BERKSHIRE HATHAWAY ENERGY CO (Form: 10-Q, Received: 08/07/2015 19:03:05)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

[X] Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the quarterly period ended June 30, 2015

[ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the transition period from ______ to _______



Commission File Number	Exact name of registrant as specified in its charter; State or other jurisdiction of incorporation or organization	IRS Employer Identification No.

001-14881	BERKSHIRE HATHAWAY ENERGY COMPANY	94-2213782
	(An Iowa Corporation)
	666 Grand Avenue, Suite 500
	Des Moines, Iowa 50309-2580
	515-242-4300

	N/A



(Former name, former address and former fiscal year, if changed since last report)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes x No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See the definitions of "large accelerated filer," "accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Exchange Act.



Large accelerated filer o	Accelerated filer o	Non-accelerated filer x	Smaller reporting company o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes o No x

All of the shares of common equity of Berkshire Hathaway Energy Company are privately held by a limited group of investors. As of July 31, 2015 , 77,391,144 shares of common stock were outstanding.

TABLE OF CONTENTS

PART I



Item 1.	Financial Statements	1
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	27
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	46
Item 4.	Controls and Procedures	46

PART II



Item 1.	Legal Proceedings	47
Item 1A.	Risk Factors	47
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	47
Item 3.	Defaults Upon Senior Securities	47
Item 4.	Mine Safety Disclosures	47
Item 5.	Other Information	47
Item 6.	Exhibits	47
Signatures		48
Exhibit Index		49

Definition of Abbreviations and Industry Terms

When used in Forward-Looking Statements, Part I - Items 2 through 4, and Part II - Items 1 through 6, the following terms have the definitions indicated.



Berkshire Hathaway Energy Company and Related Entities
BHE		Berkshire Hathaway Energy Company
Company		Berkshire Hathaway Energy Company and its subsidiaries
PacifiCorp		PacifiCorp and its subsidiaries
MidAmerican Funding		MidAmerican Funding, LLC and its subsidiaries
MidAmerican Energy		MidAmerican Energy Company
NV Energy		NV Energy, Inc. and its subsidiaries
Nevada Power		Nevada Power Company
Sierra Pacific		Sierra Pacific Power Company
Nevada Utilities		Nevada Power Company and Sierra Pacific Power Company
Northern Powergrid		Northern Powergrid Holdings Company
Northern Natural Gas		Northern Natural Gas Company
Kern River		Kern River Gas Transmission Company
AltaLink		BHE AltaLink Ltd.
ALP		AltaLink, L.P.
BHE U.S. Transmission		BHE U.S. Transmission, LLC
HomeServices		HomeServices of America, Inc. and its subsidiaries
BHE Pipeline Group		Consists of Northern Natural Gas and Kern River
BHE Transmission		Consists of AltaLink and BHE U.S. Transmission
BHE Renewables		Consists of BHE Renewables, LLC and CalEnergy Philippines
Utilities		PacifiCorp, MidAmerican Energy, Nevada Power and Sierra Pacific
Berkshire Hathaway		Berkshire Hathaway Inc. and its subsidiaries
Topaz		Topaz Solar Farms LLC
Topaz Project		550-megawatt solar project in California
Jumbo Road		Jumbo Road Holdings, LLC
Jumbo Road Project		300-megawatt wind-powered generating facility in Texas
Solar Star Funding		Solar Star Funding, LLC
Solar Star Projects		A combined 579-megawatt solar project in California

Certain Industry Terms
AESO		Alberta Electric System Operator
AFUDC		Allowance for Funds Used During Construction
AUC		Alberta Utilities Commission
EPA		United States Environmental Protection Agency
FERC		Federal Energy Regulatory Commission
GHG		Greenhouse Gases
IPUC		Idaho Public Utilities Commission
IUB		Iowa Utilities Board
kV		Kilovolt
MW		Megawatts
OPUC		Oregon Public Utility Commission
PUCN		Public Utilities Commission of Nevada
UPSC		Utah Public Service Commission
WPSC		Wyoming Public Service Commission
WUTC		Washington Utilities and Transportation Commission

Forward-Looking Statements

This report contains statements that do not directly or exclusively relate to historical facts. These statements are "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements can typically be identified by the use of forward-looking words, such as "will," "may," "could," "project," "believe," "anticipate," "expect," "estimate," "continue," "intend," "potential," "plan," "forecast" and similar terms. These statements are based upon the Company's current intentions, assumptions, expectations and beliefs and are subject to risks, uncertainties and other important factors. Many of these factors are outside the control of the Company and could cause actual results to differ materially from those expressed or implied by such forward-looking statements. These factors include, among others:


•	general economic, political and business conditions, as well as changes in, and compliance with, laws and regulations, including reliability and safety standards, affecting the Company's operations or related industries;


•	changes in, and compliance with, environmental laws, regulations, decisions and policies that could, among other items, increase operating and capital costs, reduce facility output, accelerate facility retirements or delay facility construction or acquisition;


•	the outcome of rate cases and other proceedings conducted by regulatory commissions or other governmental and legal bodies and the Company's ability to recover costs in rates in a timely manner;


•	changes in economic, industry, competition or weather conditions, as well as demographic trends, new technologies and various conservation, energy efficiency and distributed generation measures and programs, that could affect customer growth and usage, electricity and natural gas supply or the Company's ability to obtain long-term contracts with customers and suppliers;


•	performance and availability of the Company's facilities, including the impacts of outages and repairs, transmission constraints, weather, including wind, solar and hydroelectric conditions, and operating conditions;


•	a high degree of variance between actual and forecasted load or generation that could impact the Company's hedging strategy and the cost of balancing its generation resources with its retail load obligations;


•	changes in prices, availability and demand for wholesale electricity, coal, natural gas, other fuel sources and fuel transportation that could have a significant impact on generating capacity and energy costs;


•	the financial condition and creditworthiness of the Company's significant customers and suppliers;


•	changes in business strategy or development plans;


•	availability, terms and deployment of capital, including reductions in demand for investment-grade commercial paper, debt securities and other sources of debt financing and volatility in the London Interbank Offered Rate, the base interest rate for BHE 's and its subsidiaries' credit facilities;


•	changes in BHE 's and its subsidiaries' credit ratings;


•	risks relating to nuclear generation;


•	the impact of certain contracts used to mitigate or manage volume, price and interest rate risk, including increased collateral requirements, and changes in commodity prices, interest rates and other conditions that affect the fair value of certain contracts;


•	the impact of inflation on costs and the Company's ability to recover such costs in regulated rates;


•	increases in employee healthcare costs, including the implementation of the Affordable Care Act;


•	the impact of investment performance and changes in interest rates, legislation, healthcare cost trends, mortality and morbidity on pension and other postretirement benefits expense and funding requirements;


•	changes in the residential real estate brokerage and mortgage industries and regulations that could affect brokerage and mortgage transaction levels;


•	unanticipated construction delays, changes in costs, receipt of required permits and authorizations, ability to fund capital projects and other factors that could affect future facilities and infrastructure additions;


•	the availability and price of natural gas in applicable geographic regions and demand for natural gas supply;


•	the impact of new accounting guidance or changes in current accounting estimates and assumptions on the Company's consolidated financial results;

iii


•	the Company's ability to successfully integrate AltaLink and future acquired operations into its business;


•	the effects of catastrophic and other unforeseen events, which may be caused by factors beyond the Company's control or by a breakdown or failure of the Company's operating assets, including storms, floods, fires, earthquakes, explosions, landslides, mining accidents, litigation, wars, terrorism, and embargoes; and


•	other business or investment considerations that may be disclosed from time to time in BHE 's filings with the United States Securities and Exchange Commission or in other publicly disseminated written documents.

Further details of the potential risks and uncertainties affecting the Company are described in BHE 's filings with the United States Securities and Exchange Commission, including Part II, Item 1A and other discussions contained in this Form 10-Q. The Company undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. The foregoing factors should not be construed as exclusive.

PART I


Item 1.	Financial Statements

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Shareholders of

Berkshire Hathaway Energy Company

Des Moines, Iowa

We have reviewed the accompanying consolidated balance sheet of Berkshire Hathaway Energy Company and subsidiaries (the "Company") as of June 30, 2015 , and the related consolidated statements of operations and comprehensive income for the three-month and six-month periods ended June 30, 2015 and 2014 , and of changes in equity and cash flows for the six-month periods ended June 30, 2015 and 2014 . These interim financial statements are the responsibility of the Company's management.

We conducted our reviews in accordance with the standards of the Public Company Accounting Oversight Board (United States). A review of interim financial information consists principally of applying analytical procedures and making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an audit conducted in accordance with the standards of the Public Company Accounting Oversight Board (United States), the objective of which is the expression of an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion.

Based on our reviews, we are not aware of any material modifications that should be made to such consolidated interim financial statements for them to be in conformity with accounting principles generally accepted in the United States of America.

We have previously audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated balance sheet of Berkshire Hathaway Energy Company and subsidiaries as of December 31, 2014 , and the related consolidated statements of operations, comprehensive income, changes in equity, and cash flows for the year then ended (not presented herein); and in our report dated February 27, 2015 , we expressed an unqualified opinion on those consolidated financial statements. In our opinion, the information set forth in the accompanying consolidated balance sheet as of December 31, 2014 is fairly stated, in all material respects, in relation to the consolidated balance sheet from which it has been derived.

/s/ Deloitte & Touche LLP

Des Moines, Iowa

August 7, 2015

BERKSHIRE HATHAWAY ENERGY COMPANY AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS (Unaudited)

(Amounts in millions)



	As of
	June 30,		December 31,
	2015		2014
ASSETS
Current assets:
Cash and cash equivalents	$	1,132	$	617
Trade receivables, net	1,960		1,837
Income taxes receivable	87		1,156
Inventories	835		826
Mortgage loans held for sale	586		286
Other current assets	1,099		1,221
Total current assets	5,699		5,943

Property, plant and equipment, net	59,900		59,248
Goodwill	9,250		9,343
Regulatory assets	4,041		4,000
Investments and restricted cash and investments	3,296		2,803
Other assets	1,170		967

Total assets	$	83,356	$	82,304

The accompanying notes are an integral part of these consolidated financial statements.

BERKSHIRE HATHAWAY ENERGY COMPANY AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS (Unaudited) (continued)

(Amounts in millions)



	As of
	June 30,			December 31,
	2015			2014
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable	$	1,697		$	1,991
Accrued interest	479			454
Accrued property, income and other taxes	473			366
Accrued employee expenses	340			255
Short-term debt	1,025			1,445
Current portion of long-term debt	1,557			1,232
Other current liabilities	1,546			1,369
Total current liabilities	7,117			7,112

Regulatory liabilities	2,685			2,669
BHE senior debt	7,860			7,860
BHE junior subordinated debentures	3,194			3,794
Subsidiary debt	25,911			25,763
Deferred income taxes	12,060			11,802
Other long-term liabilities	2,791			2,731
Total liabilities	61,618			61,731

Commitments and contingencies (Note 13)

Equity:
BHE shareholders' equity:
Common stock - 115 shares authorized, no par value, 77 shares issued and outstanding	—			—
Additional paid-in capital	6,420			6,423
Retained earnings	15,563			14,513
Accumulated other comprehensive loss, net	(385		)	(494		)
Total BHE shareholders' equity	21,598			20,442
Noncontrolling interests	140			131
Total equity	21,738			20,573

Total liabilities and equity	$	83,356		$	82,304

The accompanying notes are an integral part of these consolidated financial statements.

BERKSHIRE HATHAWAY ENERGY COMPANY AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)

(Amounts in millions)



	Three-Month Periods						Six-Month Periods
	Ended June 30,						Ended June 30,
	2015			2014			2015			2014
Operating revenue:
Energy	$	3,690		$	3,486		$	7,463		$	7,377
Real estate	758			617			1,206			975
Total operating revenue	4,448			4,103			8,669			8,352

Operating costs and expenses:
Energy:
Cost of sales	1,229			1,286			2,583			2,918
Operating expense	935			857			1,841			1,679
Depreciation and amortization	604			494			1,185			969
Real estate	673			566			1,123			936
Total operating costs and expenses	3,441			3,203			6,732			6,502

Operating income	1,007			900			1,937			1,850

Other income (expense):
Interest expense	(476		)	(425		)	(948		)	(843		)
Capitalized interest	22			22			51			51
Allowance for equity funds	30			25			61			52
Interest and dividend income	26			9			52			18
Other, net	10			16			36			23
Total other income (expense)	(388		)	(353		)	(748		)	(699		)

Income before income tax expense and equity income	619			547			1,189			1,151
Income tax expense	82			153			205			265
Equity income	30			31			56			46
Net income	567			425			1,040			932
Net income attributable to noncontrolling interests	9			8			13			12
Net income attributable to BHE shareholders	$	558		$	417		$	1,027		$	920

The accompanying notes are an integral part of these consolidated financial statements.

BERKSHIRE HATHAWAY ENERGY COMPANY AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Unaudited)

(Amounts in millions)



	Three-Month Periods						Six-Month Periods
	Ended June 30,						Ended June 30,
	2015			2014			2015			2014

Net income	$	567		$	425		$	1,040		$	932

Other comprehensive income, net of tax:
Unrecognized amounts on retirement benefits, net of tax of $(11), $(1), $(3) and $-	(28		)	(3		)	(6		)	4
Foreign currency translation adjustment	263			102			(161		)	131
Unrealized gains (losses) on available-for-sale securities, net of tax of $77, $(37), $190 and $79	116			(56		)	282			117
Unrealized (losses) gains on cash flow hedges, net of tax of $(4), $4, $(3) and $13	(7		)	6			(6		)	19
Total other comprehensive income, net of tax	344			49			109			271

Comprehensive income	911			474			1,149			1,203
Comprehensive income attributable to noncontrolling interests	9			8			13			12
Comprehensive income attributable to BHE shareholders	$	902		$	466		$	1,136		$	1,191

The accompanying notes are an integral part of these consolidated financial statements.

BERKSHIRE HATHAWAY ENERGY COMPANY AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY (Unaudited)

(Amounts in millions)



	BHE Shareholders' Equity
										Accumulated
				Additional						Other
	Common			Paid-in			Retained			Comprehensive			Noncontrolling			Total
	Shares	Stock		Capital			Earnings			(Loss) Income, Net			Interests			Equity

Balance, December 31, 2013	77	$	—	$	6,390		$	12,418		$	(97	)	$	105		$	18,816
Net income	—	—		—			920			—			8			928
Other comprehensive income	—	—		—			—			271			—			271
Distributions	—	—		—			—			—			(11		)	(11		)
Other equity transactions	—	—		22			—			—			21			43
Balance, June 30, 2014	77	$	—	$	6,412		$	13,338		$	174		$	123		$	20,047

Balance, December 31, 2014	77	$	—	$	6,423		$	14,513		$	(494	)	$	131		$	20,573
Adoption of ASC 853	—	—		—			56			—			11			67
Net income	—	—		—			1,027			—			8			1,035
Other comprehensive income	—	—		—			—			109			—			109
Distributions	—	—		—			—			—			(10		)	(10		)
Common stock purchases	—	—		(3		)	(33		)	—			—			(36		)
Balance, June 30, 2015	77	$	—	$	6,420		$	15,563		$	(385	)	$	140		$	21,738

The accompanying notes are an integral part of these consolidated financial statements.

BERKSHIRE HATHAWAY ENERGY COMPANY AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)

(Amounts in millions)



	Six-Month Periods
	Ended June 30,
	2015			2014
Cash flows from operating activities:
Net income	$	1,040		$	932
Adjustments to reconcile net income to net cash flows from operating activities:
Depreciation and amortization	1,197			984
Allowance for equity funds	(61		)	(52		)
Equity income, net of distributions	(20		)	(32		)
Changes in regulatory assets and liabilities	243			(58		)
Deferred income taxes and amortization of investment tax credits	390			579
Other, net	13			62
Changes in other operating assets and liabilities, net of effects from acquisitions:
Trade receivables and other assets	(418		)	(84		)
Derivative collateral, net	5			(36		)
Pension and other postretirement benefit plans	(7		)	(19		)
Accrued property, income and other taxes	1,199			(151		)
Accounts payable and other liabilities	(48		)	57
Net cash flows from operating activities	3,533			2,182

Cash flows from investing activities:
Capital expenditures	(2,624		)	(2,385		)
Acquisitions, net of cash acquired	(59		)	(246		)
Decrease in restricted cash and investments	20			201
Purchases of available-for-sale securities	(102		)	(108		)
Proceeds from sales of available-for-sale securities	95			82
Equity method investments	(18		)	(22		)
Other, net	43			(1		)
Net cash flows from investing activities	(2,645		)	(2,479		)

Cash flows from financing activities:
Repayments of BHE senior debt and junior subordinated debentures	(600		)	(550		)
Common stock purchases	(36		)	—
Proceeds from subsidiary debt	1,238			1,272
Repayments of subsidiary debt	(527		)	(462		)
Net (repayments of) proceeds from short-term debt	(405		)	389
Other, net	(43		)	(43		)
Net cash flows from financing activities	(373		)	606

Net change in cash and cash equivalents	515			309
Cash and cash equivalents at beginning of period	617			1,175
Cash and cash equivalents at end of period	$	1,132		$	1,484

The accompanying notes are an integral part of these consolidated financial statements.

BERKSHIRE HATHAWAY ENERGY COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)


( 1 )	General

Berkshire Hathaway Energy Company (" BHE ") is a holding company that owns subsidiaries principally engaged in energy businesses (collectively with its subsidiaries, the "Company"). BHE is a consolidated subsidiary of Berkshire Hathaway Inc. ("Berkshire Hathaway").

The Company's operations are organized and managed as eight business segments: PacifiCorp, MidAmerican Funding, LLC ("MidAmerican Funding") (which primarily consists of MidAmerican Energy Company ("MidAmerican Energy")), NV Energy, Inc. ("NV Energy") (which primarily consists of Nevada Power Company ("Nevada Power") and Sierra Pacific Power Company ("Sierra Pacific")), Northern Powergrid Holdings Company ("Northern Powergrid") (which primarily consists of Northern Powergrid (Northeast) Limited and Northern Powergrid (Yorkshire) plc), BHE Pipeline Group (which consists of Northern Natural Gas Company ("Northern Natural Gas") and Kern River Gas Transmission Company ("Kern River")), BHE Transmission (which consists of BHE AltaLink Ltd. ("AltaLink") (which primarily consists of AltaLink, L.P. ("ALP")) and BHE U.S. Transmission, LLC), BHE Renewables, and HomeServices of America, Inc. (collectively with its subsidiaries, "HomeServices"). The Company, through these businesses, owns four utility companies in the United States serving customers in 11 states, two electricity distribution companies in Great Britain, two interstate natural gas pipeline companies in the United States, an electric transmission business in Canada, interests in electric transmission businesses in the United States, a renewable energy business primarily selling power generated from solar, wind, geothermal and hydro sources under long-term contracts, the second largest residential real estate brokerage firm in the United States and one of the largest residential real estate brokerage franchise networks in the United States.

The unaudited Consolidated Financial Statements have been prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP") for interim financial information and the United States Securities and Exchange Commission's rules and regulations for Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the disclosures required by GAAP for annual financial statements. Management believes the unaudited Consolidated Financial Statements contain all adjustments (consisting only of normal recurring adjustments) considered necessary for the fair presentation of the unaudited Consolidated Financial Statements as of June 30, 2015 and for the three- and six-month periods ended June 30, 2015 and 2014 . The results of operations for the three- and six-month periods ended June 30, 2015 are not necessarily indicative of the results to be expected for the full year.

The preparation of the unaudited Consolidated Financial Statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the unaudited Consolidated Financial Statements and the reported amounts of revenue and expenses during the period. Actual results may differ from the estimates used in preparing the unaudited Consolidated Financial Statements. Note 2 of Notes to Consolidated Financial Statements included in the Company's Annual Report on Form 10-K for the year ended December 31, 2014 describes the most significant accounting policies used in the preparation of the unaudited Consolidated Financial Statements. There have been no significant changes in the Company's assumptions regarding significant accounting estimates and policies during the six-month period ended June 30, 2015 .

( 2 ) New Accounting Pronouncements

In April 2015, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2015-03, which amends FASB Accounting Standards Codification ("ASC") Subtopic 835-30, "Interest - Imputation of Interest." The amendments in this guidance require that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability instead of as an asset. This guidance is effective for interim and annual reporting periods beginning after December 15, 2015, with early adoption permitted. This guidance must be adopted retrospectively, wherein the balance sheet of each period presented should be adjusted to reflect the new guidance. The Company is currently evaluating the impact of adopting this guidance on its Consolidated Financial Statements and disclosures included within Notes to Consolidated Financial Statements.

In May 2014, the FASB issued ASU No. 2014-09, which creates FASB ASC Topic 606, "Revenue from Contracts with Customers" and supersedes ASC Topic 605, "Revenue Recognition." The guidance replaces industry-specific guidance and establishes a single five-step model to identify and recognize revenue. The core principle of the guidance is that an entity should recognize revenue upon transfer of control of promised goods or services to customers in an amount that reflects the consideration to which an entity expects to be entitled in exchange for those goods or services. Additionally, the guidance requires the entity to disclose further quantitative and qualitative information regarding the nature and amount of revenues arising from contracts with customers, as well as other information about the significant judgments and estimates used in recognizing revenues from contracts with customers. In July 2015, the FASB decided to defer the effective date one year to interim and annual reporting periods beginning after December 15, 2017. This guidance may be adopted retrospectively or under a modified retrospective method where the cumulative effect is recognized at the date of initial application. The Company is currently evaluating the impact of adopting this guidance on its Consolidated Financial Statements and disclosures included within Notes to Consolidated Financial Statements.

In January 2014, the FASB issued ASU No. 2014-05, which amends FASB ASC Topic 853, "Service Concession Arrangements" ("ASC 853"). The amendments in this guidance require an entity to not account for service concession arrangements as a lease and should also not recognize them as property, plant and equipment. This guidance is effective for interim and annual reporting periods beginning after December 15, 2014. The Company adopted this guidance effective January 1, 2015 under a modified retrospective method where the cumulative effect is recognized at the date of initial application. The adoption resulted in the establishment of a financial asset with a related recognition of interest income, the elimination of a portion of previously recognized property, plant and equipment, the elimination of recognizing guaranteed water and energy delivery fees in operating revenue and increases to retained earnings attributable to the Company of $56 million and noncontrolling interests of $11 million .


( 3 )	Business Acquisitions

AltaLink

Transaction Description

On December 1, 2014, BHE completed its acquisition of AltaLink and AltaLink became an indirect wholly owned subsidiary of BHE . Under the terms of the Share Purchase Agreement, dated May 1, 2014, between BHE and SNC-Lavalin Group Inc. ("SNC-Lavalin"), BHE paid C$3.1 billion (US $2.7 billion ) in cash to SNC-Lavalin for 100% of the equity interests of AltaLink. BHE funded the total purchase price with $1.5 billion of junior subordinated debentures issued and sold to subsidiaries of Berkshire Hathaway, $1.0 billion borrowed under its commercial paper program and cash on hand.

ALP is a regulated electric transmission business, headquartered in Calgary, Alberta. ALP owns 7,800 miles of transmission lines and 300 substations in Alberta and operates under a cost-of-service regulatory model, including a forward test year, overseen by the Alberta Utilities Commission ("AUC").

Allocation of Purchase Price

The operations of ALP are subject to the rate-setting authority of the AUC and are accounted for pursuant to GAAP, including the authoritative guidance for regulated operations. The rate-setting and cost recovery provisions establish rates on a cost-of-service basis designed to allow ALP an opportunity to recover its costs of providing service and a return on its investment in rate base. Except for certain assets not currently in rates, the fair value of ALP's assets acquired and liabilities assumed subject to these rate-setting provisions are assumed to approximate their carrying values and, therefore, no fair value adjustments have been reflected related to these amounts.

The fair value of AltaLink's assets acquired and liabilities assumed not subject to the rate-setting provisions discussed above was determined using an income approach. This approach is based on significant estimates and assumptions, including Level 3 inputs, which are judgmental in nature. The estimates and assumptions include the projected timing and amount of future cash flows, discount rates reflecting the risk inherent in the future cash flows and future market prices. The fair value of certain contracts, deferred tax amounts and certain contingencies, among other items, are provisional and are subject to revision for up to 12 months following the acquisition date until the related valuations are completed. These items may be adjusted through regulatory assets or liabilities, to the extent recoverable in rates, or goodwill provided additional information is obtained about the facts and circumstances that existed as of the acquisition date. Such information includes, but is not limited to, further information regarding the fair value of the contracts and the resolution of contingency related items.

AltaLink's non-regulated assets acquired and liabilities assumed consist principally of AltaLink Investments, L.P.'s and AltaLink Holdings, L.P.'s senior bonds and debentures. The fair value of these liabilities was determined based on quoted market prices.

The following table summarizes the fair values of the assets acquired and liabilities assumed as of the acquisition date (in millions):



	Fair Value

Current assets, including cash and cash equivalents of $15	$	174
Property, plant and equipment	5,610
Goodwill	1,731
Other long-term assets	128
Total assets	7,643

Current liabilities, including current portion of long-term debt of $79	866
Subsidiary debt, less current portion	3,772
Deferred income taxes	95
Other long-term liabilities	182
Total liabilities	4,915

Net assets acquired	$	2,728

Goodwill

The excess of the purchase price paid over the estimated fair values of the identifiable assets acquired and liabilities assumed totaled $1.7 billion and is reflected as goodwill in the BHE Transmission reportable segment. The goodwill reflects the value for the opportunities to invest in Alberta's electric transmission infrastructure and to develop solutions to meet the long-term energy needs of Alberta. Goodwill is not amortized, but rather is reviewed annually for impairment or more frequently if indicators of impairment exist. None of the goodwill recognized is deductible for income tax purposes, and no deferred income taxes have been recorded related to the goodwill.

Pro Forma Financial Information

The following unaudited pro forma financial information reflects the consolidated results of operations of BHE, non-recurring transaction costs incurred by both BHE and AltaLink during 2014 and the amortization of the purchase price adjustments each assuming the acquisition had taken place on January 1, 2013 (in millions):



	Six-Month Period
	Ended June 30, 2014

Operating revenue	$	8,632

Net income attributable to BHE shareholders	$	944

The unaudited pro forma financial information has been presented for illustrative purposes only and is not necessarily indicative of the consolidated results of operations that would have been achieved or the future consolidated results of operations of BHE. The information is provisional in nature and subject to change based on final purchase accounting adjustments.


( 4 )	Property, Plant and Equipment, Net

Property, plant and equipment, net consists of the following (in millions):



		As of
	Depreciable	June 30,			December 31,
	Life	2015			2014
Regulated assets:
Utility generation, distribution and transmission system	5-80 years	$	66,158		$	64,645
Interstate pipeline assets	3-80 years	6,711			6,660
		72,869			71,305
Accumulated depreciation and amortization		(22,259		)	(21,447		)
Regulated assets, net		50,610			49,858

Nonregulated assets:
Independent power plants	5-30 years	4,741			4,362
Other assets	3-30 years	824			673
		5,565			5,035
Accumulated depreciation and amortization		(688		)	(839		)
Nonregulated assets, net		4,877			4,196

Net operating assets		55,487			54,054
Construction work-in-progress		4,413			5,194
Property, plant and equipment, net		$	59,900		$	59,248

Construction work-in-progress includes $4.2 billion and $4.3 billion as of June 30, 2015 and December 31, 2014 , respectively, related to the construction of regulated assets.

( 5 ) Regulatory Matters

Utah Mine Disposition

Due to quality issues with the coal reserves at PacifiCorp's Deer Creek mine in Utah and rising costs at PacifiCorp's wholly owned subsidiary, Energy West Mining Company, PacifiCorp believes the Deer Creek coal reserves are no longer able to be economically mined. As a result, in December 2014, PacifiCorp filed applications with the Utah Public Service Commission ("UPSC"), the Oregon Public Utility Commission ("OPUC"), the Wyoming Public Service Commission ("WPSC") and the Idaho Public Utilities Commission ("IPUC") seeking certain approvals, prudence determinations and accounting orders to close its Deer Creek mining operations, sell certain Utah mining assets, enter into a replacement coal supply agreement, amend an existing coal supply agreement, withdraw from the United Mine Workers of America ("UMWA") 1974 Pension Plan and settle PacifiCorp's other postretirement benefit obligation for UMWA participants (collectively, the "Utah Mine Disposition"). PacifiCorp also filed an advice letter with the California Public Utilities Commission. In April 2015, PacifiCorp filed all-party settlement stipulations with the UPSC and the WPSC finding that the decision to enter into the Utah Mine Disposition transaction is prudent and in the public interest. The UPSC approved the stipulation in April 2015 and the WPSC approved the stipulation in May 2015. In May 2015, the OPUC issued its final order concluding that the Utah Mine Disposition transaction produces net benefits for customers and is in the public interest. The IPUC also issued an order in May 2015, approving the Utah Mine Disposition and ruling that the decision to enter into the transaction is prudent and in the public interest. Accordingly, in June 2015, PacifiCorp sold the specified Utah mining assets and the replacement and amended coal supply agreements became effective. Refer to Note 13 for discussion of the contractual obligations related to the replacement coal supply agreement. Refer to Note 9 for discussion of the settlement of the other postretirement benefit obligation for UMWA participants. The Deer Creek mine is currently idled and closure activities have begun.


( 6 )	Investments and Restricted Cash and Investments

Investments and restricted cash and investments consists of the following (in millions):



	As of
	June 30,		December 31,
	2015		2014
Investments:
BYD Company Limited common stock	$	1,351	$	881
Rabbi trusts	382		386
Other	149		126
Total investments	1,882		1,393

Equity method investments:
Electric Transmission Texas, LLC	557		515
Bridger Coal Company	186		192
Other	164		161
Total equity method investments	907		868

Restricted cash and investments:
Quad Cities Station nuclear decommissioning trust funds	426		424
Other	199		233
Total restricted cash and investments	625		657

Total investments and restricted cash and investments	$	3,414	$	2,918

Reflected as:
Current assets	$	118	$	115
Noncurrent assets	3,296		2,803
Total investments and restricted cash and investments	$	3,414	$	2,918

Investments

BHE's investment in BYD Company Limited common stock is accounted for as an available-for-sale security with changes in fair value recognized in accumulated other comprehensive income (loss) ("AOCI"). As of June 30, 2015 and December 31, 2014 , the fair value of BHE's investment in BYD Company Limited common stock was $1.4 billion and $881 million , respectively, which resulted in a pre-tax unrealized gain of $1.1 billion and $649 million as of June 30, 2015 and December 31, 2014 , respectively.


( 7 )	Recent Financing Transactions

Long-Term Debt

In June 2015, BHE repaid at par value $600 million, plus accrued interest, of its junior subordinated debentures due December 2043.

In June 2015, PacifiCorp issued $250 million of its 3.35% First Mortgage Bonds due July 2025. The net proceeds were used to fund capital expenditures and for general corporate purposes, including retirement of short-term debt.

In June 2015, ALP issued C$350 million of its 4.09% Series 2015-1 Medium-Term Notes due June 2045. The net proceeds were used to repay short-term debt.

In April 2015, Northern Powergrid (Yorkshire) plc issued £150 million of its 2.50% Bonds due April 2025. The net proceeds were used for general corporate purposes, including the repayment of short-term debt.

In March 2015, Solar Star Funding, LLC issued $325 million of its 3.95% Series B Senior Secured Notes. The principal of the notes amortizes beginning June 2016 with a final maturity in June 2035. The net proceeds were used to fund the repayment or reimbursement of amounts provided by BHE for the costs related to the development, construction and financing of a combined 579-megawatt solar project in California (the "Solar Star Projects").

In March 2015, AltaLink Investments, L.P. issued C$200 million of its 2.244% Series 15-1 Senior Bonds due March 2022. The net proceeds were used to repay short-term debt, provide equity to ALP and for general corporate purposes.

Credit Facilities

In March 2015, Topaz Solar Farms LLC amended its $345 million letter of credit facility reducing the amount available to $326 million and extending the maturity date to March 2025. As of June 30, 2015 , Topaz had $316 million of letters of credit issued under this facility.

In March 2015, PacifiCorp obtained $191 million of letters of credit to support variable-rate tax-exempt bond obligations. These letters of credit expire through March 2017 and replace certain letters of credit previously issued under one of the credit facilities. Also, in March 2015, PacifiCorp arranged for the cancellation of $23 million of letters of credit previously issued under one of the credit facilities to support variable-rate tax-exempt bond obligations.

As of June 30, 2015 , PacifiCorp had $428 million of fully available letters of credit issued under committed arrangements to support variable-rate tax-exempt bond obligations, of which $56 million were issued under credit facilities.


( 8 )	Income Taxes

A reconciliation of the federal statutory income tax rate to the effective income tax rate applicable to income before income tax expense is as follows:



	Three-Month Periods				Six-Month Periods
	Ended June 30,				Ended June 30,
	2015		2014		2015		2014

Federal statutory income tax rate	35	%	35	%	35	%	35	%
Income tax credits	(13	)	(6	)	(12	)	(11	)
State income tax, net of federal income tax benefit	1		2		1		2
Income tax effect of foreign income and credits	(8	)	(3	)	(6	)	(3	)
Equity income	2		2		2		1
Other, net	(4	)	(2	)	(3	)	(1	)
Effective income tax rate	13	%	28	%	17	%	23	%

Income tax credits relate primarily to production tax credits from wind-powered generating facilities owned by MidAmerican Energy, PacifiCorp, Bishop Hill Energy II LLC and Jumbo Road Holdings, LLC. Federal renewable electricity production tax credits are earned as energy from qualifying wind-powered generating facilities is produced and sold and are based on a per-kilowatt hour rate pursuant to the applicable federal income tax law. Wind-powered generating facilities are eligible for the credits for 10 years from the date the qualifying generating facilities are placed in-service.

Berkshire Hathaway includes the Company in its United States federal income tax return. For the six-month periods ended June 30, 2015 and 2014 , the Company received net cash payments for income taxes from Berkshire Hathaway totaling $1.4 billion and $187 million , respectively.


( 9 )	Employee Benefit Plans

Domestic Operations

Net periodic benefit cost for the domestic pension and other postretirement benefit plans included the following components (in millions):



	Three-Month Periods						Six-Month Periods
	Ended June 30,						Ended June 30,
	2015			2014			2015			2014
Pension:
Service cost	$	8		$	9		$	16		$	17
Interest cost	31			33			61			66
Expected return on plan assets	(43		)	(41		)	(85		)	(82		)
Net amortization	15			9			28			20
Net periodic benefit cost	$	11		$	10		$	20		$	21

Other postretirement:
Service cost	$	2		$	4		$	6		$	7
Interest cost	9			12			16			23
Expected return on plan assets	(11		)	(12		)	(23		)	(25		)
Net amortization	(3		)	(1		)	(6		)	(2		)
Net periodic benefit cost	$	(3	)	$	3		$	(7	)	$	3

Employer contributions to the domestic pension and other postretirement benefit plans are expected to be $34 million and $1 million , respectively, during 2015 . As of June 30, 2015 , $6 million and $- million of contributions had been made to the domestic pension and other postretirement benefit plans, respectively.

Utah Mine Disposition and Labor Agreement

In conjunction with the Utah Mine Disposition described in Note 5 , in December 2014, Energy West Mining Company reached a labor settlement with the UMWA covering union employees at PacifiCorp's Deer Creek mining operations. As a result of the labor settlement, the UMWA agreed to assume PacifiCorp's other postretirement benefit obligation associated with UMWA plan participants in exchange for PacifiCorp transferring $150 million to a fund managed by the UMWA. Transfer of the assets and settlement of this obligation occurred in May 2015 and resulted in a remeasurement of the other postretirement plan assets and benefit obligation. As a result of the remeasurement, PacifiCorp recognized a $9 million settlement loss, with the portion that is probable of recovery deferred as a regulatory asset.

Foreign Operations

Net periodic benefit cost for the United Kingdom pension plan included the following components (in millions):



	Three-Month Periods						Six-Month Periods
	Ended June 30,						Ended June 30,
	2015			2014			2015			2014

Service cost	$	6		$	6		$	12		$	12
Interest cost	20			24			40			48
Expected return on plan assets	(29		)	(32		)	(58		)	(63		)
Net amortization	16			14			32			27
Net periodic benefit cost	$	13		$	12		$	26		$	24

Employer contributions to the United Kingdom pension plan are expected to be £49 million during 2015 . As of June 30, 2015 , £25 million , or $39 million , of contributions had been made to the United Kingdom pension plan.

( 10 ) Asset Retirement Obligations

In December 2014, the United States Environmental Protection Agency released its final rule regulating the management and disposal of coal combustion byproducts resulting from the operation of coal-fueled generating facilities, including requirements for the operation and closure of surface impoundment and ash landfill facilities. The final rule was published in the Federal Register in April 2015 and will be effective in October 2015. As of June 30, 2015 and December 31, 2014 , the Company's asset retirement obligations totaled $806 million and $687 million , respectively, and the change was substantially due to the impacts of the final rule.


( 11 )	Risk Management and Hedging Activities

The Company is exposed to the impact of market fluctuations in commodity prices, interest rates and foreign currency exchange rates. The Company is principally exposed to electricity, natural gas, coal and fuel oil commodity price risk primarily through BHE's ownership of PacifiCorp, MidAmerican Energy, Nevada Power and Sierra Pacific (the "Utilities") as they have an obligation to serve retail customer load in their regulated service territories. MidAmerican Energy also provides nonregulated retail electricity and natural gas services in competitive markets, which creates contractual obligations to provide electric and natural gas services. The Utilities' load and generating facilities represent substantial underlying commodity positions. Exposures to commodity prices consist mainly of variations in the price of fuel required to generate electricity, wholesale electricity that is purchased and sold, and natural gas supply for retail customers. Commodity prices are subject to wide price swings as supply and demand are impacted by, among many other unpredictable items, weather, market liquidity, generating facility availability, customer usage, storage, and transmission and transportation constraints. Interest rate risk exists on variable-rate debt, future debt issuances and mortgage commitments. Additionally, the Company is exposed to foreign currency exchange rate risk from its business operations and investments in Great Britain and Canada. The Company does not engage in a material amount of proprietary trading activities.

Each of the Company's business platforms has established a risk management process that is designed to identify, assess, monitor, report, manage and mitigate each of the various types of risk involved in its business. To mitigate a portion of its commodity price risk, the Company uses commodity derivative contracts, which may include forwards, futures, options, swaps and other agreements, to effectively secure future supply or sell future production generally at fixed prices. The Company manages its interest rate risk by limiting its exposure to variable interest rates primarily through the issuance of fixed-rate long-term debt and by monitoring market changes in interest rates. Additionally, the Company may from time to time enter into interest rate derivative contracts, such as interest rate swaps or locks, forward sale commitments, or mortgage interest rate lock commitments, to mitigate the Company's exposure to interest rate risk. The Company does not hedge all of its commodity price, interest rate and foreign currency exchange rate risks, thereby exposing the unhedged portion to changes in market prices.

There have been no significant changes in the Company's accounting policies related to derivatives. Refer to Note 12 for additional information on derivative contracts.

The following table, which reflects master netting arrangements and excludes contracts that have been designated as normal under the normal purchases or normal sales exception afforded by GAAP, summarizes the fair value of the Company's derivative contracts, on a gross basis, and reconciles those amounts to the amounts presented on a net basis on the Consolidated Balance Sheets (in millions):



	Other					Other			Other
	Current			Other		Current			Long-term
	Assets			Assets		Liabilities			Liabilities			Total
As of June 30, 2015
Not designated as hedging contracts:
Commodity assets ⁽¹⁾	$	32		$	72	$	16		$	—		$	120
Commodity liabilities ⁽¹⁾	(4		)	—		(117		)	(165		)	(286		)
Interest rate assets	15			—		—			—			15
Interest rate liabilities	—			—		(5		)	(3		)	(8		)
Total	43			72		(106		)	(168		)	(159		)

Designated as hedging contracts:
Commodity assets	1			—		2			2			5
Commodity liabilities	—			—		(24		)	(20		)	(44		)
Interest rate assets	—			—		—			—			—
Interest rate liabilities	—			—		(2		)	—			(2		)
Total	1			—		(24		)	(18		)	(41		)

Total derivatives	44			72		(130		)	(186		)	(200		)
Cash collateral receivable	—			—		40			49			89
Total derivatives - net basis	$	44		$	72	$	(90	)	$	(137	)	$	(111	)



As of December 31, 2014
Not designated as hedging contracts:
Commodity assets ⁽¹⁾	$	47		$	66	$	21		$	1		$	135
Commodity liabilities ⁽¹⁾	(11		)	—		(146		)	(134		)	(291		)
Interest rate assets	4			—		—			—			4
Interest rate liabilities	—			—		(2		)	(4		)	(6		)
Total	40			66		(127		)	(137		)	(158		)

Designated as hedging contracts:
Commodity assets	1			—		5			2			8
Commodity liabilities	—			—		(27		)	(17		)	(44		)
Interest rate assets	—			1		—			—			1
Interest rate liabilities	—			—		(4		)	—			(4		)
Total	1			1		(26		)	(15		)	(39		)

Total derivatives	41			67		(153		)	(152		)	(197		)
Cash collateral receivable	—			—		56			19			75
Total derivatives - net basis	$	41		$	67	$	(97	)	$	(133	)	$	(122	)

(1)

The Company's commodity derivatives not designated as hedging contracts are generally included in regulated rates, and as of June 30, 2015 and December 31, 2014 , a net regulatory asset of $233 million and $223 million , respectively, was recorded related to the net derivative liability of $166 million and $156 million , respectively. The difference between the net regulatory asset and the net derivative liability relates primarily to a power purchase agreement derivative at BHE Renewables.

Not Designated as Hedging Contracts

The following table reconciles the beginning and ending balances of the Company's net regulatory assets and summarizes the pre-tax gains and losses on commodity derivative contracts recognized in net regulatory assets, as well as amounts reclassified to earnings (in millions):



	Three-Month Periods						Six-Month Periods
	Ended June 30,						Ended June 30,
	2015			2014			2015			2014

Beginning balance	$	255		$	159		$	223		$	182
Changes in fair value recognized in net regulatory assets	(3		)	(11		)	57			(7		)
Net (losses) gains reclassified to operating revenue	(2		)	(5		)	7			(35		)
Net (losses) gains reclassified to cost of sales	(17		)	(1		)	(54		)	2
Ending balance	$	233		$	142		$	233		$	142

Designated as Hedging Contracts

The Company uses commodity derivative contracts accounted for as cash flow hedges to hedge electricity and natural gas commodity prices for delivery to nonregulated customers, spring operational sales, natural gas storage and other transactions. The following table reconciles the beginning and ending balances of the Company's accumulated other comprehensive (income) loss (pre-tax) and summarizes pre-tax gains and losses on commodity derivative contracts designated and qualifying as cash flow hedges recognized in other comprehensive income ("OCI"), as well as amounts reclassified to earnings (in millions):



	Three-Month Periods						Six-Month Periods
	Ended June 30,						Ended June 30,
	2015			2014			2015			2014

Beginning balance	$	27		$	(12	)	$	32		$	12
Changes in fair value recognized in OCI	25			(18		)	17			(77		)
Net gains reclassified to operating revenue	2			—			3			—
Net (losses) gains reclassified to cost of sales	(16		)	5			(14		)	40
Ending balance	$	38		$	(25	)	$	38		$	(25	)

Certain derivative contracts, principally interest rate locks, have settled and the fair value at the date of settlement remains in AOCI and is recognized in earnings when the forecasted transactions impact earnings. Realized gains and losses on hedges and hedge ineffectiveness are recognized in income as operating revenue, cost of sales, operating expense or interest expense depending upon the nature of the item being hedged. For the three- and six-month periods ended June 30, 2015 and 2014 , hedge ineffectiveness was insignificant. As of June 30, 2015 , the Company had cash flow hedges with expiration dates extending through December 2019 and $22 million of pre-tax net unrealized losses are forecasted to be reclassified from AOCI into earnings over the next twelve months as contracts settle.

Derivative Contract Volumes

The following table summarizes the net notional amounts of outstanding derivative contracts with fixed price terms that comprise the mark-to-market values as of (in millions):



	Unit of	June 30,		December 31,
	Measure	2015		2014
Electricity purchases	Megawatt hours	10		6
Natural gas purchases	Decatherms	318		308
Fuel purchases	Gallons	7		2
Interest rate swaps	US$	432		443
Mortgage sale commitments, net	US$	(532	)	(264	)

Credit Risk

The Utilities are exposed to counterparty credit risk associated with wholesale energy supply and marketing activities with other utilities, energy marketing companies, financial institutions and other market participants. Credit risk may be concentrated to the extent the Utilities' counterparties have similar economic, industry or other characteristics and due to direct or indirect relationships among the counterparties. Before entering into a transaction, the Utilities analyze the financial condition of each significant wholesale counterparty, establish limits on the amount of unsecured credit to be extended to each counterparty and evaluate the appropriateness of unsecured credit limits on an ongoing basis. To further mitigate wholesale counterparty credit risk, the Utilities enter into netting and collateral arrangements that may include margining and cross-product netting agreements and obtain third-party guarantees, letters of credit and cash deposits. If required, the Utilities exercise rights under these arrangements, including calling on the counterparty's credit support arrangement.

Collateral and Contingent Features

In accordance with industry practice, certain wholesale derivative contracts contain credit support provisions that in part base certain collateral requirements on credit ratings for senior unsecured debt as reported by one or more of the three recognized credit rating agencies. These derivative contracts may either specifically provide bilateral rights to demand cash or other security if credit exposures on a net basis exceed specified rating-dependent threshold levels ("credit-risk-related contingent features") or provide the right for counterparties to demand "adequate assurance," or in some cases terminate the contract, in the event of a material adverse change in creditworthiness. These rights can vary by contract and by counterparty. As of June 30, 2015 , the applicable credit ratings from the three recognized credit rating agencies were investment grade.

The aggregate fair value of the Company's derivative contracts in liability positions with specific credit-risk-related contingent features totaled $256 million and $243 million as of June 30, 2015 and December 31, 2014 , respectively, for which the Company had posted collateral of $58 million and $28 million , respectively, in the form of cash deposits. If all credit-risk-related contingent features for derivative contracts in liability positions had been triggered as of June 30, 2015 and December 31, 2014 , the Company would have been required to post $186 million and $182 million , respectively, of additional collateral. The Company's collateral requirements could fluctuate considerably due to market price volatility, changes in credit ratings, changes in legislation or regulation, or other factors.


( 12 )	Fair Value Measurements

The carrying value of the Company's cash, certain cash equivalents, receivables, payables, accrued liabilities and short-term borrowings approximates fair value because of the short-term maturity of these instruments. The Company has various financial assets and liabilities that are measured at fair value on the Consolidated Financial Statements using inputs from the three levels of the fair value hierarchy. A financial asset or liability classification within the hierarchy is determined based on the lowest level input that is significant to the fair value measurement. The three levels are as follows:


•	Level 1 — Inputs are unadjusted quoted prices in active markets for identical assets or liabilities that the Company has the ability to access at the measurement date.

•

Level 2 — Inputs include quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable for the asset or liability and inputs that are derived principally from or corroborated by observable market data by correlation or other means (market corroborated inputs).


•	Level 3 — Unobservable inputs reflect the Company's judgments about the assumptions market participants would use in pricing the asset or liability since limited market data exists. The Company develops these inputs based on the best information available, including its own data.

The following table presents the Company's assets and liabilities recognized on the Consolidated Balance Sheets and measured at fair value on a recurring basis (in millions):



	Input Levels for Fair Value Measurements
	Level 1			Level 2			Level 3			Other ⁽¹⁾			Total
As of June 30, 2015
Assets:
Commodity derivatives	$	—		$	38		$	87		$	(24	)	$	101
Interest rate derivatives	—			8			7			—			15
Mortgage loans held for sale	—			566			—			—			566
Money market mutual funds ⁽²⁾	877			—			—			—			877
Debt securities:
United States government obligations	131			—			—			—			131
International government obligations	—			3			—			—			3
Corporate obligations	—			40			—			—			40
Municipal obligations	—			2			—			—			2
Agency, asset and mortgage-backed obligations	—			3			—			—			3
Auction rate securities	—			—			45			—			45
Equity securities:
United States companies	239			—			—			—			239
International companies	1,357			—			—			—			1,357
Investment funds	160			—			—			—			160
	$	2,764		$	660		$	139		$	(24	)	$	3,539
Liabilities:
Commodity derivatives	$	(12	)	$	(265	)	$	(53	)	$	113		$	(217	)
Interest rate derivatives	—			(8		)	(2		)	—			(10		)
	$	(12	)	$	(273	)	$	(55	)	$	113		$	(227	)



	Input Levels for Fair Value Measurements
	Level 1			Level 2			Level 3			Other ⁽¹⁾			Total
As of December 31, 2014
Assets:
Commodity derivatives	$	1		$	48		$	94		$	(40	)	$	103
Interest rate derivatives	—			5			—			—			5
Mortgage loans held for sale	—			279			—			—			279
Money market mutual funds ⁽²⁾	320			—			—			—			320
Debt securities:
United States government obligations	136			—			—			—			136
International government obligations	—			1			—			—			1
Corporate obligations	—			39			—			—			39
Municipal obligations	—			2			—			—			2
Agency, asset and mortgage-backed obligations	—			2			—			—			2
Auction rate securities	—			—			45			—			45
Equity securities:
United States companies	238			—			—			—			238
International companies	886			—			—			—			886
Investment funds	137			—			—			—			137
	$	1,718		$	376		$	139		$	(40	)	$	2,193
Liabilities:
Commodity derivatives	$	(18	)	$	(274	)	$	(43	)	$	115		$	(220	)
Interest rate derivatives	—			(10		)	—			—			(10		)
	$	(18	)	$	(284	)	$	(43	)	$	115		$	(230	)


(1)	Represents netting under master netting arrangements and a net cash collateral receivable of $89 million and $75 million as of June 30, 2015 and December 31, 2014 , respectively.


(2)	Amounts are included in cash and cash equivalents; other current assets; and noncurrent investments and restricted cash and investments on the Consolidated Balance Sheets. The fair value of these money market mutual funds approximates cost.

Derivative contracts are recorded on the Consolidated Balance Sheets as either assets or liabilities and are stated at estimated fair value unless they are designated as normal purchases or normal sales and qualify for the exception afforded by GAAP. When available, the fair value of derivative contracts is estimated using unadjusted quoted prices for identical contracts in the market in which the Company transacts. When quoted prices for identical contracts are not available, the Company uses forward price curves. Forward price curves represent the Company's estimates of the prices at which a buyer or seller could contract today for delivery or settlement at future dates. The Company bases its forward price curves upon market price quotations, when available, or internally developed and commercial models, with internal and external fundamental data inputs. Market price quotations are obtained from independent brokers, exchanges, direct communication with market participants and actual transactions executed by the Company. Market price quotations are generally readily obtainable for the applicable term of the Company's outstanding derivative contracts; therefore, the Company's forward price curves reflect observable market quotes. Market price quotations for certain electricity and natural gas trading hubs are not as readily obtainable due to the length of the contract. Given that limited market data exists for these contracts, as well as for those contracts that are not actively traded, the Company uses forward price curves derived from internal models based on perceived pricing relationships to major trading hubs that are based on unobservable inputs. The estimated fair value of these derivative contracts is a function of underlying forward commodity prices, interest rates, currency rates, related volatility, counterparty creditworthiness and duration of contracts. Refer to Note 11 for further discussion regarding the Company's risk management and hedging activities.

The Company's mortgage loans held for sale are valued based on independent quoted market prices, where available, or the prices of other mortgage whole loans with similar characteristics. As necessary, these prices are adjusted for typical securitization activities, including servicing value, portfolio composition, market conditions and liquidity.

The Company's investments in money market mutual funds and debt and equity securities are stated at fair value and are primarily accounted for as available-for-sale securities. When available, a readily observable quoted market price or net asset value of an identical security in an active market is used to record the fair value. In the absence of a quoted market price or net asset value of an identical security, the fair value is determined using pricing models or net asset values based on observable market inputs and quoted market prices of securities with similar characteristics. The fair value of the Company's investments in auction rate securities, where there is no current liquid market, is determined using pricing models based on available observable market data and the Company's judgment about the assumptions, including liquidity and nonperformance risks, which market participants would use when pricing the asset.

The following table reconciles the beginning and ending balances of the Company's assets and liabilities measured at fair value on a recurring basis using significant Level 3 inputs (in millions):



	Three-Month Periods								Six-Month Periods
	Ended June 30,								Ended June 30,
				Interest			Auction					Interest			Auction
	Commodity			Rate			Rate		Commodity			Rate			Rate
	Derivatives			Derivatives			Securities		Derivatives			Derivatives			Securities
2015:
Beginning balance	$	49		$	8		$	44	$	51		$	—		$	45
Changes included in earnings	3			24			—		11			45			—
Changes in fair value recognized in OCI	(4		)	—			1		(3		)	—			—
Changes in fair value recognized in net regulatory assets	(14		)	—			—		(17		)	—			—
Purchases	1			—			—		1			—			—
Settlements	(1		)	(27		)	—		(9		)	(43		)	—
Transfers from Level 2	—			—			—		—			3			—
Ending balance	$	34		$	5		$	45	$	34		$	5		$	45



2014:
Beginning balance	$	13		$	—	$	45	$	60		$	—	$	44
Changes included in earnings	(4		)	—		—		(21		)	—		—
Changes in fair value recognized in OCI	1			—		1		4			—		2
Changes in fair value recognized in net regulatory assets	(2		)	—		—		—			—		—
Settlements	1			—		—		1			—		—
Transfers from Level 2	—			—		—		(35		)	—		—
Ending balance	$	9		$	—	$	46	$	9		$	—	$	46

The Company's long-term debt is carried at cost on the Consolidated Financial Statements. The fair value of the Company's long-term debt is a Level 2 fair value measurement and has been estimated based upon quoted market prices, where available, or at the present value of future cash flows discounted at rates consistent with comparable maturities with similar credit risks. The carrying value of the Company's variable-rate long-term debt approximates fair value because of the frequent repricing of these instruments at market rates. The following table presents the carrying value and estimated fair value of the Company's long-term debt (in millions):



	As of June 30, 2015				As of December 31, 2014
	Carrying		Fair		Carrying		Fair
	Value		Value		Value		Value

Long-term debt	$	38,522	$	42,676	$	38,649	$	43,863


( 13 )	Commitments and Contingencies

Legal Matters

The Company is party to a variety of legal actions arising out of the normal course of business. Plaintiffs occasionally seek punitive or exemplary damages. The Company does not believe that such normal and routine litigation will have a material impact on its consolidated financial results. The Company is also involved in other kinds of legal actions, some of which assert or may assert claims or seek to impose fines, penalties and other costs in substantial amounts and are described below.

USA Power

In October 2005, prior to BHE's ownership of PacifiCorp, PacifiCorp was added as a defendant to a lawsuit originally filed in February 2005 in the Third District Court of Salt Lake County, Utah ("Third District Court") by USA Power, LLC, USA Power Partners, LLC and Spring Canyon Energy, LLC (collectively, the "Plaintiff"). The Plaintiff's complaint alleged that PacifiCorp misappropriated confidential proprietary information in violation of Utah's Uniform Trade Secrets Act and accused PacifiCorp of breach of contract and related claims in regard to the Plaintiff's 2002 and 2003 proposals to build a natural gas-fueled generating facility in Juab County, Utah. In October 2007, the Third District Court granted PacifiCorp's motion for summary judgment on all counts and dismissed the Plaintiff's claims in their entirety. In a May 2010 ruling on the Plaintiff's petition for reconsideration, the Utah Supreme Court reversed summary judgment and remanded the case back to the Third District Court for further consideration. In May 2012, a jury awarded damages to the Plaintiff for breach of contract and misappropriation of a trade secret in the amounts of $18 million for actual damages and $113 million for unjust enrichment. In May 2012, the Plaintiff filed a motion seeking exemplary damages. Under the Utah Uniform Trade Secrets law, the judge may award exemplary damages in an additional amount not to exceed twice the original award. The Plaintiff also filed a motion to seek recovery of attorneys' fees in an amount equal to 40% of all amounts ultimately awarded in the case. In October 2012, PacifiCorp filed post-trial motions for a judgment notwithstanding the verdict and a new trial. As a result of a hearing in December 2012, the trial judge denied PacifiCorp's post-trial motions with the exception of reducing the aggregate amount of damages to $113 million . In January 2013, the Plaintiff filed a motion for prejudgment interest. An initial judgment was entered in April 2013 in which the trial judge denied the Plaintiff's motions for exemplary damages and prejudgment interest and ruled that PacifiCorp must pay the Plaintiff's attorneys' fees based on applying a reasonable rate to hours worked. In May 2013, a final judgment was entered against PacifiCorp in the amount of $115 million , which includes the $113 million of aggregate damages previously awarded and amounts awarded for the Plaintiff's attorneys' fees. The final judgment also ordered that postjudgment interest accrue beginning as of the date of the April 2013 initial judgment. In May 2013, PacifiCorp posted a surety bond issued by a subsidiary of Berkshire Hathaway to secure its estimated obligation. PacifiCorp strongly disagrees with the jury's verdict and is vigorously pursuing all appellate measures. Both PacifiCorp and the Plaintiff filed appeals with the Utah Supreme Court. Briefing before the Utah Supreme Court is complete and oral arguments are scheduled for September 2015. As of June 30, 2015 , PacifiCorp had accrued $120 million for the final judgment and postjudgment interest, and believes the likelihood of any additional material loss is remote; however, any additional awards against PacifiCorp could also have a material effect on the consolidated financial results. Any payment of damages will be at the end of the appeals process, which could take as long as several years.

Commitments

As a result of the Utah Mine Disposition discussed in Note 5 , PacifiCorp's replacement coal supply agreement for one of its generating facilities became effective in June 2015. Also during the three-month period ended June 30, 2015, PacifiCorp entered into several purchased electricity contracts from facilities that have not yet achieved commercial operation. These coal supply and purchased electricity contracts result in minimum future purchases of $70 million in 2016, $112 million in 2017, $127 million in 2018, $127 million in 2019 and $1.601 billion in 2020 and thereafter.

The Solar Star Projects, which are a combined 579-MW solar project in California, were placed in-service in June 2015. BHE committed to provide Solar Star Funding, LLC and its subsidiaries with equity to fund the costs of the Solar Star Projects in an amount up to $2.75 billion , less, among other things, the gross proceeds of long-term debt issuances, project revenue prior to completion and the total equity contributions made by BHE or its subsidiaries. As of June 30, 2015, the remaining equity commitment for the Solar Star Projects is $426 million . If BHE does not maintain a minimum credit rating from two of the following three ratings agencies of at least BBB- from Standard & Poor's Ratings Services or Fitch Ratings or Baa3 from Moody's Investors Service, BHE's obligation under the equity commitment agreement would be supported by cash collateral or a letter of credit issued by a financial institution that meets certain minimum criteria specified in the financing document. Upon reaching the project completion date of the Solar Star Projects, BHE will have no further obligation to make any equity contributions and any unused equity contribution obligation will be canceled under the equity commitment agreement.

In March 2015, the equity commitment for the Topaz Project was canceled as the project reached the project completion date.

Environmental Laws and Regulations

Guarantees

The Company has entered into guarantees as part of the normal course of business and the sale of certain assets. These guarantees are not expected to have a material impact on the Company's consolidated financial results.


( 14 )	Components of Other Comprehensive Income (Loss), Net

The following table shows the change in AOCI attributable to BHE shareholders by each component of OCI, net of applicable income taxes (in millions):



							Unrealized
	Unrecognized			Foreign			Gains on		Unrealized			AOCI
	Amounts on			Currency			Available-		Gains on			Attributable
	Retirement			Translation			For-Sale		Cash Flow			To BHE
	Benefits			Adjustment			Securities		Hedges			Shareholders, Net

Balance, December 31, 2013	$	(559	)	$	(98	)	$	524	$	36		$	(97	)
Other comprehensive income	4			131			117		19			271
Balance, June 30, 2014	$	(555	)	$	33		$	641	$	55		$	174

Balance, December 31, 2014	$	(490	)	$	(412	)	$	390	$	18		$	(494	)
Other comprehensive (loss) income	(6		)	(161		)	282		(6		)	109
Balance, June 30, 2015	$	(496	)	$	(573	)	$	672	$	12		$	(385	)

Reclassifications from AOCI to net income for the periods ended June 30, 2015 and 2014 were insignificant. For information regarding cash flow hedge reclassifications from AOCI to net income in their entirety, refer to Note 11 . Additionally, refer to the "Foreign Operations" discussion in Note 9 for information about unrecognized amounts on retirement benefits reclassifications from AOCI that do not impact net income in their entirety.


( 15 )	Segment Information

The Company's reportable segments with foreign operations include Northern Powergrid , whose business is principally in the United Kingdom, BHE Transmission , whose business includes operations in Canada, and BHE Renewables , whose business includes operations in the Philippines. Intersegment eliminations and adjustments, including the allocation of goodwill, have been made. Information related to the Company's reportable segments is shown below (in millions):



	Three-Month Periods						Six-Month Periods
	Ended June 30,						Ended June 30,
	2015			2014			2015			2014
Operating revenue:
PacifiCorp	$	1,269		$	1,243		$	2,519		$	2,531
MidAmerican Funding	797			775			1,748			2,005
NV Energy	835			795			1,541			1,433
Northern Powergrid	263			324			587			641
BHE Pipeline Group	208			226			540			612
BHE Transmission	150			—			275			—
BHE Renewables	190			145			314			214
HomeServices	758			617			1,206			975
BHE and Other ⁽¹⁾	(22		)	(22		)	(61		)	(59		)
Total operating revenue	$	4,448		$	4,103		$	8,669		$	8,352

Depreciation and amortization:
PacifiCorp	$	196		$	183		$	390		$	366
MidAmerican Funding	99			86			199			170
NV Energy	103			95			204			187
Northern Powergrid	50			50			98			98
BHE Pipeline Group	50			50			100			98
BHE Transmission	53			—			91			—
BHE Renewables	56			32			105			53
HomeServices	6			8			12			15
BHE and Other ⁽¹⁾	(3		)	(2		)	(2		)	(3		)
Total depreciation and amortization	$	610		$	502		$	1,197		$	984

Operating income:
PacifiCorp	$	327		$	343		$	600		$	635
MidAmerican Funding	122			51			229			204
NV Energy	178			179			299			286
Northern Powergrid	130			178			323			359
BHE Pipeline Group	56			29			256			259
BHE Transmission	58			(2		)	104			(4		)
BHE Renewables	66			80			72			109
HomeServices	85			51			83			39
BHE and Other ⁽¹⁾	(15		)	(9		)	(29		)	(37		)
Total operating income	1,007			900			1,937			1,850
Interest expense	(476		)	(425		)	(948		)	(843		)
Capitalized interest	22			22			51			51
Allowance for equity funds	30			25			61			52
Interest and dividend income	26			9			52			18
Other, net	10			16			36			23
Total income before income tax expense and equity income	$	619		$	547		$	1,189		$	1,151



	Three-Month Periods				Six-Month Periods
	Ended June 30,				Ended June 30,
	2015		2014		2015		2014
Interest expense:
PacifiCorp	$	95	$	99	$	190	$	195
MidAmerican Funding	50		51		100		97
NV Energy	65		71		128		141
Northern Powergrid	36		38		71		76
BHE Pipeline Group	17		19		35		38
BHE Transmission	37		—		73		—
BHE Renewables	49		41		95		82
HomeServices	1		1		2		2
BHE and Other ⁽¹⁾	126		105		254		212
Total interest expense	$	476	$	425	$	948	$	843



	As of
	June 30,		December 31,
	2015		2014
Total assets:
PacifiCorp	$	23,530	$	23,466
MidAmerican Funding	15,672		15,368
NV Energy	14,457		14,454
Northern Powergrid	7,438		7,076
BHE Pipeline Group	4,896		4,968
BHE Transmission	8,005		7,992
BHE Renewables	5,712		6,123
HomeServices	2,053		1,629
BHE and Other ⁽¹⁾	1,593		1,228
Total assets	$	83,356	$	82,304



	Three-Month Periods				Six-Month Periods
	Ended June 30,				Ended June 30,
	2015		2014		2015		2014
Operating revenue by country:
United States	$	4,032	$	3,751	$	7,801	$	7,656
United Kingdom	263		324		587		639
Canada	153		6		280		10
Philippines and other	—		22		1		47
Total operating revenue by country	$	4,448	$	4,103	$	8,669	$	8,352



	Three-Month Periods					Six-Month Periods
	Ended June 30,					Ended June 30,
	2015		2014			2015		2014
Income (loss) before income tax expense and equity income by country:
United States	$	465	$	396		$	823	$	843
United Kingdom	102		142			266		285
Canada	43		(3		)	78		(4		)
Philippines and other	9		12			22		27
Total income (loss) before income tax expense and equity income by country	$	619	$	547		$	1,189	$	1,151


(1)	The differences between the reportable segment amounts and the consolidated amounts, described as BHE and Other , relate to other corporate entities, corporate functions and intersegment eliminations.

The following table shows the change in the carrying amount of goodwill by reportable segment for the six-month period ended June 30, 2015 (in millions):



									BHE
			MidAmerican		NV		Northern		Pipeline			BHE			BHE		Home-
	PacifiCorp		Funding		Energy		Powergrid		Group			Transmission			Renewables		Services		Other		Total

December 31, 2014	$	1,129	$	2,102	$	2,369	$	1,100	$	127		$	1,657		$	95	$	761	$	3	$	9,343
Acquisitions	—		—		—		—		—			31			—		—		—		31
Foreign currency translation	—		—		—		7		—			(118		)	—		—		—		(111		)
Other	—		—		—		—		(13		)	—			—		—		—		(13		)
June 30, 2015	$	1,129	$	2,102	$	2,369	$	1,107	$	114		$	1,570		$	95	$	761	$	3	$	9,250


Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations

The following is management's discussion and analysis of certain significant factors that have affected the consolidated financial condition and results of operations of the Company during the periods included herein. Explanations include management's best estimate of the impact of weather, customer growth and other factors. This discussion should be read in conjunction with the Company's historical unaudited Consolidated Financial Statements and Notes to Consolidated Financial Statements in Item 1 of this Form 10-Q. The Company's actual results in the future could differ significantly from the historical results.

The Company's operations are organized and managed as eight business segments: PacifiCorp, MidAmerican Funding (which primarily consists of MidAmerican Energy), NV Energy (which primarily consists of Nevada Power and Sierra Pacific), Northern Powergrid (which primarily consists of Northern Powergrid (Northeast) Limited and Northern Powergrid (Yorkshire) plc), BHE Pipeline Group (which consists of Northern Natural Gas and Kern River), BHE Transmission (which consists of AltaLink and BHE U.S. Transmission), BHE Renewables, and HomeServices. The Company, through these businesses, owns four utility companies in the United States serving customers in 11 states, two electricity distribution companies in Great Britain, two interstate natural gas pipeline companies in the United States, an electric transmission business in Canada, interests in electric transmission businesses in the United States, a renewable energy business primarily selling power generated from solar, wind, hydro and geothermal sources under long-term contracts, the second largest residential real estate brokerage firm in the United States and one of the largest residential real estate brokerage franchise networks in the United States. The reportable segment financial information includes all necessary adjustments and eliminations needed to conform to the Company's significant accounting policies. The differences between the reportable segment amounts and the consolidated amounts, described as BHE and Other , relate principally to other corporate entities, corporate functions and intersegment eliminations.

Results of Operations for the Second Quarter and First Six Months of 2015 and 2014

Overview

Net income for the Company's reportable segments is summarized as follows (in millions):



	Second Quarter											First Six Months
	2015			2014			Change					2015			2014			Change
Net income attributable to BHE shareholders:
PacifiCorp	$	172		$	184		$	(12	)	(7	)%	$	306		$	340		$	(34	)	(10	)%
MidAmerican Funding	129			30			99			*		228			185			43			23
NV Energy	78			78			—			—		122			105			17			16
Northern Powergrid	77			109			(32		)	(29	)	204			221			(17		)	(8	)
BHE Pipeline Group	24			9			15			*		136			139			(3		)	(2	)
BHE Transmission	48			13			35			*		91			22			69			*
BHE Renewables	35			30			5			17		35			31			4			13
HomeServices	49			29			20			69		47			21			26			*
BHE and Other	(54		)	(65		)	11			17		(142		)	(144		)	2			1
Total net income attributable to BHE shareholders	$	558		$	417		$	141		34		$	1,027		$	920		$	107		12

* Not meaningful

Net income attributable to BHE shareholders increased $141 million for the second quarter of 2015 compared to 2014 due to the following:

•

PacifiCorp's net income decreased due to the prior year recognition of expected insurance recoveries for fire claims, higher depreciation and amortization of $13 million and lower AFUDC of $8 million, partially offset by higher margins of $33 million. Margins increased primarily due to higher retail rates and higher retail customer load from hot weather in June 2015, partially offset by lower renewable energy credit revenue and lower wholesale electricity revenue.

•

MidAmerican Funding's net income increased due to higher margins of $53 million, substantially from changes in electric retail rates and rate structure and lower energy costs, higher recognized production tax credits of $43 million and other income tax benefits, lower fossil-fueled generation maintenance of $21 million and a one-time refund of $8 million to natural gas customers in 2014 of insurance recoveries related to environmental matters, partially offset by higher depreciation and amortization of $13 million due to wind-powered generation and other plant placed in-service, lower AFUDC of $6 million and higher income taxes on greater pre-tax income.


•	NV Energy's net income was flat as the higher regulated electric margins of $12 million and lower interest expense of $6 million were offset by higher depreciation and amortization of $8 million and higher operating expense of $5 million.


•	Northern Powergrid's net income decreased due to lower tariff rates, the stronger United States dollar of $8 million and higher distribution related costs.


•	BHE Pipeline Group's net income increased due to lower losses on gas sales of $16 million related to system balancing activities, which were unusually high in 2014 due to weather, higher transportation revenue and lower operating expense.


•	BHE Transmission's net income increased $35 million due to the acquisition of AltaLink on December 1, 2014.


•	BHE Renewables' net income increased due to additional solar capacity placed in-service and a favorable change in the valuation of a power purchase agreement derivative, partially offset by lower earnings at CE Generation and lower wind generation at existing projects.


•	HomeServices' net income increased due to higher earnings at existing businesses from an increase in closed brokerage units, home sales prices and closed title units, and positive results at newly acquired businesses.


•	BHE and Other net loss improved due primarily to favorable United States income taxes on foreign earnings, partially offset by higher interest expense of $23 million.

Net income attributable to BHE shareholders increased $107 million for the first six months of 2015 compared to 2014 due to the following:

•

PacifiCorp's net income decreased due to the prior year recognition of expected insurance recoveries for fire claims, higher depreciation and amortization of $24 million and lower AFUDC of $16 million, partially offset by higher margins of $23 million. Margins increased primarily due to higher retail rates and lower natural gas generation, partially offset by lower wholesale electricity revenue volumes, higher coal costs and generation, lower renewable energy credit revenue and lower retail customer load.

•

MidAmerican Funding's net income increased due to higher regulated electric margins of $51 million from changes in electric retail rates and rate structure, lower energy costs and higher transmission revenue related to MidAmerican Energy's Multi-Value Projects, lower fossil-fueled generation maintenance of $21 million, higher recognized production tax credits of $16 million and a one-time refund of $8 million to natural gas customers in 2014 of insurance recoveries related to environmental matters, partially offset by higher depreciation and amortization of $29 million due to wind-powered generation and other plant placed in-service, lower AFUDC of $12 million and lower natural gas margins of $6 million primarily from colder than normal winter temperatures in 2014.


•	NV Energy's net income increased due to higher regulated electric margins of $34 million and lower interest expense of $13 million, partially offset by higher depreciation and amortization of $17 million and higher operating expense of $7 million.


•	Northern Powergrid's net income decreased due to the stronger United States dollar of $20 million.


•	BHE Transmission's net income increased due to the acquisition of AltaLink on December 1, 2014 totaling $64 million and higher equity earnings at Electric Transmission Texas, LLC due to continued investment and additional plant placed in-service.


•	BHE Renewables' net income increased due to higher operating income at the Topaz Project with the plant fully online in 2015 and a favorable change in the valuation of a power purchase agreement derivative, partially offset by lower earnings at CE Generation and lower wind generation at existing projects.


•	HomeServices' net income increased due to higher earnings at existing businesses from an increase in closed brokerage units, home sales prices and closed title units, and positive results at newly acquired businesses.


•	BHE and Other net loss improved due primarily to favorable United States income taxes on foreign earnings and lower other operating expenses, partially offset by higher interest expense of $47 million.

Reportable Segment Results

Operating revenue and operating income for the Company's reportable segments are summarized as follows (in millions):



	Second Quarter											First Six Months
	2015			2014			Change					2015			2014			Change
Operating revenue:
PacifiCorp	$	1,269		$	1,243		$	26		2	%	$	2,519		$	2,531		$	(12	)	—	%
MidAmerican Funding	797			775			22			3		1,748			2,005			(257		)	(13	)
NV Energy	835			795			40			5		1,541			1,433			108			8
Northern Powergrid	263			324			(61		)	(19	)	587			641			(54		)	(8	)
BHE Pipeline Group	208			226			(18		)	(8	)	540			612			(72		)	(12	)
BHE Transmission	150			—			150			*		275			—			275			*
BHE Renewables	190			145			45			31		314			214			100			47
HomeServices	758			617			141			23		1,206			975			231			24
BHE and Other	(22		)	(22		)	—			—		(61		)	(59		)	(2		)	(3	)
Total operating revenue	$	4,448		$	4,103		$	345		8		$	8,669		$	8,352		$	317		4



Operating income:
PacifiCorp	$	327		$	343		$	(16	)	(5	)%	$	600		$	635		$	(35	)	(6	)%
MidAmerican Funding	122			51			71			*		229			204			25			12
NV Energy	178			179			(1		)	(1	)	299			286			13			5
Northern Powergrid	130			178			(48		)	(27	)	323			359			(36		)	(10	)
BHE Pipeline Group	56			29			27			93		256			259			(3		)	(1	)
BHE Transmission	58			(2		)	60			*		104			(4		)	108			*
BHE Renewables	66			80			(14		)	(18	)	72			109			(37		)	(34	)
HomeServices	85			51			34			67		83			39			44			*
BHE and Other	(15		)	(9		)	(6		)	(67	)	(29		)	(37		)	8			22
Total operating income	$	1,007		$	900		$	107		12		$	1,937		$	1,850		$	87		5

* Not meaningful

PacifiCorp

Operating revenue increased $26 million for the second quarter of 2015 compared to 2014 due to higher retail revenue of $69 million, partially offset by lower wholesale and other revenue of $43 million. The increase in retail revenue was due to higher retail rates of $50 million and higher retail customer load of $19 million. Customer load increased 1.6% due to the impacts of hot weather in June 2015 on residential and commercial customers and an increase in the average number of residential and commercial customers primarily in Utah, partially offset by lower residential customer usage in Utah and lower irrigation customer usage primarily in Idaho. Wholesale and other revenue decreased due to lower renewable energy credit revenue of $23 million, lower average wholesale volumes of $11 million and lower average wholesale prices of $6 million.

Operating income decreased $16 million for the second quarter of 2015 compared to 2014 due to the prior year recognition of expected insurance recoveries for fire claims and higher depreciation and amortization of $13 million, partially offset by higher margins of $33 million. Margins increased due to the higher operating revenue and lower energy costs of $7 million. Energy costs decreased due to lower natural gas generation and a lower average cost of natural gas, partially offset by higher coal generation and a higher average cost of coal.

Operating revenue decreased $12 million for the first six months of 2015 compared to 2014 due to lower wholesale and other revenue of $61 million, partially offset by higher retail revenue of $49 million. The increase in retail revenue was due to higher retail rates of $74 million, partially offset by lower retail customer load of $25 million. Customer load decreased 1.0% due to lower residential, irrigation and commercial customer usage, partially offset by an increase in the average number of residential customers in Utah and Oregon and an increase in the average number of commercial customers in Utah. The impacts of the hot weather in June 2015 on residential and commercial customers were largely offset by the impacts of mild weather in the first quarter of 2015 on residential and commercial customers primarily in Oregon and Washington. Wholesale and other revenue decreased due to lower wholesale volumes of $30 million and lower renewable energy credit revenue of $29 million.

Operating income decreased $35 million for the first six months of 2015 compared to 2014 due to the prior year recognition of insurance recoveries for fire claims and higher depreciation and amortization of $24 million primarily due to higher plant in-service including the Lake Side 2 natural gas-fueled generating facility placed in-service in May 2014, partially offset by higher margins of $23 million. Margins increased due to lower energy costs of $35 million, partially offset by the lower operating revenue. Energy costs decreased due to lower natural gas generation, lower average cost of purchased electricity and lower natural gas prices, partially offset by higher purchased electricity volumes, lower net deferrals of incurred net power costs and higher coal costs and generation.

MidAmerican Funding

Operating revenue increased $22 million for the second quarter of 2015 compared to 2014 due to higher regulated electric operating revenue of $35 million and higher nonregulated and other operating revenue of $12 million, partially offset by lower regulated natural gas operating revenue of $25 million. Regulated electric operating revenue increased due to higher retail revenue of $28 million and higher wholesale and other revenue of $7 million. Retail revenue increased due to $36 million from higher electric rates primarily in Iowa and $6 million from higher recoveries through adjustment clauses, which is substantially offset in operating expense, partially offset by $9 million from milder temperatures and $5 million from non-weather-related customer load factors. The increase in Iowa electric rates reflects higher retail rates and changes in rate structure related to seasonal pricing that were effective with the implementation of the final base rates in August 2014 and result in a greater differential between higher rates from June to September and lower rates in the remaining months. Electric retail customer load decreased 2.2% compared to 2014 as a result of milder temperatures, partially offset by strong industrial growth. Electric wholesale and other revenue increased due to higher wholesale volumes of $21 million and higher transmission revenue of $5 million related to MidAmerican Energy's Multi-Value Projects, partially offset by lower average wholesale prices of $18 million. Nonregulated and other operating revenue increased due to higher electricity volumes and prices, partially offset by lower natural gas prices and volumes. Regulated natural gas operating revenue decreased due to a lower average per-unit cost of gas sold of $34 million, which is offset in cost of sales, and 15.2% lower retail sales volumes from warmer temperatures in 2015, partially offset by higher wholesale volumes and other retail usage factors.

Operating income increased $71 million for the second quarter of 2015 compared to 2014 due to higher regulated electric operating income of $60 million, higher regulated natural gas operating income of $7 million and higher nonregulated and other operating income of $4 million. Regulated electric operating income increased due to the higher retail rates and changes in rate structure related to seasonal pricing, lower fossil-fueled generation maintenance from planned major outages in 2014 of $21 million and lower energy costs of $16 million from lower purchased power costs and a lower average cost of fuel for generation, partially offset by higher depreciation and amortization of $13 million due to wind generation and other plant placed in-service. Regulated natural gas operating income increased due to a one-time refund of $8 million to customers in 2014 of insurance recoveries related to environmental matters. Nonregulated and other operating income increased primarily due to higher average margins per unit sold on higher electricity sales volumes.

Operating revenue decreased $257 million for the first six months of 2015 compared to 2014 due to lower regulated natural gas operating revenue of $241 million and lower nonregulated and other operating revenue of $27 million, partially offset by higher regulated electric operating revenue of $11 million. Regulated natural gas operating revenue decreased due to a lower average per-unit cost of gas sold of $228 million, which is offset in cost of sales, and 14.3% lower retail sales volumes primarily from colder than normal winter temperatures in 2014, partially offset by higher wholesale volumes. Nonregulated and other operating revenue decreased due to lower natural gas prices and volumes, partially offset by higher electricity volumes and prices. Regulated electric operating revenue increased due to higher retail revenue of $24 million, partially offset by lower wholesale and other revenue of $13 million. Retail revenue increased due to $21 million from higher recoveries through adjustment clauses, which is substantially offset in operating expense, and $19 million from higher electric rates primarily in Iowa, partially offset by $19 million from milder temperatures compared to the first six months of 2014. Electric retail customer load decreased 0.7% compared to 2014 as a result of milder temperatures, partially offset by strong industrial growth. Electric wholesale and other revenue decreased due to lower average wholesale prices of $39 million, partially offset by higher wholesale volumes of $21 million and higher transmission revenue of $10 million related to MidAmerican Energy's Multi-Value Projects.

Operating income increased $25 million for the first six months of 2015 compared to 2014 due to higher regulated electric operating income of $30 million, partially offset by lower regulated natural gas operating income of $4 million and lower nonregulated and other operating income of $1 million. Regulated electric operating income increased due to the higher retail rates, lower energy costs of $40 million from lower purchased power costs and a lower average cost of fuel for generation, and lower fossil-fueled generation maintenance from the planned major outages in 2014 of $21 million, partially offset by higher depreciation and amortization of $28 million due to wind generation and other plant placed in-service and changes in retail rate structure related to seasonal pricing. Regulated natural gas operating income decreased due to lower retail sales volumes, partially offset by a one-time refund of $8 million to customers in 2014 of insurance recoveries related to environmental matters.

NV Energy

Operating revenue increased $40 million for the second quarter of 2015 compared to 2014 due primarily to higher regulated electric operating revenue of $35 million. Regulated electric operating revenue increased due to higher retail revenue of $28 million and higher wholesale and other revenue of $7 million. Retail revenue was higher due to $30 million from higher retail rates as a result of deferred energy adjustment mechanisms and a rate design change from the 2014 Nevada Power general rate case effective in January 2015, $8 million from higher energy efficiency rate revenue and $6 million from higher customer growth, partially offset by $14 million from lower customer usage primarily due to the impacts of weather. Electric retail customer load decreased 1.4% compared to 2014.

Operating income decreased $1 million for the second quarter of 2015 compared to 2014 due to higher regulated electric margins of $12 million from the higher regulated electric operating revenue, partially offset by higher energy costs of $23 million. Energy costs increased due to higher net deferred power costs of $86 million, higher natural gas generation and a higher average cost of coal, partially offset by a lower average cost of natural gas and lower coal generation. Additionally, operating income decreased due to higher depreciation and amortization of $8 million due to higher regulatory amortizations and higher operating expense of $5 million.

Operating revenue increased $108 million for the first six months of 2015 compared to 2014 due to higher regulated electric operating revenue of $97 million and higher regulated natural gas operating revenue of $11 million due primarily to a rate change. Regulated electric operating revenue increased due to higher retail revenue of $86 million and higher wholesale and other revenue of $11 million. Retail revenue was higher due to $62 million from higher retail rates as a result of deferred energy adjustment mechanisms and a rate design change from the 2014 Nevada Power general rate case effective in January 2015, $17 million from higher customer growth and $15 million of higher energy efficiency rate revenue, partially offset by lower customer usage primarily due to the impacts of weather. Electric retail customer load increased 1.0% compared to 2014.

Operating income increased $13 million for the first six months of 2015 compared to 2014 due to higher regulated electric margins of $34 million from the higher regulated electric operating revenue, partially offset by higher energy costs of $63 million. Energy costs increased due to higher net deferred power costs of $173 million, higher natural gas generation and higher purchased electricity of $6 million, partially offset by lower coal generation and a lower average cost of natural gas and coal. The higher regulated electric margins were partially offset by higher depreciation and amortization of $17 million due to higher regulatory amortizations and higher operating expense of $7 million.

Northern Powergrid

Operating revenue decreased $61 million for the second quarter of 2015 compared to 2014 due to lower distribution revenue of $30 million and the stronger United States dollar of $26 million. Distribution revenue decreased due to lower tariff rates of mainly reflecting the impact of the new price control period effective April 1, 2015. Operating income decreased $48 million for the second quarter of 2015 compared to 2014 due to the lower distribution revenue, the stronger United States dollar of $13 million and higher distribution related costs of $6 million.

Operating revenue decreased $54 million for the first six months of 2015 compared to 2014 due to the stronger United States dollar of $56 million and lower contracting revenue of $7 million, partially offset by higher distribution revenue of $9 million. Distribution revenue increased due to the recovery of the December 2013 customer rebate totaling $13 million, partially offset by lower tariff rates. Operating income decreased $36 million for the first six months of 2015 compared to 2014 mainly due to the stronger United States dollar of $31 million and higher distribution related costs of $9 million.

BHE Pipeline Group

Operating revenue decreased $18 million for the second quarter of 2015 compared to 2014 due to lower gas sales of $20 million related to system balancing activities, partially offset by higher transportation revenue. Operating income increased $27 million for the second quarter of 2015 compared to 2014 due to lower losses on gas sales of $16 million related to system balancing activities, which were unusually high in 2014 due to weather, the higher transportation revenue and lower operating expense of $6 million.

Operating revenue decreased $72 million for the first six months of 2015 compared to 2014 due to lower gas sales of $68 million related to system and operational balancing activities. Operating income decreased $3 million for the first six months of 2015 compared to 2014 due to higher depreciation. The lower revenue related to system and operational balancing activities was offset by lower costs of gas sold.

BHE Transmission

AltaLink was acquired on December 1, 2014, and its results are included in the consolidated results beginning as of that date. Operating revenue and operating income for the second quarter of 2015 from AltaLink was $150 million and $57 million, respectively. Operating revenue and operating income for the first six months of 2015 from AltaLink was $275 million and $104 million, respectively.

BHE Renewables

Operating revenue increased $45 million for the second quarter of 2015 compared to 2014 due to an increase of $39 million as additional solar capacity was placed in-service, an increase from the acquisition of the remaining 50% interest in CE Generation in June 2014 of $23 million, a favorable change in the valuation of a power purchase agreement derivative of $7 million and the Jumbo Road Project of $4 million as it reached commercial operation in April 2015, partially offset by a $22 million decrease at CalEnergy Philippines and lower wind generation at existing projects. CalEnergy Philippines operating revenue decreased due to the adoption of Financial Accounting Standards Board Accounting Standards Codification Topic 853, "Service Concession Arrangements" ("ASC 853") on January 1, 2015, which resulted in the elimination of recognizing the guaranteed water and energy delivery fees in operating revenue and the establishment of a financial asset with a related recognition of interest income.

Operating income decreased $14 million for the second quarter of 2015 compared to 2014 as the higher operating revenue was more than offset by higher operating expense of $35 million and higher depreciation and amortization of $24 million. Operating expense increased due to $28 million from the CE Generation acquisition and $4 million from additional solar capacity placed in-service. Depreciation and amortization increased due to $14 million from the CE Generation acquisition, $12 million from additional solar capacity placed in-service and $4 million for the Jumbo Road Project, partially offset by a $6 million decrease at CalEnergy Philippines due to the adoption of ASC 853, which reclassed a portion of property, plant and equipment to a financial asset.

Operating revenue increased $100 million for the first six months of 2015 compared to 2014 due to an increase of $73 million as additional solar capacity was placed in-service, an increase from the CE Generation acquisition of $55 million and a favorable change in the valuation of a power purchase agreement derivative of $24 million, partially offset by a $43 million decrease at CalEnergy Philippines due to the adoption of ASC 853 and lower wind generation at existing projects.

Operating income decreased $37 million for the first six months of 2015 compared to 2014 as the higher operating revenue was more than offset by higher operating expense of $86 million and higher depreciation and amortization of $52 million. Operating expense increased due to $69 million from the CE Generation acquisition, $8 million from additional solar capacity placed in-service and higher project acquisition costs of $6 million. Depreciation and amortization increased due to $33 million from the CE Generation acquisition, $25 million from additional solar capacity placed in-service and $4 million for the Jumbo Road Project, partially offset by an $11 million decrease at CalEnergy Philippines.

HomeServices

Operating revenue increased $141 million for the second quarter of 2015 compared to 2014 due to a 12.5% increase in closed brokerage units and a 6.4% increase in average home sales prices. The increase in operating revenue was due to an increase from existing businesses totaling $98 million and an increase in acquired businesses totaling $43 million. The increase in existing businesses reflects an 11.4% increase in closed brokerage units and a 4.5% increase in average home sales prices. Operating income increased $34 million for the second quarter of 2015 compared to 2014 due to higher revenues offset by higher costs, primarily commission expense, at existing businesses of $28 million and higher earnings at acquired businesses of $6 million.

Operating revenue increased $231 million for the first six months of 2015 compared to 2014 due to a 12.6% increase in closed brokerage units and a 7.9% increase in average home sales prices. The increase in operating revenue was due to an increase from existing businesses totaling $138 million and an increase in acquired businesses totaling $93 million. The increase in existing businesses reflects a 10.6% increase in closed brokerage units and a 4.1% increase in average home sales prices. Operating income increased $44 million for the first six months of 2015 compared to 2014 due to higher revenues offset by higher costs, primarily commission expense, at existing businesses of $37 million and higher earnings at acquired businesses of $7 million.

BHE and Other

Operating loss increased $6 million for the second quarter and improved $8 million for the first six months of 2015 compared to 2014 due primarily to changes in other operating expense.

Consolidated Other Income and Expense Items

Interest Expense

Interest expense is summarized as follows (in millions):



	Second Quarter								First Six Months
	2015		2014		Change				2015		2014		Change

Subsidiary debt	$	346	$	319	$	27	8	%	$	687	$	629	$	58	9	%
BHE senior debt and other	101		86		15		17		204		175		29		17
BHE junior subordinated debentures	29		20		9		45		57		39		18		46
Total interest expense	$	476	$	425	$	51	12		$	948	$	843	$	105	12

Interest expense on subsidiary debt increased $27 million for the second quarter and $58 million for the first six months of 2015 compared to 2014 due to $37 million and $73 million, respectively, from the acquisition of AltaLink in December 2014 and $6 million for the first six months of 2015 compared to 2014 from the acquisition of the remaining 50% interest in CE Generation in June 2014. Additionally, debt issuances at MidAmerican Funding ($850 million in April 2014), Northern Powergrid (£150 million in April 2015) and BHE Renewables ($325 million in March 2015) increased interest expense, partially offset by scheduled maturities and principal payments and the impact of the foreign currency exchange rate of $4 million and $7 million, respectively.

Interest expense on BHE senior debt and other increased $15 million for the second quarter and $29 million for the first six months of 2015 compared to 2014 due to the issuance of $1.5 billion of BHE senior debt in December 2014.

Interest expense on BHE junior subordinated debentures increased $9 million for the second quarter and $18 million for the first six months of 2015 compared to 2014 due to the issuance of $1.5 billion of junior subordinated debentures to certain Berkshire Hathaway subsidiaries in the fourth quarter of 2014, partially offset by the repayment of junior subordinated debentures totaling $300 million in June 2014.

Capitalized Interest

Capitalized interest was flat for the second quarter of 2015 compared to 2014 as $11 million from AltaLink was offset by lower construction work-in-progress balances related to the Solar Star and Topaz Projects.

Capitalized interest was flat for the first six months of 2015 compared to 2014 as $22 million from AltaLink and higher construction work-in-progress balances related to the Jumbo Road Project were offset by lower construction work-in-progress balances related to the Solar Star and Topaz Projects and at PacifiCorp and MidAmerican Energy.

Allowance for Equity Funds

Allowance for equity funds increased $5 million for the second quarter and $9 million for the first six months of 2015 compared to 2014 primarily due to $13 million and $26 million, respectively, from AltaLink, partially offset by lower construction work-in-progress balances at PacifiCorp and MidAmerican Energy.

Interest and Dividend Income

Interest and dividend income increased $17 million for the second quarter and $34 million for the first six months of 2015 compared to 2014 primarily due to the recognition of interest income on the financial asset established as a result of the adoption of ASC 853 at CalEnergy Philippines.

Other, net

Other, net decreased $6 million for the second quarter of 2015 compared to 2014 due to lower investment returns, partially offset by a favorable movement on interest rate swaps.

Other, net increased $13 million for the first six months of 2015 compared to 2014 due to a gain on sale of a generating facility lease at MidAmerican Funding in 2015 and a favorable movement on interest rate swaps.

Income Tax Expense

Income tax expense decreased $71 million for the second quarter of 2015 compared to 2014 and the effective tax rates were 13% for 2015 and 28% for 2014. The effective tax rate decreased due to higher production tax credits recognized of $42 million, favorable United States income taxes on foreign earnings of $31 million primarily due to foreign tax credits and favorable impacts of rate making of $17 million.

Income tax expense decreased $60 million for the first six months of 2015 compared to 2014 and the effective tax rates were 17% for 2015 and 23% for 2014. The effective tax rate decreased due to favorable United States income taxes on foreign earnings of $32 million primarily due to foreign tax credits, favorable impacts of rate making of $21 million and higher production tax credits recognized of $12 million.

Production tax credits are recognized in earnings for interim periods based on the application of an estimated annual effective tax rate to pretax earnings. Federal renewable electricity production tax credits are earned as energy from qualifying wind-powered generating facilities is produced and sold and are based on a per-kilowatt hour rate pursuant to the applicable federal income tax law. Production tax credits recognized in the second quarter of 2015 were $76 million, or $42 million higher than 2014 primarily at MidAmerican Energy, while production tax credits earned in the second quarter of 2015 were $66 million, or relatively flat compared to 2014. Production tax credits recognized in the first six months of 2015 were $133 million, or $12 million higher than 2014 primarily at MidAmerican Energy, while production tax credits earned in the first six months of 2015 were $143 million, or relatively flat compared to 2014.The difference between production tax credits recognized and earned of $10 million as of June 30, 2015 will be recorded in earnings over the remainder of 2015.

Equity Income

Equity income is summarized as follows (in millions):



	Second Quarter										First Six Months
	2015		2014			Change					2015		2014			Change

Electric Transmission Texas, LLC	$	20	$	21		$	(1	)	(5	)%	$	41	$	37		$	4		11	%
Agua Caliente	8		8			—			—		10		11			(1		)	(9	)
HomeServices	1		2			(1		)	(50	)	2		1			1			100
CE Generation	—		(4		)	4			100		—		(8		)	8			100
Other	1		4			(3		)	(75	)	3		5			(2		)	(40	)
Total equity income	$	30	$	31		$	(1	)	(3	)	$	56	$	46		$	10		22

Equity income increased $10 million for the first six months of 2015 compared to 2014 due to the acquisition of the remaining 50% interest in CE Generation in June 2014, which incurred a loss in 2014, and higher equity earnings at Electric Transmission Texas, LLC from continued investments and additional plant placed in-service.

Liquidity and Capital Resources

Each of BHE 's direct and indirect subsidiaries is organized as a legal entity separate and apart from BHE and its other subsidiaries. It should not be assumed that the assets of any subsidiary will be available to satisfy BHE 's obligations or the obligations of its other subsidiaries. However, unrestricted cash or other assets that are available for distribution may, subject to applicable law, regulatory commitments and the terms of financing and ring-fencing arrangements for such parties, be advanced, loaned, paid as dividends or otherwise distributed or contributed to BHE or affiliates thereof. Refer to Note 17 of Notes to Consolidated Financial Statements in Item 8 of the Company's Annual Report on Form 10-K for the year ended December 31, 2014 for further discussion regarding the limitation of distributions from BHE 's subsidiaries.

The Company's long-term debt may include provisions that allow BHE or its subsidiaries to redeem such debt in whole or in part at any time. These provisions generally include make-whole premiums.

As of June 30, 2015 , the Company's total net liquidity was as follows (in millions):



																		Home-
							MidAmerican			NV		Northern						Services
	BHE			PacifiCorp			Funding			Energy		Powergrid			AltaLink			And Other			Total

Cash and cash equivalents	$	245		$	96		$	303		$	232	$	4		$	3		$	249		$	1,132

Credit facilities ⁽¹⁾	2,000			1,200			609			650		268			1,040			1,038			6,805
Less:
Short-term debt	—			—			—			—		(178		)	(117		)	(730		)	(1,025		)
Tax-exempt bond support and letters of credit	(65		)	(206		)	(195		)	—		—			(4		)	—			(470		)
Net credit facilities	1,935			994			414			650		90			919			308			5,310

Total net liquidity	$	2,180		$	1,090		$	717		$	882	$	94		$	922		$	557		$	6,442
Credit facilities:
Maturity dates	2017			2017, 2018			2016, 2018			2018		2020			2016, 2019			2015, 2016, 2018


(1)	Includes the drawn uncommitted credit facilities totaling $33 million at Northern Powergrid .

Operating Activities

Net cash flows from operating activities for the six-month periods ended June 30, 2015 and 2014 were $3.5 billion and $2.2 billion , respectively. Higher income tax receipts of $1.22 billion and improved operating results, including AltaLink, were partially offset by higher interest payments of $88 million and other changes in working capital.

In December 2014, the Tax Increase Prevention Act of 2014 (the "Act") was signed into law, extending the 50% bonus depreciation for qualifying property purchased and placed in-service before January 1, 2015 and before January 1, 2016 for certain longer-lived assets. Production tax credits were extended for wind power and other forms of non-solar renewable energy projects that begin construction before the end of 2014. As a result of the Act, the Company's cash flows from operations have benefited in 2015 due to bonus depreciation on qualifying assets placed in-service and for production tax credits earned on qualifying projects. The timing of the Company's income tax cash flows from period to period can be significantly affected by the changes in the tax law and the estimated federal income tax payment methods and assumptions for each payment date.

Investing Activities

Net cash flows from investing activities for the six-month periods ended June 30, 2015 and 2014 were $(2.6) billion and $(2.5) billion , respectively. The change was primarily due to higher capital expenditures, including AltaLink, and changes in restricted cash and investments primarily used to fund capital expenditures at the Solar Star Projects in 2014, partially offset by higher acquisitions totaling $246 million in 2014 compared to $59 million in 2015.

Financing Activities

Net cash flows from financing activities for the six-month period ended June 30, 2015 was $(373) million . Uses of cash totaled $1.6 billion and consisted mainly of repayment of BHE junior subordinated debentures of $600 million, repayments of subsidiary debt totaling $527 million , net repayments of short-term debt of $405 million and repurchases of common stock totaling $36 million. Sources of cash totaled $1.2 billion related to proceeds from subsidiary debt issuances.

In June 2015, ALP issued C$350 million of its 4.09% Series 2015-1 Medium-Term Notes due June 2045. The net proceeds were used to repay short-term debt.

Net cash flows from financing activities for the six-month period ended June 30, 2014 was $606 million . Sources of cash totaled $1.7 billion and consisted of proceeds from subsidiary debt issuances of $1.3 billion and net proceeds from short-term debt of $389 million. Uses of cash totaled $1.1 billion and consisted mainly of repayments of BHE senior debt and junior subordinated debentures of $550 million and repayments of subsidiary debt of $462 million.

Future Uses of Cash

The Company has available a variety of sources of liquidity and capital resources, both internal and external, including net cash flows from operating activities, public and private debt offerings, the issuance of commercial paper, the use of unsecured revolving credit facilities, the issuance of equity and other sources. These sources are expected to provide funds required for current operations, capital expenditures, acquisitions, investments, debt retirements and other capital requirements. The availability and terms under which each subsidiary has access to external financing depends on a variety of factors, including its credit ratings, investors' judgment of risk and conditions in the overall capital markets, including the condition of the utility industry and project finance markets, among other items.

Capital Expenditures

The Company has significant future capital requirements. Capital expenditure needs are reviewed regularly by management and may change significantly as a result of these reviews, which may consider, among other factors, changes in environmental and other rules and regulations; impacts to customers' rates; outcomes of regulatory proceedings; changes in income tax laws; general business conditions; load projections; system reliability standards; the cost and efficiency of construction labor, equipment and materials; commodity prices; and the cost and availability of capital. Prudently incurred expenditures for compliance-related items, such as pollution-control technologies, replacement generation, nuclear decommissioning, hydroelectric relicensing, hydroelectric decommissioning and associated operating costs are generally incorporated into BHE 's energy subsidiaries' regulated retail rates. Expenditures for certain assets may ultimately include acquisitions of existing assets.

The Company's historical and forecast capital expenditures, each of which exclude amounts for non-cash equity AFUDC and other non-cash items, by reportable segment are as follows (in millions):



	Six-Month Periods				Annual
	Ended June 30,				Forecast
	2014		2015		2015
Capital expenditures by business :
PacifiCorp	$	532	$	419	$	924
MidAmerican Funding	433		428		1,462
NV Energy	185		223		577
Northern Powergrid	326		382		771
BHE Pipeline Group	76		88		201
BHE Transmission	—		516		971
BHE Renewables	819		556		1,020
HomeServices	8		5		23
BHE and Other	6		7		18
Total	$	2,385	$	2,624	$	5,967



Capital expenditures by type:
Solar generation	$	778	$	428	$	815
Wind generation	246		358		998
Electric transmission	157		549		1,063
Environmental	142		62		184
Other development projects	53		22		71
Electric distribution and other operating	1,009		1,205		2,836
Total	$	2,385	$	2,624	$	5,967

The Company's historical and forecast capital expenditures consisted mainly of the following:


•	Solar generation includes the following:


◦	Construction of the Topaz Project totaling $49 million and $310 million for the six-month periods ended June 30, 2015 and 2014 , respectively. Final completion under the engineering, procurement and construction agreement occurred February 28, 2015, and project completion was achieved under the financing documents on March 30, 2015.

◦

Construction of the Solar Star Projects totaling $362 million and $468 million for the six-month periods ended June 30, 2015 and 2014 , respectively. Subsidiaries of Solar Star Funding anticipate costs for the Solar Star Projects will total an additional $346 million for 2015 . As of June 30, 2015, all 579 MW of the Solar Star Projects had been placed in-service under the construction contracts. Facility substantial completion under the engineering, procurement and construction agreements occurred July 10, 2015 for Solar Star 2 and July 17, 2015 for Solar Star 1, and both projects declared July 1, 2015 as the commercial operation date in accordance with the power purchase agreements.

• Wind generation includes the following:

◦

Construction of wind-powered generating facilities at MidAmerican Energy totaling $236 million and $208 million for the six-month periods ended June 30, 2015 and 2014 , respectively. MidAmerican Energy anticipates costs for wind-powered generating facilities will total an additional $555 million for 2015 . MidAmerican Energy is constructing an additional 657 MW (nominal ratings) of wind-powered generating facilities expected to be placed in-service in 2015, including 162 MW (nominal ratings) approved by the IUB in February 2015.


◦	Construction of the Jumbo Road Project totaling $68 million and $37 million for the six-month periods ended June 30, 2015 and 2014 , respectively. The project is comprised of 162 General Electric Company 1.85 MW wind turbines with a total capacity of 300 MW and achieved commercial operation in April 2015.

◦

On February 27, 2015, the Company acquired Grande Prairie Wind, LLC ("Grande Prairie"), which owns certain assets that will facilitate the development of up to 400 MW of wind-powered generating facilities in Nebraska ("Grande Prairie Project"). Equipment procurement and ongoing construction of the Grande Prairie Project totaled $54 million for the six-month period ended June 30, 2015 . Grande Prairie anticipates costs for the Grande Prairie Project will total an additional $72 million for 2015 .


•	Electric transmission includes investments for ALP 's directly assigned projects from the AESO, PacifiCorp 's costs primarily associated with the Energy Gateway Transmission Expansion Program and MidAmerican Energy 's MVPs approved by the MISO for the construction of 245 miles of 345 kV transmission line located in Iowa and Illinois.

•

Environmental includes the installation of new or the replacement of existing emissions control equipment at certain generating facilities at the Utilities , including installation or upgrade of selective catalytic reduction control systems and low nitrogen oxide burners to reduce nitrogen oxides, particulate matter control systems, sulfur dioxide emissions control systems and mercury emissions control systems, as well as expenditures for the management of coal combustion residuals.


•	Electric distribution and other operating includes ongoing distribution systems infrastructure needed at the Utilities and Northern Powergrid and investments in routine expenditures for transmission, generation and other infrastructure needed to serve existing and expected demand.

MidAmerican Energy Wind

In April 2015, MidAmerican Energy filed with the IUB an application for ratemaking principles related to the construction of up to 552 MW (nominal ratings) of additional wind-powered generating facilities expected to be placed in-service by the end of 2016. In June 2015, MidAmerican Energy and the Iowa Office of Consumer Advocate entered into a settlement agreement relating to the proposal. The settlement agreement, which is subject to IUB approval, establishes a cost cap of $903 million, including AFUDC, and provides for a fixed rate of return on equity of 11.35% over the proposed 30-year useful lives of those facilities in any future Iowa rate proceeding. The cost cap ensures that as long as total costs are below the cap, the investment will be deemed prudent in any future Iowa rate proceeding. MidAmerican Energy has requested IUB approval by the end of the third quarter of 2015.

Other Renewable Investments

The Company has entered into renewable tax equity investments that require equity contributions of approximately $170 million in 2015 and $480 million in 2016.

PacifiCorp and the California ISO Memorandum of Understanding

In April 2015, PacifiCorp and the California Independent System Operator Corporation ("California ISO") entered into a non-binding memorandum of understanding to explore the feasibility, costs and benefits of PacifiCorp joining the California ISO as a participating transmission owner. A comprehensive benefits study is underway and is expected to be completed by late September 2015. Should PacifiCorp decide to take additional steps to pursue joining the California ISO, a stakeholder input and review process would be initiated and PacifiCorp would seek necessary regulatory approvals, including from its state regulatory commissions and the FERC. PacifiCorp and the California ISO launched the regional energy imbalance market ("EIM") in November 2014, which allows PacifiCorp to participate in the California ISO's real-time energy markets to most cost-effectively manage short-term fluctuations in energy supply and demand. Joining the California ISO would extend that participation by PacifiCorp into the day-ahead energy market operated by the California ISO, in addition to unified planning and operation of PacifiCorp's transmission network.

Nevada Utilities Energy Imbalance Market

The Nevada Utilities have announced plans to join the EIM in October 2015. The EIM is expected to reduce costs to serve customers through more efficient dispatch of a larger and more diverse pool of generation resources, more effectively integrate renewables and enhance reliability through improved situational awareness and responsiveness. In July 2015, following the issuance of an order by the FERC and in conjunction with the California ISO's announcement of a supplemental stakeholder process, the California ISO and the Nevada Utilities announced a change in the EIM entrance date to November 2015.

NV Energy Joint Dispatch

Nevada Power and Sierra Pacific are currently parties to an Interim Joint Dispatch Agreement ("Interim JDA") which outlines the joint dispatch of their combined power supply resources utilizing ON Line. In March 2015, Nevada Power and Sierra Pacific filed an application with the PUCN seeking approval of an indefinite Joint Dispatch Agreement ("JDA"). The JDA is intended to replace the currently effective Interim JDA, which terminates on December 31, 2015. Joint dispatch transactions addressed by the proposed JDA include real-time, hourly and daily transactions. The JDA also explicitly governs joint dispatch transactions between the Nevada Utilities and the California ISO utilizing the California ISO's EIM.

The primary differences between the Interim JDA and the JDA relate to EIM transactions with the California ISO. The JDA establishes Nevada Power as the EIM scheduling coordinator for the Nevada Utilities and recognizes that the joint dispatch costs and benefits associated with EIM transactions will be governed by the accounting protocols and allocations set forth in the JDA, which are unchanged from those currently in effect under the Interim JDA. In July 2015, the PUCN approved the JDA with minor modifications, and established December 31, 2019 as the termination date for the agreement. In July 2015, the JDA was filed with the FERC for approval.

Contractual Obligations

As of June 30, 2015 , there have been no material changes outside the normal course of business in contractual obligations from the information provided in Item 7 of the Company's Annual Report on Form 10-K for the year ended December 31, 2014 other than the 2015 debt issuances and the renewable tax equity investments previously discussed.

Regulatory Matters

BHE's regulated subsidiaries and certain affiliates are subject to comprehensive regulation. The discussion below contains material developments to those matters disclosed in Item 7 of the Company's Annual Report on Form 10-K for the year ended December 31, 2014 , and new regulatory matters occurring in 2015 .

PacifiCorp

Utah Mine Disposition

In December 2014, PacifiCorp filed applications with the UPSC, the OPUC, the WPSC and the IPUC seeking certain approvals, prudence determinations and accounting orders to close PacifiCorp's Deer Creek mining operations, sell certain Utah mining assets, enter into a replacement coal supply agreement, amend an existing coal supply agreement, withdraw from the United Mine Workers of America ("UMWA") 1974 Pension Plan and settle PacifiCorp's other postretirement benefit obligation for UMWA participants (collectively, the "Utah Mine Disposition"). PacifiCorp also filed an advice letter with the CPUC.

In April 2015, PacifiCorp filed all-party settlement stipulations with the UPSC and the WPSC finding that the decision to enter into the Utah Mine Disposition transaction is prudent and in the public interest and recommending the appropriate treatment for accounting and ratemaking purposes. The UPSC approved the stipulation in April 2015 and the WPSC approved the stipulation in May 2015. The IPUC also issued an order in May 2015, approving the Utah Mine Disposition and ruling that the decision to enter into the transaction was prudent and in the public interest. The IPUC's order established the accounting treatment necessary to implement the transaction while deferring any incremental ratemaking treatment to the next general rate case.

In May 2015, the OPUC issued its final order in the Utah Mine Disposition transaction proceeding, concluding that the transaction produces net benefits for customers and is in the public interest. In accordance with the OPUC order, PacifiCorp implemented two tariffs that reflect an overall annual rate increase of $3 million effective June 2015.

Utah

In March 2015, PacifiCorp filed its annual Energy Balancing Account with the UPSC requesting recovery of $31 million in deferred net power costs for the period January 1, 2014 through December 31, 2014. If approved by the UPSC, the new rates will be effective November 2015.

In March 2015, PacifiCorp filed its annual renewable energy credit ("REC") balancing account application with the UPSC requesting recovery of $6 million over a two-year period. In May 2015, the UPSC approved the new rates effective June 2015 on an interim basis until a final order is issued by the UPSC.

Oregon

In April 2015, PacifiCorp made its initial filing for the annual Transition Adjustment Mechanism with the OPUC for an annual increase of $12 million, or an average price increase of 1%, based on forecasted net power costs for calendar year 2016. The filing will be subject to updates throughout the year. If approved by the OPUC, the new rates will be effective January 2016.

Wyoming

In March 2015, PacifiCorp filed a general rate case with the WPSC requesting an annual increase of $32 million, or an average price increase of 5%, effective January 2016. The filing includes a proposal to implement a modified Energy Cost Adjustment Mechanism ("ECAM") to replace the current ECAM, which sunsets for new deferrals December 2015. In June 2015, PacifiCorp filed a net power cost update reducing the requested increase to $30 million, or an average price increase of 4%.

In March 2015, PacifiCorp filed its annual ECAM and Renewable Energy Credit and Sulfur Dioxide Revenue Adjustment Mechanism ("RRA") applications with the WPSC. The ECAM filing requests approval to recover $8 million in deferred net power costs for the period January 1, 2014 through December 31, 2014, and the RRA application requests approval to refund $1 million to customers. In May 2015, the WPSC approved the ECAM and RRA rates effective May 2015 on an interim basis until a final order is issued by the WPSC.

Washington

In May 2014, PacifiCorp filed a general rate case with the WUTC requesting an annual increase of $27 million, or an average price increase of 8%. In November 2014, PacifiCorp filed rebuttal testimony that increased the request to $32 million, or an average price increase of 10%, primarily as a result of updated net power costs. In March 2015, the WUTC issued a final order in the proceeding approving an overall annual increase of $10 million, or an average price increase of 3%, effective March 2015. In April 2015, PacifiCorp filed a petition for judicial review of certain findings of the WUTC's March 2015 order.

In the March 2015 general rate case order described above, the WUTC initiated a second phase of the proceeding to implement a Power Cost Adjustment Mechanism ("PCAM") under which a portion of the difference between base net power costs set during a general rate case and actual net power costs would be deferred and reflected in future rates. In May 2015, the WUTC approved an all-party stipulation in which the parties agreed to the implementation of a PCAM. The PCAM applies a $4 million dead band for positive or negative net power cost variances. For net power cost variances between $4 million and $10 million, the PCAM reflects asymmetrical sharing bands in which amounts to be recovered from customers will be allocated 50% to customers and 50% to PacifiCorp, and amounts to be credited to customers will be allocated 75% to customers and 25% to PacifiCorp. Positive or negative net power cost variances in excess of $10 million will be allocated 90% to customers and 10% to PacifiCorp. PacifiCorp will make its first annual PCAM filing in June 2016 to cover net power costs for the period April 1, 2015 through December 31, 2015. The PCAM will convert to a calendar year basis beginning in 2016.

Idaho

In February 2015, PacifiCorp filed its annual ECAM application with the IPUC requesting recovery of $17 million, consisting primarily of $10 million for deferred net power costs and $6 million for the difference between REC revenues included in base rates and actual REC revenues. In March 2015, the IPUC approved recovery of $16 million effective April 2015.

In May 2015, PacifiCorp filed an application with the IPUC requesting approval to modify the ECAM, update base net power costs and increase rates by $10 million, effective January 2016. The requested increase includes $7 million for the difference between REC revenues included in base rates and actual REC revenues, and $3 million as a result of updating base net power costs.

NV Energy

In July 2015, Nevada Power filed an amendment to its Emissions Reduction and Capacity Replacement Plan ("ERCR Plan") with the PUCN. The amendment requests PUCN approval of two renewable power purchase agreements with 100-MW solar photovoltaic generating facilities related to the replacement of coal plants. Each of these agreements were entered into by issuing requests for proposals for the procurement of energy through the competitive solicitation process that was set forth in Nevada Power's ERCR Plan in compliance with Senate Bill No. 123 ("SB 123"). In June 2015, the Nevada State Legislature passed Assembly Bill No. 498, which modified the capacity replacement components of SB 123. As a result, Nevada Power will not proceed with issuance of a third 100-MW request for proposal for renewable energy until such time as the PUCN determines Nevada Power has satisfactorily demonstrated a need for such electric generating capacity.

Northern Powergrid

On March 2, 2015, Northern Powergrid sought permission from the Competition and Markets Authority ("CMA") to appeal against the license modifications that give effect to the RIIO-ED1 price control. The appeal relates to three specific areas:


1.	Ofgem's decision to demand further cost savings in relation to smart grid technology over and above the ones captured by its original benchmarking exercise;


2.	Ofgem's assessment of the variation in wage rates across the country; and


3.	Ofgem's projections for labor cost increases.

Permission to appeal was granted by the CMA on March 30, 2015. The appeal is expected to conclude in the fourth quarter of 2015 in accordance with the timetable required by the CMA. British Gas Trading Limited (an electricity supplier) has been granted permission to appeal the price control, with a view to reduce the revenue available to all slow-tracked Distribution Network Operators. This appeal has the same review timetable. The outcome of these appeals may increase or reduce the revenue available to Northern Powergrid based on the Final Determination under RIIO-ED1 if the CMA (or the Gas and Electricity Markets Authority, as directed by the CMA) amends the price control determination.

Kern River

In December 2009, the FERC issued an order establishing revised rates for the period of Kern River's initial long-term contracts ("Period One rates") and required that rates be established based on a levelized rate design for eligible customers that elect to take service following the expiration of their initial contracts ("Period Two rates"). In November 2010, the FERC issued an order that established Kern River is entitled to base its Period Two rates on a 100% equity capital structure.

In July 2011, the FERC issued an order requiring, among other things, that Period Two rates be based on a return on equity of 11.55% and a levelization period that coincides with a contract length of 10 or 15 years. Kern River filed in compliance with the FERC's order in August 2011 and, following an order on compliance, again in September 2011. In late September 2011, the FERC issued a second order on compliance, accepting Kern River's filing. In February 2013, the FERC issued an order that denied the requests for rehearing regarding its previous orders on Period Two rates.

In December 2013, Kern River filed its notice of appeal with the United States Court of Appeals for the District of Columbia. Kern River appealed the effective date of the final order for purposes of refunds and the denial of allowing a modification to Period One rates related to the rolled in shipper group rate credit. The shipper group appealed the appropriate rate of return to be utilized in designing Period Two rates in conjunction with the use of a 100% equity capital structure. In June 2015, the United States Court of Appeals for the District of Columbia denied both appeals.

ALP

In November 2014, ALP filed a general tariff application asking the AUC to approve revenue requirements of C$811 million for 2015 and C$1.0 billion for 2016, primarily due to continued investment in capital projects as directed by the AESO. In January 2015, the AUC issued its decision approving ALP's 2015 interim tariff application, as filed, thereby authorizing ALP to invoice the AESO C$61 million per month commencing January 1, 2015.

In March 2015, the AUC issued its decision regarding cost of capital matters applicable to all electricity and natural gas utilities under its jurisdiction, including ALP. In its decision, which was retroactively applied to January 1, 2013, the AUC decreased the generic rate of return on common equity applicable to all utilities to 8.30% from the previously approved placeholder rate of 8.75% and decreased ALP's common equity ratio from 37% to 36% for the years 2013, 2014 and 2015. The approved common equity ratio and generic rate of return on common equity will remain in effect on an interim basis for 2016 and beyond, until changed by the AUC. In April 2015, the AUC opened a new generic cost of capital proceeding for 2016 and 2017. In May 2015, ALP and other utilities requested the return on equity and capital structures for 2016 be set at the same amounts as were approved by the AUC for 2015. In July 2015, the AUC denied ALP and other utilities request and stated that it will initiate a normal course generic cost of capital proceeding for 2016 and 2017. The AUC plans to set the scope of the proceeding and develop streamlined processes for the proceeding before the end of the third quarter of 2015.

ALP and other utilities have applied to the Alberta Court of Appeal for Leave to appeal this decision. The appeal is based on, among other things, the AUC's failure to compensate the utilities, including ALP, in the return allowed by the AUC for any amount relating to the increased risk to which the AUC has exposed the utilities as a result of the Utility Asset Disposition Decision, which was released in November 2013. In addition, the AUC failed to compensate the utilities by not assessing additional factors required to set a return on equity for 2013 and 2014, in compliance with the fair return standard.

In June 2015, ALP amended the general tariff application to propose (i) additional transmission tariff relief measures for customers and (ii) modifications to its capital structure. The amended application requests the AUC to approve revenue requirements of C$680 million for 2015 and C$739 million for 2016. In ALP's amended general tariff application, measures have been proposed that, if approved by the AUC, are expected to reduce transmission tariffs by approximately C$178 million in 2015, C$266 million in 2016 and C$111 million in 2017. ALP's amendment includes timing benefits to customers by discontinuing (i) the use of construction work-in-progress in-rate base effective January 1, 2015, and refunding related amounts received as part of the 2011 to 2014 transmission tariffs and (ii) the collection of future income taxes in current tariff revenue, effective January 1, 2016, and refunding related amounts received as part of the transmission tariffs for 2015 and prior years. In addition, ALP's amendment requests the AUC to approve an increase of 2% in ALP's common equity ratio. The AUC has scheduled a hearing on the amended general tariff application in December 2015.

In December 2014, ALP filed its 2012-2013 Deferral Accounts Reconciliation Application seeking the AUC's approval to collect C$30 million from the AESO for previously uncollected deferral account balances. In addition, ALP is seeking approval of nearly C$1.7 billion of direct assign capital additions, included as part of the direct assigned capital deferral account filing. The AUC has scheduled a hearing for this application during November 2015.

In its November 2013 decision pertaining to ALP's 2013-2014 general tariff application, the AUC directed ALP to re-forecast the capital project expenditures for 2013 and 2014 Engineering, Procurement and Construction Management ("EPCM") services to reflect a two times labor multiplier and other approved mark-ups. While the AUC has not disallowed the new EPCM rates that ALP negotiated, there is a risk that, in a future direct assigned capital deferral account decision, the AUC may disallow a portion of the costs ALP has incurred for EPCM services in connection with capital projects executed under these relationship agreements. ALP has appealed this decision, which is scheduled to be heard in October 2015. ALP has requested approval of the capital project expenditures, including the new competitively bid EPCM rates, in its 2012-2013 direct assigned capital deferral account filing.

Environmental Laws and Regulations

The Company is subject to federal, state, local and foreign laws and regulations regarding air and water quality, renewable portfolio standards, emissions performance standards, climate change, coal combustion byproduct disposal, hazardous and solid waste disposal, protected species and other environmental matters that have the potential to impact the Company's current and future operations. In addition to imposing continuing compliance obligations, these laws and regulations provide regulators with the authority to levy substantial penalties for noncompliance including fines, injunctive relief and other sanctions. These laws and regulations are administered by the EPA and various state, local and international agencies. The Company believes it is in material compliance with all applicable laws and regulations, although many are subject to interpretation that may ultimately be resolved by the courts. Refer to "Liquidity and Capital Resources" for discussion of the Company's forecast environmental-related capital expenditures. The discussion below contains material developments to those matters disclosed in Item 7 of the Company's Annual Report on Form 10-K for the year ended December 31, 2014 .

Clean Air Act Regulations

National Ambient Air Quality Standards

The Sierra Club filed a lawsuit against the EPA in August 2013 with respect to the one-hour sulfur dioxide standards and its failure to make certain attainment designations in a timely manner. In March 2015, the United States District Court for the Northern District of California ("Northern District of California") accepted as an enforceable order an agreement between the EPA and Sierra Club to resolve litigation concerning the deadline for completing the designations. The Northern District of California's order directed the EPA to complete designations in three phases: the first phase by July 2, 2016; the second phase by December 31, 2017; and the final phase by December 31, 2020. The first phase of the designations require the EPA to designate two groups of areas: 1) areas that have newly monitored violations of the 2020 sulfur dioxide standard; and 2) areas that contain any stationary source that, according to the EPA's data, either emitted more than 16,000 tons of sulfur dioxide in 2012 or emitted more than 2,600 tons of sulfur dioxide and had an emission rate of at least 0.45 lbs/sulfur dioxide per million British thermal unit in 2012 and, as of March 2, 2015, had not been announced for retirement. MidAmerican Energy's George Neal Unit 4 and the Ottumwa Generating Station (in which MidAmerican Energy has a majority ownership interest in, but does not operate), are included as units subject to the first phase of the designations, having emitted more than 2,600 tons of sulfur dioxide and having an emission rate of at least 0.45 lbs/sulfur dioxide per million British thermal unit in 2012. States may submit to the EPA updated recommendations and supporting information for the EPA to consider in making its determinations and Iowa intends to submit such updated and supporting information by the specified deadline of September 18, 2015. The EPA intends to promulgate final sulfur dioxide area designations no later than July 2, 2016.

Mercury and Air Toxics Standards

Numerous lawsuits have been filed in the United States Court of Appeals for the District of Columbia Circuit ("D.C. Circuit") challenging the Mercury and Air Toxics Standards ("MATS"). In April 2014, the D.C. Circuit upheld the MATS requirements. In November 2014, the United States Supreme Court agreed to hear the MATS appeal on the limited issue of whether the EPA unreasonably refused to consider costs in determining whether it is appropriate to regulate hazardous air pollutants emitted by electric utilities. Oral argument in the case was held before the United States Supreme Court in March 2015, and a decision was issued by the United States Supreme Court in June 2015, which reversed and remanded the MATS rule to the D.C. Circuit for further action. The United States Supreme Court held that the EPA had acted unreasonably when it deemed cost irrelevant to the decision to regulate generating facilities, and that cost, including costs of compliance, must be considered before deciding whether regulation is necessary and appropriate. The United States Supreme Court's decision did not vacate or stay implementation of the MATS rule and until the D.C. Circuit takes further action, the Company continues to have a legal obligation under the MATS rule and its permits issued by the states in which it operates to comply with the MATS rule, including operating all emissions controls or otherwise complying with the MATS requirements, such as PacifiCorp idling the Carbon coal-fueled generating facility ("Carbon Facility") and MidAmerican Energy retiring the Walter Scott, Jr. Energy Center Units 1 and 2 coal-fueled generating facilities and ceasing the utilization of coal at the Riverside Generating Station. Refer to the Regional Haze section below for additional requirements regarding the Carbon Facility.

Regional Haze

The state of Utah issued a regional haze State Implementation Plan ("SIP") requiring the installation of sulfur dioxide, nitrogen oxides and particulate matter controls on Hunter Units 1 and 2, and Huntington Units 1 and 2. In December 2012, the EPA approved the sulfur dioxide portion of the Utah regional haze SIP and disapproved the nitrogen oxides and particulate matter portions. Certain groups appealed the EPA's approval of the sulfur dioxide portion and oral argument was heard before the United States Court of Appeals for the Tenth Circuit ("Tenth Circuit") in March 2014. In October 2014, the Tenth Circuit upheld the EPA's approval of the sulfur dioxide portion of the SIP. The state of Utah and PacifiCorp filed petitions for administrative and judicial review of the EPA's final rule on the best available retrofit technology ("BART") determinations for the nitrogen oxides and particulate matter portions of Utah's regional haze SIP in March 2013. Oral argument was held before the Tenth Circuit in March 2014. In May 2014, the Tenth Circuit dismissed the petition on jurisdictional grounds. In addition, and separate from the EPA's approval process and related litigation, the Utah Division of Air Quality has undertaken an additional BART analysis for Hunter Units 1 and 2, and Huntington Units 1 and 2. The additional BART analysis and revised regional haze SIP was submitted in June 2015 to the EPA for review and proposed action after a public comment period. The revised regional haze SIP includes a state-enforceable requirement to retire the Carbon Facility by August 15, 2015, and PacifiCorp has begun to make plans for decommissioning. This requirement is independent of the requirements of the MATS rule as discussed above. The EPA is expected to review and take final action on the SIP in 2016. It is unknown how the EPA's decision regarding the Utah SIP may impact PacifiCorp's obligations under the regional haze requirements.

The state of Arizona issued a regional haze SIP requiring, among other things, the installation of sulfur dioxide, nitrogen oxides and particulate matter controls on Cholla Unit 4. The EPA approved in part, and disapproved in part, the Arizona SIP and issued a Federal Implementation Plan ("FIP") for the disapproved portions requiring selective catalytic reduction controls on Cholla Unit 4. PacifiCorp filed an appeal in the United States Court of Appeals for the Ninth Circuit ("Ninth Circuit") regarding the FIP as it relates to Cholla Unit 4, and the Arizona Department of Environmental Quality and other affected Arizona utilities filed separate appeals of the FIP as it relates to their interests. The Ninth Circuit issued an order in February 2015, holding the matter in abeyance relating to PacifiCorp and Arizona Public Service Company as they work with state and federal agencies on an alternate compliance approach for Cholla Unit 4. In January 2015, Arizona Public Service Company submitted the permit applications and studies required to amend the Title V permit, and subsequently the Arizona SIP to convert Cholla Unit 4 to a natural gas-fueled unit in 2025. The Arizona Department of Environmental Quality prepared a draft permit and a revision to the Arizona regional haze SIP, held two public hearings in July 2015 and, after considering the comments received during the public comment period that closed on July 14, 2015, will submit final proposals to the EPA for review, public comment and final action.

Climate Change

GHG Performance Standards

Under the Clean Air Act, the EPA may establish emissions standards that reflect the degree of emissions reductions achievable through the best technology that has been demonstrated, taking into consideration the cost of achieving those reductions and any non-air quality health and environmental impact and energy requirements. The EPA entered into a settlement agreement with a number of parties, including certain state governments and environmental groups, in December 2010 to promulgate emissions standards covering GHG. In April 2012, the EPA proposed new source performance standards for new fossil-fueled generating facilities that would limit emissions of carbon dioxide to 1,000 pounds per MWh. As part of his Climate Action Plan, President Obama announced a national climate change strategy and issued a presidential memorandum requiring the EPA to issue a re-proposed GHG new source performance standard for fossil-fueled generating facilities by September 2013. The September 2013 GHG new source performance standards released by the EPA set different standards for coal-fueled and natural gas-fueled generating facilities. The proposed standard for natural gas-fueled generating facilities considered the size of the unit and the electricity sent to the grid from the unit. The proposed standards were published in the Federal Register January 8, 2014, and the public comment period closed in May 2014. On August 3, 2015, the EPA issued the final new source performance standards, establishing a standard of 1,000 pounds of carbon dioxide per MWh for large natural gas-fueled generating facilities and 1,400 pounds of carbon dioxide per MWh for new coal-fueled generating facilities with the "Best System of Emission Reduction" for coal-fueled generating facilities reflecting highly efficient supercritical pulverized coal facilities with partial carbon capture and sequestration or integrated gasification combined-cycle units that are co-fired with natural gas or pre-combustion slipstream capture of carbon dioxide. Any new fossil-fueled generating facilities constructed by the Company will be required to meet the GHG new source performance standards.

In June 2014, the EPA released proposed regulations to address GHG emissions from existing fossil-fueled generating facilities, referred to as the Clean Power Plan, under Section 111(d) of the Clean Air Act. The EPA's proposal calculated state-specific emission rate targets to be achieved based on four building blocks that it determined were the "Best System of Emission Reduction." The four building blocks include: (a) a 6% heat rate improvement from coal-fueled generating facilities; (b) increased utilization of existing combined-cycle natural gas-fueled generating facilities to 70%; (c) increased deployment of renewable and non-carbon generating resources; and (d) increased energy efficiency. Under this proposal, states could have utilized any measure to achieve the specified emission reduction goals, with an initial implementation period of 2020-2029 and the final goal to be achieved by 2030. When fully implemented, the proposal was expected to reduce carbon dioxide emissions in the power sector to 30% below 2005 levels by 2030. The final Clean Power Plan was released August 3, 2015 and changed the methodology upon which the Best System of Emission Reduction is based to include: (a) heat rate improvements; (b) increased utilization of existing combined-cycle natural gas-fueled generating facilities; and (c) increased deployment of new and incremental non-carbon generation placed in-service after 2012. The EPA also changed the compliance period to begin in 2022, with three interim periods of compliance and with the final goal to be achieved by 2030. Based on changes to the state emission reduction targets, which are now all between 771 pounds per MWh and 1,305 pounds per MWh, the Clean Power Plan, when fully implemented, is expected to reduce carbon dioxide emissions in the power sector to 32% below 2005 levels by 2030. The EPA also released on August 3, 2015, a draft federal plan as an option or backstop for states to utilize in the event they do not submit approvable state plans. The draft federal plan is expected to be open for a 90-day public comment period after publication in the Federal Register. States are required to submit initial implementation plans by September 2016, and may request an extension to September 2018. The impacts of the final rule or the federal plan on PacifiCorp, MidAmerican Energy, Nevada Power, Sierra Pacific and BHE Renewables cannot be determined until the states develop their implementation plans or the federal plan is finalized. PacifiCorp, MidAmerican Energy, Nevada Power and Sierra Pacific have historically pursued cost-effective projects, including plant efficiency improvements, increased diversification of their generating fleets to include deployment of renewable and lower carbon generating resources, and advancement of customer energy efficiency programs.

The GHG rules and the Company's compliance requirements are subject to potential outcomes from proceedings and litigation challenging the rules.

Coal Combustion Byproduct Disposal

In May 2010, the EPA released a proposed rule to regulate the management and disposal of coal combustion byproducts, presenting two alternatives to regulation under the Resource Conservation and Recovery Act ("RCRA"). The public comment period closed in November 2010. The final rule was released by the EPA on December 19, 2014, was published in the Federal Register on April 17, 2015 and will be effective on October 19, 2015. The final rule regulates coal combustion byproducts as non-hazardous waste under RCRA Subtitle D and establishes minimum nationwide standards for the disposal of coal combustion residuals. Under the final rule, surface impoundments and landfills utilized for coal combustion byproducts may need to be closed unless they can meet the more stringent regulatory requirements.

As defined by the final rule, PacifiCorp operates 18 surface impoundments and seven landfills that contain coal combustion byproducts. MidAmerican Energy owns or operates seven surface impoundments and four landfills that contain coal combustion byproducts. The Nevada Utilities operate ten evaporative surface impoundments and two landfills that contain coal combustion byproducts. Refer to Note 10 for discussion of the impacts on asset retirement obligations as a result of the final rule.

Collateral and Contingent Features

Debt of BHE and debt and preferred securities of certain of its subsidiaries are rated by credit rating agencies. Assigned credit ratings are based on each rating agency's assessment of the rated company's ability to, in general, meet the obligations of its issued debt or preferred securities. The credit ratings are not a recommendation to buy, sell or hold securities, and there is no assurance that a particular credit rating will continue for any given period of time.

BHE and its subsidiaries have no credit rating downgrade triggers that would accelerate the maturity dates of outstanding debt, and a change in ratings is not an event of default under the applicable debt instruments. The Company's unsecured revolving credit facilities do not require the maintenance of a minimum credit rating level in order to draw upon their availability. However, commitment fees and interest rates under the credit facilities are tied to credit ratings and increase or decrease when the ratings change. A ratings downgrade could also increase the future cost of commercial paper, short- and long-term debt issuances or new credit facilities.

In accordance with industry practice, certain wholesale agreements, including derivative contracts, contain credit support provisions that in part base certain collateral requirements on credit ratings for senior unsecured debt as reported by one or more of the three recognized credit rating agencies. These agreements may either specifically provide bilateral rights to demand cash or other security if credit exposures on a net basis exceed specified rating-dependent threshold levels ("credit-risk-related contingent features") or provide the right for counterparties to demand "adequate assurance," or in some cases terminate the contract, in the event of a material adverse change in creditworthiness. These rights can vary by contract and by counterparty. As of June 30, 2015 , the applicable credit ratings from the three recognized credit rating agencies were investment grade. If all credit-risk-related contingent features or adequate assurance provisions for these agreements had been triggered as of June 30, 2015 , the Company would have been required to post $550 million of additional collateral. The Company's collateral requirements could fluctuate considerably due to market price volatility, changes in credit ratings, changes in legislation or regulation, or other factors. Refer to Note 11 of Notes to Consolidated Financial Statements in Item 1 of this Form 10-Q for a discussion of the Company's collateral requirements specific to the Company's derivative contracts.

New Accounting Pronouncements

For a discussion of new accounting pronouncements affecting the Company, refer to Note 2 of Notes to Consolidated Financial Statements in Item 1 of this Form 10-Q.

Critical Accounting Estimates

Certain accounting measurements require management to make estimates and judgments concerning transactions that will be settled several years in the future. Amounts recognized on the Consolidated Financial Statements based on such estimates involve numerous assumptions subject to varying and potentially significant degrees of judgment and uncertainty and will likely change in the future as additional information becomes available. Estimates are used for, but not limited to, the accounting for the effects of certain types of regulation, derivatives, impairment of goodwill and long-lived assets, pension and other postretirement benefits, income taxes and revenue recognition - unbilled revenue. For additional discussion of the Company's critical accounting estimates, see Item 7 of the Company's Annual Report on Form 10-K for the year ended December 31, 2014 . There have been no significant changes in the Company's assumptions regarding critical accounting estimates since December 31, 2014 .


Item 3.	Quantitative and Qualitative Disclosures About Market Risk

For quantitative and qualitative disclosures about market risk affecting the Company, see Item 7A of the Company's Annual Report on Form 10-K for the year ended December 31, 2014 . The Company's exposure to market risk and its management of such risk has not changed materially since December 31, 2014 . Refer to Note 11 of Notes to Consolidated Financial Statements in Item 1 of this Form 10-Q for disclosure of the Company's derivative positions as of June 30, 2015 .


Item 4.	Controls and Procedures

At the end of the period covered by this Quarterly Report on Form 10-Q, the Company carried out an evaluation, under the supervision and with the participation of the Company's management, including the Chief Executive Officer (principal executive officer) and the Chief Financial Officer (principal financial officer), of the effectiveness of the design and operation of the Company's disclosure controls and procedures (as defined in Rule 13a-15(e) promulgated under the Securities and Exchange Act of 1934, as amended). Based upon that evaluation, the Company's management, including the Chief Executive Officer (principal executive officer) and the Chief Financial Officer (principal financial officer), concluded that the Company's disclosure controls and procedures were effective to ensure that information required to be disclosed by the Company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the United States Securities and Exchange Commission's rules and forms, and is accumulated and communicated to management, including the Company's Chief Executive Officer (principal executive officer) and Chief Financial Officer (principal financial officer), or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure. There has been no change in the Company's internal control over financial reporting during the quarter ended June 30, 2015 that has materially affected, or is reasonably likely to materially affect, the Company's internal control over financial reporting.

PART II


Item 1.	Legal Proceedings

None.


Item 1A.	Risk Factors

There has been no material change to the Company's risk factors from those disclosed in Item 1A of the Company's Annual Report on Form 10-K for the year ended December 31, 2014 .


Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds

Not applicable.


Item 3.	Defaults Upon Senior Securities

Not applicable.


Item 4.	Mine Safety Disclosures

Information regarding the Company's mine safety violations and other legal matters disclosed in accordance with Section 1503(a) of the Dodd-Frank Wall Street Reform and Consumer Protection Act is included in Exhibit 95 to this Form 10-Q.


Item 5.	Other Information

Not applicable.


Item 6.	Exhibits

The exhibits listed on the accompanying Exhibit Index are filed as part of this Quarterly Report.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.



	BERKSHIRE HATHAWAY ENERGY COMPANY
	(Registrant)



Date: August 7, 2015	/s/ Patrick J. Goodman
	Patrick J. Goodman
	Executive Vice President and Chief Financial Officer
	(principal financial and accounting officer)

EXHIBIT INDEX


Exhibit No.	Description

4.1

First Supplemental Indenture, dated as of March 12, 2015, between Solar Star Funding, LLC, as Issuer, and Wells Fargo Bank, National Association, as Trustee, relating to the $325,000,000 in principal amounts of the 3.95% Series B Senior Secured Notes Due 2035 (incorporated by reference to Exhibit 4.1 to the Berkshire Hathaway Energy Company Quarterly Report on Form 10-Q for the quarter ended March 31, 2015).

4.2

Series 15-1 Supplemental Indenture, dated March 6, 2015, by and between AltaLink Investments, L.P., AltaLink Investment Management Ltd. and BNY Trust Company of Canada, relating to C$200,000,000 in principal amounts of the 2.244% Series 15-1 Senior Bonds due 2022 (incorporated by reference to Exhibit 4.2 to the Berkshire Hathaway Energy Company Quarterly Report on Form 10-Q for the quarter ended March 31, 2015).


4.3	Trust Deed, dated as of April 1, 2015, among Northern Powergrid (Yorkshire) plc and HSBC Corporate Trustee Company (UK) Limited, relating to £150,000,000 in principal amount of the 2.50% Bonds due 2025 (incorporated by reference to Exhibit 4.3 to the Berkshire Hathaway Energy Company Quarterly Report on Form 10-Q for the quarter ended March 31, 2015).


4.4	Twenty-Eighth Supplemental Indenture, dated as of June 1, 2015, to PacifiCorp's Mortgage and Deed of Trust dated as of January 9, 1989 (incorporated by reference to Exhibit 4.1 to the PacifiCorp Current Report on Form 8-K dated June 19, 2015).


4.5	Twentieth Supplemental Indenture, dated June 30, 2015, by and between AltaLink, L.P., AltaLink Management Ltd. and BNY Trust Company of Canada, relating to C$350,000,000 in principal amounts of the 4.09% Series 2015-1 Medium-Term Notes due 2045.


15	Awareness Letter of Independent Registered Public Accounting Firm.


31.1	Principal Executive Officer Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.


31.2	Principal Financial Officer Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.


32.1	Principal Executive Officer Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.


32.2	Principal Financial Officer Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.


95	Mine Safety Disclosures Required by the Dodd-Frank Wall Street Reform and Consumer Protection Act.

101

The following financial information from Berkshire Hathaway Energy Company's Quarterly Report on Form 10-Q for the quarter ended June 30, 2015 , is formatted in XBRL (eXtensible Business Reporting Language) and included herein: (i) the Consolidated Balance Sheets, (ii) the Consolidated Statements of Operations, (iii) the Consolidated Statements of Comprehensive Income, (iv) the Consolidated Statements of Changes in Equity, (v) the Consolidated Statements of Cash Flows, and (vi) the Notes to Consolidated Financial Statements, tagged in summary and detail.

EXHIBIT 4.5

ALTALINK, L.P.

CAPITAL MARKETS PLATFORM

TWENTIETH

SUPPLEMENTAL

INDENTURE

TWENTIETH SUPPLEMENTAL INDENTURE

Dated as of June 30, 2015

CAL01-#1682714-v6-Capital_Markets_Platform_Twentieth_Series_Supplement_June_2015

ALTALINK, L.P.
TWENTIETH SUPPLEMENTAL INDENTURE

THIS TWENTIETH SUPPLEMENTAL INDENTURE dated as of the 30 ^th day of June, 2015

BETWEEN:

ALTALINK MANAGEMENT LTD. , as general partner of AltaLink, L.P. a limited partnership created pursuant to the laws of the Province of Alberta,

(hereinafter called the “ Issuer ”)

- and -

ALTALINK MANAGEMENT LTD. , a company incorporated under the laws of the Province of Alberta,

(hereinafter called the “ General Partner ”)

OF THE FIRST PART

- and -

BNY TRUST COMPANY OF CANADA , a trust company incorporated under the laws of Canada

(hereinafter called the “ Trustee ”)

OF THE SECOND PART

WHEREAS


(A)	by an amended and restated master trust indenture dated as of April 28, 2003 between the Issuer, the General Partner and the Trustee (the “ Master Indenture ”) provision was made for the issuance and securing of Bonds of the Issuer in one or more Series, unlimited as to aggregate principal amount but issuable only upon the terms and subject to the conditions therein provided;


(B)	the Issuer has issued 22 supplemental indentures pursuant to the Master Indenture;


(C)	the Issuer has duly authorized the creation and issue of Obligation Bonds, in the form of Medium-Term Notes (the “ Notes ”), pursuant to the provisions of the Master Indenture and this Supplemental Indenture;


(D)	the Issuer wishes to apply the net proceeds of the issue of Notes in accordance with the terms of Section 2.11 hereof;

CAL01: 1682714: v6

- 2 -


(E)	this supplemental indenture is executed pursuant to all necessary authorizations and resolutions of the Issuer to authorize the creation, issuance and delivery of the Notes and to establish the terms, provisions and conditions thereof;


(F)	this supplemental indenture is hereinafter sometimes referred to as the “Twentieth Supplemental Indenture”; and


(G)	the foregoing recitals are made as representations and statements of fact by the Issuer and not the Trustee.

NOW THEREFORE THIS INDENTURE WITNESSES that in consideration of the premises, the covenants and agreements herein contained and the sum of Ten Dollars ($10.00) now paid by each of the parties hereto to the other (the receipt and sufficiency of which are hereby acknowledged), the parties hereto agree as follows:

ARTICLE 1
INTERPRETATION


1.1	Interpretation

This Twentieth Supplemental Indenture is supplemental to the Master Indenture and shall be read in conjunction therewith. Except only insofar as the Master Indenture may be inconsistent with the express provisions of this Twentieth Supplemental Indenture, in which case the terms of this Twentieth Supplemental Indenture shall govern and supersede those contained in the Master Indenture only to the extent of such inconsistency, this Twentieth Supplemental Indenture shall henceforth have effect so far as practicable as if all of the provisions of the Master Indenture and this Twentieth Supplemental Indenture were contained in one instrument. The expressions used in this Twentieth Supplemental Indenture and in the Notes which are defined in the Master Indenture shall, except as otherwise provided herein, have the respective meanings ascribed to them in the Master Indenture. Unless otherwise stated, any reference in this Twentieth Supplemental Indenture to an Article, Section, Subsection, Paragraph or Schedule shall be interpreted as a reference to the stated Article, Section of or Schedule to, this Twentieth Supplemental Indenture.


1.2	Definitions

For purposes of this Twentieth Supplemental Indenture and the Recitals hereof, except as otherwise expressly provided or unless the context otherwise provides:


(a)	The definition of “Business Day” in section 1.1 of the Master Indenture is replaced by the following definition:

“ Business Day ” means any day, other than a Saturday or Sunday, that is neither a legal holiday nor a day on which banking institutions are authorized or required by law or executive order to close in the city of Toronto, Ontario; provided, however, that, if an Interest Rate Basis specified in a Floating Rate Note is LIBOR, such day is also a London Business Day.


(b)	The following additional words and phrases shall have the following meanings:

- 3 -

“ Addendum ” means an addendum attached to and forming part of a Note.

“ Amortizing Note ” means a Note with respect to which payments will be applied first to interest due and payable thereon and then to the reduction of the unpaid principal amount thereof.

“ BA Rate ”, with respect to a Floating Rate Note, means the Interest Rate Basis calculated in accordance with paragraph 2.5(b)(x).

“ BA Rate Interest Determination Date ”, with respect to a Floating Rate Note, has the meaning specified in paragraph 2.5(b)(x).

“ Beneficial Owner ” means any person holding a beneficial interest in a Note.

“ Calculation Agent ” means the Calculation Agent specified in a Floating Rate Note (or such successor thereto as is appointed by the Issuer) to make calculations relating to such note, and if no Calculation Agent is so specified, the Trustee.

“ Cdn. Prime Rate ”, with respect to a Floating Rate Note, has the meaning specified in paragraph 2.5(b)(xiii).

“ Cdn. Prime Rate Interest Determination Date ”, with respect to a Floating Rate Note has the meaning specified in paragraph 2.5(b)(xiii).

“ CDS ” means CDS Clearing and Depository Services Inc. and its successors in interest.

“ Certificated Notes ” has the meaning specified in Section 2.3.

“ Date Count Convention ” means the convention for counting days specified in a Note for the purpose of computing interest payments for such note in accordance with Section 2.5.

“ Designated LIBOR Page ” means either (a) if “LIBOR Reuters” is specified in a Floating Rate Note as the method for calculating LIBOR, the display on the Reuters Monitor Money Rates Service for the purpose of displaying the London interbank rates of major banks for the applicable Index Currency or (b) if “LIBOR Telerate” is specified in a Floating Rate Note as the method for calculating LIBOR, or neither “LIBOR Reuters” nor “LIBOR Telerate” is so specified, the display on the Bridge Telerate Service for the purpose of displaying the London interbank rates of major banks for the applicable Index Currency.

“ Exchange Rate Agent ” means the Exchange Rate Agent specified in a Note (or such successor thereto as is appointed by the Issuer) to make calculations relating to the conversion of amounts relating to such note from one currency to another, and if no Exchange Rate Agent is so specified, the Trustee.

- 4 -

“ Extendible Note ” means a Note the maturity of which may be extended, either in whole or in part, at the option of the Issuer, for one or more periods up to but not beyond the Note’s final Maturity Date.

“ Fixed Rate Note ” has the meaning specified in Section 2.3.

“ Floating Rate Note ” has the meaning specified in Section 2.3.

“ Foreign Issuer ” means a foreign issuer as such term is defined in Regulation S.

“ Global Note ” has the meaning specified in Section 2.3.

“ Holder ” means the Person in whose name a Note shall be registered.

“ Index Currency ” means the currency (including currency units) designated in a Floating Rate Note as the currency for which LIBOR shall be calculated, and if no such currency is so designated, the Index Currency shall be Canadian dollars.

“ Index Maturity ” means the maturity period designated in a Floating Rate Note, as the maturity period for deposits in the Index Currency used in the calculation of LIBOR.

“ Initial Interest Rate ”, with respect to a Floating Rate Note, has the meaning specified in paragraph 2.5(b)(i).

“ Interest Determination Date ”, with respect to a Floating Rate Note, has the meaning specified in paragraph 2.5(b)(viii).

“ Interest Payment Date ” means any Stated Maturity on an instalment of interest on a Bond, which shall, in the case of a Floating Rate Note, be the date specified in paragraph 2.5(b)(vii).

“ Interest Rate Basis ” or “ Interest Rate Bases ”, with respect to a Floating Rate Note, means the basis or bases upon which the interest rate on such Floating Rate Note is calculated as determined in accordance with Subsection 2.5(b).

“ Interest Reset Date ”, with respect to a Floating Rate Note, means the date upon which the interest rate on such Floating Rate Note is reset as determined in accordance with Subsection 2.5(b).

“ Interest Reset Period ”, with respect to a Floating Rate Note, means the period from and including each Interest Reset Date with respect to such note to and including the day preceding the next subsequent Interest Reset Date with respect to such note, and the initial Interest Reset Period with respect to a Floating Rate Note is the period from the date of issue of such note to the day preceding the first Interest Reset Date for such note.

“ LIBOR ”, with respect to a Floating Rate Note, means the Interest Rate Basis calculated in accordance with paragraph 2.5(b)(xi).

- 5 -

“ LIBOR Interest Determination Date ”, with respect to a Floating Rate Note, has the meaning specified in paragraph 2.5(b)(xi).

“ London Business Day ” means any day on which dealings in an Index Currency are transacted in the London interbank market.

“ Market Exchange Rate ”, with respect to payments made in Canadian dollars, for a Specified Currency other than Canadian dollars, means the noon dollar buying rate announced by the Bank of Canada for such Specified Currency.

“ Maturity Date ” has the meaning specified in paragraph 2.5(a)(i).

“ Master Indenture ” has the meaning specified in Recital (A) above.

“ Notes ” has the meaning specified in Recital (C) above.

“ Original Issue Date ” in respect of a Note means the date on which the Note is originally issued, unless the Note is issued in replacement of another Note (the “ old Note ”), on a transfer, exchange or otherwise, in which case it shall mean the date on which the old Note was issued.

“ Paying Agent ” has the meaning specified in Section 4.3.

“ Pricing Supplement ” has the meaning specified in Section 2.1.

“ Principal Financial Centre ” means the capital of the country of the Index Currency, except that: (i) with respect to United States dollars and Swiss francs, the Principal Financial Centre shall be the city of New York and Zurich, respectively, and (ii) with respect to the Euro, the Principal Financial Centre shall be the capital city of one of the member countries of the European Union as chosen by the Calculation Agent (after consultation with the Issuer).

“ Prospectus ” has the meaning specified in Subsection 2.1.

“ Qualified Institutional Buyer ” or “ QIB ” shall have the meaning specified in Rule 144A under the U.S. Securities Act.

“ Record Date ” has the meaning specified in Section 4.2.

“ Redemption Date ” means, with respect to a Note to be redeemed, the date set forth for redemption of that Note in the relevant notice of redemption given pursuant to section 3.18 of the Master Indenture.

“ Redemption Price ” means, with respect to a Note to be redeemed, the redemption price set forth in the applicable Pricing Supplement.

“ Regulation S ” means Regulation S under the U.S. Securities Act.

- 6 -

“ Reuters CDOR Page ” means the display designated as page “CDOR” on the Reuters Monitor Money Rates Service (or such other page as may replace the CDOR page on that service for the purpose of displaying banker’s acceptance rates of banks and investment dealers).

“ Rule 144A ” means Rule 144A under the U.S. Securities Act.

“ Specified Currency ” means the currency specified in a Note for issuance thereof and for payment of principal, premium, if any, and/or interest, and if no such currency is specified, Canadian dollars.

“ Spread ”, with respect to a Floating Rate Note, means the number of basis points to be added to or subtracted from the related Interest Rate Basis or Interest Rate Bases applicable to such Floating Rate Note.

“ Spread Multiplier ”, with respect to a Floating Rate Note, means the percentage of the related Interest Rate Basis applicable to such Floating Rate Note by which such Interest Rate Basis will be multiplied to determine the applicable interest rate payable on such Floating Rate Note.

“ Stated Maturity ”, when used with respect to any Note or any instalment of interest thereon, means, in the case of principal, the date specified in such Note as the fixed date on which the principal of such Note is due and payable, which date shall, in the case of a Floating Rate Note, coincide with an Interest Payment Date or, in the case of interest, the date on which such instalment of interest is due and payable, which shall, in the case of a Floating Rate Note, be on an Interest Payment Date.

“ TARGET System ” means the Trans-European Automated Real-Time Gross Settlement Express Transfer system that links Euro-denominated real-time gross settlement systems in the European Union and the European Central Bank payment mechanism, to provide a European Union-wide real-time gross settlement system.

“ U.S. Person ” means a person who is a “U.S. person” as defined in Regulation S.

“ U.S. Securities Act ” means the United States Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder by the United States Securities and Exchange Commission.

“ U.S. Securities Act Legend ” means the legend set out in Schedule “B”, as the same may be amended from time to time by the Issuer in order to comply with applicable U.S. securities laws.

- 7 -

ARTICLE 2
MEDIUM-TERM NOTES


2.1	Issue of the Notes

The Issuer hereby creates and authorizes for immediate issue a Series of Bonds pursuant to the Master Indenture and this Twentieth Supplemental Indenture to be designated as “Medium-Term Notes” which shall be limited to an aggregate amount of $2,000,000,000.00 in lawful money of Canada. The aggregate amount of the Notes shall be calculated, in the case of interest bearing Notes, on the basis of the principal amount of such Notes issued, and in the case of non-interest bearing Notes, on the basis of the gross proceeds received by the Issuer. The Notes shall be issued from time to time in one or more series or issues pursuant to the Issuer’s short form base shelf prospectus dated June 23, 2015 or any prospectus filed with the securities regulatory authorities in replacement thereof (the “ Prospectus ”) and the applicable pricing supplement (the “ Pricing Supplement ”), as amended and supplemented from time to time.


2.2	Terms of the Notes

The Notes shall have the following terms and conditions:

(a)

Date and Interest. Each Note shall be dated as of the date of issue and shall bear interest, if any, from the date of issue at the rate (either fixed or floating) determined by the Issuer at the time of issue, as specified in the Pricing Supplement for such Note. Interest, if any, shall be payable on the dates determined by the Issuer at the time of issue, as specified in the Pricing Supplement for such Note.


(b)	Maturity. Each Note shall mature on the date determined by the Issuer at the time of issue, as specified in the Pricing Supplement for such Note, which date shall be more than one year from the date of issue, as specified in the Pricing Supplement for such Note.


(c)	Currency. Each Note shall be issued and payable in such currency as is determined by the Issuer at the time of issue as specified in the Pricing Supplement for such Note.


(d)	Denominations. The Notes shall be issued in denominations of $1,000 or more in Canadian currency or the equivalent thereof in other currencies at the time of issue or in such other denominations as are determined by the Issuer at the time of issue as specified in the Pricing Supplement for such Notes.


2.3	Form of the Notes

The Notes shall be issued from time to time in fully registered form and each series or issue of Notes shall be issued in the form of a global note (a “ Global Note ”) except in the circumstances set forth in Subsections 2.8(a) and 2.8(c), in Section 3.2 or unless the Issuer determines to issue such Notes in definitive form at the time of issue, in which case Notes will be issued in the form of definitive certificates (the “ Certificated Notes ”) and in either case: (i) shall specify the applicable date of issue, rate of interest (including, in the case of a floating rate Note (a “ Floating Rate Note ”),

- 8 -

the applicable Interest Rate Basis or Interest Rate Bases), date or dates on which interest shall be payable, maturity date, currency in which the Note is to be issued and in which interest, premium (if any) and principal shall be paid, and denomination; (ii) shall specify such other provisions as are to govern the Note, provided that they shall be consistent with those provisions set out in the Prospectus and the applicable Pricing Supplement; and (iii) shall be substantially in the form of Schedule A-I in the case of a fixed rate Note (a “ Fixed Rate Note ”) or in the form of Schedule A-II in the case of a Floating Rate Note, in all cases with such appropriate additions and variations as shall be required and as are consistent with the provisions set out in the Prospectus and the applicable Pricing Supplement and shall bear such distinguishing letters and numbers as the Trustee shall approve, or in such other form or forms as may, from time to time, be approved by the Issuer. Beneficial interests in a Global Note shall be represented through book-entry accounts, to be established and maintained by CDS for financial institutions acting on behalf of Beneficial Owners as direct and indirect participants in CDS. Global Notes and Certificated Notes shall be payable as to principal and interest thereon at the principal office in Toronto of the Paying Agent.


2.4	Certification and Delivery of Notes

The Notes may, from time to time, be executed by the Issuer and delivered to the Trustee for certification, and the Trustee shall thereupon certify and deliver the Notes as directed by a Written Order of the Issuer, after initial receipt by the Trustee of the documents set forth in section 2.4 of the Master Indenture, and which shall also set out: (i) whether such Note is a Floating Rate Note or Fixed Rate Note; (ii) its principal amount; (iii) its issue price; (iv) its Original Issue Date; (v) its Maturity Date; (vi) if it is redeemable at the option of the Issuer, the Redemption Date and the Redemption Price; (vii) its Interest Payment Date or Dates; (viii) if it is a Fixed Rate Note, its rate of interest; (ix) if it is a Floating Rate Note, its Interest Rate Basis or Bases, its Initial Interest Rate, its Interest Determination Date or Dates, its Interest Reset Date or Dates, or its Interest Reset Period and interest payment period, its Spread (if any), its Spread Multiplier (if any), its maximum interest rate (if any), and its minimum interest rate (if any); (x) whether it is to be issued in the form of Certificated Notes or a Global Note; and (xi) the terms of any other special provisions relating to such Notes.


2.5	Interest on the Notes


(a)	The following terms and conditions shall apply to the determination of interest on a Note unless otherwise provided in the Note:

(i)

The Issuer will pay interest on a Note on each Interest Payment Date, commencing on the first Interest Payment Date next succeeding the Original Issue Date, and on the Stated Maturity or any prior date on which the principal, or an instalment of principal, of such Note becomes due or payable (the Stated Maturity or such prior date, as the case may be, is herein referred to as the “Maturity Date”); provided, however, that if the Original Issue Date falls between a Record Date and the related Interest Payment Date or on an Interest Payment Date, interest payments will commence on the second Interest Payment Date succeeding the Original Issue Date. Interest on such Note will accrue from and including the immediately preceding Interest Payment Date in respect of which interest has been paid or duly made available for payment

- 9 -

or, if no interest has been paid, from and including the Original Issue Date, to but excluding such Interest Payment Date or the Maturity Date, as the case may be. If any Interest Payment Date or the Maturity Date falls on a day that is not a Business Day, the required payment of principal, premium, if any, and/or interest will be made on the next succeeding Business Day as if made on the date such payment was due, and no interest shall accrue on such payment for the period from and after such Interest Payment Date or the Maturity Date, as the case may be, to the date of such payment on the next succeeding Business Day. The interest so payable on any Interest Payment Date will be paid to the Holder of such Note at the close of business on the Record Date for such Interest Payment Date. Interest payable at the Maturity Date will be payable to the Person to whom the principal thereof shall be payable.

(ii)

Payments of principal of, and premium, if any, and interest on, a Note will be made to the Holder thereof in Canadian dollars regardless of the Specified Currency stated therein unless the Holder thereof makes the election described below. If the Specified Currency is other than Canadian dollars, the Exchange Rate Agent will convert all payments in respect thereof into Canadian dollars in the manner described below; provided, however, that the Holder may elect to receive payment of principal of and premium, if any, and/or interest on such note in the Specified Currency by submitting a written request for such payment to the Trustee at its principal office in the City of Toronto on or prior to the applicable Record Date or at least 15 calendar days prior to the Maturity Date, as the case may be. Such written request may be mailed or hand delivered or sent by cable, telex or other form of facsimile transmission. The Holder may elect to receive payment in such Specified Currency for all such principal, premium, if any, and interest payments and need not file a separate election for each payment. The election will remain in effect until revoked by written notice to the Trustee, but written notice of any such revocation must be received by the Trustee on or prior to the applicable Record Date or at least 15 calendar days prior to the Maturity Date, as the case may be. Notwithstanding the foregoing, if the applicable Specified Currency is not available for the payment of principal, premium, if any, or interest with respect to such note due to the imposition of exchange controls or other circumstances beyond the control of the Issuer, the Issuer will be entitled to satisfy its obligations to the Holder by making such payment in Canadian dollars on the basis of the Market Exchange Rate on the second Business Day prior to such payment or, if such Market Exchange Rate is not then available, on the basis of the most recently available Market Exchange Rate. Any payment made in Canadian dollars under the circumstances set forth above where the required payment is in a Specified Currency other than Canadian dollars will not constitute a payment default under such Note or under the Master Indenture. All determinations referred to above made by the Issuer or its agent (including the Exchange Rate Agent) shall be at its sole discretion and shall, in the absence of manifest error, be conclusive and for all purposes binding on the Holder of such of a Note.

- 10 -

(iii)

Interest payments for a Note shall be computed and paid on the basis of: (i) a 360-day year of twelve 30-day months if the Day Count Convention specified therein is “30/360” for the relevant period, (ii) the actual number of days in the related month and a 360-day year if the Day Count Convention specified therein is “Actual/360” for the relevant period, (iii) the actual number of days in the related year and month if the Day Count Convention specified therein is “Actual/Actual” for the relevant period, or (iv) such other basis as may be specified in a Note.

(iv)

For the purpose only of disclosure required by the Interest Act (Canada) and without affecting the interest payable on a Note, the yearly rate of interest which is equivalent to the rate of interest payable on a Note where the Day Count Convention specified above is other than “Actual/Actual” is the rate of interest payable with respect to the Note multiplied by the number of days in the year for which such calculation is made and divided by 360.


(b)	The following terms and conditions shall apply to the determination of interest on a Floating Rate Note unless otherwise provided in the Floating Rate Note:

(i)

A Floating Rate Note shall bear interest at the rate determined by reference to the applicable Interest Rate Basis specified therein: (i) plus or minus the applicable Spread, if any, and/or (ii) multiplied by the applicable Spread Multiplier, if any. Commencing on the first Interest Reset Date, the rate at which interest on the Floating Rate Note shall be payable shall be reset as of each Interest Reset Date specified therein; provided, however, that the interest rate in effect for the period from the Original Issue Date to but excluding the first Interest Reset Date will be the initial interest rate (the “Initial Interest Rate”). Notwithstanding the foregoing, if a Floating Rate Note is designated in such Note as having an Addendum attached, such note shall bear interest in accordance with the terms described in such Addendum.


(ii)	Interest payable on a Floating Rate Note will be determined by reference to the applicable Interest Rate Basis or Interest Rate Bases, which may, as described below, include: (i) the BA Rate, (ii) LIBOR, (iii) the Cdn. Prime Rate, or (iv) such other Interest Rate Basis or interest rate formula as may be set forth therein and described in the applicable Addendum.


(iii)	The interest rate on a Floating Rate Note in effect on each day shall be the interest rate determined as of the most recent Interest Determination Date.

(iv)

The interest rate on a Floating Rate Note applicable to each Interest Reset Period commencing on the Interest Reset Date with respect to such Interest Reset Period will be the rate determined as of the applicable Interest Determination Date. Each Interest Rate Basis shall be the rate determined in accordance with the applicable provisions below. The rate of interest on a Floating Rate Note will be reset daily, weekly, monthly, quarterly, semi-annually, annually or pursuant to such other period as specified in the Floating

- 11 -

Rate Note. Unless otherwise specified in the Floating Rate Note, the Interest Reset Date(s) will be, if the Interest Reset Period set forth in the Floating Rate Note is: (i) daily, each Business Day; (ii) weekly, the Wednesday of each week; (iii) monthly, the third Wednesday of each month; (iv) quarterly, the third Wednesday of March, June, September and December of each year; (v) semi-annually, the third Wednesday of the two months specified in the Floating Rate Note; and (vi) annually, the third Wednesday of the month specified in the Floating Rate Note. If any Interest Reset Date (which term includes the first Interest Reset Date unless the context otherwise requires) would otherwise be a day that is not a Business Day, such Interest Reset Date shall be postponed to the next succeeding Business Day, except that if an Interest Rate Basis shown therein is LIBOR and such Business Day falls in the next succeeding calendar month, such Interest Reset Date shall be the immediately preceding Business Day.

(v)

Interest payable on a Floating Rate Note on any Interest Payment Date shall be the amount of interest accrued from and including the immediately preceding Interest Payment Date in respect of which interest has been paid (or from and including the Original Issue Date specified therein, if no interest has been paid), to but excluding the related Interest Payment Date; provided, however, that interest payable at maturity will include interest accrued to but excluding the Maturity Date. Accrued interest on a Floating Rate Note is calculated by multiplying the face amount thereof by an accrued interest factor. Such accrued interest factor is computed by adding the interest factor calculated for each day in the period for which accrued interest is being calculated. The interest factor for each such day shall be computed by dividing the interest rate applicable to such day by 360 if the Interest Rate Basis specified in such note is LIBOR, or by the actual number of days in the year if the Interest Rate Basis specified in such note is the BA Rate or the Cdn. Prime Rate.

(vi)

A Floating Rate Note may also have either or both of the following: (i) a maximum numerical limitation, or ceiling, on the rate at which interest may accrue during any Interest Reset Period; and (ii) a minimum numerical limitation, or floor, on the rate at which interest may accrue during any Interest Reset Period. In addition to any maximum interest rate that may be applicable to a Floating Rate Note, the maximum interest rate that may be applicable to a Floating Rate Note will in no event be higher than the maximum rate permitted by the laws of Canada.

(vii)

Interest on a Floating Rate Note will be payable, where the rate of interest resets, unless otherwise specified in the Floating Rate Note: (i) daily, weekly or monthly, on the third Wednesday of each month or on the third Wednesday of March, June, September and December of each year, as specified in the applicable Pricing Supplement; (ii) quarterly, on the third Wednesday of March, June, September and December of each year; (iii) semi-annually, on the third Wednesday of the months of each year specified in the Floating

- 12 -

Rate Note; and (iv) annually, on the third Wednesday of the month specified in the Floating Rate Note and, in each case, on the Maturity Date (each, an “Interest Payment Date”). If any Interest Payment Date for a Floating Rate Note (other than the Maturity Date) would otherwise be a day that is not a Business Day, such Interest Payment Date will be postponed to the next succeeding day that is a Business Day, except that where LIBOR is the applicable Interest Rate Basis, if such Business Day falls in the next succeeding calendar month, such Interest Payment Date will be the immediately preceding Business Day. If the Maturity Date of a Floating Rate Note falls on a day that is not a Business Day, the required payment of principal, premium, if any, and/or interest will be made on the next succeeding Business Day as if made on the date such payment was due, and no interest shall accrue on such payment for the period from and after the Maturity Date to the date of such payment on the next succeeding Business Day.


(viii)	The “Interest Determination Date” with respect to the BA Rate and the Cdn. Prime Rate will be the applicable Interest Reset Date, and the “Interest Determination Date” with respect to LIBOR will be the second London Business Day immediately preceding the applicable Interest Reset Date. All calculations on a Floating Rate Note shall be made by the Calculation Agent.

(ix)

All percentages resulting from any calculation on a Floating Rate Note will be rounded to the nearest one-hundred-thousandth of a percentage point, with five one millionths of a percentage point rounded upwards (e.g., 9.876545% (or .09876545) would be rounded to 9.87655% (or .0987655)), and all amounts used in or resulting from such calculation will be rounded, in the case of United States or Canadian dollars, to the nearest cent or, in the case of a Specified Currency other than United States or Canadian dollars, to the nearest unit of the Specified Currency (such unit being the smallest unit of the Specified Currency in general use) (with one-half cent or one-half of the applicable unit of Specified Currency being rounded upward).

(x)

If an Interest Rate Basis for a Floating Rate Note is specified in such note as the “BA Rate”, the “BA Rate” shall be determined on the applicable Interest Determination Date (the “BA Rate Interest Determination Date”) as the rate per annum (based on a year of 365 or 366 days) equal to the arithmetic average rounded to the fifth decimal place (with .000005 being rounded up) of the bid rates of interest for Canadian dollar bankers’ acceptances, for an equivalent period to the next Interest Reset Date of the Floating Rate Note, as expressed on the Reuters CDOR page as of 10:00 a.m., Toronto time, on the BA Rate Interest Determination Date for the applicable Interest Reset Period, if three or more bid rates appear on the Reuters CDOR page at any such time. If fewer than three bid rates appear on the Reuters CDOR page at any such time, the BA Rate shall be the rate per annum (based on a year of 365 or 366 days) equal to the arithmetic average rounded to the fifth decimal place (with .000005 being rounded up) of the bid rate quotations for Canadian dollar bankers’ acceptances, for an equivalent period to the next

- 13 -

Interest Reset Date of the Floating Rate Note and that is representative of a single transaction in the market at such time, by the principal Toronto office of three of the five largest Schedule I Canadian chartered banks in the Canadian interbank market selected by the Issuer at approximately 10:00 a.m., Toronto time, on the BA Rate Interest Determination Date.

(xi)

If an Interest Rate Basis for a Floating Rate Note is specified in such note as “LIBOR”, “LIBOR” will be determined on the applicable Interest Determination Date (a “LIBOR Interest Determination Date”), on the basis of either: (i) if “LIBOR Reuters” is specified in such note as the method for calculating LIBOR, the arithmetic average of the offered rates (unless the specified Designated LIBOR Page by its terms provides only for a single rate, in which case such single rate shall be used) for deposits in the Index Currency having the Index Maturity designated in such note, that appear on the Designated LIBOR Page specified in such note as of 11:00 a.m., London time, on such LIBOR Interest Determination Date, if at least two such offered rates appear (unless, as aforesaid, only a single rate is required) on such Designated LIBOR Page, or (ii) if “LIBOR Telerate” is specified in such note as the method for calculating LIBOR or if neither “LIBOR Reuters” nor “LIBOR Telerate” is so specified, the rate for deposits in the Index Currency having the Index Maturity designated in such note, that appears on the Designated LIBOR Page specified in such note as of 11:00 a.m., London time, on such LIBOR Interest Determination Date; provided, however, that if the Index Currency is the Euro, the LIBOR Interest Determination Date must occur on a day that the TARGET System is open. If fewer than two such offered rates appear, or if no such rate appears, as applicable, LIBOR in respect of the related LIBOR Interest Determination Date will be determined in accordance with the provisions described in the immediately succeeding paragraph.

(xii)

With respect to a LIBOR Interest Determination Date on which fewer than two offered rates appear, or no rate appears, as the case may be, on the applicable Designated LIBOR Page as specified in the immediately preceding paragraph, the Calculation Agent will request the principal London offices of each of four major reference banks in the London interbank market, as selected by the Calculation Agent (after consultation with the Issuer), to provide the Calculation Agent with its offered quotation for deposits in the Index Currency for the period of the Index Maturity designated in such note, to prime banks in the London interbank market at approximately 11:00 a.m., London time, on such LIBOR Interest Determination Date and in a principal amount that is representative for a single transaction in such Index Currency in such market at such time. If at least two such quotations are provided, LIBOR determined on such LIBOR Interest Determination Date will be the arithmetic average of such quotations. If fewer than two quotations are provided, LIBOR determined on such LIBOR Interest Determination Date will be the arithmetic mean of the rates quoted at approximately 11:00 a.m., in the applicable Principal Financial Centre, on such LIBOR Interest

- 14 -

Determination Date by three major banks in such Principal Financial Centre selected by the Calculation Agent (after consultation with the Issuer) for loans in the Index Currency to leading European banks, having the Index Maturity designated in such note and in a principal amount that is representative for a single transaction in such Index Currency in such market at such time.

(xiii)

If an Interest Rate Basis for a Floating Rate Note is specified in such note as “Cdn. Prime Rate”, the “Cdn. Prime Rate” shall be determined on the applicable Interest Determination Date (a “ Cdn. Prime Rate Interest Determination Date ”) as the rate (expressed as an annual percentage rate based on a year of 365 or 366 days) determined by the Issuer to be the arithmetic average (rounded to the nearest one-hundred-thousandth of one per cent, with .000005 being rounded up) of the rates publicly quoted by the Schedule I Canadian chartered banks as base rates for determining interest rates on Canadian dollar prime rate loans in Canada prevailing at 10:00 a.m. (Toronto time) on the Cdn. Prime Rate Interest Determination Date.


(xiv)	At the request of the Holder of a Floating Rate Note, the Calculation Agent shall provide to such Holder the interest rate thereon then in effect and, if determined, the interest rate which shall become effective as of the next Interest Reset Date.


2.6	Conversion

If so determined by the Issuer at the time of issue, the Holder of a Note may, but only upon notice from the Issuer, convert all but not less than all of such Holder’s notes into an equal aggregate principal amount of a new Series of Notes issued by the Issuer. If given, such notice from the Issuer shall be given not less than 30 days nor more than 60 days prior to the date of conversion.


2.7	Amortizing Notes and Extendible Notes


(a)	The Issuer may issue Amortizing Notes and shall set forth in such notes a table specifying repayment information with respect to such notes and any additional terms and conditions thereof.

(b)

The Issuer may issue Extendible Notes and shall set forth in such notes the specific terms of the extension of such notes, including without limitation the date or dates on which the Issuer’s option to extend can be exercised and whether the option can be exercised with respect to some but not all of the outstanding principal balance of such notes, and any additional terms and conditions thereof, including without limitation the specific terms and conditions upon which the maturity of such notes may be extended.


2.8	U.S. Restrictions


(a)	The Notes issued in the United States shall be issued as Certificated Notes in accordance with the provisions of Section 3.4.

- 15 -

(b)

If, at any time, a holder of a Certificated Note bearing the U.S. Securities Act Legend wishes to transfer its interest to a Person required or permitted to take delivery thereof in the form of an interest in a Global Note, the Trustee will cancel the definitive certificate representing such Certificated Note, the Issuer shall execute and deliver to the Trustee for authorization and registration by it a replacement Global Note in a principal amount equal to the sum of (x) the principal amount of the relevant Global Note then deposited with CDS and (y) the principal amount of the cancelled Certificated Note. The Trustee shall exchange and deliver to CDS the replacement Global Note against surrender and delivery of the Global Note deposited with CDS immediately prior to the exchange and CDS will be instructed by the Trustee to make appropriate entries in the book entry accounts established and maintained by CDS or its nominee for financial institutions acting as direct and indirect participants of CDS on behalf of Beneficial Owners to include the transferee of the Certificated Note.

(c)

If, at any time, a person holding an interest in a Global Note wishes to transfer a Note to a person in the United States who is required to comply with resale restrictions imposed under the U.S. Securities Act, the Issuer shall execute and deliver to the Trustee for authorization and registration a Certificated Note representing such Note bearing the U.S. Securities Act Legend and a replacement Global Note in a principal amount equal to the difference between (x) the principal amount of the relevant Global Note then deposited with CDS and (y) the principal amount of the Certificated Note to be issued to the person in the United States. The Trustee shall exchange and deliver to CDS the replacement Global Note against surrender and delivery of the relevant Global Note deposited with CDS immediately prior to the exchange and CDS will be instructed by the Trustee to make appropriate entries in the book entry accounts established and maintained by CDS or its nominee for financial institutions acting as direct and indirect participants of CDS on behalf of beneficial owners to record the transfer of the Note to the person in the United States.


2.9	Global Legends Certification

As required by section 3.4 of the Master Indenture, the Global Bond legend on any Global Note shall be as set out on the forms of Global Notes attached hereto as Schedules A-I and A-II and the Trustee’s certificate of authentication shall be in the form annexed to those Schedules. The Global Notes shall not be lithographed or printed with steel engraved borders but shall be typewritten.


2.10	Obligation Bonds

The Notes shall be Obligation Bonds.


2.11	Purposes of the Notes

The proceeds of the issue of the Notes shall be utilized by the Issuer for the following purposes:


(a)	to pay the Costs of Issuance of the Notes;

- 16 -


(b)	to make payments of principal, interest and premiums, if any, on previously issued Notes or Bonds;


(c)	to fund the growth and expansion of its electrical transmission network in Alberta through capital development projects and acquisitions;


(d)	to repay bank indebtedness, if any, under the Issuer’s credit facilities;


(e)	to repay outstanding commercial paper, if any;


(f)	to fund certain Funds (including any Sinking Funds) and Reserve Funds maintained by the Issuer pursuant to the Master Indenture and this Twentieth Supplemental Indenture;


(g)	to fund other capital projects related to the operation and maintenance of the Business; and


(h)	for general business purposes.

ARTICLE 3
CERTIFICATED NOTES


3.1	Limitation on Certificated Notes

Except in the circumstances referred to in Section 2.3 and Section 2.8, owners of beneficial interests in any Notes shall not be entitled to have Notes registered in their names, shall not receive or be entitled to receive physical delivery of Notes and shall not be considered registered holders of Notes under this Twentieth Supplemental Indenture or for the purposes of the Master Indenture. Neither the Issuer nor the Trustee shall have any responsibility or liability for maintaining, supervising or reviewing any records of CDS relating to beneficial interests in any Notes or for any aspect of the records of CDS relating to payments made by CDS on account of such beneficial interests.


3.2	Certificated Notes

A Global Note is exchangeable, in whole but not in part, for Certificated Notes registered in the name of a Person other than CDS or its nominee if: (i) CDS notifies the Issuer that it is unwilling or unable to continue as depository of that Global Note or ceases to be a recognized clearing agency under the Securities Act (Alberta) or other applicable Canadian securities legislation and a successor depository is not appointed by the Issuer within ninety (90) days after receiving such notice or becoming aware that CDS is no longer so recognized, or (ii) there shall occur and be continuing an Event of Default, or (iii) the Issuer in its sole discretion determines to issue Certificated Notes in definitive form in exchange for a Global Note.


3.3	Cancellation of a Global Note

Upon the exchange of a Global Note for Certificated Notes, the Trustee shall receive and cancel the Global Note, shall reduce to nil the holdings of CDS or its nominee, as applicable, on the register for the Notes represented by that Global Note, and shall authenticate Certificated Notes in an aggregate principal amount equal to and in exchange for the CDS participants’ beneficial interests

- 17 -

in that Global Note as of the Record Date for such exchange, as directed in writing by CDS. On or after any such exchange, but only to the extent reasonably practicable in the circumstances, the Trustee shall make all payments in respect of such Certificated Notes to the registered holders thereof, notwithstanding such exchange occurred after the Record Date for any payment and prior to such payment date.


3.4	Issuance of Certificated Notes with U.S. Restrictions

(a)

Notes issued in exchange for a Global Note or to persons in the United States pursuant to Subsections 2.8(a) and 2.8(c) shall be issued as Certificated Notes in authorized denominations, shall have the same benefits and be subject to the same terms and conditions as that Global Note (except insofar as such terms and conditions specifically relate to that Global Note), shall be registered in the names and denominations as the Issuer shall direct and shall be delivered as directed by the persons in whose names such Certificated Notes are to be registered. The Certificated Notes shall be in substantially the form, mutatis mutandis , of the Global Note, except as provided in Section 3.4(b) and without the Global Note legend set out thereon. Unless otherwise determined by the Issuer, it shall not be necessary for any Certificated Notes to be lithographed or printed with steel engraved borders.

(b)

Each Certificated Note originally issued to a person in the United States, as well as all certificates issued in exchange for or in substitution of the foregoing securities, will bear the U.S. Securities Act Legend; provided that, if any such securities are being sold outside the United States in accordance with Rule 904 of Regulation S and provided that the Issuer was a Foreign Issuer at the time the Notes were issued, the legend may be removed by providing a declaration to the Trustee, as registrar and transfer agent, to the effect set forth in Schedule “C” hereto (or in such other form as the Trustee may from time to time prescribe) and, provided further, that, if any Notes are being sold, or on the request of the holder at such time as the Notes may be sold without restriction, pursuant to Rule 144 under the U.S. Securities Act, such legend may be removed, provided that the Trustee has received a written opinion of U.S. counsel of recognized standing reasonably satisfactory to the Issuer to effect that, or such certification or other information that the Trustee may reasonably require to determine that, such legend is no longer required under applicable requirements of the U.S. Securities Act or state securities laws in the United States of America.


(c)	Except as provided in Subsection 3.4(b), if a Certificated Note tendered for transfer bears the U.S. Securities Act Legend and the transferee is a person in the United States, the Certificated Note issued to such transferee shall also bear the U.S. Securities Act Legend.


(d)	The Trustee shall maintain a list of all registered holders of Certificated Notes bearing the U.S. Securities Act Legend.

- 18 -

ARTICLE 4
OTHER MATTERS RELATING TO THE BONDS


4.1	No Notice of Trusts or Equities

Neither the Issuer nor the Trustee nor any of their respective officers or employees shall be bound to see to the execution of any trust affecting the ownership of any Note or be affected by notice of any equity that may be subsisting in respect thereof.


4.2	Record Date

The record date (“ Record Date ”) for purposes of payment of principal, interest, if any, and Redemption Price, if any, on the Notes is as of 5:00 p.m. (Toronto time) on the tenth (10 ^th ) Business Day preceding the Maturity Date, any Interest Payment Date or any Redemption Date, as applicable, for such Notes. Principal of, interest, if any, and Redemption Price, if any, on such Notes are payable to the Person registered in the register on the relevant Record Date as the holder of such Notes. The Trustee shall not be required to register any transfer or exchange of such Notes during the period from any Record Date to the corresponding payment date.


4.3	Paying Agent

The Paying Agent for the Notes shall be the Trustee at its principal office in Toronto.

ARTICLE 5
REDEMPTION


5.1	Election to Redeem; Notice to Trustee

If so specified in the Pricing Supplement, the Issuer may redeem, at its option, in whole or in part at any time, any Notes, in accordance with this Article 5 and sections 3.16 to 3.22 of the Master Indenture. If the Issuer elects to redeem less than all the Notes, the Issuer shall, at least thirty (30) days prior to the Redemption Date fixed by the Issuer (unless a shorter notice shall be satisfactory to the Trustee and CDS), notify the Trustee and CDS of such Redemption Date and of the principal amount of the Notes to be redeemed and shall deliver to the Trustee and CDS such documentation and records as shall enable the Trustee and CDS to select the Notes to be redeemed pursuant to Section 5.2.


5.2	Selection by Trustee of Notes to be Redeemed

If less than all the Notes are to be redeemed, the Notes to be redeemed shall be redeemed on a pro rata basis based on the principal amount of Notes held by each holder. The Trustee shall determine the Notes to be redeemed in accordance with section 3.17 of the Master Indenture and shall notify the Issuer in writing of the Notes to be redeemed as soon as practicable and, in the case of Notes which shall only be partially redeemed, the principal amount thereof to be redeemed. For all purposes of this Twentieth Supplemental Indenture, unless the context otherwise requires, all provisions relating to the redemption of Notes shall relate, in the case of any Notes redeemed or to be redeemed only in part, to the portion of the principal amount of such Notes which has been or is to be redeemed.

- 19 -


5.3	Place of Redemption

The place where the Notes to be redeemed are to be surrendered for payment of the Redemption Price shall be at the principal office in Toronto of the Paying Agent.


5.4	Applicable Provisions

Save as set out in this Article 5 to the contrary, the redemption of any Notes under this Twentieth Supplemental Indenture shall be conducted in accordance with sections 3.16 to 3.22 of the Master Indenture.

ARTICLE 6
CONFIRMATION OF PRINCIPAL INDENTURE


6.1	Confirmation of Master Indenture

The Master Indenture, as supplemented by this Twentieth Supplemental Indenture, shall be and continue in full force and effect and is hereby confirmed.

ARTICLE 7
TAX COVENANTS


7.1	Withholding Tax

If the Issuer is required to make any payment to any Governmental Authority in connection with or due to the application of any withholding tax or similar tax or rate to any payment made or due to be made pursuant to this Indenture (the “ Required Amount ”) then the Issuer:


(a)	shall consult with the Trustee in order to determine the beneficial ownership of the Notes for the purpose of determining the appropriate rate of withholding, including the availability of any reduction in withholding pursuant to an applicable tax treaty;


(b)	shall deduct and withhold the Required Amount from payments made or due under this Indenture;


(c)	shall remit the Required Amount to the relevant Governmental Authority within the time required by applicable law;


(d)	shall promptly forward to a Holder or the Trustee on behalf of a Holder a certified copy of the official receipt or other documentation satisfactory to the Trustee evidencing the payment of the Required Amount to such Governmental Authority; and


(e)	shall not be responsible to increase or “gross up” any payment to any Holder or to the Trustee on behalf of any Holder and shall be entitled to reduce the amount of each such payment by the Required Amount and the payment made to any Holder or Trustee on behalf of any Holder shall be deemed to have been made in full.

- 20 -

ARTICLE 8
FOR BENEFIT OF THE NOTES


8.1	Benefit of Master Indenture

The Issuer and the Trustee confirm that all of the provisions of this Twentieth Supplemental Indenture are for the benefit of the Holders of the Notes so long as any such Notes remain outstanding.

ARTICLE 9
ACCEPTANCE OF TRUST BY TRUSTEE


9.1	Acceptance of Trust

The Trustee hereby accepts the trusts in this Twentieth Supplemental Indenture declared and provided and agrees to perform the same upon the terms and conditions contained herein.

ARTICLE 10
EXECUTION


10.1	Counterparts

This Twentieth Supplemental Indenture may be simultaneously executed in several counterparts, each of which when so executed shall be deemed to be an original and such counterparts together shall constitute one and the same instrument.


10.2	Formal Date

For purposes of convenience, this Twentieth Supplemental Indenture may be referred to as bearing a formal date of June 30, 2015 irrespective of the actual date of the execution thereof.


10.3	Acknowledgement

The Issuer is a limited partnership formed under the Partnership Act (Alberta), a limited partner of which is only liable for any of its liabilities or any of its losses to the extent of the amount that such limited partner has contributed or agreed to contribute to its capital and such limited partner’s pro rata share of any undistributed income.


10.4	Governing Law

This Twentieth Supplemental Indenture shall be governed by and construed in accordance with the laws of the Province of Alberta and the laws of Canada applicable therein.

- 21 -

IN WITNESS WHEREOF the parties hereto have duly executed this Twentieth Supplemental Indenture under their respective corporate seals and the hands of their proper officers in that behalf.



ALTALINK MANAGEMENT LTD., as general partner of ALTALINK, L.P.
By:	/s/ Joseph W. Bronneberg
	Name:	Joseph W. Bronneberg
	Title:	Executive Vice President & Chief Financial Officer



By:	/s/ Christopher J. Lomore
	Name:	Christopher J. Lomore
	Title:	Vice President, Treasurer

I/We have authority to bind the Issuer ALTALINK MANAGEMENT LTD.
By:	/s/ Joseph W. Bronneberg
	Name:	Joseph W. Bronneberg
	Title:	Executive Vice President & Chief Financial Officer
By:	/s/ Christopher J. Lomore
	Name:	Christopher J. Lomore
	Title:	Vice President, Treasurer



		BNY TRUST COMPANY OF CANADA
		By:	/s/ Kevin Bird
			Name: Kevin Bird
			Title: Vice President
		By:
			Name:
			Title:

SCHEDULE A-I
FORM OF GLOBAL NOTE (FIXED RATE NOTE)

THIS NOTE IS A GLOBAL BOND WITHIN THE MEANING OF THE PRINCIPAL INDENTURE AND IS REGISTERED IN THE NAME OF CDS & CO. AS NOMINEE OF CDS CLEARING AND DEPOSITORY SERVICES INC. UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF CDS CLEARING AND DEPOSITORY SERVICES INC. (“CDS”) TO ALTALINK, L.P. (THE “ISSUER”) OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IN RESPECT THEREOF IS REGISTERED IN THE NAME OF CDS & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF CDS (AND ANY PAYMENT IS MADE TO CDS & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF CDS), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL SINCE THE REGISTERED OWNER HEREOF, CDS & CO., HAS A PROPERTY INTEREST IN THE SECURITIES REPRESENTED BY THIS CERTIFICATE AND IT IS A VIOLATION OF ITS RIGHTS FOR ANOTHER PERSON TO HOLD, TRANSFER OR DEAL WITH THIS CERTIFICATE.

REGISTERED

ALTALINK, L.P.

MEDIUM-TERM NOTE SERIES________

(Fixed Rate Note)



No. CFX ____________		ISIN No. CA __________ CUSIP No. __________
PRINCIPAL AMOUNT: $____________________		DENOMINATIONS (if other than Cdn. dollars or Cdn. dollar denominations of Cdn.$1,000.00):
ORIGINAL ISSUE DATE: ___________________		SPECIFIED CURRENCY: Canadian Dollars: [ ] Yes [ ] No Foreign Currency: ___________________ Exchange Rate Agent: ________________
STATED MATURITY: ______________________		INTEREST RATE: ___________________%
INTEREST PAYMENT DATE(S): __________________________________________		PAYMENTS OF PRINCIPAL AND ANY PREMIUM AND INTEREST: [ ] Canadian Dollars [ ] Specified Currency
RECORD DATE(S): __________________________________________		DAY COUNT CONVENTION: [ ] 30/360 for the period from _____ to _____ [ ] Actual/360 for the period from _____ to _____ [ ] Actual/Actual for the period from_____ to _____ [ ] Other
OTHER PROVISIONS: See “Redemption” below.		ADDENDUM ATTACHED: [ ] Yes [ ] No

CAL01: 1682714: v6

- 2 -

ALTALINK, L.P. (the “ Issuer ”), for value received, hereby promises to pay to

This note is one of a duly authorized series of Medium-Term Notes (hereinafter called the “ Notes ”) of the Issuer issued and to be issued under an amended and restated master trust indenture dated as of the 28 ^th day of April, 2003 as amended or supplemented from time to time (herein called the “ Indenture ”) between the Issuer and BNY Trust Company of Canada, (herein called the “ Trustee ” which term includes any additional successor trustee under the Indenture with respect to the series of which this Note is a part), to which Indenture reference is hereby made for a statement of the respective rights thereunder of the Issuer, the Trustee and the Holders of the Notes and the terms upon which the Notes are to be authenticated and delivered, all to the same effect as if the provision of the Indenture were herein set forth, to all of which provisions the Holder of this Note assents by acceptance hereof. The Notes are direct obligations of the Issuer secured in the manner provided for under the Indenture. The Notes will generally rank pari passu with all present and future indebtedness of the Issuer issued pursuant to the Indenture, subject to any Sinking Fund Reserves established for any series of bonds. This Note is one of the series of Notes designated above, to be issued from time to time at an aggregate initial offering price of up to $2,000,000,000.00.

All terms used in this Note which are defined in the Indenture shall, unless otherwise defined in this Note, have the meanings assigned to them in the Indenture.

Unless otherwise provided above or in an Addendum hereto, this Note is not subject to any sinking fund and is not redeemable at the option of the Issuer prior to the Stated Maturity.

The Issuer may at any time purchase Notes at any price or prices in the open market or otherwise. Notes so purchased by the Issuer may be held or resold or, at the discretion of the Issuer, may be surrendered to the Trustee for cancellation.

If so specified above or in an Addendum hereto, the Holder of this Note may, but only upon notice from the Issuer, convert all but not less than all of such Holder’s Notes into an equal aggregate principal amount of a new series of notes issued by the Issuer. If given, such notice from the Issuer shall be given not less than 30 days nor more than 60 days prior to the date of conversion and in accordance with the provisions of the Indenture.

Any provisions contained or incorporated by reference herein with respect to the calculation of the interest rate applicable to this Note, its Interest Payment Dates, the Maturity Date or any other matter relating hereto may be modified as specified in an Addendum relating hereto if so specified above.

If this Note is designated on the first page hereof under “Other Provisions” as an Amortizing Note or as an Extendible Note, certain additional provisions with respect to this Note will be specified above or in an Addendum hereto.

The Indenture contains provisions making binding upon all holders of Bonds (as defined in the Indenture and including the Notes) issued thereunder resolutions passed at meetings of such holders held in accordance with such provisions and instruments signed by the holders of a specified majority of Bonds outstanding, which resolutions or instruments may have the effect of amending the terms of this Note or the Indenture.

As provided in the Indenture and subject to certain limitations therein set forth, the transfer of this Note may be registered on the security register of the Issuer, upon surrender of this Note for registration of transfer at the office or agency of the Trustee in the City of Toronto, duly endorsed or accompanied by a written instrument of transfer, in form satisfactory to the Issuer and the security registrar, duly executed by the Holder hereof or by its attorney duly

- 3 -

authorized in writing, and thereupon one or more new Notes of this series of authorized denominations, and for the same aggregate principal amount and tenor, will be issued to the designated transferee or transferees.

Prior to due presentment of this Note for registration of transfer, the Issuer, the Trustee and any agent of the Issuer or the Trustee may treat the Holder in whose name this Note is registered as the owner hereof for all purposes, whether or not this Note be overdue, and neither the Issuer, the Trustee nor any such agent shall be affected by notice to the contrary.

This Note shall be governed by and construed in accordance with the laws of the Province of Alberta.

Unless the certificate of authentication hereon has been executed by or on behalf of the Trustee by manual signature, this Note shall not be entitled to any benefit under the Indenture or be valid or obligatory for any purpose.

IN WITNESS WHEREOF , the Issuer has caused this instrument to be duly executed, manually or in facsimile, and an imprint or facsimile of its corporate seal to be imprinted hereon.



DATED:		ALTALINK MANAGEMENT LTD., as general partner of ALTALINK, L.P.


		By:
			Name:
			Title:


		By:
			Name:
			Title:

			I/We have authority to bind the Issuer

TRUSTEE’S CERTIFICATE OF AUTHENTICATION This is one of the Notes of the series designated and referred to in the within mentioned Indenture. BNY TRUST COMPANY OF CANADA , as Trustee

By:
By:	Authorized Signature

ASSIGNMENT/TRANSFER FORM

FOR VALUE RECEIVED the undersigned registered holder hereby sell(s), assign(s) and transfer(s) unto

(Please print or type assignee's name and address including postal code)

the within Note and all rights thereunder, hereby irrevocably constituting and appointing

_____________________________________________________________ attorney to transfer said Note on the books of the Issuer with full power of substitution in the premises.



Dated:
	Signature of transferring registered Holder*



Signature of transferring registered Holder guaranteed by:**

	Signature of Guarantor*


*	NOTICE: The signature of the registered Holder to this assignment must correspond with the name as written upon the face of the within instrument in every particular, without alteration or enlargement or any change whatsoever.


**	Signature must be guaranteed by an authorized officer of a Canadian chartered bank or a major Canadian trust issuer or by a medallion signature guarantee from a member of a recognized Medallion Signature Guarantee Program.

CAL01: 1682714: v6

SCHEDULE A-II
FORM OF GLOBAL NOTE (FLOATING RATE NOTE)

REGISTERED

ALTALINK, L.P.

MEDIUM-TERM NOTE SERIES______________ (Floating Rate Note)



No. CFLR ____________		ISIN No. CA __________ CUSIP No. __________
PRINCIPAL AMOUNT: $____________________		DENOMINATIONS (if other than Cdn. dollars or Cdn. dollar denominations of Cdn.$1,000.00): ___________
ORIGINAL ISSUE DATE: ___________________		STATED MATURITY: _________________________
INTEREST PAYMENT PERIOD: _____________		INTEREST PAYMENT DATE(S): ________________
INTEREST RATE BASIS: ___________________		RECORD DATE(S): ____________________________
INITIAL INTEREST RATE: __________________		INTEREST RESET DATE(S): ____________________
INTEREST RESET PERIOD: _________________		INTEREST DETERMINATION DATE(S): _________
OPTIONAL REPAYMENT DATE(S): __________
SPREAD (PLUS OR MINUS): ________________		SPREAD MULTIPLIER: ________________________
PAYMENT OF PRINCIPAL AND ANY PREMIUM AND INTEREST: [ ] Canadian Dollars [ ] Specified Currency		SPECIFIED CURRENCY: Canadian Dollars: [ ] Yes [ ] No Foreign Currency: ____________________ Exchange Rate Agent: _________________
DESIGNATED LIBOR PAGE: [ ] LIBOR Telerate [ ] LIBOR Reuters
INDEX MATURITY: _______________________		INDEX CURRENCY: ___________________
MAXIMUM INTEREST RATE: _______________		MINIMUM INTEREST RATE: _______________
CALCULATION DATE: _____________________		CALCULATION AGENT: ______________
		DAY COUNT CONVENTION: [ ] 30/360 for the period from _____ to _____ [ ] Actual/360 for the period from _____ to _____ [ ] Actual/Actual for the period from_____ to _____ [ ] Other
OTHER PROVISIONS: See “Redemption” below.		ADDENDUM ATTACHED: [ ] Yes [ ] No

CAL01: 1682714: v6

- 2 -

ALTALINK, L.P. (the “ Issuer ”), for value received, hereby promises to pay to

, or registered assigns, the principal sum of (the “ Principal Amount ”) on the Stated Maturity specified above (except to the extent redeemed or repaid prior to the Stated Maturity), and to pay interest thereon on the Interest Payment Dates specified above, at a rate per annum equal to the Initial Interest Rate specified above from the Original Issue Date to the first Interest Reset Date specified above and thereafter at a rate per annum determined in accordance with the provisions hereof and any Addendum relating hereto depending upon the Interest Rate Basis or Bases, if any, and such other terms specified above, until but excluding the date on which the principal hereof is paid or duly made available for payment. Reference herein to “this Note”, “hereof” “herein” and comparable terms shall include an Addendum hereto if an Addendum is specified above.

This note is one of a duly authorized series of Medium-Term Notes (hereinafter called the “ Notes ”) of the Issuer issued and to be issued under an amended and restated master trust indenture dated as of the 28 ^th day of April, 2003 as amended or supplemented from time to time (herein called the “ Indenture ”) between the Issuer and BNY Trust Company of Canada, (herein called the “ Trustee ”, which term includes any additional successor trustee under the Indenture with respect to the series of which this Note is a part) to which Indenture reference is hereby made for a statement of the respective rights thereunder of the Issuer, the Trustee and the Holders of the Notes and the terms upon which the Notes are to be authenticated and delivered, all to the same effect as if the provisions of the Indenture were herein set forth to all of which provisions the Holders of this Note assents by acceptance hereof. The Notes are direct obligations of the Issuer secured in the manner provided for under the Indenture. The Notes will generally rank pari passu with all present and future indebtedness of the Issuer issued pursuant to the Indenture, subject to any Sinking Fund Reserves established for any series of bonds. This Note is one of the series of Notes designated above, to be issued from time to time at an aggregate initial offering price of up to $2,000,000,000.00.

All terms used in this Note which are defined in the Indenture shall, unless otherwise defined in this Note, have the meanings assigned to them in the Indenture.

Unless otherwise provided above or in an Addendum hereto, this Note is not subject to any sinking fund and is not redeemable at the option of the Issuer prior to the Stated Maturity.

Any provision contained or incorporated by reference herein with respect to the determination of an Interest Rate Basis, the calculation of the interest rate applicable to this Note, the Interest Payment Dates, the Maturity Date or any other variable term relating hereto may be modified as specified in an Addendum relating hereto if so specified above.

- 3 -

or agency of the Trustee in the City of Toronto, duly endorsed or accompanied by a written instrument of transfer, in form satisfactory to the Issuer and the security registrar, duly executed by the Holder hereof or by its attorney duly authorized in writing, and thereupon one or more new Notes of this series of authorized denominations, and for the same aggregate principal amount and tenor, will be issued to the designated transferee or transferees.

This Note shall be governed by and construed in accordance with the laws of the Province of Alberta.

IN WITNESS WHEREOF , the Issuer has caused this instrument to be duly executed, manually or in facsimile, and an imprint or facsimile of its corporate seal to be imprinted hereon.



DATED:		ALTALINK MANAGEMENT LTD., as general partner of ALTALINK, L.P.


		By:
			Name:
			Title:


		By:
			Name:
			Title:

			I/We have authority to bind the Issuer

TRUSTEE’S CERTIFICATE OF AUTHENTICATION This is one of the Notes of the series designated and referred to in the within mentioned Indenture. BNY TRUST COMPANY OF CANADA , as Trustee

By:
By:	Authorized Signature

ASSIGNMENT/TRANSFER FORM

FOR VALUE RECEIVED the undersigned registered holder hereby sell(s), assign(s) and transfer(s) unto

(Please print or type assignee's name and address including postal code)

the within Note and all rights thereunder, hereby irrevocably constituting and appointing

_____________________________________________________________ attorney to transfer said Note on the books of the Issuer with full power of substitution in the premises.



Dated:
	Signature of transferring registered Holder*



Signature of transferring registered Holder guaranteed by:**

	Signature of Guarantor*


*	NOTICE: The signature of the registered Holder to this assignment must correspond with the name as written upon the face of the within instrument in every particular, without alteration or enlargement or any change whatsoever.


**	Signature must be guaranteed by an authorized officer of a Canadian chartered bank or a major Canadian trust issuer or by a medallion signature guarantee from a member of a recognized Medallion Signature Guarantee Program.

CAL01: 1682714: v6

SCHEDULE “B”
U.S. SECURITIES LEGEND

THE NOTES REPRESENTED HEREBY HAVE NOT BEEN, AND WILL NOT BE, REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE “U.S. SECURITIES ACT”) OR UNDER ANY STATE SECURITIES LAWS. THE HOLDER HEREOF, BY PURCHASING SUCH NOTES AGREES FOR THE BENEFIT OF ALTALINK, L.P. (“ALTALINK”) THAT SUCH NOTES MAY BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED ONLY (A) TO ALTALINK, (B) OUTSIDE THE UNITED STATES IN ACCORDANCE WITH RULE 904 OF REGULATION S UNDER THE US SECURITIES ACT, (C) INSIDE THE UNITED STATES IN ACCORDANCE WITH (1) RULE 144A UNDER THE U.S. SECURITIES ACT OR (2) RULE 144 UNDER THE U.S. SECURITIES ACT, IF AVAILABLE, (D) UNDER AN EFFECTIVE REGISTRATION STATEMENT UNDER THE U.S. SECURITIES ACT, OR (E) IN ANOTHER TRANSACTION THAT DOES NOT REQUIRE REGISTRATION UNDER THE U.S. SECURITITES ACT, AND IN EACH CASE IN ACCORDANCE WITH ANY ONE APPLICABLE STATE SECURITITES LAWS OR SECURITIES LAWS OF ANY OTHER APPLICABLE JURISDICTION; SUBJECT IN THE CASE OF (B), (C)(2) AND (E) ABOVE TO ALTALINK’S AND BNY TRUST COMPANY OF CANADA’S RIGHT, PRIOR TO ANY SUCH OFFER, SALE OR TRANSFER, TO REQUIRE THE DELIVERY OF AN OPINION OF COUNSEL, CERTIFICATION OR OTHER INFORMATION SATISFACTORY TO EACH OF ALTALINK AND BNY TRUST COMPANY OF CANADA.

DELIVERY OF THIS CERTIFICATE MAY NOT CONSTITUTE “GOOD DELIVERY” IN SETTLEMENT OF TRANSACTIONS ON STOCK EXCHANGES IN CANADA. A NEW CERTIFICATE BEARING NO LEGEND, DELIVERY OF WHICH WILL CONSTITUTE “GOOD DELIVERY”, MAY BE OBTAINED FROM BNY TRUST COMPANY OF CANADA UPON DELIVERY OF THIS CERTIFICATE AND A DULY EXECUTED DECLARATION, IN A FORM SATISFACTORY TO BNY TRUST COMPANY OF CANADA AND ALTALINK, TO THE EFFECT THAT THE SALE OF THE NOTES REPRESENTED HEREBY IS BEING MADE IN COMPLIANCE WITH RULE 904 OF REGULATION S UNDER THE U.S. SECURITIES ACT.

SCHEDULE “C”
FORM OF DECLARATION FOR REMOVAL OF LEGEND


To:	BNY Trust Company of Canada

as registrar and transfer agent

for the Medium Term Notes

of Altalink, L.P.

And To:        AltaLink, L.P., by its general partner ,
        AltaLink Management Ltd.
        2611 – 3 ^rd Avenue S.E.
        Calgary, Alberta T2A 7W7

The undersigned (a) acknowledges that the sale of the securities of AltaLink, L.P.(“AltaLink”) to which this declaration relates is being made in reliance on Rule 904 of Regulation S under the United States Securities Act of 1933, as amended (the “U.S. Securities Act”), and (b) certifies that: (1) the undersigned is not an “affiliate” of AltaLink as that term is defined in Rule 405 under the U.S. Securities Act; (2) the offer of such securities was not made to a person in the United States and at the time the buy order was originated, the buyer was outside the United States or the seller and any person acting on its behalf reasonably believed that the buyer was outside the United States; (3) neither the seller nor any affiliate of the seller nor any person acting on behalf of any of them has engaged or will engage in any directed selling efforts in the United States in connection with the offer and sale of such securities; (4) the sale is bona fide and not for the purpose of “washing off” the resale restrictions imposed because the securities are “restricted securities” (as that term is defined in Rule 144(a)(3) under the U.S. Securities Act); (5) the seller does not intend to replace the securities sold in reliance on Rule 904 of Regulation S with fungible unrestricted securities; and (6) the contemplated sale is not a transaction or part of a series of transactions which, although in technical compliance with Regulation S, is part of a plan or scheme to evade the registration provisions of the U.S. Securities Act. Terms used herein have the meanings given to them by Regulation S under the U.S. Securities Act.

Dated:

By:

Name:

Title:

EXHIBIT 15

August 7, 2015

To the Board of Directors and Shareholders of

Berkshire Hathaway Energy Company

Des Moines, Iowa

We have reviewed, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the unaudited consolidated interim financial information of Berkshire Hathaway Energy Company and subsidiaries for the periods ended June 30, 2015 and 2014 , as indicated in our report dated August 7, 2015 ; because we did not perform an audit, we expressed no opinion on that information.

We are aware that our report referred to above, which is included in your Quarterly Report on Form 10-Q for the quarter ended June 30, 2015 , is incorporated by reference in Registration Statement No. 333-147957 on Form S-8.

We also are aware that the aforementioned report, pursuant to Rule 436(c) under the Securities Act of 1933, is not considered a part of the Registration Statement prepared or certified by an accountant or a report prepared or certified by an accountant within the meaning of Sections 7 and 11 of that Act.

/s/ Deloitte & Touche LLP

Des Moines, Iowa

EXHIBIT 31.1

CERTIFICATION PURSUANT TO

SECTION 302 OF THE

SARBANES-OXLEY ACT OF 2002

I, Gregory E. Abel, certify that:


1.	I have reviewed this Quarterly Report on Form 10-Q of Berkshire Hathaway Energy Company;


2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;


3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;


4.	The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:


(a)	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;


(b)	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;


(c)	Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and


(d)	Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and


5.	The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):


(a)	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and


(b)	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.



Date: August 7, 2015	/s/ Gregory E. Abel
	Gregory E. Abel
	Chairman, President and Chief Executive Officer
	(principal executive officer)

EXHIBIT 31.2

CERTIFICATION PURSUANT TO

SECTION 302 OF THE

SARBANES-OXLEY ACT OF 2002

I, Patrick J. Goodman, certify that:


1.	I have reviewed this Quarterly Report on Form 10-Q of Berkshire Hathaway Energy Company;


2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;


3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;


4.	The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:


(a)	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;


(b)	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;


(c)	Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and


(d)	Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and


5.	The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):


(a)	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and


(b)	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.



Date: August 7, 2015	/s/ Patrick J. Goodman
	Patrick J. Goodman
	Executive Vice President and Chief Financial Officer
	(principal financial officer)

EXHIBIT 32.1

CERTIFICATION PURSUANT TO

SECTION 906 OF THE

SARBANES-OXLEY ACT OF 2002

I, Gregory E. Abel, Chairman, President and Chief Executive Officer of Berkshire Hathaway Energy Company (the "Company"), certify, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350, that to the best of my knowledge:


(1)	the Quarterly Report on Form 10-Q of the Company for the quarterly period ended June 30, 2015 (the "Report") fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m or 78o(d)); and


(2)	the information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company.



Date: August 7, 2015	/s/ Gregory E. Abel
	Gregory E. Abel
	Chairman, President and Chief Executive Officer
	(principal executive officer)

EXHIBIT 32.2

CERTIFICATION PURSUANT TO

SECTION 906 OF THE

SARBANES-OXLEY ACT OF 2002

I, Patrick J. Goodman, Executive Vice President and Chief Financial Officer of Berkshire Hathaway Energy Company (the "Company"), certify, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350, that to the best of my knowledge:


(1)	the Quarterly Report on Form 10-Q of the Company for the quarterly period ended June 30, 2015 (the "Report") fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m or 78o(d)); and


(2)	the information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company.



Date: August 7, 2015	/s/ Patrick J. Goodman
	Patrick J. Goodman
	Executive Vice President and Chief Financial Officer
	(principal financial officer)

EXHIBIT 95

MINE SAFETY VIOLATIONS AND OTHER LEGAL MATTER DISCLOSURES

PURSUANT TO SECTION 1503(a) OF THE DODD-FRANK WALL STREET

REFORM AND CONSUMER PROTECTION ACT

PacifiCorp and its subsidiaries operate certain coal mines and coal processing facilities (collectively, the "mining facilities") that are regulated by the Federal Mine Safety and Health Administration ("MSHA") under the Federal Mine Safety and Health Act of 1977 (the "Mine Safety Act"). MSHA inspects PacifiCorp's mining facilities on a regular basis. The total number of reportable Mine Safety Act citations, orders, assessments and legal actions for the three-month period ended June 30, 2015 are summarized in the table below and are subject to contest and appeal. The severity and assessment of penalties may be reduced or, in some cases, dismissed through the contest and appeal process. Amounts are reported regardless of whether PacifiCorp has challenged or appealed the matter. Coal reserves that are not yet mined and mines that are closed or idled are not included in the information below if no reportable events occurred at those locations during the three-month period ended June 30, 2015 . There were no mining-related fatalities during the three-month period ended June 30, 2015 . PacifiCorp has not received any notice of a pattern, or notice of the potential to have a pattern, of violations of mandatory health or safety standards that are of such nature as could have significantly and substantially contributed to the cause and effect of coal or other mine health or safety hazards under Section 104(e) of the Mine Safety Act during the three-month period ended June 30, 2015 .



	Mine Safety Act							Legal Actions
						Total
	Section 104				Section	Value of
	Significant		Section		107(a)	Proposed		Pending
	and	Section	104(d)	Section	Imminent	MSHA		as of Last	Instituted	Resolved
	Substantial	104(b)	Citations/	110(b)(2)	Danger	Assessments		Day of	During	During
Mining Facilities	Citations ⁽¹⁾	Orders ⁽²⁾	Orders ⁽³⁾	Violations ⁽⁴⁾	Orders ⁽⁵⁾	(in thousands)		Period ⁽⁶⁾	Period	Period

Deer Creek ⁽⁷⁾	—	—	—	—	—	$	5	1	—	1
Bridger (surface)	3	—	—	—	—	9		3	—	2
Bridger (underground)	9	—	—	—	—	98		5	2	5
Cottonwood Preparatory Plant ⁽⁸⁾	—	—	—	—	—	—		—	—	—
Wyodak Coal Crushing Facility	—	—	—	—	—	—		—	—	—


(1)	Citations for alleged violations of mandatory health and safety standards that could significantly or substantially contribute to the cause and effect of a safety or health hazard under Section 104 of the Mine Safety Act.


(2)	For alleged failure to totally abate the subject matter of a Mine Safety Act Section 104(a) citation within the period specified in the citation.


(3)	For alleged unwarrantable failure (i.e., aggravated conduct constituting more than ordinary negligence) to comply with a mandatory health or safety standard.


(4)	For alleged flagrant violations (i.e., reckless or repeated failure to make reasonable efforts to eliminate a known violation of a mandatory health or safety standard that substantially and proximately caused, or reasonably could have been expected to cause, death or serious bodily injury).


(5)	For the existence of any condition or practice in a coal or other mine which could reasonably be expected to cause death or serious physical harm before such condition or practice can be abated.


(6)	Amounts include six contests of proposed penalties under Subpart C and three contests of citations or orders under Subpart B of the Federal Mine Safety and Health Review Commission's procedural rules. The pending legal actions are not exclusive to citations, notices, orders and penalties assessed by MSHA during the reporting period.


(7)	The Deer Creek mine is currently idled and closure activities have begun.


(8)	The Cottonwood Preparatory Plant was sold in June 2015.