American Municipal Power, Inc. Consolidated Financial Statements December 31, 2016 and 2015 American Municipal Power, Inc. Index December 31, 2016 and 2015 Page(s) ReportofIndependent Auditors...........................................................................................................1–2 ConsolidatedFinancialStatements BalanceSheets........................................................................................................................................3–4 StatementsofRevenuesandExpenses......................................................................................................5 StatementsofChangesinMemberandPatronEquities.............................................................................6 StatementsofCashFlows.......................................................................................................................7–8 NotestoFinancialStatements...............................................................................................................9–66 ReportofIndependent Auditors TotheBoardofTrusteesandMembersof AmericanMunicipalPower,Inc. WehaveauditedtheaccompanyingconsolidatedfinancialstatementsofAmericanMunicipalPower,Inc. anditssubsidiaries,whichcomprisetheconsolidatedbalancesheetsasofDecember31,2016and2015, andtherelatedconsolidatedstatementsofrevenuesandexpenses,ofchangesinmemberandpatron equities,andofcashflowsfortheyearsthenended. Management’sResponsibilityfortheConsolidatedFinancialStatements Managementisresponsibleforthepreparationandfairpresentationoftheconsolidatedfinancial statementsinaccordancewithaccountingprinciplesgenerallyacceptedintheUnitedStatesofAmerica; thisincludesthedesign,implementation,andmaintenanceofinternalcontrolrelevanttothepreparation andfairpresentationofconsolidatedfinancialstatementsthatarefreefrommaterialmisstatement, whetherduetofraudorerror. Auditors’Responsibility Ourresponsibilityistoexpressanopinionontheconsolidatedfinancialstatementsbasedonouraudits. WeconductedourauditsinaccordancewithauditingstandardsgenerallyacceptedintheUnitedStatesof America. Thosestandardsrequirethatweplanandperformtheaudittoobtainreasonableassurance aboutwhethertheconsolidatedfinancialstatementsarefreefrommaterialmisstatement. Anauditinvolvesperformingprocedurestoobtainauditevidenceabouttheamountsanddisclosuresin theconsolidatedfinancialstatements. Theproceduresselecteddependonourjudgment,includingthe assessmentoftherisksofmaterialmisstatementoftheconsolidatedfinancialstatements,whetherdueto fraudorerror. Inmakingthoseriskassessments,weconsiderinternalcontrolrelevanttotheCompany’s preparationandfairpresentationoftheconsolidatedfinancialstatementsinordertodesignaudit proceduresthatareappropriateinthecircumstances,butnotforthepurposeofexpressinganopinionon theeffectivenessoftheCompany’sinternalcontrol. Accordingly,weexpressnosuchopinion. Anaudit alsoincludesevaluatingtheappropriatenessofaccountingpoliciesusedandthereasonablenessof significantaccountingestimatesmadebymanagement,aswellasevaluatingtheoverallpresentationof theconsolidatedfinancialstatements. Webelievethattheauditevidencewehaveobtainedissufficient andappropriatetoprovideabasisforourauditopinion. PricewaterhouseCoopersLLP,41SouthHighStreet,Suite2500,Columbus,OH43215 T:(614)2258700,F:(614)2241044,www.pwc.com/us Opinion Inouropinion,theconsolidatedfinancialstatementsreferredtoabovepresentfairly,inallmaterial respects,thefinancialpositionofAmericanMunicipalPower,Inc.anditssubsidiariesasofDecember31, 2016and2015,andtheresultsoftheiroperationsandtheircashflowsfortheyearsthenendedin accordancewithaccountingprinciplesgenerallyacceptedintheUnitedStatesofAmerica. April19,2017 2 American Municipal Power, Inc. Consolidated Balance Sheets December 31, 2016 and 2015 December31, December31, 2016 2015 Assets Utilityplant Electricplantinservice $ 3,976,142,251 $ 1,961,747,992 Accumulateddepreciation (313,992,944) (209,239,897) Totalutilityplant 3,662,149,307 1,752,508,095 Nonutilitypropertyandequipment Nonutilitypropertyandequipment 21,132,273 26,687,366 Accumulateddepreciation (9,827,151) (15,075,399) Totalnonutilitypropertyandequipment 11,305,122 11,611,967 Constructionwork-in-progress 848,457,212 2,542,984,068 Plantheldforfutureuse 34,881,075 35,444,960 Coalreserves 23,537,987 24,289,252 Trusteefundsandotherassets Trusteefunds 333,791,713 240,911,289 Trusteefunds-restricted 785,796,709 781,814,925 Financingreceivables-members 5,049,613 9,917,087 Notesreceivable 2,797,002 2,918,329 Regulatoryassets 416,798,128 331,928,040 InvestmentinTheEnergyAuthority 10,211,442 10,211,442 Intangibleandotherassets,netofaccumulated amortizationof$3,822,025and$3,057,620,respectively 27,270,915 32,776,674 Totaltrusteefundsandotherassets 1,581,715,522 1,410,477,786 Currentassets Cashandcashequivalents 131,846,461 107,158,983 Cashandcashequivalents-restricted 11,360,258 33,587,383 Trusteefunds 243,125,116 255,746,345 Trusteefunds-restricted 11,316,075 21,303,628 Investments 67,205 14,574,681 Collateralpostings 25,216,992 23,315,857 Accountsreceivable 87,363,342 87,651,299 Interestreceivable 30,221,054 23,065,760 Financingreceivables-members 26,337,558 17,398,543 Notesreceivable - 49,796,786 Inventories 8,403,648 8,010,440 Regulatoryassets 13,253,508 24,680,286 Prepaidexpensesandotherassets 7,306,074 5,521,148 Totalcurrentassets 595,817,291 671,811,139 Totalassets $ 6,757,863,516 $ 6,449,127,267 3 American Municipal Power, Inc. Consolidated Balance Sheets December 31, 2016 and 2015 December31, December31, 2016 2015 EquitiesandLiabilities Memberandpatronequities Contributedcapital $ 826,968 $ 813,018 Patronagecapital 77,061,450 66,813,898 Totalmemberandpatronequities 77,888,418 67,626,916 Long-termdebt Term debt 5,926,965,916 5,512,629,764 Term debtonbehalfofCentralVirginia ElectricCooperative 21,062,499 21,916,666 Revolvingcreditloan 203,500,000 350,900,000 Totallong-term debt 6,151,528,415 5,885,446,430 Currentliabilities Accountspayable 133,941,677 120,600,278 Accruedpostretirementbenefits - 3,509,648 Accruedinterest 134,892,971 126,762,465 Term debt 77,042,309 77,687,412 Term debtonbehalfofmembers 18,503,500 9,044,500 Term debtonbehalfofCentralVirginia ElectricCooperative 854,167 854,167 Regulatoryliabilities 4,664,527 5,724,815 Otherliabilities 18,404,436 29,210,298 Totalcurrentliabilities 388,303,587 373,393,583 Othernoncurrentliabilities Deferredgainonsaleofrealestate 1,161,368 1,211,736 Assetretirementobligations 7,772,557 7,696,014 Regulatoryliabilities 61,414,452 47,110,528 Otherliabilities 69,794,719 66,642,061 Totalothernoncurrentliabilities 140,143,096 122,660,339 Totalliabilities 6,679,975,098 6,381,500,352 Totalequitiesandliabilities $ 6,757,863,516 $ 6,449,127,267 Theaccompanyingnotesareanintegralpartoftheseconsolidatedfinancialstatements. 4 American Municipal Power, Inc. Consolidated Statements of Revenues and Expenses Years Ended December 31, 2016 and 2015 December31, December31, 2016 2015 Revenues Electricrevenue $ 1,218,475,675 $ 1,103,886,270 Servicefees 11,501,983 11,515,575 Programsandother 12,513,647 12,589,167 Totalrevenues 1,242,491,305 1,127,991,012 Operatingexpenses Purchasedelectricpower 586,225,109 630,841,544 Production 189,894,065 153,816,006 Fuel 109,873,099 134,439,105 Depreciationandamortization 108,087,872 58,815,265 Administrativeandgeneral 10,932,461 4,527,526 Propertyandrealestatetaxes 9,329,282 4,236,294 Programsandother 14,257,250 16,157,022 Totaloperatingexpenses 1,028,599,138 1,002,832,762 Operatingmargin 213,892,167 125,158,250 Nonoperatingrevenues(expenses) Interestexpense (265,860,845) (141,574,043) Interestincome,subsidy 45,080,516 13,541,226 Interestincome,other 13,355,383 16,633,800 Other,net 3,780,331 (7,935,393) Totalnonoperatingexpenses (203,644,615) (119,334,410) Netmargin $ 10,247,552 $ 5,823,840 Theaccompanyingnotesareanintegralpartoftheseconsolidatedfinancialstatements. 5 American Municipal Power, Inc. Consolidated Statements of Changes in Member and Patron Equities Years Ended December 31, 2016 and 2015 Contributed Patronage Capital Capital Total BalancesatDecember31,2014 $ 806,248 $ 60,990,058 $ 61,796,306 Capitalcontributions 6,770 - 6,770 Netmargin - 5,823,840 5,823,840 BalancesatDecember31,2015 813,018 66,813,898 67,626,916 Capitalcontributions 13,950 - 13,950 Netmargin - 10,247,552 10,247,552 BalancesatDecember31,2016 $ 826,968 $ 77,061,450 $ 77,888,418 Theaccompanyingnotesareanintegralpartoftheseconsolidatedfinancialstatements. 6 American Municipal Power, Inc. Consolidated Statements of Cash Flows Years Ended December 31, 2016 and 2015 December31, December31, 2016 2015 Cashflowsfromoperatingactivities Netmargin $ 10,247,552 $ 5,823,840 Adjustmentstoreconcilenetmargintonetcash providedbyoperatingactivities Depreciationandamortization 107,336,607 57,918,097 Depletionofcoalreserves 751,265 756,398 Amortizationofdeferredfinancingcosts 5,125,243 4,442,296 Amortizationofbondpremium,netof amortizationofbonddiscount (8,337,936) (6,062,329) Accretionofinterestonassetretirementobligations 357,146 (39,101) Lossondisposalofutilitypropertyandequipment 176,585 2,481,393 Unrealized(gain)lossoninvestments (3,594,537) 4,643,182 Changesinassetsandliabilities Collateralpostings (1,901,135) (2,526,258) Accountsreceivable 287,957 (12,568,879) Interestreceivable (12,703,615) (8,674,908) Inventories (393,208) (649,383) Regulatoryassetsandliabilities,net (70,155,002) (12,219,649) Prepaidexpensesandotherassets 2,020,849 2,092,699 Accountspayable (3,240,099) 5,521,683 Accruedpostretirementbenefits (3,509,648) 2,827,587 Accruedinterest 58,913,168 12,522,147 Assetretirementobligations (280,603) 6,696 Otherliabilities 3,920,905 42,433 Netcashprovidedbyoperatingactivities 85,021,494 56,337,944 Cashflowsfrominvestingactivities Purchaseofutilitypropertyandequipment (115,702,666) (9,200,486) Purchaseofnonutilitypropertyandequipment (562,484) (285,959) Proceedsduetorepaymentsofloansmadetorelatedparties 49,796,786 8,000,726 Purchaseofconstructionwork-in-progress (235,613,139) (390,153,743) Proceedsfromsaleofinvestments 892,926,205 418,334,777 Purchaseofinvestments (949,077,619) (841,074,563) Purchaseofplantheldforfutureuse 563,885 (329,122) Changesinrestrictedcashandcashequivalents 22,227,125 (8,319,765) Netcashusedininvestingactivities (335,441,907) (823,028,135) Theaccompanyingnotesareanintegralpartoftheseconsolidatedfinancialstatements. 7 American Municipal Power, Inc. Consolidated Statements of Cash Flows Years Ended December 31, 2016 and 2015 December31, December31, 2016 2015 Cashflowsfromfinancingactivities Proceedsfromrevolvingcreditloan 224,200,000 129,000,000 Paymentsonrevolvingcreditloan (371,600,000) (94,100,000) Costofissuanceofdebt (4,169,903) (4,517,800) Principalpaymentsontermdebt (77,687,412) (64,650,843) Principalpaymentsontermdebtonbehalfofmembers (9,044,500) (12,113,000) Proceedsfromissuanceoftermdebt 499,817,964 839,462,257 Proceedsfromissuanceoftermdebt onbehalfofmembers 18,503,500 9,044,500 Principalpaymentsontermdebtonbehalfof CentralVirginiaElectricCooperative (854,167) (854,167) Proceedsfromfinancingreceivables-members 7,272,170 16,439,515 Fundingoffinancingreceivables-members (11,343,711) (14,438,195) Capitalcontributions 13,950 6,770 Netcashprovidedbyfinancingactivities 275,107,891 803,279,037 Netchangeincashandcashequivalents 24,687,478 36,588,846 Cashandcashequivalents Beginningofperiod 107,158,983 70,570,137 Endofperiod $ 131,846,461 $ 107,158,983 Supplementaldisclosureofcashflowinformation Cashpaidduringtheperiodforinterest,netof amountcapitalized $ 207,221,609 $ 129,322,406 Supplementaldisclosureofnoncash investingandfinancingactivities Capitalexpendituresincludedinaccountspayable $ 59,865,516 $ 43,063,274 Capitalexpendituresincludedinaccruedinterest, netofinterestreceivable 17,231,335 62,265,675 Theaccompanyingnotesareanintegralpartoftheseconsolidatedfinancialstatements. 8