281,000 and

$1,780,000 as of December 31, 2016 and 2015, respectively.

OPPD AN NUAL REPORT 201 6 57

Notes to Financial Statements as of and for the Years Ended December 31, 201 6 and 2015

13. FORT CALHOUN STATION The NRC placed FCS into a special category of its inspection manual, Chapter 0350, in December 2011. This Chapter is for nuclear plants that are in extended shutdowns with performance issues. In August 2012, the Board of Directors authorized management to enter into a long-term operating agreement with Exelon Generation Company, LLC, (Exelon) to provide operating and managerial support at FCS for 20 years. The Company remained the owner and licensed operator of the station, while Exelon had day-to-day operational authority at FCS, subject to oversight by and decision-making authority of OPPD for licensed activities. Station operations resumed in December 2013, and the station was removed from Chapter 0350 status in March 2015. In June 2016, the OPPD Board of Directors approved a recommendation by management to cease operations at FCS by December 31, 2016, and begin the decommis-sioning process using the safe storage ("SAFSTOR") methodology. The decision was made after a review of the Company's generation resource portfolio, and the station ceased operations on October 24, 2016. Notice was provided to Exelon in December 2016 to terminate the Operating Services Agreement.

As a result of the Board decision to cease operations, the FCS assets were impaired as of June 30, 2016. The write-offs of FCS-related assets and the related contract termination fees for the year ended December 31, 2016, were $959,575,000 ,which was recorded to the Special Item in the Statements of Revenues, Expenses and Changes in Net Position.

The following table summarizes the write-offs associated with the Special Item as of December 31, 2016 (in thousands).

Net electric plant $ 728,674 Regulatory assets 79,793 Net nuclear fuel 70,419 Materials and supplies 64,597 Contract termination fees 15,216 Other 876 Total $959,575 Aportion of the nuclear fuel inventory was not included in the impairment as it is anticipated to be sold in 2017. As a result, it was reclassified as Nuclear Fuel Held For Sale and reported at fair value in Current Assets in the Statements of Net Position. The balance was $12,453,000 as of December 31, 2016.

Aportion of the materials and supplies inventory was not included in the impairment as it is anticipated to be sold. As a result, it was reported at fair value in Current Assets in the Statements of Net Position. The balance was $3,748,000 as of December 31, 2016.

The FCS regulatory asset for recovery costs incurred in 2012 and 2013 were deferred as a regulatory asset based on Board approval. The deferral of the costs related to recovery was not included in the impairment, but will continue to be amortized (and collected through retail rates) through 2023 as these costs benefit current and future ratepayers.

FCS will utilize the SAFSTOR method of decommissioning, as described by the NRC, which allows a period of up to 60 years to fully decommission the facility. The total estimated cost in 2016 dollars to decommission FCS using the SAFSTOR methodology was

$1,348,897,000 as of December 31, 2016. The estimated cost to decommission the station in 2016 dollars for the NRC-required obligations was $1,249,597,000 as of December 31, 2016, which included $124,685,000 in Current Liabilities and $1,124,912,000 in Other Liabilities in the Statements of Net Position. The estimated cost was based on a third-party, site-specific cost study completed in February 2017.

The major assumptions used in the cost estimate as the basis for the decommissioning liability for December 31, 2016, were as follows:

• Costs are provided in 2016 dollars

• Site facilities are based on a 2013 analysis and updated to include a new security building

• Personnel costs based on a single average salary, adjusted for headcount reductions

• Overhead costs for site and corporate support

• Recurring non-labor costs derived from the 2017 site budget, and adjusted for near-term or one-time costs 58 OPPD ANNUAL REPORT 2016

• Design conditions related to the vessel, internal components, control element assemblies, containment building structure and other miscellaneous equipment and material

• Transition activities including system draining and abandonment, water processing, warehouse cleanup, site modifications, scrap and salvage Aregulatory asset was approved to match the recovery of decommissioning expenses with the decommissioning funding amounts collected through retail rates. The balance of the regulatory asset was $864,093,000 as of December 31, 2016, which included $147,000,000 in Current Assets and $717,093,000 in Other Long-Term Assets in the Statements of Net Position. The balance of the decommissioning trust assets as of December 31, 2016, was $382,134,000.

As a result of the Board decision to cease operations at FCS, the Company incurred costs to terminate contracts with vendors and recorded these costs as part of the Special Item in 2016. Nuclear fuel contract termination fees of $9,450,000 were incurred in 2016. The cancellation of the Operating Services Agreement with Exelon required OPPD to make a payment of $5,000,000 to terminate the agreement. The $5,000,000 was written off to the Special Item in 2016 as part of the decision to cease operations and was paid in February 2017. Other vendor contracts were also terminated as a result of this decision and these termination costs were included in the write-off noted above.

Employees located at FCS, and terminated as a result of the decision to cease operations, are eligible for an employee severance package. The package includes a lump-sum payment to eligible employees with a base of 12 weeks of pay based on current salary, plus an additional week of pay for each year of service up to a maximum of 52 weeks. Employees enrolled in the Company's medical benefit plans are also eligible for a lump-sum payment of medical, dental and vision insurance coverage costs based on the number of weeks used in the severance calculation (as noted above). Retiring employees are only eligible for payment related to dental coverage. In 2016, 57 employees received severance payments totaling

$3,220,000.

Severance costs are accrued as the benefits are earned and recognized ratably over the future service period. Severance costs are estimated to be paid to a total of approximately 496 employees in various waves of reductions through 2022. Severance costs of $7,708,000 were recorded as of December 31, 2016.

In 2016, OPPD established a Key Employee Performance Plan (KEPP) to help ensure that key positions remained staffed for continued safe operations. As part of the KEPP, certain key positions at FCS are eligible for a performance incentive. Performance incentives are paid to employ-ees based on attainment of certain milestone dates that extend to 2019. In 2016, 82 employees received performance incentive payments total-ing $1,775,000. Performance incentive costs are estimated to be paid to a total of approximately 134 employees. Performance incentive costs of

$3,196,000 were recorded as of December 31, 2016.

14. NORTH OMAHA STATION The Board of Directors approved a resolution in June 2014 for the Future Power Generation Plan (Plan). The Plan included changes to the generation portfolio, including the retirement in 2016 of N01, N02 and N03, to comply with existing and future environmental regulations.

Other approved changes included the retrofitting of North Omaha Station Units 4 and 5 and Nebraska City Unit 1 (NCl) with basic emissions controls, as well as load reductions through demand-side management programs. The estimated useful lives of NOl, N02 and N03 were reduced as a result of the planned future retirement. This change in estimate resulted in additional depreciation expense of $2,629,000 and $9,923,000 for the years ended December 31, 2016 and 2015, respectively.

As a result of the June 2016 Board resolution to cease operations at FCS, a decision was made to retain NOl, N02 and N03, using natural gas, for capacity purposes through at least 2018. Subsequent to the resolution, OPPD completed its 2016 Integrated Resource Pian. This plan, filed with the Western Area Power Administration in late February 2017, reflects the retention of N01, N02 and N03 on natural gas through December 31, 2021.

OPPD ANNUAL REPORT 2016 59

Notes to Financial Statements as of and for the Years Ended December 31, 2016 and 2015

15. COMMITMENTS AND CONTINGENCIES Commitments for the uncompleted portion of construction contracts were approximately $36,836,000 at December 31, 2016.

Power sales commitments that extend through 2027 were $48,265,000 as of December 31, 2016. Power purchase commitments that extend through 2020 were $53,146,000 as of December 31, 2016. These amounts do not include the Participation Power Agreements (PPAs) for OPPD's commitments for wind energy purchases or NC2, which are separately disclosed below.

The following table summarizes OPPD's commitments for wind purchase agreements as of December 31, 2016.

Total capacity OPPDShare Commibnent Amount (inMW) (inMW) Through (in thousands)

Ainsworth* 59.4 10.0 2025 $17,388 Elkhorn Ridge** 80.0 25.0 2029 12,337 Total 139.4 35.0 $29,725

• This PPA is on a "take-or-pay" basis and the Company is obligated to make payments for purchased power even if the power is not available, delivered or taken by OPPD. In addition, the Company is obligated, through a step-up provision, to pay a share of any deficit in funds resulting from a default at the Ainsworth facility. Included in this amount is OPPD's expected share of decommissioning costs.

• • This PPA is on a "take-and-pay" basis and requires payments when the power is made available to OPPD. The commitment amount includes monthly fixed demand charges.

There are no commitments for Crofton Bluffs, Broken Bow I and II, Flat Water, Petersburg and Prairie Breeze.

There are 40-year PPAs with seven public power and municipal utilities (the Participants) for the sale of half of the net capacity of NC2. The Participants have agreed to purchase their respective shares of the output on a "take-or-pay" basis even if the power is not available, delivered to or taken by the Participants. The Participants are subject to a step-up provision, whereby in the event of a Participant default, the remaining Participants are obligated to pay a share of any deficit in funds resulting from the default. There is an NC2 Transmission Facilities Cost Agreement with the Participants that addresses the cost allocation, payment and cost recovery for delivery of their respective power.

OPPD has coal supply contracts that extend through 2019 with minimum future payments of $153,921,000 at December 31, 2016.

The Company also has coal-transportation contracts that extend through 2020 with minimum future payments of $335,007,000 as of December 31, 2016. These contracts are subject to price adjustments.

In 2007, OPPD and the Metropolitan Community College (MCC) executed an Educational Services Agreement for $1,000,000 of educational services (as defined in the Agreement) over a 10-year period. If OPPD has not purchased the educational services by the end of the term, MCC shall have the right to extend the Agreement for an additional five years. As of December 31, 2016, OPPD's remaining commitment was $136,000.

Under the provisions of the Price-Anderson Act as of December 31, 2016, 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 $127,318,000 per reactor, per incident, with a maximum of $18,963,000 per incident in any one calendar year. These amounts are subject to adjustment every five years in accordance with the Consumer Price Index.

OPPD has received and responded to requests for information from the Environmental Protection Agency (EPA) relating to compliance with the Clean Air Act at the North Omaha and NCl stations. OPPD received a Notice of Violation (NO\~ from the EPA in August 2014 alleging a violation of the Clean Air Act by undertaking certain projects at NCl. The Company believes it has complied with all regulations relative to the projects in question and has discussed the matters with EPA. The EPA would have to establish the allega-tions in the NOV in court. If the EPA establishes a Clean Air Act violation in court, which could be subject to possible appellate court review, remedies can include civil penalties and a requirement to install pollution-control equipment. OPPD cannot determine at this time whether it will have any future financial obligation with respect to the NOV.

The Company is engaged in routine litigation incidental to the conduct of its business and, in the opinion of Management, based upon the advice of General Counsel, the aggregate amounts recoverable or payable, taking into account amounts provided in the financial statements, are not significant.

60 OPPD ANNUAL REPORT 2016

16. SUBSEQUENT EVENTS The Company was notified in February 2017 by one of the wind providers that OPPD will receive a one-time rebate payment of $7,771,000 as part of the Nebraska Advantage Act. The PPA states that the Company is entitled to an equal share of any benefit of legislation adopted by the state of Nebraska that provides credits or incentives that can be applied to offset the cost of delivered energy. The rebate is due to OPPD in 2017.

OPPD accepted an insurance claim settlement for the NC2 turbine outage and received payment in january 2017 for $6,760,000. The turbine replacement project is scheduled to be completed during the spring 2017. Any differences between the actual costs and the settlement will be adjusted accordingly with the insurance carrier.

OPPD ANNUAL REPORT 2016 61

Required Supplementary Information Schedule of Changes in Net Pension Liability and Related Ratios The following schedule shows the history of changes in Net Pension Liability as of December 31 using a January 1 measurement date (in thousands).

2016 2015 TOTAL PENSION LIABILITY Service cost $ 23,224 $ 22,492 Interest on total pension liability 100,285 93,643 Changes of benefit terms 1,268 Difference between expected and actual experience 2,593 (5,328)

Changes of assumptions 54,712 Benefit payments, including refunds of employee contributions (81,441) (79,681)

Net change in total pension liability 45,929 85,838 Total pension liability (beginning) 1,310,737 1,224,899 Total pension liability (ending) (a) s 1,356,666 $1,310,737 PLA,.~ FIDUCIARY NET POSITION Contributions from employer $ 46,568 $ 53,008 Contributions from employee 12,375 11,720 Net investment income (11,465) 32,020 Benefit payments, including refunds of employee contributions (81,441) (79,681)

Administrative expense (111) (193)

Net change in plan fiduciary net position (34,074) 16,874 Plan fiduciary net position (beginning) 903,563 886,689 Plan fiduciary net position (ending) (b) $ 869!489 s 9031563 Net pension liability (ending) (a)-(b) $ 487,177 $ 407,174 Plan fiduciary net position as a percentage of total pension liability 64.09% 68.94%

Covered-employee payroll $ 200,905 $ 196,344 Net pension liability as a percentage of covered-employee payroll 242.49% 207.38%

Schedule is intended to shaw information for 10 years. Additional years will be displayed when available.

SCHEDULE OF CONTRIBUTIONS The following table shows the history of Contributions as of December 31, using a January 1 measurement date (in thousands).

2016 2015 2014 Actuarially determined contribution $ 50,711 $ 46,568 $ 53,008 Contribution made in relation to the actuarially determined contribution 50,711 46,568 53,008 Contribution deficiency (excess) $ $ $

Covered-employee payroll $200,905 $196,344 $194,100 Contributions as a percentage of payroll 25.24% 23.72% 27.31%

Schedule is intended to show information for 10 years. Additional years will bedisplayedwhen available.

62 OPPD ANNUAL REPORT 201 6

Notes to Required Supplementary Information Valuation Date: Actuarially determined contribution rates are calculated as of January 1; one-year prior to the end of the fiscal year in which contri-butions are reported.

Methods and Assumptions used to Determined Contribution Rates Actuarial Cost Method: Entry Age Normal with 20-year closed amortization period for unfunded liability Asset Valuation Method: five-year smoothing Salary Increases: Varies by age Investment Rate of Return: 7.00% for 2016, 7.75% for 2015 and earlier Retirement Rates: Varies by age and service Mortality Rates: RP-2014 Aggregate mortality table with generational projection using Scale MP-2014 OPPD ANNUAL REPORT 2016 63

Statistics (Unaudited) 2016 2015 2014 2013 2012 2011 2010 2009 2008 2007 Total Utility Plant (at year end)

(in thousands of dollars) ...... 4,305,055 5,574,941 5,395,489 5,288,168 5,187,395 5,027,093 4,865,417 4,678,449 4,561,815 4,259,501 Total Indebtedness (at year end)

(in thousands of dollars)...... 2,193,921 2,256,348 2,224,843 2,267,277 2,296,305 2,085,540 2,011,969 1,937,704 1,902,403 1,866,472 Operating Revenues (in thousands of dollars)

Residential ............................. 410,957 383,051 379,986 385,171 362,105 337,053 335,294 292,887 271,935 267,042 Cornmerdal .......................... 324,545 315,079 311,917 306,719 292,296 274,102 284,400 265,668 238,496 228,060 Industrial ............... ................ 210,912 201,805 207,649 213,742 197,225 186,417 164,621 139,865 109,827 100,239 Off-System Sales ................... 175,506 195,512 223,055 118,268 123,191 159,732 184,374 158,354 127,676 110,399 FPPA Revenue .................... ... (6,115) (19,166) (20,147) 15,169 (3,237) 35,345 269 Unbilled Revenues ................ 6,753 (976) (1,800) 4,490 4,517 (4,239) 1,232 7,449 3,391 1,742 Provision for Rate Stabilization (26,000) 25,000 (4,000)

Provision for Debt Retirement 17,000 17,000 24,000 (13,000) 13,000 20,000 27,000 Other Electric Revenues ....... 29,918 30,930 29,798 29,654 54,900 29,352 29,160 22,743 16,648 15,771 Total ................................... 1,126,476 1,131,235 1,126,458 1,090,213 1,047,997 1,041,762 986,350 899,966 787,973 750,253 Operations & Maintenance Expenses (in thousands of dollars) ...... 823,857 841,939 832,519 796,104 770,073 789,516 720,957 653,993 561,396 508,524 Payments in Ueu of Taxes (in thousands of dollars) ...... 34,138 32,241 31,651 31,827 30,094 28,217 27,851 24,810 22,426 21,398 Net Operating Revenues before Dep~tlon,~ortization and Decommissioning (in thousands of dollars) ...... 268,481 257,055 262,288 262,282 247,830 224,029 237,542 221,163 204,151 220,331 Net Income Before Special Item (in thousands of dollars) ...... 25,750 32,322 51,925 55,276 54,829 54,440 40,047 46,557 79,186 89,489 Special Item (in thousands of dollars) ...... (959,575)

Net Income (Loss)

(in thousands of dollars) ...... (933,825) 32,322 51,925 55,276 54,829 54,440 40,047 46,557 79,186 89,489 Energy Sales (in megawatt-hours)

Residential............................. 3,588,933 3,470,523 3,559,978 3,607,439 3,595,316 3,602,973 3,644,400 3,361,672 3,486,858 3,546,116 Cornmerdal .... ...................... 3,683,821 3,630,557 3,638,193 3,561,707 3,492,745 3,481,459 3,777,092 3,672,982 3,758,853 3,750,634 Industrial ............................... 3,328,290 3,301,175 3,500,977 3,606,611 3,670,346 3,698,719 3,427,710 3,039,396 2,877,282 2,759,087 Off-System Sales................... 7,238,266 7,840,683 7,694,203 3,925,574 3,671,978 4,631,175 5,552,645 5,534,803 3,003,888 2,858,004 Unbilled Sales ....................... 63,638 (26,640) (39,493) 26,221 28,558 (85,917) (24,109) 74,416 50,374 13,858 Total ................................... 17,902,948 18,216,298 18,353,858 14,727,552 14,458,943 15,328,409 16,377,738 15,683,269 13,177,255 12,927,699 Number of Curtomers (average per year)

Residential ............................. 323,784 319,501 315,705 311,921 308,516 308,412 303,374 299,813 296,648 293,642 Cornmerdal .......................... 45,537 45,104 44,785 44,221 43,589 43,564 43,225 43,134 42,867 42,214 Industrial ............................... 164 174 177 193 210 206 154 151 142 134 Off-System ............................. 15 11 15 33 35 41 38 34 32 35 Total ................................... 369,500 364,790 360,682 356,368 352,350 352,223 346,791 343,132 339,689 336,025 Cents Per kWh (average)

Residential ............................. 11.47 11.07 10.68 10.68 10.12 9.37 9.22 8.77 7.82 7.51 Cornmerdal .......................... 8.81 8.69 8.57 8.61 8.40 7.89 7.54 7.29 6.36 6.07 L'ldustrial ............................... 6.35 6.12 5.94 5.96 5.38 5.05 4.83 4.62 3.82 3.64 Retail ...................................... 8.94 8.66 8.42 8.43 7.94 7.42 7.26 6.96 6.13 5.93 Generating Capability (at year end)

(in megawatts) ...................... 2,490.1 3,080.3 3,232.1 3,237.0 3,208.8 3,222.7 3,224.7 3,223.9 2,548.8 2,548.8 System Peak Load (in megawatts) ...................... 2,354.4 2,315.1 2,291.1 2,339.4 2,451.6 2,468.3 2,402.8 2,316.4 2,181.1 2,197.4 Net System Requirements (in megawatt-hours)

Generated.............................. 14,689,524 15,399,002 16,212,801 13,209,542 12,855,389 13,807,712 15,870,513 15,263,983 12,477,032 12,274,660 Purchased and Net Interchanged ..................... (3,502,796) (4,488,016) (5,026,318) (1,819,871) (1,529,643) (2,576,167) (4,428,059) (4,627,627) (1,864,214) (1,738,833)

Net ......................................... 11,186,728 10,910,986 11,186,483 11,389,671 11,325,746 11,231,545 11,442,454 10,636,356 10,612,818 10,535,827 64 OPPD ANNUAL REPORT 2016

Investor Relations and Corporate Information Corporate Headquarters Commercial Paper Holders OPPD Minibond Holders Energy Plaza Issuing and Paying Agent OPPD is the Paying Agent, Transfer Agent and 444 South 16th Street Mall The Bank of New York Mellon Trust Registrar on OPPD's Minibonds. OPPD Mini-Omaha, Nebraska 68 102-224 7 Company, N.A. bond Administration provides information and 402-636-2000 New York, New York assistance to Minibond holders regarding:

oppd.com

• Interest Payments General Counsel Senior, Subordinate and Interest on Current Interest-Bearing Minibonds Fraser Stryker PC LLO Separate System Bondholders is paid on April1 and October 1 each year.

Omaha, Nebraska You may contact OPPD with questions

• Ownership Transfer about OPPD debt at: Minibond Transfer Information Forms can be Financial Advisor Finance & Investor Relations obtained via oppd.com or by contacting the Barclays Capita/Inc.

Omaha Public Power District Minibond Administrator. (See below.)

New York, New York 444 South 16th Street Mall

• Optional Early Redemption Consulting Engineer Omaha, Nebraska 68102-2247

• Replacement of Lost Minibond Certificate NewGen Strategies & Solutions Email: finfo@oppd.com Minibond Administrator Lakewood, Colorado 402-636-3286 You may contact the Minibond Administrator at:

Independent Auditors Minibond Administrator The Trustee and Paying Agent on OPPD's Deloitte & Touche LLP Omaha Public Power District Senior lien Debt, Subordinated Revenue Omaha, Nebraska 444 South 16th Street Mall Bonds and Separate System Revenue Bonds is Bond Counsel The Bank of New York Mellon Trust Company, Omaha, Nebraska 68102-2247 Kutak Rock LLP N.A. You may contact The Bank of New York Email: minibonds@oppd.com Omaha, Nebraska Mellon Trust Company, N.A. directly at: Omaha, Nebraska, area: 402-636-3286 Outstate Nebraska: 800-428-5584 The Bank of New York Mellon Trust Company, N.A.

Global Corporate Trust Available Financial Information 2 North LaSalle Street, Suite 1020 In compliance with Securities and Exchange Chicago, Illinois 60602 Commission Rule 15c2-12, information regard*

ing OPPD is available through the Municipal Email: corporate. bond. research@bnymellon. com Securities Rulemaking Board's Electronic Bondholder Communications: 800-254-2826 Municipal Market Access System. Copies of its most recent annual reports, interim reports and official statements also are available upon request at finfo@oppd.com or at the following address:

Finance Division Omaha Public Power District 444 South 16th Street Mall Omaha, Nebraska 68102-2247 Financial information in the annual report also is available at oppd.com

Energy Plaza 444 South 16th Street Mall Omaha, Nebraska 68102 Omaha Public PcJ,ier District