News Release: Moody’s Upgrades Rating of Metropolitan Utilities District

October 16, 2017, Omaha, Neb. – Citing “strengthened financial position and growing service area,” Moody’s Investors Service upgraded Metropolitan Utilities District’s water system bond rating two notches to “Aa2" with a “stable outlook.” The District was previously rated “A1” by the rating agency. The District currently has $220 million of water revenue bonds outstanding.

“We are pleased that Moody’s has recognized the strong financial condition of the District,” said M.U.D. President Scott Keep. “By raising the District’s rating two steps, not a common event, this is a very strong endorsement of the financial decisions of our Board and the impressive financial management of our staff.”

In addition to noting the District’s growing service area, Moody’s noted the District’s improved liquidity and moderate debt burden. The District serves more than 200,000 water and gas customers located within 241 square miles in Omaha and nearby communities. In 2016, its 15 leading water customers represented only 7 percent of revenue, a statistic that speaks to the diversity of its service area economy. The rating agency also described the District’s debt service coverage as “healthy.”

M.U.D. Chief Financial Officer Debra Schneider said, “This upgrade validates the sound fiscal policies the board and staff of the District have worked hard to develop and implement. Specifically, our focus on improving liquidity, meeting debt service coverage, maintaining a moderate debt burden and solid asset management. We continue to responsibly invest in infrastructure to ensure safe, reliable and cost-effective service to our customers.”

About Metropolitan Utilities District

M.U.D. provides safe, reliable, and cost-effective natural gas and water services to our community. We serve safe drinking water to 211,263 customers in the metropolitan Omaha area and maintain nearly 27,000 hydrants for fire protection. As the fifth largest public gas utility in the United States, we also serve natural gas to 227,106 customers. We are a public utility and proud to be customer-owned. The District is governed by a board of seven directors, elected by our customer-owners. Visit www.mudomaha.com for more information.

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Media Contact: Tracey Christensen, APR Director of Communications 402.504.7215 tracey_christensen@mudnebr.com

U.S. PUBLIC FINANCE

CREDIT OPINION16 October 2017

Update

Contacts

Daniel Simpson +1.312.706.9965Analystdan.simpson@moodys.com

Matthew Butler +1.312.706.9970VP-Senior Analystmatthew.butler@moodys.com

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Metropolitan Utilities District of Omaha, NEUpdate - Moody's Upgrades Metropolitan Utilities District ofOmaha, NE's Water Revenue Bonds to Aa2; Outlook Stable

Summary Rating RationaleMoody's Investors Service has upgraded the Metropolitan Utilities District of Omaha, NE'swater revenue bonds to Aa2 from A1. The district currently has $220 million of waterrevenue bonds outstanding. The outlook remains stable.

The upgrade to Aa2 is primarily driven by the district's strengthened financial positionand growing service area that includes the economically strong Omaha metro area. Therating also incorporates the district's strong asset condition, adequate legal covenants, andmoderate debt burden.

Credit Strengths

» Growing service area that includes the economically strong Omaha metro area

» Strong management team indicated by recent improvement in the district's liquidity anddebt service coverage

» Unlimited rate setting authority vested in the district's Board of Directors

Credit Challenges

» Customer base may be rate sensitive due to debt service obligations from overlappingentities

Rating OutlookThe stable outlook reflects our expectation that the district's growing service area andstrong rate setting record will support the maintenance of healthy debt service coverage andliquidity over the near term.

Factors that Could Lead to an Upgrade

» Substantial growth in the water system's service area and strengthening of residentincome indices

» Continued improvement in the water system's liquidity

Factors that Could Lead to a Downgrade

» Liquidity falling below 180 days cash on hand

» Reduction in net income that results in narrowed debt service coverage

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» Significant increase in leverage and growth in fixed costs

Key Indicators

Exhibit 1

Omaha Metropolitan Utilities District, Water Enterprise, NE

System Characteristics

Asset Condition (Net Fixed Assets / Annual Depreciation) 62 years

System Size - O&M (in $000s) 67,506

Service Area Wealth: MFI % of US median 108.00%

Legal Provisions

Rate Covenant (x) 1.20x

Debt Service Reserve Requirement Series 2012: DSRF funded at less 3-prong test (Aa); Series 2015: NO explicit DSRF

Management

Rate Management Aa

Regulatory Compliance and Capital Planning Aa

Financial Strength

2012 2013 2014 2015 2016

Operating Revenue ($000) 110,229 106,199 106,047 102,964 115,095

System Size - O&M (in $000s) 67,372 67,854 69,812 66,147 67,506

Net Funded Debt ($000) 222,525 204,743 197,141 230,309 219,617

Annual Debt Service Coverage (x) 2.98x 2.53x 2.45x 2.51x 3.04x

Cash on Hand 1 days 90 days 79 days 160 days 266 days

Debt to Operating Revenues (x) 2.0x 1.9x 1.9x 2.2x 1.9x

Source: District's audited financial statements, Moody's Investors Service, US Census Bureau

Detailed Rating ConsiderationsService Area and System Characteristics: Expanding Omaha metro area anchors growing customer baseWe expect the water system's expanding service area, which includes the Omaha metro area, will support continued customer growth.The Omaha region is home to a very diverse economy and growing employment base, both of which support low unemployment.The Metropolitan Utilities District of Omaha was created in 1913 as a public utility governed by a locally elected board. The districtprovides water and gas services to a nearly coterminous area. The district's water services encompass a 288 square-mile service areathat includes Omaha, substantial portions of Douglas (Aaa) and Sarpy (Aaa stable) Counties, as well as parts of Washington County.

In 2016 the system had approximately 212,000 customers, which reflected an average of 0.9% year-over-year growth for the last threeyears. The district projects a 0.5% annual increase in customers going forward. The customer base includes stable entities such as theCity of Omaha (Aa2 stable), Douglas County School District 1 (Omaha) (Aa2 stable), the Offutt Air Force Base and Creighton University(A2 positive). The largest fifteen customers of the district account for 11% of consumption and 7% revenue.

Three water treatment plants provide a combined maximum capacity of approximately 318 million gallons per day (MGD). The watersystem's current capacity is healthy with average daily demand measuring 87 MGD in 2016. Water is provided through well fieldslocated on the Platte River and surface water from the Missouri River.

Debt Service Coverage and Liquidity: Water rate increases spur improvement in debt service and liquidityDebt service coverage and liquidity are expected to remain healthy. Fiscal 2016 net water revenue provided 3.0x coverage of thatyear's debt service. This was up from historic levels. From 2011 through 2014, net water revenue coverage averaged 2.40x debt service

This publication does not announce a credit rating action. For any credit ratings referenced in this publication, please see the ratings tab on the issuer/entity page onwww.moodys.com for the most updated credit rating action information and rating history.

2 16 October 2017 Metropolitan Utilities District of Omaha, NE: Update - Moody's Upgrades Metropolitan Utilities District of Omaha, NE's Water Revenue Bonds to Aa2;Outlook Stable

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before improving to 2.50x in fiscal 2015. The improvement in debt service coverage was largely driven by a series of annual water rateincreases that began in 2011. Fiscal 2016 net revenue provided 2.6x coverage of maximum annual debt service (MADS).

LIQUIDITYWater enterprise liquidity is expected to remain strong. At the close of fiscal 2016, the water enterprise held $49 million in unrestrictedcash and investments, or 266 days of operating and maintenance (O&M) expenditures. Management has significantly improved theliquidity of the water enterprise since 2012, when liquidity stood at a very low $300,000. Management targets at least 180 days ofO&M and has no plans to significantly reduce current liquidity levels.

Debt and Legal Covenants: Leverage to remain moderateThe water enterprise debt burden is moderate and plans for additional borrowing are modest through 2021. In fiscal 2016, debt tooperating revenues was 1.9x. The district's current capital plan assumes issuance up to $30 million in bonds in 2019 to address currentneeds of the system's largest water treatment plant. We expect a lack of significant capital needs and anticipated growth in revenuewill keep the debt burden moderate.

Outstanding debt is secured by net revenue of the water enterprise and carries a rate covenant and an additional bonds test of 1.20xaverage annual debt service. Only the water system's outstanding Series 2012 bonds carry a debt service reserve requirement, whichwas funded with $3 million of original bond proceeds. The required debt service reserve is set at the lessor of MADS, 1.25x averageannual debt service, or 10% of original principal.

DEBT STRUCTUREAll debt secured by net revenue of the water enterprise is fixed rate. All outstanding water enterprise debt will be retired by 2035.

DEBT-RELATED DERIVATIVESThe district has no exposure to debt-related derivatives.

PENSIONS AND OPEBWater and gas employees participate in a Metropolitan Utilities District of Omaha's Retirement Plan, a single-employer defined benefitpension plan administered by the district. In fiscal 2016, the water system's pension contribution, net of gas enterprise support, was$4.7 million,or 4.0% of operating revenues.

The district operates a single-employer OPEB plan for retiree healthcare. As of January 1, 2015, the reported unfunded liability was$200 million. The district's fiscal 2016 OPEB contribution consisted of a $3.2 million pay-go contribution and a $5 million contributionto its OPEB trust, which the district recently created to begin pre-funding benefits. The district intends to increase its annual OPEBcontribution so that within five years it will be funding at the actuarial required contribution level. Total fiscal 2016 OPEB contributionswere $8.2 million, or 3.0% of combined gas and water system operating revenues.

Management and Governance: Board of directors have unlimited rate setting authority and oversight of enterprisesThe Board of the Metropolitan Utilities District has unlimited rate setting authority. Since 2011, the administration regularly raisedwater rates, which improved debt service coverage and liquidity. Unlike the water system, the gas system does not materially relyon the board's willingness and ability to increase rates and instead relies on its automatic gas cost adjustment. The majority of thedistrict's employees are represented by one local union. The current contract is settled through March 31, 2018. Under Nebraska law,unions and their members are not permitted to strike or otherwise disrupt the operations of a public utility service.

Legal SecurityOutstanding water revenue bonds are secured by a senior lien on net revenue of the district's water system.

Use of ProceedsNot Applicable.

Obligor ProfileMetropolitan Utilities District of Omaha was created in the early 1900s as a political subdivision by the Nebraska legislature to providewater and gas service to the Omaha metropolitan area. The district is governed by an elected board of directors that serve seven yearterms and is the only municipal utility district in Nebraska.

3 16 October 2017 Metropolitan Utilities District of Omaha, NE: Update - Moody's Upgrades Metropolitan Utilities District of Omaha, NE's Water Revenue Bonds to Aa2;Outlook Stable

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MethodologyThe principal methodology used in this rating was US Municipal Utility Revenue Debt published in December 2014. Please see theRating Methodologies page on www.moodys.com for a copy of this methodology.

4 16 October 2017 Metropolitan Utilities District of Omaha, NE: Update - Moody's Upgrades Metropolitan Utilities District of Omaha, NE's Water Revenue Bonds to Aa2;Outlook Stable

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6 16 October 2017 Metropolitan Utilities District of Omaha, NE: Update - Moody's Upgrades Metropolitan Utilities District of Omaha, NE's Water Revenue Bonds to Aa2;Outlook Stable