BERKSHIRE HATHAWAY ENERGY CO (Form: 10-Q, Received: 08/04/2017 17:17:46)

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, 2017

[ ] 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

001-05152	PACIFICORP	93-0246090
	(An Oregon Corporation)
	825 N.E. Multnomah Street
	Portland, Oregon 97232
	888-221-7070

333-90553	MIDAMERICAN FUNDING, LLC	47-0819200
	(An Iowa Limited Liability Company)
	666 Grand Avenue, Suite 500
	Des Moines, Iowa 50309-2580
	515-242-4300

333-15387	MIDAMERICAN ENERGY COMPANY	42-1425214
	(An Iowa Corporation)
	666 Grand Avenue, Suite 500
	Des Moines, Iowa 50309-2580
	515-242-4300

000-52378	NEVADA POWER COMPANY	88-0420104
	(A Nevada Corporation)
	6226 West Sahara Avenue
	Las Vegas, Nevada 89146
	702-402-5000

000-00508	SIERRA PACIFIC POWER COMPANY	88-0044418
	(A Nevada Corporation)
	6100 Neil Road
	Reno, Nevada 89511
	775-834-4011

	N/A
	(Former name or former address, if changed from 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.



Registrant	Yes	No
BERKSHIRE HATHAWAY ENERGY COMPANY	X
PACIFICORP	X
MIDAMERICAN FUNDING, LLC		X
MIDAMERICAN ENERGY COMPANY	X
NEVADA POWER COMPANY	X
SIERRA PACIFIC POWER COMPANY	X

Indicate by check mark whether the registrants have submitted electronically and posted on their corporate Web sites, 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 registrants were 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, a smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.



Registrant	Large Accelerated Filer	Accelerated filer	Non-accelerated Filer	Smaller Reporting Company	Emerging Growth Company
BERKSHIRE HATHAWAY ENERGY COMPANY			X
PACIFICORP			X
MIDAMERICAN FUNDING, LLC			X
MIDAMERICAN ENERGY COMPANY			X
NEVADA POWER COMPANY			X
SIERRA PACIFIC POWER COMPANY			X

If an emerging growth company, indicate by check mark if the registrants have elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o

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

Yes o No x

All shares of outstanding common stock of Berkshire Hathaway Energy Company are privately held by a limited group of investors. As of July 31, 2017 , 77,174,325 shares of common stock, no par value, were outstanding.

All shares of outstanding common stock of PacifiCorp are indirectly owned by Berkshire Hathaway Energy Company. As of July 31, 2017 , 357,060,915 shares of common stock, no par value, were outstanding.

All of the member's equity of MidAmerican Funding, LLC is held by its parent company, Berkshire Hathaway Energy Company, as of July 31, 2017 .

All shares of outstanding common stock of MidAmerican Energy Company are owned by its parent company, MHC Inc., which is a direct, wholly owned subsidiary of MidAmerican Funding, LLC. As of July 31, 2017 , 70,980,203 shares of common stock, no par value, were outstanding.

All shares of outstanding common stock of Nevada Power Company are owned by its parent company, NV Energy, Inc., which is an indirect, wholly owned subsidiary of Berkshire Hathaway Energy Company. As of July 31, 2017 , 1,000 shares of common stock, $1.00 stated value, were outstanding.

All shares of outstanding common stock of Sierra Pacific Power Company are owned by its parent company, NV Energy, Inc. As of July 31, 2017 , 1,000 shares of common stock, $3.75 par value, were outstanding.

This combined Form 10-Q is separately filed by Berkshire Hathaway Energy Company, PacifiCorp, MidAmerican Funding, LLC, MidAmerican Energy Company, Nevada Power Company and Sierra Pacific Power Company. Information contained herein relating to any individual company is filed by such company on its own behalf. Each company makes no representation as to information relating to the other companies.

TABLE OF CONTENTS

PART I



Item 1.	Financial Statements	1
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	2
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	152
Item 4.	Controls and Procedures	152

PART II



Item 1.	Legal Proceedings	153
Item 1A.	Risk Factors	153
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	153
Item 3.	Defaults Upon Senior Securities	153
Item 4.	Mine Safety Disclosures	153
Item 5.	Other Information	153
Item 6.	Exhibits	153
Signatures		154
Exhibit Index		155

Definition of Abbreviations and Industry Terms

When used in Forward-Looking Statements, Part I - Items 2 through 3, 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
Berkshire Hathaway Energy or the 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 and its subsidiaries
Sierra Pacific		Sierra Pacific Power Company and its subsidiaries
Nevada Utilities		Nevada Power Company and Sierra Pacific Power Company
Registrants		Berkshire Hathaway Energy Company, PacifiCorp, MidAmerican Funding, MidAmerican Energy, Nevada Power and Sierra Pacific
Subsidiary Registrants		PacifiCorp, MidAmerican Funding, MidAmerican Energy, Nevada Power and Sierra Pacific
Northern Powergrid		Northern Powergrid Holdings Company
Northern Natural Gas		Northern Natural Gas Company
Kern River		Kern River Gas Transmission Company
AltaLink		BHE Canada Holdings Corporation
ALP		AltaLink, L.P.
BHE U.S. Transmission		BHE U.S. Transmission, LLC
HomeServices		HomeServices of America, Inc. and its subsidiaries
BHE Pipeline Group or Pipeline Companies		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 Company, Nevada Power Company and Sierra Pacific Power Company
Berkshire Hathaway		Berkshire Hathaway Inc.
Pinyon Pines Projects		168-megawatt and 132-megawatt wind-powered generating facilities in California

Certain Industry Terms
AESO		Alberta Electric System Operator
AFUDC		Allowance for Funds Used During Construction
AUC		Alberta Utilities Commission
CPUC		California Public Utilities Commission
Dth		Decatherms
EPA		United States Environmental Protection Agency
FERC		Federal Energy Regulatory Commission
GHG		Greenhouse Gases
GWh		Gigawatt Hours
GTA		General Tariff Application
IPUC		Idaho Public Utilities Commission
IUB		Iowa Utilities Board
kV		Kilovolt



MW		Megawatts
MWh		Megawatt Hours
OPUC		Oregon Public Utility Commission
PUCN		Public Utilities Commission of Nevada
REC		Renewable Energy Credit
RPS		Renewable Portfolio Standards
SEC		United States Securities and Exchange Commission
SIP		State Implementation Plan
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 relevant Registrant'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 each Registrant and could cause actual results to differ materially from those expressed or implied by such forward-looking statements. These factors include, among others:

•

the occurrence of any event, change or other circumstances that could give rise to the termination of the agreement and plan of merger between BHE and Energy Future Holdings Corp., among others, or the failure to consummate the transactions contemplated by the agreement and plan of merger (the "Mergers"), including due to the failure to receive the required regulatory approvals, the taking of governmental action (including the passage of legislation) to block the Mergers or the failure to satisfy other closing conditions;


•	actions taken or conditions imposed by governmental or other regulatory authorities in connection with the Mergers;


•	general economic, political and business conditions, as well as changes in, and compliance with, laws and regulations, including income tax reform, initiatives regarding deregulation and restructuring of the utility industry, and reliability and safety standards, affecting the respective Registrant'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 regulatory rate reviews and other proceedings conducted by regulatory agencies or other governmental and legal bodies and the respective Registrant's ability to recover costs through 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 private generation measures and programs, that could affect customer growth and usage, electricity and natural gas supply or the respective Registrant's ability to obtain long-term contracts with customers and suppliers;


•	performance, availability and ongoing operation of the respective Registrant's facilities, including facilities not operated by the Registrants, due to the impacts of market conditions, outages and repairs, transmission constraints, weather, including wind, solar and hydroelectric conditions, and operating conditions;

•

the effects of catastrophic and other unforeseen events, which may be caused by factors beyond the control of each respective Registrant or by a breakdown or failure of the Registrants' operating assets, including storms, floods, fires, earthquakes, explosions, landslides, mining accidents, litigation, wars, terrorism, embargoes, and cyber security attacks, data security breaches, disruptions, or other malicious acts;


•	a high degree of variance between actual and forecasted load or generation that could impact a Registrant'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;

iii


•	the financial condition and creditworthiness of the respective Registrant'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 interest rates;


•	changes in the respective Registrant's credit ratings;


•	risks relating to nuclear generation, including unique operational, closure and decommissioning risks;


•	hydroelectric conditions and the cost, feasibility and eventual outcome of hydroelectric relicensing proceedings;


•	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 ability of the respective Registrants to recover such costs in regulated rates;


•	fluctuations in foreign currency exchange rates, primarily the British pound and the Canadian dollar;


•	increases in employee healthcare costs;


•	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 transactions;


•	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 consolidated financial results of the respective Registrants;


•	the ability to successfully integrate future acquired operations into a Registrant's business; and


•	other business or investment considerations that may be disclosed from time to time in the Registrants' filings with the SEC or in other publicly disseminated written documents.

Further details of the potential risks and uncertainties affecting the Registrants are described in the Registrants' filings with the SEC, including Part II, Item 1A and other discussions contained in this Form 10-Q. Each Registrant 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.


Item 1.	Financial Statements



Berkshire Hathaway Energy Company and its subsidiaries
Report of Independent Registered Public Accounting Firm		4
Consolidated Balance Sheets		5
Consolidated Statements of Operations		7
Consolidated Statements of Comprehensive Income		8
Consolidated Statements of Changes in Equity		9
Consolidated Statements of Cash Flows		10
Notes to Consolidated Financial Statements		11
PacifiCorp and its subsidiaries
Report of Independent Registered Public Accounting Firm		56
Consolidated Balance Sheets		57
Consolidated Statements of Operations		59
Consolidated Statements of Changes in Shareholders' Equity		60
Consolidated Statements of Cash Flows		61
Notes to Consolidated Financial Statements		62
MidAmerican Energy Company
Report of Independent Registered Public Accounting Firm		79
Balance Sheets		80
Statements of Operations		82
Statements of Changes in Equity		83
Statements of Cash Flows		84
Notes to Financial Statements		85
MidAmerican Funding, LLC and its subsidiaries
Report of Independent Registered Public Accounting Firm		94
Consolidated Balance Sheets		95
Consolidated Statements of Operations		97
Consolidated Statements of Changes in Equity		98
Consolidated Statements of Cash Flows		99
Notes to Consolidated Financial Statements		100
Nevada Power Company and its subsidiaries
Report of Independent Registered Public Accounting Firm		113
Consolidated Balance Sheets		114
Consolidated Statements of Operations		115
Consolidated Statements of Changes in Shareholder's Equity		116
Consolidated Statements of Cash Flows		117
Notes to Consolidated Financial Statements		118
Sierra Pacific Power Company and its subsidiaries
Report of Independent Registered Public Accounting Firm		133
Consolidated Balance Sheets		134
Consolidated Statements of Operations		135
Consolidated Statements of Changes in Shareholder's Equity		136
Consolidated Statements of Cash Flows		137
Notes to Consolidated Financial Statements		138


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



Berkshire Hathaway Energy Company and its subsidiaries		31
PacifiCorp and its subsidiaries		70
MidAmerican Funding, LLC and its subsidiaries and MidAmerican Energy Company		103
Nevada Power Company and its subsidiaries		126
Sierra Pacific Power Company and its subsidiaries		146

Berkshire Hathaway Energy Company and its subsidiaries

Consolidated Financial Section

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, 2017 , and the related consolidated statements of operations and comprehensive income for the three-month and six-month periods ended June 30, 2017 and 2016 , and of changes in equity and cash flows for the six-month periods ended June 30, 2017 and 2016 . 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, 2016 , 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 24, 2017 , 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, 2016 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 4, 2017

BERKSHIRE HATHAWAY ENERGY COMPANY AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS (Unaudited)

(Amounts in millions)



	As of
	June 30,		December 31,
	2017		2016
ASSETS
Current assets:
Cash and cash equivalents	$	827	$	721
Trade receivables, net	1,854		1,751
Income taxes receivable	230		—
Inventories	893		925
Mortgage loans held for sale	408		359
Other current assets	954		917
Total current assets	5,166		4,673

Property, plant and equipment, net	63,686		62,509
Goodwill	9,204		9,010
Regulatory assets	4,474		4,307
Investments and restricted cash and investments	4,261		3,945
Other assets	1,018		996

Total assets	$	87,809	$	85,440

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,
	2017			2016
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable	$	1,214		$	1,317
Accrued interest	466			454
Accrued property, income and other taxes	376			389
Accrued employee expenses	302			261
Short-term debt	2,495			1,869
Current portion of long-term debt	1,880			1,006
Other current liabilities	1,021			1,017
Total current liabilities	7,754			6,313

Regulatory liabilities	3,023			2,933
BHE senior debt	6,770			7,418
BHE junior subordinated debentures	494			944
Subsidiary debt	26,904			26,748
Deferred income taxes	14,211			13,879
Other long-term liabilities	2,783			2,742
Total liabilities	61,939			60,977

Commitments and contingencies (Note 11)

Equity:
BHE shareholders' equity:
Common stock - 115 shares authorized, no par value, 77 shares issued and outstanding	—			—
Additional paid-in capital	6,362			6,390
Retained earnings	20,467			19,448
Accumulated other comprehensive loss, net	(1,089		)	(1,511		)
Total BHE shareholders' equity	25,740			24,327
Noncontrolling interests	130			136
Total equity	25,870			24,463

Total liabilities and equity	$	87,809		$	85,440

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,
	2017			2016			2017			2016
Operating revenue:
Energy	$	3,598		$	3,280		$	7,179		$	6,830
Real estate	956			841			1,541			1,332
Total operating revenue	4,554			4,121			8,720			8,162

Operating costs and expenses:
Energy:
Cost of sales	1,049			970			2,168			2,065
Operating expense	950			909			1,833			1,791
Depreciation and amortization	660			640			1,270			1,259
Real estate	846			748			1,429			1,240
Total operating costs and expenses	3,505			3,267			6,700			6,355

Operating income	1,049			854			2,020			1,807

Other income (expense):
Interest expense	(457		)	(468		)	(915		)	(941		)
Capitalized interest	10			103			20			114
Allowance for equity funds	18			115			35			130
Interest and dividend income	27			27			53			54
Other, net	(3		)	1			22			11
Total other income (expense)	(405		)	(222		)	(785		)	(632		)

Income before income tax expense and equity income	644			632			1,235			1,175
Income tax expense	83			121			135			195
Equity income	26			34			50			60
Net income	587			545			1,150			1,040
Net income attributable to noncontrolling interests	13			9			20			14
Net income attributable to BHE shareholders	$	574		$	536		$	1,130		$	1,026

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,
	2017			2016			2017			2016

Net income	$	587		$	545		$	1,150		$	1,040

Other comprehensive income, net of tax:
Unrecognized amounts on retirement benefits, net of tax of $(3), $13, $(4), and $19	(4		)	40			1			62
Foreign currency translation adjustment	221			(272		)	308			(205		)
Unrealized gains on available-for-sale securities, net of tax of $53, $14, $71 and $36	81			38			119			71
Unrealized (losses) gains on cash flow hedges, net of tax of $(2), $16, $(4) and $2	(2		)	24			(6		)	1
Total other comprehensive income, net of tax	296			(170		)	422			(71		)

Comprehensive income	883			375			1,572			969
Comprehensive income attributable to noncontrolling interests	13			9			20			14
Comprehensive income attributable to BHE shareholders	$	870		$	366		$	1,552		$	955

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, Net			Interests			Equity

Balance, December 31, 2015	77	$	—	$	6,403		$	16,906		$	(908	)	$	134		$	22,535
Net income	—	—		—			1,026			—			8			1,034
Other comprehensive loss	—	—		—			—			(71		)	—			(71		)
Distributions	—	—		—			—			—			(9		)	(9		)
Other equity transactions	—	—		1						—			9			10
Balance, June 30, 2016	77	$	—	$	6,404		$	17,932		$	(979	)	$	142		$	23,499

Balance, December 31, 2016	77	$	—	$	6,390		$	19,448		$	(1,511	)	$	136		$	24,463
Net income	—	—		—			1,130			—			9			1,139
Other comprehensive income	—	—		—			—			422			—			422
Distributions	—	—		—			—			—			(12		)	(12		)
Common stock purchases	—	—		(1		)	(18		)	—			—			(19		)
Common stock exchange	—	—		(6		)	(94		)	—			—			(100		)
Other equity transactions	—	—		(21		)	1			—			(3		)	(23		)
Balance, June 30, 2017	77	$	—	$	6,362		$	20,467		$	(1,089	)	$	130		$	25,870

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,
	2017			2016
Cash flows from operating activities:
Net income	$	1,150		$	1,040
Adjustments to reconcile net income to net cash flows from operating activities:
Depreciation and amortization	1,292			1,274
Allowance for equity funds	(35		)	(130		)
Equity income, net of distributions	(9		)	(44		)
Changes in regulatory assets and liabilities	21			(1		)
Deferred income taxes and amortization of investment tax credits	341			291
Other, net	3			(72		)
Changes in other operating assets and liabilities, net of effects from acquisitions:
Trade receivables and other assets	(73		)	(252		)
Derivative collateral, net	(13		)	23
Pension and other postretirement benefit plans	(25		)	(9		)
Accrued property, income and other taxes	(244		)	557
Accounts payable and other liabilities	20			94
Net cash flows from operating activities	2,428			2,771

Cash flows from investing activities:
Capital expenditures	(1,813		)	(2,103		)
Acquisitions, net of cash acquired	(588		)	(66		)
Decrease in restricted cash and investments	30			9
Purchases of available-for-sale securities	(122		)	(55		)
Proceeds from sales of available-for-sale securities	127			88
Equity method investments	(65		)	(282		)
Other, net	(6		)	(46		)
Net cash flows from investing activities	(2,437		)	(2,455		)

Cash flows from financing activities:
Repayments of BHE senior debt and junior subordinated debentures	(950		)	(1,000		)
Common stock purchases	(19		)	—
Proceeds from subsidiary debt	1,163			1,461
Repayments of subsidiary debt	(668		)	(1,529		)
Net proceeds from short-term debt	617			465
Other, net	(31		)	(39		)
Net cash flows from financing activities	112			(642		)

Effect of exchange rate changes	3			(4		)

Net change in cash and cash equivalents	106			(330		)
Cash and cash equivalents at beginning of period	721			1,108
Cash and cash equivalents at end of period	$	827		$	778

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 a highly diversified portfolio of locally-managed businesses principally engaged in the energy industry (collectively with its subsidiaries, the "Company") and is a consolidated subsidiary of Berkshire Hathaway Inc. ("Berkshire Hathaway").

The Company is organized 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 Canada Holdings Corporation ("AltaLink") (which primarily consists of AltaLink, L.P. ("ALP")) and BHE U.S. Transmission, LLC), BHE Renewables (which primarily consists of BHE Renewables, LLC and CalEnergy Philippines) and HomeServices of America, Inc. (collectively with its subsidiaries, "HomeServices"). The Company, through these locally managed and operated 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 hydroelectric 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, 2017 and for the three- and six-month periods ended June 30, 2017 and 2016 . The results of operations for the three- and six-month periods ended June 30, 2017 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, 2016 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, 2017 .

( 2 ) New Accounting Pronouncements

In March 2017, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2017-07, which amends FASB Accounting Standards Codification ("ASC") Topic 715, "Compensation - Retirement Benefits." The amendments in this guidance require that an employer disaggregate the service cost component from the other components of net benefit cost and report the service cost component in the same line item as other compensation costs arising from services rendered by the pertinent employees during the period. The other components of net benefit cost are required to be presented in the statement of operations separately from the service cost component and outside the subtotal of operating income. Additionally, the guidance only allows the service cost component to be eligible for capitalization when applicable. This guidance is effective for interim and annual reporting periods beginning after December 15, 2017, with early adoption permitted. This guidance must be adopted retrospectively for the presentation of the service cost component and the other components of net benefit cost in the statement of operations and prospectively for the capitalization of the service cost component in the balance sheet. The Company plans to adopt this guidance effective January 1, 2018 and is currently evaluating the impact on its Consolidated Financial Statements and disclosures included within Notes to Consolidated Financial Statements.

In November 2016, the FASB issued ASU No. 2016-18, which amends FASB ASC Subtopic 230-10, “Statement of Cash Flows - Overall.” The amendments in this guidance require that a statement of cash flows explain the change during the period in the total of cash, cash equivalents, and amounts generally described as restricted cash or restricted cash equivalents. Amounts generally described as restricted cash and restricted cash equivalents should be included with cash and cash equivalents when reconciling the beginning-of-period and end-of-period total amounts shown on the statement of cash flows. This guidance is effective for interim and annual reporting periods beginning after December 15, 2017, with early adoption permitted, and is required to be adopted retrospectively. The Company plans to adopt this guidance effective January 1, 2018 and is currently evaluating the impact on its Consolidated Financial Statements and disclosures included within Notes to Consolidated Financial Statements.

In August 2016, the FASB issued ASU No. 2016-15, which amends FASB ASC Topic 230, "Statement of Cash Flows." The amendments in this guidance address the classification of eight specific cash flow issues within the statement of cash flows with the objective of reducing the existing diversity in practice. This guidance is effective for interim and annual reporting periods beginning after December 15, 2017, with early adoption permitted, and is required to be adopted retrospectively. The Company plans to adopt this guidance effective January 1, 2018 and does not believe the adoption of this guidance will have a material impact on its Consolidated Financial Statements.

In February 2016, the FASB issued ASU No. 2016-02, which creates FASB ASC Topic 842, "Leases" and supersedes Topic 840 "Leases." This guidance increases transparency and comparability among entities by recording lease assets and lease liabilities on the balance sheet and disclosing key information about leasing arrangements. A lessee should recognize in the balance sheet a liability to make lease payments (the lease liability) and a right-of-use asset representing its right to use the underlying asset for the lease term. The recognition, measurement, and presentation of expenses and cash flows arising from a lease by a lessee have not significantly changed from previous guidance. This guidance is effective for interim and annual reporting periods beginning after December 15, 2018, with early adoption permitted, and is required to be adopted using a modified retrospective approach. The Company plans to adopt this guidance effective January 1, 2019 and is currently evaluating the impact on its Consolidated Financial Statements and disclosures included within Notes to Consolidated Financial Statements.

In January 2016, the FASB issued ASU No. 2016-01, which amends FASB ASC Subtopic 825-10, "Financial Instruments - Overall." The amendments in this guidance address certain aspects of recognition, measurement, presentation and disclosure of financial instruments including a requirement that all investments in equity securities that do not qualify for equity method accounting or result in consolidation of the investee be measured at fair value with changes in fair value recognized in net income. This guidance is effective for interim and annual reporting periods beginning after December 15, 2017, with early adoption not permitted, and is required to be adopted prospectively by means of a cumulative-effect adjustment to the balance sheet as of the beginning of the fiscal year of adoption. 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. The material impacts currently identified include recording the unrealized gains and losses on available-for-sale securities in the Consolidated Statements of Operations as opposed to other comprehensive income ("OCI"). For the six-month periods ended June 30, 2017 and 2016 , these amounts, net of tax, were $119 million and $71 million , respectively.

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 August 2015, the FASB issued ASU No. 2015-14, which defers the effective date of ASU No. 2014-09 one year to interim and annual reporting periods beginning after December 15, 2017. During 2016, the FASB issued several ASUs that clarify the implementation guidance for ASU No. 2014-09 but do not change the core principle of the guidance. 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 plans to adopt this guidance effective January 1, 2018 under the modified retrospective method and is currently evaluating the impact on its Consolidated Financial Statements and disclosures included within Notes to Consolidated Financial Statements. The Company currently does not expect the timing and amount of revenue currently recognized to be materially different after adoption of the new guidance as a majority of revenue is recognized when the Company has the right to invoice as it corresponds directly with the value to the customer of the Company’s performance to date. The Company's current plan is to quantitatively disaggregate revenue in the required financial statement footnote by regulated energy, nonregulated energy and real estate, with further disaggregation of regulated energy by jurisdiction and real estate by line of business.


( 3 )	Business Acquisitions

Oncor Electric Delivery Company LLC

On July 7, 2017, BHE and certain subsidiaries entered into an agreement and plan of merger (the “Merger Agreement”) with Energy Future Holdings Corp. (“EFH Corp.”) and Energy Future Intermediate Holding Company LLC (“EFIH”), which is part of a joint plan of reorganization filed on July 7, 2017 with the United States Bankruptcy Court for the District of Delaware (the “Bankruptcy Court”) for EFH Corp., EFIH and the EFH/EFIH Debtors (as defined in the Plan of Reorganization). Pursuant to the Merger Agreement, BHE will become the indirect owner of 80.03% of the outstanding equity interests of Oncor Electric Delivery Company LLC (“Oncor”). According to Oncor’s public filings, Oncor is a regulated electricity transmission and distribution company that operates the largest transmission and distribution system in Texas, delivering electricity to more than 3.4 million homes and businesses and operating more than 122,000 miles of transmission and distribution lines. Texas Transmission Investment LLC (“TTI”) owns 19.75% of Oncor’s outstanding membership interests and certain Oncor directors, employees and retirees indirectly beneficially own the remaining 0.22% of Oncor’s outstanding membership interests.

BHE intends to acquire the 19.75% minority interest position in Oncor owned by TTI through either a privately negotiated agreement separate from the Merger Agreement or by exercising contractual rights pursuant to the Investor Rights Agreement. The Investor Rights Agreement is an agreement by and among Oncor, Oncor Electric Delivery Holdings Company LLC, TTI and EFH Corp. that governs the rights and obligations in connection with the minority interest position in Oncor owned by TTI. In the event of a change in control, EFH Corp. may exercise its rights under the Investor Rights Agreement requiring TTI to sell or otherwise transfer its ownership interest to BHE. BHE also intends to acquire the 0.22% minority interest position in Oncor indirectly beneficially owned by certain Oncor directors, employees and retirees through a separate, privately negotiated agreement. These transactions, when combined with the Merger Agreement described above, if completed, would result in Oncor being an indirect, wholly owned subsidiary of BHE.

Pursuant to the Merger Agreement, the consideration funded by BHE for the acquisition of EFH Corp. will be $9.0 billion , which implies an equity value of approximately $11.25 billion for 100% of Oncor. The consideration is expected to be paid in cash, subject to certain terms and conditions set forth in the Merger Agreement. BHE’s primary shareholder has committed to provide the capital to fund the entire purchase price and BHE will fund the $9.0 billion purchase price by issuing common equity to its existing shareholders. Closing of the Merger Agreement is expected in the fourth quarter of 2017.

The Merger Agreement is subject to numerous approvals, rulings and conditions, including those from the Bankruptcy Court, the Public Utility Commission of Texas and the Federal Energy Regulatory Commission (“FERC”), and the expiration of the applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976. The Bankruptcy Court has scheduled August 21, 2017, to hear the motion to approve the Merger Agreement and October 24, 2017, as the start date of the confirmation hearing on the joint plan of reorganization.

Until Bankruptcy Court approval of the Merger Agreement is obtained, its terms are not binding on EFH Corp. or EFIH. BHE, EFH Corp. and EFIH have certain termination rights under the Merger Agreement and, assuming approval of the Merger Agreement by the Bankruptcy Court, EFH Corp. and EFIH may be obligated to pay BHE a termination fee of $270 million under certain circumstances.

Other

The Company completed various acquisitions totaling $588 million , net of cash acquired, for the six-month period ended June 30, 2017 . The purchase price for each acquisition was allocated to the assets acquired and liabilities assumed, which related primarily to development and construction costs for the 110-megawatt Alamo 6 solar project, the remaining 25% interest in the Silverhawk natural gas-fueled generation facility at Nevada Power and residential real estate brokerage businesses. There were no other material assets acquired or liabilities assumed.


( 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	2017			2016
Regulated assets:
Utility generation, transmission and distribution systems	5-80 years	$	72,317		$	71,536
Interstate natural gas pipeline assets	3-80 years	6,969			6,942
		79,286			78,478
Accumulated depreciation and amortization		(24,029		)	(23,603		)
Regulated assets, net		55,257			54,875

Nonregulated assets:
Independent power plants	5-30 years	5,880			5,594
Other assets	3-30 years	1,164			1,002
		7,044			6,596
Accumulated depreciation and amortization		(1,222		)	(1,060		)
Nonregulated assets, net		5,822			5,536

Net operating assets		61,079			60,411
Construction work-in-progress		2,607			2,098
Property, plant and equipment, net		$	63,686		$	62,509

Construction work-in-progress includes $2.3 billion as of June 30, 2017 and $1.8 billion as of December 31, 2016 , related to the construction of regulated assets.

During the fourth quarter of 2016, MidAmerican Energy revised its electric and gas depreciation rates based on the results of a new depreciation study, the most significant impact of which was longer estimated useful lives for certain wind-powered generating facilities. The effect of this change was to reduce depreciation and amortization expense by $34 million annually, or $8 million and $17 million for the three- and six-month periods ended June 30, 2017 , based on depreciable plant balances at the time of the change.


( 5 )	Investments and Restricted Cash and Investments

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



	As of
	June 30,		December 31,
	2017		2016
Investments:
BYD Company Limited common stock	$	1,381	$	1,185
Rabbi trusts	427		403
Other	128		106
Total investments	1,936		1,694

Equity method investments:
BHE Renewables tax equity investments	811		741
Electric Transmission Texas, LLC	694		672
Bridger Coal Company	150		165
Other	143		142
Total equity method investments	1,798		1,720

Restricted cash and investments:
Quad Cities Station nuclear decommissioning trust funds	485		460
Other	238		282
Total restricted cash and investments	723		742

Total investments and restricted cash and investments	$	4,457	$	4,156

Reflected as:
Other current assets	$	196	$	211
Noncurrent assets	4,261		3,945
Total investments and restricted cash and investments	$	4,457	$	4,156

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"). The fair value of BHE's investment in BYD Company Limited common stock reflects a pre-tax unrealized gain of $1,149 million and $953 million as of June 30, 2017 and December 31, 2016 , respectively.


( 6 )	Recent Financing Transactions

Long-Term Debt

In July 2017, Northern Powergrid Metering Limited entered into a £200 million secured amortizing corporate facility with a stated maturity of June 2026. The amortizing facility has a variable interest rate based on the London Interbank Offered Rate plus a spread that varies based on an agreed-upon schedule. In July 2017, Northern Powergrid Metering Limited received proceeds of £120 million under the facility to repay amounts provided by Yorkshire Electricity Group plc which provides internal funds for the continuing smart meter deployment program of Northern Powergrid Metering Limited. Northern Powergrid Metering Limited has entered into interest rate swaps that fix the underlying interest rate on 85% of the outstanding debt.

In July 2017, Cordova Funding Corporation redeemed the remaining $89 million of its 8.48% to 9.07% Series A Senior Secured Bonds due December 2019, CE Generation, LLC redeemed the remaining $51 million of its 7.416% Senior Secured Bonds due December 2018, and Salton Sea Funding Corporation redeemed the remaining $20 million of its 7.475% Senior Secured Series F Bonds due November 2018, each at redemption prices determined in accordance with the terms of the respective indentures.

In the first six months of 2017, BHE repaid at par value a total of $550 million , plus accrued interest, of its junior subordinated debentures due December 2044.

In June 2017, BHE issued $100 million of its 5.0% junior subordinated debentures due June 2057 in exchange for 181,819 shares of BHE no par value common stock held by a minority shareholder. The junior subordinated debentures are redeemable at BHE's option at any time from and after June 15, 2037, at par plus accrued and unpaid interest.

In May 2017, Alamo 6, LLC issued $232 million of its 4.17% Senior Secured Notes due March 2042. The principal of the notes amortizes beginning March 2018 with a final maturity in March 2042. 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 110-megawatt solar project in Texas.

In April 2017, Kern River redeemed the remaining $175 million of its 4.893% Senior Notes due April 2018 at a redemption price determined in accordance with the terms of the indenture.

In February 2017, MidAmerican Energy issued $375 million of its 3.10% First Mortgage Bonds due May 2027 and $475 million of its 3.95% First Mortgage Bonds due August 2047. An amount equal to the net proceeds was used to finance capital expenditures, disbursed during the period from February 2, 2016 to February 1, 2017, with respect to investments in MidAmerican Energy's 551-megawatt Wind X and 2,000-megawatt Wind XI projects, which were previously financed with MidAmerican Energy's general funds.

In February 2017, MidAmerican Energy redeemed in full through optional redemption its $250 million of 5.95% Senior Notes due July 2017.

Credit Facilities

In June 2017, BHE extended, with lender consent, the maturity date to June 2020 for its $2.0 billion unsecured credit facility and PacifiCorp extended, with lender consent, the maturity date to June 2020 for its $400 million unsecured credit facility, each by exercising the first of two available one-year extensions.

In June 2017, PacifiCorp terminated its $600 million unsecured credit facility expiring March 2018 and entered into a $600 million unsecured credit facility expiring June 2020 with two one-year extension options subject to lender consent. The credit facility, which supports PacifiCorp's commercial paper program and certain series of its tax-exempt bond obligations and provides for the issuance of letters of credit, has a variable interest rate based on the Eurodollar rate or a base rate, at PacifiCorp's option, plus a spread that varies based on PacifiCorp's credit ratings for its senior unsecured long-term debt securities. The credit facility requires PacifiCorp's ratio of consolidated debt, including current maturities, to total capitalization not exceed 0.65 to 1.0 as of the last day of each quarter.

In June 2017, MidAmerican Energy terminated its $600 million unsecured credit facility expiring March 2018 and entered into a $900 million unsecured credit facility expiring June 2020 with two one-year extension options subject to lender consent. The credit facility, which supports MidAmerican Energy's commercial paper program and its variable-rate tax-exempt bond obligations and provides for the issuance of letters of credit, has a variable interest rate based on the Eurodollar rate or a base rate, at MidAmerican Energy's option, plus a spread that varies based on MidAmerican Energy's credit ratings for senior unsecured long-term debt securities. The credit facility requires MidAmerican Energy's ratio of consolidated debt, including current maturities, to total capitalization not exceed 0.65 to 1.0 as of the last day of each quarter.

In June 2017, Nevada Power amended its $400 million secured credit facility, extending the maturity date to June 2020 with two one-year extension options subject to lender consent. The amended credit facility, which is for general corporate purposes and provides for the issuance of letters of credit, has a variable interest rate based on the Eurodollar rate or a base rate, at Nevada Power's option, plus a spread that varies based on Nevada Power's credit ratings for its senior secured long-term debt securities. The amended credit facility requires Nevada Power's ratio of consolidated debt, including current maturities, to total capitalization not to exceed 0.65 to 1.0 as of the last day of each quarter.

In June 2017, Sierra Pacific amended its $250 million secured credit facility, extending the maturity date to June 2020 with two one-year extension options subject to lender consent. The amended credit facility, which is for general corporate purposes and provides for the issuance of letters of credit, has a variable interest rate based on the Eurodollar rate or a base rate, at Sierra Pacific's option, plus a spread that varies based on Sierra Pacific's credit ratings for its senior secured long-term debt securities. The amended credit facility requires Sierra Pacific's ratio of consolidated debt, including current maturities, to total capitalization not exceed 0.65 to 1.0 as of the last day of each quarter.

In May 2017, BHE entered into a $1.0 billion unsecured credit facility expiring May 2018. The credit facility, which is for general corporate purposes and also supports BHE's commercial paper program and provides for the issuance of letters of credit, has a variable interest rate based on the Eurodollar rate or a base rate, at BHE's option, plus a spread that varies based on BHE's credit ratings for its senior unsecured long-term debt securities. The credit facility requires BHE's ratio of consolidated debt, including current maturities, to total capitalization not exceed 0.70 to 1.0 as of the last day of each quarter.


( 7 )	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,
	2017		2016		2017		2016

Federal statutory income tax rate	35	%	35	%	35	%	35	%
Income tax credits	(19	)	(12	)	(17	)	(13	)
State income tax, net of federal income tax benefit	1		1		(2	)	(1	)
Income tax effect of foreign income	(5	)	(6	)	(5	)	(5	)
Equity income	1		2		1		2
Other, net	—		(1	)	(1	)	(1	)
Effective income tax rate	13	%	19	%	11	%	17	%

Income tax credits relate primarily to production tax credits from wind-powered generating facilities owned by MidAmerican Energy, PacifiCorp and BHE Renewables. 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 period ended June 30, 2017 the Company made net cash payments for income taxes to Berkshire Hathaway totaling $24 million . For the six-month period ended June 30, 2016 , the Company received net cash payments for income taxes from Berkshire Hathaway totaling $658 million .


( 8 )	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,
	2017			2016			2017			2016
Pension:
Service cost	$	6		$	7		$	12		$	15
Interest cost	29			32			58			63
Expected return on plan assets	(40		)	(41		)	(80		)	(81		)
Net amortization	8			13			15			24
Net periodic benefit cost	$	3		$	11		$	5		$	21

Other postretirement:
Service cost	$	2		$	2		$	4		$	5
Interest cost	8			8			14			16
Expected return on plan assets	(11		)	(10		)	(21		)	(21		)
Net amortization	(4		)	(4		)	(7		)	(7		)
Net periodic benefit credit	$	(5	)	$	(4	)	$	(10	)	$	(7	)

Employer contributions to the domestic pension and other postretirement benefit plans are expected to be $15 million and $5 million , respectively, during 2017 . As of June 30, 2017 , $7 million and $4 million of contributions had been made to the domestic pension and other postretirement benefit plans, respectively.

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,
	2017			2016			2017			2016

Service cost	$	7		$	6		$	13		$	11
Interest cost	15			19			29			38
Expected return on plan assets	(25		)	(29		)	(49		)	(58		)
Net amortization	16			11			33			23
Net periodic benefit cost	$	13		$	7		$	26		$	14

Employer contributions to the United Kingdom pension plan are expected to be £39 million during 2017 . As of June 30, 2017 , £20 million , or $25 million , of contributions had been made to the United Kingdom pension plan.


( 9 )	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 Company, Nevada Power Company and Sierra Pacific Power Company (the "Utilities") as they have an obligation to serve retail customer load in their regulated service territories. The Company also provides nonregulated retail electricity and natural gas services in competitive markets. 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, manage, monitor and report 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 10 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, 2017
Not designated as hedging contracts:
Commodity assets ⁽¹⁾	$	22		$	88		$	5		$	1		$	116
Commodity liabilities ⁽¹⁾	(4		)	(1		)	(55		)	(139		)	(199		)
Interest rate assets	12			—			—			—			12
Interest rate liabilities	—			—			(4		)	(7		)	(11		)
Total	30			87			(54		)	(145		)	(82		)

Designated as hedging contracts:
Commodity assets	—			—			2			6			8
Commodity liabilities	—			—			(13		)	(16		)	(29		)
Interest rate assets	—			6			—			—			6
Interest rate liabilities	—			—			(2		)	(1		)	(3		)
Total	—			6			(13		)	(11		)	(18		)

Total derivatives	30			93			(67		)	(156		)	(100		)
Cash collateral receivable	—			—			20			64			84
Total derivatives - net basis	$	30		$	93		$	(47	)	$	(92	)	$	(16	)



	Other					Other			Other
	Current			Other		Current			Long-term
	Assets			Assets		Liabilities			Liabilities			Total
As of December 31, 2016
Not designated as hedging contracts:
Commodity assets ⁽¹⁾	$	42		$	86	$	5		$	2		$	135
Commodity liabilities ⁽¹⁾	(10		)	—		(46		)	(150		)	(206		)
Interest rate assets	15			—		—			—			15
Interest rate liabilities	—			—		(4		)	(6		)	(10		)
Total	47			86		(45		)	(154		)	(66		)

Designated as hedging contracts:
Commodity assets	1			—		2			3			6
Commodity liabilities	—			—		(14		)	(8		)	(22		)
Interest rate assets	—			8		—			—			8
Interest rate liabilities	—			—		(3		)	—			(3		)
Total	1			8		(15		)	(5		)	(11		)

Total derivatives	48			94		(60		)	(159		)	(77		)
Cash collateral receivable	—			—		13			61			74
Total derivatives - net basis	$	48		$	94	$	(47	)	$	(98	)	$	(3	)

(1)

The Company's commodity derivatives not designated as hedging contracts are generally included in regulated rates, and as of June 30, 2017 and December 31, 2016 , a net regulatory asset of $162 million and $148 million , respectively, was recorded related to the net derivative liability of $83 million and $71 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,
	2017			2016			2017			2016

Beginning balance	$	180		$	253		$	148		$	250
Changes in fair value recognized in net regulatory assets	—			(49		)	33			(13		)
Net gains (losses) reclassified to operating revenue	1			(3		)	14			(3		)
Net losses reclassified to cost of sales	(19		)	(16		)	(33		)	(49		)
Ending balance	$	162		$	185		$	162		$	185

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. Certain commodity derivative contracts 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. 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 OCI, as well as amounts reclassified to earnings (in millions):



	Three-Month Periods						Six-Month Periods
	Ended June 30,						Ended June 30,
	2017			2016			2017			2016

Beginning balance	$	23		$	72		$	16		$	46
Changes in fair value recognized in OCI	7			(28		)	23			20
Net losses reclassified to cost of sales	(9		)	(18		)	(18		)	(40		)
Ending balance	$	21		$	26		$	21		$	26

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, 2017 and 2016 , hedge ineffectiveness was insignificant. As of June 30, 2017 , the Company had cash flow hedges with expiration dates extending through June 2026 and $13 million of pre-tax 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	2017		2016

Electricity purchases	Megawatt hours	11		5
Natural gas purchases	Decatherms	279		271
Fuel purchases	Gallons	5		11
Interest rate swaps	US$	694		714
Mortgage sale commitments, net	US$	(348	)	(309	)

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, 2017 , 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 $194 million and $190 million as of June 30, 2017 and December 31, 2016 , respectively, for which the Company had posted collateral of $73 million and $69 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, 2017 and December 31, 2016 , the Company would have been required to post $112 million and $110 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.


( 10 )	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 financial 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, 2017
Assets:
Commodity derivatives	$	2		$	26		$	96		$	(19	)	$	105
Interest rate derivatives	—			8			10			—			18
Mortgage loans held for sale	—			408			—			—			408
Money market mutual funds ⁽²⁾	773			—			—			—			773
Debt securities:
United States government obligations	161			—			—			—			161
International government obligations	—			4			—			—			4
Corporate obligations	—			36			—			—			36
Municipal obligations	—			2			—			—			2
Agency, asset and mortgage-backed obligations	—			1			—			—			1
Equity securities:
United States companies	270			—			—			—			270
International companies	1,388			—			—			—			1,388
Investment funds	175			—			—			—			175
	$	2,769		$	485		$	106		$	(19	)	$	3,341
Liabilities:
Commodity derivatives	$	(2	)	$	(211	)	$	(15	)	$	103		$	(125	)
Interest rate derivatives	—			(12		)	(2		)	—			(14		)
	$	(2	)	$	(223	)	$	(17	)	$	103		$	(139	)



As of December 31, 2016
Assets:
Commodity derivatives	$	5		$	49		$	87		$	(22	)	$	119
Interest rate derivatives	—			16			7			—			23
Mortgage loans held for sale	—			359			—			—			359
Money market mutual funds ⁽²⁾	586			—			—			—			586
Debt securities:
United States government obligations	161			—			—			—			161
International government obligations	—			3			—			—			3
Corporate obligations	—			36			—			—			36
Municipal obligations	—			2			—			—			2
Agency, asset and mortgage-backed obligations	—			2			—			—			2
Equity securities:
United States companies	250			—			—			—			250
International companies	1,190			—			—			—			1,190
Investment funds	147			—			—			—			147
	$	2,339		$	467		$	94		$	(22	)	$	2,878
Liabilities:
Commodity derivatives	$	(2	)	$	(199	)	$	(27	)	$	96		$	(132	)
Interest rate derivatives	(1		)	(11		)	(1		)	—			(13		)
	$	(3	)	$	(210	)	$	(28	)	$	96		$	(145	)


(1)	Represents netting under master netting arrangements and a net cash collateral receivable of $84 million and $74 million as of June 30, 2017 and December 31, 2016 , 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 9 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 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
2017:
Beginning balance	$	72		$	9		$	—	$	60		$	6		$	—
Changes included in earnings	—			39			—		12			66			—
Changes in fair value recognized in OCI	—			—			—		(2		)	—			—
Changes in fair value recognized in net regulatory assets	(3		)	—			—		(2		)	—			—
Purchases	1			—			—		1			(2		)	—
Settlements	11			(40		)	—		12			(62		)	—
Ending balance	$	81		$	8		$	—	$	81		$	8		$	—



	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
2016:
Beginning balance	$	58		$	11		$	26		$	47		$	4		$	44
Changes included in earnings	(20		)	29			—			(1		)	54			—
Changes in fair value recognized in OCI	6			—			2			—			—			6
Changes in fair value recognized in net regulatory assets	(5		)	—			—			(11		)	—			—
Redemptions	—			—			(10		)	—			—			(32		)
Settlements	5			(26		)	—			9			(44		)	—
Ending balance	$	44		$	14		$	18		$	44		$	14		$	18

The Company's long-term debt is carried at cost on the Consolidated Balance Sheets. 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, 2017				As of December 31, 2016
	Carrying		Fair		Carrying		Fair
	Value		Value		Value		Value

Long-term debt	$	36,048	$	41,340	$	36,116	$	40,718


( 11 )	Commitments and Contingencies

Fuel, Capacity and Transmission Contract Commitments

During the six-month period ended June 30, 2017 , MidAmerican Energy amended certain of its natural gas supply and transportation contracts increasing minimum payments by $247 million through 2021 and $70 million for 2022 through 2041.

Construction Commitments

During the six-month period ended June 30, 2017 , MidAmerican Energy entered into contracts totaling $514 million for the construction of wind-powered generating facilities in 2017 through 2019, including $222 million in 2017, $284 million in 2018 and $8 million in 2019.

Operating Leases and Easements

During the six-month period ended June 30, 2017 , MidAmerican Energy entered into non-cancelable easements with minimum payments totaling $114 million through 2057 for land in Iowa on which some of its wind-powered generating facilities will be located.

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.

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. The Company believes it is in material compliance with all applicable laws and regulations.

Hydroelectric Relicensing

PacifiCorp's Klamath hydroelectric system is currently operating under annual licenses with the FERC. In February 2010, PacifiCorp, the United States Department of the Interior, the United States Department of Commerce, the state of California, the state of Oregon and various other governmental and non-governmental settlement parties signed the Klamath Hydroelectric Settlement Agreement ("KHSA").

Congress failed to pass legislation needed to implement the original KHSA. On April 6, 2016, PacifiCorp, the states of California and Oregon and the United States Departments of the Interior and Commerce and other stakeholders executed an amendment to the KHSA. Consistent with the terms of the amended KHSA, on September 23, 2016, PacifiCorp and the Klamath River Renewal Corporation ("KRRC") jointly filed an application with the FERC to transfer the license for the four mainstem Klamath River hydroelectric generating facilities from PacifiCorp to the KRRC. Also on September 23, 2016, the KRRC filed an application with the FERC to surrender the license and decommission the facilities. The KRRC's license surrender application included a request for the FERC to refrain from acting on the surrender application until after the transfer of the license to the KRRC is effective.

Under the amended KHSA, PacifiCorp and its customers are protected from uncapped dam removal costs and liabilities. The KRRC must indemnify PacifiCorp from liabilities associated with dam removal. The amended KHSA also limits PacifiCorp's contribution to facilities removal costs to no more than $200 million , of which up to $184 million would be collected from PacifiCorp's Oregon customers with the remainder to be collected from PacifiCorp's California customers. California voters approved a water bond measure in November 2014 from which the state of California's contribution towards facilities removal costs are being drawn. In accordance with this bond measure, additional funding of up to $250 million for facilities removal costs was included in the California state budget in 2016, with the funding effective for at least five years. If facilities removal costs exceed the combined funding that will be available from PacifiCorp's Oregon and California customers and the state of California, sufficient funds would need to be provided by the KRRC or an entity other than PacifiCorp for removal to proceed.

If certain conditions in the amended KHSA are not satisfied and the license does not transfer to the KRRC, PacifiCorp will resume relicensing with the FERC.

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.


( 12 )	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 (Losses)			Attributable
	Retirement			Translation			For-Sale		on Cash			To BHE
	Benefits			Adjustment			Securities		Flow Hedges			Shareholders, Net

Balance, December 31, 2015	$	(438	)	$	(1,092	)	$	615	$	7		$	(908	)
Other comprehensive income (loss)	62			(205		)	71		1			(71		)
Balance, June 30, 2016	$	(376	)	$	(1,297	)	$	686	$	8		$	(979	)

Balance, December 31, 2016	$	(447	)	$	(1,675	)	$	585	$	26		$	(1,511	)
Other comprehensive income (loss)	1			308			119		(6		)	422
Balance, June 30, 2017	$	(446	)	$	(1,367	)	$	704	$	20		$	(1,089	)

Reclassifications from AOCI to net income for the periods ended June 30, 2017 and 2016 were insignificant. For information regarding cash flow hedge reclassifications from AOCI to net income in their entirety, refer to Note 9 . Additionally, refer to the "Foreign Operations" discussion in Note 8 for information about unrecognized amounts on retirement benefits reclassifications from AOCI that do not impact net income in their entirety.


( 13 )	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,
	2017		2016			2017			2016
Operating revenue:
PacifiCorp	$	1,245	$	1,233		$	2,526		$	2,485
MidAmerican Funding	659		585			1,355			1,211
NV Energy	753		707			1,337			1,322
Northern Powergrid	219		249			464			528
BHE Pipeline Group	192		188			507			503
BHE Transmission	158		(18		)	324			140
BHE Renewables	220		170			364			309
HomeServices	956		841			1,541			1,332
BHE and Other ⁽¹⁾	152		166			302			332
Total operating revenue	$	4,554	$	4,121		$	8,720		$	8,162

Depreciation and amortization:
PacifiCorp	$	202	$	199		$	398		$	396
MidAmerican Funding	141		110			258			220
NV Energy	106		105			210			209
Northern Powergrid	52		50			101			100
BHE Pipeline Group	43		54			73			107
BHE Transmission	53		66			107			116
BHE Renewables	63		56			124			112
HomeServices	10		9			22			15
BHE and Other ⁽¹⁾	—		(1		)	(1		)	(1		)
Total depreciation and amortization	$	670	$	648		$	1,292		$	1,274



	Three-Month Periods						Six-Month Periods
	Ended June 30,						Ended June 30,
	2017			2016			2017			2016
Operating income:
PacifiCorp	$	338		$	339		$	683		$	663
MidAmerican Funding	136			140			243			240
NV Energy	191			173			289			262
Northern Powergrid	94			125			227			283
BHE Pipeline Group	55			60			263			252
BHE Transmission	73			(122		)	150			(46		)
BHE Renewables	84			52			99			76
HomeServices	110			93			112			92
BHE and Other ⁽¹⁾	(32		)	(6		)	(46		)	(15		)
Total operating income	1,049			854			2,020			1,807
Interest expense	(457		)	(468		)	(915		)	(941		)
Capitalized interest	10			103			20			114
Allowance for equity funds	18			115			35			130
Interest and dividend income	27			27			53			54
Other, net	(3		)	1			22			11
Total income before income tax expense and equity income	$	644		$	632		$	1,235		$	1,175



Interest expense:
PacifiCorp	$	95	$	96	$	190	$	191
MidAmerican Funding	59		55		118		109
NV Energy	58		63		116		130
Northern Powergrid	33		36		64		72
BHE Pipeline Group	10		13		22		26
BHE Transmission	39		38		80		74
BHE Renewables	52		48		102		97
HomeServices	1		—		2		1
BHE and Other ⁽¹⁾	110		119		221		241
Total interest expense	$	457	$	468	$	915	$	941



Operating revenue by country:
United States	$	4,177	$	3,889		$	7,924	$	7,488
United Kingdom	219		249			464		528
Canada	158		(17		)	324		143
Philippines and other	—		—			8		3
Total operating revenue by country	$	4,554	$	4,121		$	8,720	$	8,162



Income before income tax expense and equity income by country:
United States	$	529	$	498	$	952	$	856
United Kingdom	62		91		164		210
Canada	38		28		80		71
Philippines and other	15		15		39		38
Total income before income tax expense and equity income by country	$	644	$	632	$	1,235	$	1,175



	As of
	June 30,		December 31,
	2017		2016
Total assets:
PacifiCorp	$	23,626	$	23,563
MidAmerican Funding	18,261		17,571
NV Energy	14,188		14,320
Northern Powergrid	6,940		6,433
BHE Pipeline Group	4,900		5,144
BHE Transmission	8,794		8,378
BHE Renewables	7,643		7,010
HomeServices	2,061		1,776
BHE and Other ⁽¹⁾	1,396		1,245
Total assets	$	87,809	$	85,440


(1)	The differences between the reportable segment amounts and the consolidated amounts, described as BHE and Other , relate principally to other 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, 2017 (in millions):



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

December 31, 2016	$	1,129	$	2,102	$	2,369	$	930	$	75		$	1,470	$	95	$	840	$	9,010
Acquisitions	—		—		—		—		—			—		—		106		106
Foreign currency translation	—		—		—		36		—			54		—		—		90
Other	—		—		—		—		(2		)	—		—		—		(2		)
June 30, 2017	$	1,129	$	2,102	$	2,369	$	966	$	73		$	1,524	$	95	$	946	$	9,204


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 Part I, Item 1 of this Form 10-Q. The Company's actual results in the future could differ significantly from the historical results.

The Company is organized 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. BHE , through these locally managed and operated 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 hydroelectric 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 entities, corporate functions and intersegment eliminations.

Results of Operations for the Second Quarter and First Six Months of 2017 and 2016

Overview

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



	Second Quarter											First Six Months
	2017			2016			Change					2017			2016			Change
Net income attributable to BHE shareholders:
PacifiCorp	$	176		$	177		$	(1	)	(1	)%	$	355		$	342		$	13		4	%
MidAmerican Funding	131			127			4			3		233			200			33			17
NV Energy	91			76			15			20		124			97			27			28
Northern Powergrid	53			70			(17		)	(24	)	135			168			(33		)	(20	)
BHE Pipeline Group	27			30			(3		)	(10	)	148			139			9			6
BHE Transmission	53			68			(15		)	(22	)	113			116			(3		)	(3	)
BHE Renewables	71			32			39			*		105			44			61			*
HomeServices	62			55			7			13		62			56			6			11
BHE and Other	(90		)	(99		)	9			9		(145		)	(136		)	(9		)	(7	)
Total net income attributable to BHE shareholders	$	574		$	536		$	38		7		$	1,130		$	1,026		$	104		10

* Not meaningful

Net income attributable to BHE shareholders increased $38 million for the second quarter of 2017 compared to 2016 due to the following:

•

PacifiCorp's net income decreased $1 million due primarily to higher depreciation and amortization of $9 million from additional plant placed in-service and higher operations and maintenance expenses, partially offset by higher gross margins of $14 million, excluding the impact of demand side management amortization expense. Gross margins increased due to higher retail customer volumes, lower natural gas-fueled generation, higher wheeling revenue and higher wholesale revenue, partially offset by lower average retail rates, higher purchased electricity costs and higher coal costs.

•

MidAmerican Funding's net income increased $4 million due primarily to higher electric gross margins of $32 million, excluding the impact of demand side management program costs, and higher recognized production tax credits of $5 million, partially offset by higher depreciation and amortization of $31 million, substantially from accruals for Iowa regulatory arrangements. Electric gross margins increased due to higher wholesale revenue, higher transmission revenue and higher retail customer volumes, partially offset by higher coal-fueled generation and purchased power costs.


•	NV Energy's net income increased $15 million due primarily to higher electric gross margins of $20 million, excluding the impact of energy efficiency program costs, and lower interest expense of $6 million, due primarily to lower rates on outstanding debt balances. Electric gross margins increased due to a refinement of the unbilled revenue estimate, customer growth and higher customer usage.


•	Northern Powergrid's net income decreased $17 million due largely to the stronger United States dollar of $6 million, higher pension expense of $9 million and lower distribution revenue of $8 million. Distribution revenue decreased due to lower tariff rates and lower units distributed, partially offset by favorable movements in regulatory provisions.


•	BHE Pipeline Group's net income decreased $3 million due mainly to higher operating expenses and costs associated with the early redemption of the 4.893% Senior Notes at Kern River, partially offset by higher transportation revenue at Northern Natural Gas.


•	BHE Transmission's net income decreased $15 million from lower earnings at AltaLink of $10 million, due primarily to decreases in contingent liabilities in 2016, and at BHE U.S. Transmission of $5 million from lower equity earnings at Electric Transmission Texas, LLC due to the impacts of new rates effective in March 2017.


•	BHE Renewables' net income increased $39 million due primarily to higher generation at the Solar Star projects due to transformer related forced outages in 2016, favorable earnings from tax equity investments reaching commercial operation, additional wind and solar capacity placed in-service and a favorable change in the valuation of a power purchase agreement derivative.


•	HomeServices' net income increased $7 million due primarily to higher earnings from existing franchise businesses and acquired brokerage businesses.


•	BHE and Other net loss improved $9 million due primarily to higher federal income tax credits recognized on a consolidated basis and lower interest expense due to redemptions of junior subordinated debentures, partially offset by higher other operating costs.

Net income attributable to BHE shareholders increased $104 million for the first six months of 2017 compared to 2016 due to the following:

•

PacifiCorp's net income increased $13 million due primarily to higher gross margins of $41 million, excluding the impact of demand side management amortization expense, partially offset by higher depreciation and amortization of $15 million from additional plant placed in-service and higher property taxes of $3 million. Gross margins increased due to higher retail customer volumes, lower natural gas-fueled generation, higher wholesale revenue from higher volumes and short-term market prices, lower purchased electricity prices and higher wheeling revenue, partially offset by higher purchased electricity volumes, lower average retail rates and higher coal costs. Retail customer volumes increased 2.6% due to impacts of weather on residential customers in Oregon and Washington, higher industrial usage primarily in Utah and Idaho, higher commercial usage across the service territory and an increase in the average number of residential customers in Utah and Oregon and commercial customers in Utah, partially offset by lower residential usage in Utah and Oregon.

•

MidAmerican Funding's net income increased $33 million due primarily to higher electric gross margins of $53 million, excluding the impact of demand side management program costs, and higher recognized production tax credits of $26 million, partially offset by higher depreciation and amortization of $38 million, due to accruals for Iowa regulatory arrangements and wind-powered generating facilities placed in-service in the second half of 2016, and higher operations and maintenance expenses. Electric gross margins increased due to higher wholesale revenue from higher sales prices and volumes, higher retail customer volumes, higher recoveries through bill riders and higher transmission revenue, partially offset by higher coal-fueled generation and purchased power costs. Retail customer volumes increased 2.0% due to industrial growth net of lower residential and commercial volumes due to milder temperatures.

•

NV Energy's net income increased $27 million due primarily to higher electric gross margins of $24 million, excluding the impact of energy efficiency program costs, and lower interest expense of $15 million, due primarily to lower rates on outstanding debt balances. Electric gross margins increased due to a refinement of the unbilled revenue estimate, customer growth and higher customer usage, due mainly to the impacts of weather.

•

Northern Powergrid's net income decreased $33 million due largely to the stronger United States dollar of $19 million, lower distribution revenue of $10 million and higher pension expense of $10 million. Distribution revenue decreased due to lower units distributed, the recovery in 2016 of the December 2013 customer rebate and unfavorable movements in regulatory provisions, partially offset by higher tariff rates.


•	BHE Pipeline Group’s net income increased $9 million due to a reduction in expenses and regulatory liabilities related to the impact of an alternative rate structure approved by the FERC at Kern River and higher transportation revenue at Northern Natural Gas, partially offset by higher operating expenses and costs associated with the early redemption of the 4.893% Senior Notes at Kern River.


•	BHE Transmission's net income decreased $3 million at BHE U.S. Transmission from lower equity earnings at Electric Transmission Texas, LLC due to the impacts of new rates effective in March 2017. AltaLink's earnings were unchanged as the impacts of additional assets placed in-service were offset by decreases in contingent liabilities in 2016.

•

BHE Renewables' net income increased $61 million due primarily to favorable earnings from tax equity investments reaching commercial operation, additional wind and solar capacity placed in-service, higher generation at the Solar Star projects due to transformer related forced outages in 2016, favorable changes in the valuations of interest rate swap derivatives and higher production at the Casecnan project due to higher rainfall.


•	HomeServices' net income increased $6 million due primarily to higher earnings at existing franchise businesses.


•	BHE and Other net loss increased $9 million due primarily to lower federal income tax credits recognized on a consolidated basis and higher other operating costs, partially offset by lower consolidated deferred state income tax expense due to changes in the tax status of certain subsidiaries and lower interest expense due to redemptions of junior subordinated debentures.

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
	2017		2016			Change					2017		2016		Change
Operating revenue:
PacifiCorp	$	1,245	$	1,233		$	12		1	%	$	2,526	$	2,485	$	41		2	%
MidAmerican Funding	659		585			74			13		1,355		1,211		144			12
NV Energy	753		707			46			7		1,337		1,322		15			1
Northern Powergrid	219		249			(30		)	(12	)	464		528		(64		)	(12	)
BHE Pipeline Group	192		188			4			2		507		503		4			1
BHE Transmission	158		(18		)	176			*		324		140		184			*
BHE Renewables	220		170			50			29		364		309		55			18
HomeServices	956		841			115			14		1,541		1,332		209			16
BHE and Other	152		166			(14		)	(8	)	302		332		(30		)	(9	)
Total operating revenue	$	4,554	$	4,121		$	433		11		$	8,720	$	8,162	$	558		7



Operating income:
PacifiCorp	$	338		$	339		$	(1	)	—	%	$	683		$	663		$	20		3	%
MidAmerican Funding	136			140			(4		)	(3	)	243			240			3			1
NV Energy	191			173			18			10		289			262			27			10
Northern Powergrid	94			125			(31		)	(25	)	227			283			(56		)	(20	)
BHE Pipeline Group	55			60			(5		)	(8	)	263			252			11			4
BHE Transmission	73			(122		)	195			*		150			(46		)	196			*
BHE Renewables	84			52			32			62		99			76			23			30
HomeServices	110			93			17			18		112			92			20			22
BHE and Other	(32		)	(6		)	(26		)	*		(46		)	(15		)	(31		)	*
Total operating income	$	1,049		$	854		$	195		23		$	2,020		$	1,807		$	213		12

* Not meaningful

PacifiCorp

Operating revenue increased $12 million for the second quarter of 2017 compared to 2016 due to higher wholesale and other revenue of $15 million, partially offset by lower retail revenue of $3 million. Wholesale and other revenue increased due to higher wholesale volumes and short-term market prices and higher wheeling revenue. Retail revenue decreased due primarily to lower average rates and lower demand side management revenue (offset in operations and maintenance expenses), primarily driven by the establishment of the Utah Sustainable Transportation and Energy Plan program, partially offset by higher customer volumes. Retail customer volumes increased 2.4% due to higher commercial and industrial usage and an increase in the average number of residential and commercial customers primarily in Utah.

Operating income decreased by $1 million for the second quarter of 2017 compared to 2016 due to higher depreciation and amortization of $9 million from additional plant placed in-service, partially offset by lower operations and maintenance expenses of $7 million and higher gross margins of $3 million. Operations and maintenance expenses decreased due to a decrease in demand side management amortization expense (offset in retail revenue) of $11 million and lower pension expense, partially offset by higher injury and damage expenses, due primarily to a prior year accrual for insurance proceeds and current year settlements, and higher labor costs related to storm damage restoration. Gross margins were higher due to the increase in operating revenue and lower natural gas-fueled generation, partially offset by higher purchased electricity costs from higher volumes and prices and higher coal costs.

Operating revenue increased $41 million for the first six months of 2017 compared to 2016 due to higher wholesale and other revenue of $27 million and higher retail revenue of $14 million. Wholesale and other revenue increased due primarily to higher wholesale volumes and short-term market prices and higher wheeling revenue. Retail revenue increased due to higher customer volumes, partially offset by lower average rates and lower demand side management revenue (offset in operations and maintenance expenses), primarily driven by the establishment of the Utah Sustainable Transportation and Energy Plan program. Retail customer volumes increased 2.6% due to the impacts of weather on residential customers in Oregon and Washington, higher industrial usage primarily in Utah and Idaho, higher commercial usage across the service territory and an increase in the average number of residential customers in Utah and Oregon and commercial customers in Utah, partially offset by lower residential usage in Utah and Oregon.

Operating income increased $20 million for the first six months of 2017 compared to 2016 due to lower operations and maintenance expenses of $22 million and higher gross margins of $18 million, partially offset by higher depreciation and amortization of $15 million from additional plant placed in-service and higher property taxes of $3 million. Operations and maintenance expenses decreased due to a decrease in demand side management amortization expense (offset in retail revenue) of $23 million and lower pension expense, partially offset by higher injury and damage expenses, due primarily to a prior year accrual for insurance proceeds and current year settlements, and higher labor costs related to storm damage restoration. Gross margins were higher due to the increase in operating revenue, lower natural gas-fueled generation and lower purchased electricity prices, partially offset by higher purchased electricity volumes and higher coal costs.

MidAmerican Funding

Operating revenue increased $74 million for the second quarter of 2017 compared to 2016 due to higher electric operating revenue of $56 million and higher natural gas operating revenue of $18 million. Electric operating revenue increased due to higher wholesale and other revenue of $46 million and higher retail revenue of $10 million. Electric wholesale and other revenue increased due to higher wholesale volumes of $22 million, higher wholesale prices of $16 million and higher transmission revenue of $6 million. Electric retail revenue increased $19 million from non-weather usage and rate factors, including higher industrial sales volumes, and $2 million from higher recoveries through bill riders (substantially offset in cost of sales, operating expense and income tax expense), partially offset by $11 million from the impact of milder temperatures in 2017. Electric retail customer volumes increased 2.5% from industrial growth, partially offset by the unfavorable impact of temperatures. Natural gas operating revenue increased due to a higher average per-unit cost of gas sold of $18 million (offset in cost of sales).

Operating income decreased $4 million for the second quarter of 2017 compared to 2016 due to higher depreciation and amortization of $31 million and higher operations and maintenance expenses of $11 million, partially offset by higher electric gross margins of $36 million and higher natural gas gross margins of $3 million. Electric gross margins were higher due to the increase in operating revenue, partially offset by higher coal-fueled generation and higher purchased power costs. The increase in depreciation and amortization reflects higher accruals for Iowa regulatory arrangements and wind generation and other plant placed in-service, partially offset by a reduction of $8 million from lower depreciation rates implemented in December 2016. Operations and maintenance expenses increased due primarily to higher demand side management program costs (offset in retail revenue) of $5 million and higher maintenance costs related to additional wind turbines.

Operating revenue increased $144 million for the first six months of 2017 compared to 2016 due to higher electric operating revenue of $90 million and higher natural gas operating revenue of $54 million. Electric operating revenue increased due to higher wholesale and other revenue of $67 million and higher retail revenue of $23 million. Electric wholesale and other revenue increased due to higher wholesale volumes of $37 million, higher wholesale prices of $23 million and higher transmission revenue of $5 million. Electric retail revenue increased $28 million from non-weather usage and rate factors, including higher industrial sales volumes, and $9 million from higher recoveries through bill riders (substantially offset in cost of sales, operating expense and income tax expense), partially offset by $14 million from the impact of milder temperatures in 2017. Electric retail customer volumes increased 2.0% from industrial growth, partially offset by the unfavorable impact of temperatures. Natural gas operating revenue increased due to a higher average per-unit cost of gas sold of $58 million (offset in cost of sales) and 1.2% higher wholesale sales volumes, partially offset by 6.3% lower retail sales volumes.

Operating income increased $3 million for the first six months of 2017 compared to 2016 due to higher electric gross margins of $60 million and higher natural gas gross margins of $2 million, partially offset by higher depreciation and amortization of $38 million, higher operations and maintenance expenses of $17 million and higher property and other taxes of $4 million. Electric gross margins were higher due to the increase in operating revenue, partially offset by higher coal-fueled generation and higher purchased power costs. The increase in depreciation and amortization reflects higher accruals for Iowa regulatory arrangements and wind generation and other plant placed in-service, partially offset by a reduction of $17 million from lower depreciation rates implemented in December 2016. Operations and maintenance expenses increased due primarily to higher demand side management program costs (offset in retail revenue) of $9 million and higher maintenance costs related to additional wind turbines.

NV Energy

Operating revenue increased $46 million for the second quarter of 2017 compared to 2016 due to higher electric retail operating revenue. Retail revenue was higher due to $25 million from higher retail rates, primarily from energy costs that are passed on to customers through deferred energy adjustment mechanisms, $13 million from customer growth, $11 million from impact fees received due to industrial customers purchasing energy from alternative providers and becoming distribution only service customers, $10 million from a refinement of the unbilled revenue estimate and $7 million from customer usage, primarily from the impacts of weather, partially offset by $12 million from lower commercial and industrial revenue mainly from customers purchasing energy from alternative providers and becoming distribution only customers in 2016 and $7 million from lower energy efficiency rate revenue (offset in operating expenses). Electric retail customer volumes, including distribution only service customers, increased 2.2% compared to 2016.

Operating income increased $18 million for the second quarter of 2017 compared to 2016 due to higher electric gross margins of $13 million and lower operating expenses of $5 million, due primarily to lower energy efficiency program costs (offset in electric operating revenue). Electric gross margins were higher due to the increase in electric operating revenue, partially offset by higher energy costs of $34 million. Energy costs increased due to a higher average cost of fuel for generation of $29 million, higher purchased power costs of $3 million and higher net deferred power costs of $2 million.

Operating revenue increased $15 million for the first six months of 2017 compared to 2016 due to higher electric operating revenue of $28 million, partially offset by lower natural gas operating revenue of $14 million. Electric operating revenue increased due to higher retail revenue of $23 million and higher transmission revenue of $5 million. Retail revenue increased due to $15 million from higher retail rates primarily from energy costs that are passed on to customers through deferred energy adjustment mechanisms, $13 million from customer growth, $11 million from impact fees received due to industrial customers purchasing energy from alternative providers and becoming distribution only service customers, $10 million from a refinement of the unbilled revenue estimate and $7 million from customer usage, primarily from the impacts of weather, partially offset by $20 million from lower commercial and industrial revenue mainly from customers purchasing energy from alternative providers and becoming distribution only customers in 2016 and $13 million of lower energy efficiency rate revenue (offset in operating expenses). Electric retail customer volumes, including distribution only service customers, increased 1.4% compared to 2016. Natural gas operating revenue decreased due to lower energy rates, partially offset by higher customer usage.

Operating income increased $27 million for the first six months of 2017 compared to 2016 due to lower operating expenses of $15 million and higher electric gross margins of $11 million. Operating expenses decreased due primarily to lower energy efficiency program costs (offset in electric operating revenue). Electric gross margins were higher due to the increase in electric operating revenue, partially offset by higher energy costs of $18 million. Energy costs increased due to a higher average cost of fuel for generation of $63 million and higher purchased power costs of $5 million, partially offset by lower net deferred power costs of $50 million.

Northern Powergrid

Operating revenue decreased $30 million for the second quarter of 2017 compared to 2016 due to the stronger United States dollar of $27 million and lower distribution revenue of $8 million, partially offset by higher smart metering revenue of $6 million. Distribution revenue decreased due to lower tariff rates of $4 million and lower units distributed of $6 million, partially offset by favorable movements in regulatory provisions of $2 million Operating income decreased $31 million for the second quarter of 2017 compared to 2016 due to the stronger United States dollar of $11 million, higher pension expense of $9 million and higher depreciation of $8 million from additional assets placed in-service.

Operating revenue decreased $64 million for the first six months of 2017 compared to 2016 due to the stronger United States dollar of $65 million and lower distribution revenue of $10 million, partially offset by higher smart metering revenue of $12 million. Distribution revenue decreased due to lower units distributed of $12 million, the recovery in 2016 of the December 2013 customer rebate of $11 million and unfavorable movements in regulatory provisions of $3 million, partially offset by higher tariff rates of $15 million. Operating income decreased $56 million for the first six months of 2017 compared to 2016 due to the stronger United States dollar of $32 million, higher depreciation of $14 million from additional assets placed in service and higher pension expense of $10 million.

BHE Pipeline Group

Operating revenue increased $4 million for the second quarter of 2017 compared to 2016 due to higher transportation revenues and higher gas sales of $13 million related to system balancing activities (largely offset in cost of sales) at Northern Natural Gas, partially offset by lower transportation revenues at Kern River. Operating income decreased $5 million for the second quarter of 2017 compared to 2016 due primarily to lower transportation revenues at Kern River and higher operating expenses, partially offset by lower depreciation expense and higher transportation revenues at Northern Natural Gas.

Operating revenue increased $4 million for the first six months of 2017 compared to 2016 due to higher transportation revenues and higher gas sales of $17 million related to system balancing activities (largely offset in cost of sales) at Northern Natural Gas, partially offset by lower transportation revenues at Kern River. Operating income increased $11 million for the first six months of 2017 compared to 2016 due primarily to a reduction in expenses and regulatory liabilities related to the impact of an alternative rate structure approved by FERC at Kern River, lower depreciation expense and higher transportation revenues at Northern Natural Gas, partially offset by lower transportation revenues at Kern River and higher operating expenses.

BHE Transmission

Operating revenue increased $176 million for the second quarter of 2017 compared to 2016 due primarily to a one-time reduction of $200 million from the 2015-2016 GTA decision received in May 2016 at AltaLink and $4 million from additional assets placed in service, partially offset by lower costs recovered in operating revenue and the stronger United States dollar of $8 million. Operating income increased $195 million for the second quarter of 2017 compared to 2016 due primarily to the higher operating revenue from the 2015-2016 GTA decision that required AltaLink to refund $200 million to customers in 2016 through reduced monthly billings for the change from receiving cash during construction for the return on construction work-in-progress in rate base to recording allowance for borrowed and equity funds used during construction related to construction expenditures during the 2011 to 2014 time period. The refund was offset with higher capitalized interest and allowance for equity funds.

Operating revenue increased $184 million for the first six months of 2017 compared to 2016 due primarily to a one-time reduction of $200 million from the 2015-2016 GTA decision received in May 2016 at AltaLink and $10 million from additional assets placed in service, partially offset by lower costs recovered in operating revenue. Operating income increased $196 million for the first six months of 2017 compared to 2016 due primarily to the changes in operating revenue.

BHE Renewables

Operating revenue increased $50 million for the second quarter of 2017 compared to 2016 due to higher generation at the Solar Star projects of $20 million due to transformer related forced outages in 2016, additional wind and solar capacity placed in-service of $15 million, a favorable change in the valuation of a power purchase agreement derivative of $12 million and higher geothermal generation of $4 million. Operating income increased $32 million for the second quarter of 2017 compared to 2016 due to the increase in operating revenue, partially offset by higher operating expense of $12 million and higher depreciation and amortization of $7 million, each due primarily to the additional wind and solar capacity placed in-service. Operating expense also increased from the scope and timing of maintenance at certain geothermal plants.

Operating revenue increased $55 million for the first six months of 2017 compared to 2016 due to additional wind and solar capacity placed in-service of $28 million, higher generation at the Solar Star projects of $25 million due to transformer related forced outages in 2016, higher production at the Casecnan project of $5 million due to higher rainfall and higher geothermal generation of $4 million, partially offset by lower generation at the Topaz project of $7 million due to a scheduled maintenance outage. Operating income increased $23 million for the first six months of 2017 compared to 2016 due to the increase in operating revenue, partially offset by higher operating expense of $22 million and higher depreciation and amortization of $12 million, each due primarily to the additional wind and solar capacity placed in-service. Operating expense also increased from the scope and timing of maintenance at certain geothermal plants. The change in depreciation and amortization reflects a reduction of $4 million from the extension of the useful life of certain wind-generating facilities from 25 years to 30 years effective January 2017.

HomeServices

Operating revenue increased $115 million for the second quarter of 2017 compared to 2016 due to a 6.0% increase in closed brokerage units and a 9.7% increase in average home sales prices. The increase in operating revenue was due to an increase from existing businesses totaling $27 million and an increase in acquired businesses totaling $88 million. The increase in revenue from existing businesses is due to a 4.1% increase in average home sales prices. Operating income increased $17 million for the second quarter of 2017 compared to 2016 due to higher earnings from existing franchise businesses, due mainly to a favorable settlement and a gain on the collection of notes receivables, and acquired brokerage businesses.

Operating revenue increased $209 million for the first six months of 2017 compared to 2016 due to an 8.2% increase in closed brokerage units and a 7.3% increase in average home sales prices. The increase in operating revenue was due to an increase from existing businesses totaling $68 million and an increase in acquired businesses totaling $141 million. The increase in revenue from existing businesses is due to a 1.2% increase in closed brokerage units and a 2.5% increase in average home sales prices. Operating income increased $20 million for the first six months of 2017 compared to 2016 due primarily to higher earnings from existing franchise businesses, due mainly to a favorable settlement and a gain on the collection of notes receivable.

BHE and Other

Operating revenue decreased $14 million for the second quarter of 2017 compared to 2016 due to lower electricity volumes and rates, partially offset by higher natural gas volumes and rates, at MidAmerican Energy Services, LLC. Operating loss increased $26 million for the second quarter of 2017 compared to 2016 due to higher other operating costs and lower margins of $4 million at MidAmerican Energy Services, LLC.

Operating revenue decreased $30 million for the first six months of 2017 compared to 2016 due to lower electricity volumes and rates, partially offset by higher natural gas rates, at MidAmerican Energy Services, LLC. Operating loss increased $31 million for the first six months of 2017 compared to 2016 due to higher other operating costs.

Consolidated Other Income and Expense Items

Interest Expense

Interest expense is summarized as follows (in millions):



	Second Quarter									First Six Months
	2017		2016		Change					2017		2016		Change

Subsidiary debt	$	345	$	347	$	(2	)	(1	)%	$	691	$	697	$	(6	)	(1	)%
BHE senior debt and other	106		103		3			3		211		204		7			3
BHE junior subordinated debentures	6		18		(12		)	(67	)	13		40		(27		)	(68	)
Total interest expense	$	457	$	468	$	(11	)	(2	)	$	915	$	941	$	(26	)	(3	)

Interest expense decreased $11 million for the second quarter of 2017 compared to 2016 and $26 million for the first six months of 2017 compared to 2016 due to repayments of BHE junior subordinated debentures of $550 million in 2017 and $2.0 billion in 2016, scheduled maturities and principal payments, early redemptions and the impact of foreign currency exchange rate movements of $7 million in the quarter and $9 million in the first six months, partially offset by debt issuances at MidAmerican Funding, AltaLink and BHE Renewables.

Capitalized Interest

Capitalized interest decreased $93 million for the second quarter of 2017 compared to 2016 and $94 million for the first six months of 2017 compared to 2017 due primarily to $96 million recorded in the second quarter of 2016 from the 2015-2016 GTA decision received in May 2016 at AltaLink, which was offset in operating revenue, partially offset by higher construction work-in-progress balances at MidAmerican Energy.

Allowance for Equity Funds

Allowance for equity funds decreased $97 million for the second quarter of 2017 compared to 2016 and $95 million for the first six months of 2017 compared to 2016 due primarily to $104 million recorded in the second quarter of 2016 from the 2015-2016 GTA decision received in May 2016 at AltaLink, which was offset in operating revenue, partially offset by higher construction work-in-progress balances at MidAmerican Energy.

Other, net

Other, net decreased $4 million for the second quarter of 2017 compared to 2016 primarily due to costs associated with the early redemption of subsidiary long-term debt in 2017.

Other, net increased $11 million for the first six months of 2017 compared to 2016 mainly due to higher investment returns and favorable changes in the valuations of interest rate swap derivatives of $8 million, partially offset by costs associated with the early redemption of subsidiary long-term debt in 2017.

Income Tax Expense

Income tax expense decreased $38 million for the second quarter of 2017 compared to 2016 and the effective tax rate was 13% for 2017 and 19% for 2016 . The effective tax rate decreased due to higher production tax credits recognized of $43 million, partially offset by unfavorable impacts of rate making of $11 million.

Income tax expense decreased $60 million for the first six months of 2017 compared to 2016 and the effective tax rate was 11% for 2017 and 17% for 2016 . The effective tax rate decreased due to higher production tax credits recognized of $62 million and lower consolidated deferred state income tax expense due to changes in the tax status of certain subsidiaries, partially offset by higher income tax expense on higher pre-tax income.

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 based on a per-kilowatt rate pursuant to the applicable federal income tax law and are eligible for the credit for 10 years from the date the qualifying generating facilities are placed in-service. Production tax credits recognized in 2017 were $203 million, or $62 million higher than 2016, while production tax credits earned in 2017 were $270 million, or $75 million higher than 2016. The difference between production tax credits recognized and earned of $67 million as of June 30, 2017 , primarily at MidAmerican Energy, will be reflected in earnings over the remainder of 2017.

Equity Income

Equity income decreased $8 million for the second quarter of 2017 compared to 2016 and $10 million for the first six months of 2017 compared to 2016 due to lower equity earnings at Electric Transmission Texas, LLC, due primarily to the impacts of new rates effective in March 2017, and lower pre-tax equity earnings from tax equity investments at BHE Renewables.

Net Income Attributable to Noncontrolling Interests

Net income attributable to noncontrolling interests increased $4 million for the second quarter of 2017 compared to 2016 and $6 million for the first six months of 2017 compared to 2016 due to higher earnings at HomeServices' franchise business.

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. 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. 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, 2016 for further discussion regarding the limitation of distributions from BHE 's subsidiaries.

As of June 30, 2017 , the Company's total net liquidity was as follows (in millions):



							MidAmerican			NV			Northern
	BHE			PacifiCorp			Funding			Energy			Powergrid		AltaLink			Other			Total

Cash and cash equivalents	$	6		$	167		$	371		$	15		$	38	$	9		$	221		$	827

Credit facilities	3,000			1,000			909			650			195		1,022			965			7,741
Less:
Short-term debt	(1,745		)	—			—			—			—		(283		)	(467		)	(2,495		)
Tax-exempt bond support and letters of credit	(7		)	(92		)	(220		)	(80		)	—		(8		)	—			(407		)
Net credit facilities	1,248			908			689			570			195		731			498			4,839

Total net liquidity	$	1,254		$	1,075		$	1,060		$	585		$	233	$	740		$	719		$	5,666
Credit facilities:
Maturity dates	2018, 2020			2020			2018, 2020			2020			2020		2017, 2018, 2021			2017, 2018

Operating Activities

Net cash flows from operating activities for the six-month periods ended June 30, 2017 and 2016 were $2.4 billion and $2.8 billion , respectively. The decrease was due primarily to a change in income tax payments and higher cash payments for interest, partially offset by improved operating results and other changes in working capital.

In December 2015, the Protecting Americans from Tax Hikes Act of 2015 ("PATH") was signed into law, extending bonus depreciation for qualifying property acquired and placed in-service before January 1, 2020 (bonus depreciation rates will be 50% in 2015-2017, 40% in 2018, and 30% in 2019), with an additional year for certain longer lived assets. Production tax credits were extended and phased-out for wind power and other forms of non-solar renewable energy projects that begin construction before the end of 2019. Production tax credits are maintained at full value through 2016, at 80% of value in 2017, at 60% of value in 2018, and 40% of value in 2019. Investment tax credits were extended and phased-down for solar projects that are under construction before the end of 2021 (investment tax credit rates are 30% through 2019, 26% in 2020 and 22% in 2021; they revert to the statutory rate of 10% thereafter). As a result of PATH, the Company's cash flows from operations are expected to benefit due to bonus depreciation on qualifying assets placed in-service through 2019, production tax credits through 2029 and investment tax credits earned on qualifying wind and solar projects through 2021, respectively.

The timing of the Company's income tax cash flows from period to period can be significantly affected by the estimated federal income tax payment methods and assumptions used for each payment date.

Investing Activities

Net cash flows from investing activities for the six-month periods ended June 30, 2017 and 2016 were $(2.437) billion and $(2.455) billion , respectively. The change was due primarily to lower capital expenditures of $290 million and lower funding of tax equity investments, partially offset by higher cash paid for acquisitions.

Financing Activities

Net cash flows from financing activities for the six-month period ended June 30, 2017 was $112 million . Sources of cash totaled $1.8 billion and consisted of $1.2 billion of proceeds from subsidiary debt issuances and $617 million of net proceeds from short-term debt. Uses of cash totaled $1.7 billion and consisted mainly of repayments of BHE senior debt and junior subordinated debentures totaling $950 million and repayments of subsidiary debt totaling $668 million.

For a discussion of recent financing transactions, refer to Note 6 of Notes to Consolidated Financial Statements in Part I, Item 1 of this Form 10-Q.

Net cash flows from financing activities for the six-month period ended June 30, 2016 was $(642) million . Uses of cash totaled $2.6 billion and consisted mainly of repayments of subsidiary debt totaling $1.5 billion and repayments of BHE junior subordinated debentures of $1.0 billion. Sources of cash totaled $1.9 billion and consisted of $1.5 billion of proceeds from subsidiary debt issuances and $465 million net proceeds from short-term debt.

The Company may from time to time seek to acquire its outstanding debt securities through cash purchases in the open market, privately negotiated transactions or otherwise. Any debt securities repurchased by the Company may be reissued or resold by the Company from time to time and will depend on prevailing market conditions, the Company's liquidity requirements, contractual restrictions and other factors. The amounts involved may be material.

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 BHE and 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. 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, are as follows (in millions):



	Six-Month Periods				Annual
	Ended June 30,				Forecast
	2016		2017		2017
Capital expenditures by business:
PacifiCorp	$	415	$	370	$	825
MidAmerican Funding	506		546		1,893
NV Energy	274		226		439
Northern Powergrid	307		288		591
BHE Pipeline Group	74		83		362
BHE Transmission	272		146		340
BHE Renewables	242		137		310
HomeServices	8		11		32
BHE and Other	5		6		22
Total	$	2,103	$	1,813	$	4,814



Capital expenditures by type:
Wind generation	$	370	$	234	$	1,343
Solar generation	9		52		127
Electric transmission	234		190		353
Environmental	31		35		132
Other growth	198		256		567
Operating	1,261		1,046		2,292
Total	$	2,103	$	1,813	$	4,814

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

• Wind generation includes the following:

◦

Construction of wind-powered generating facilities at MidAmerican Energy totaling $129 million and $172 million for the six-month periods ended June 30, 2017 and 2016 , respectively. MidAmerican Energy anticipates costs for wind-powered generating facilities will total an additional $632 million for 2017 . In August 2016, the IUB issued an order approving ratemaking principles related to MidAmerican Energy 's construction of up to 2,000 MW (nominal ratings) of wind-powered generating facilities expected to be placed in-service in 2017 through 2019. The ratemaking principles establish a cost cap of $3.6 billion, including AFUDC, and a fixed rate of return on equity of 11.0% over the proposed 40-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. Additionally, the ratemaking principles modify the revenue sharing mechanism currently in effect. The revised sharing mechanism will be effective in 2018 and will be triggered each year by actual equity returns if they are above the weighted average return on equity for MidAmerican Energy calculated annually. Pursuant to the change in revenue sharing, MidAmerican Energy will share 100% of the revenue in excess of this trigger with customers. Such revenue sharing will reduce coal and nuclear generation rate base, which is intended to mitigate future base rate increases. Each of these projects is expected to qualify for 100% of production tax credits currently available.

◦

Repowering certain existing wind-powered generating facilities at PacifiCorp and MidAmerican Energy and the construction of new wind-powered generating facilities at PacifiCorp totaling $90 million for the six-month period ended June 30, 2017 . PacifiCorp and MidAmerican Energy anticipate costs for these activities will total an additional $404 million for 2017 . The repowering projects entail the replacement of significant components of older turbines. The energy production from the repowered and the new facilities is expected to qualify for 100% of the federal renewable electricity production tax credits available for ten years once the equipment is placed in-service.

◦

Construction of wind-powered generating facilities at BHE Renewables totaling $18 million and $198 million for the six-month periods ended June 30, 2017 and 2016, respectively. BHE Renewables anticipates costs for wind-powered generating facilities will total an additional $70 million in 2017 and $258 million in 2018. BHE Renewables is developing and constructing up to 212 MW of wind-powered generating facilities in the state of Illinois.


•	Solar generation includes the construction of the community solar gardens project in Minnesota at BHE Renewables totaling $50 million for the six-month period ended June 30, 2017 . BHE Renewables anticipates costs for the community solar gardens project will total an additional $73 million in 2017 and $18 million in 2018.

•

Electric transmission includes PacifiCorp's costs associated with main grid reinforcement and the Energy Gateway Transmission Expansion Program, MidAmerican Energy's Multi-Value Projects approved by the Midcontinent Independent System Operator, Inc. for the construction of approximately 250 miles of 345 kV transmission line located in Iowa and Illinois and AltaLink's directly assigned projects from the AESO.

•

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.


•	Other growth includes projects to deliver power and services to new markets, new customer connections and enhancements to existing customer connections.


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

Oncor Electric Delivery Company LLC Acquisition

On July 7, 2017, BHE and certain subsidiaries entered into an agreement and plan of merger (the "Merger Agreement") with Energy Future Holdings Corp. (“EFH Corp.”) and Energy Future Intermediate Holding Company LLC whereby BHE will become the indirect owner of 80.03% of Oncor Electric Delivery Company LLC ("Oncor").

Pursuant to the Merger Agreement, the consideration funded by BHE for the acquisition of EFH Corp. will be $9.0 billion, which implies an equity value of approximately $11.25 billion for 100% of Oncor. The consideration is expected to be paid in cash, subject to certain terms and conditions set forth in the Merger Agreement. BHE’s primary shareholder has committed to provide the capital to fund the entire purchase price and BHE will fund the $9.0 billion purchase price by issuing common equity to its existing shareholders. Subject to numerous closing conditions, closing of the Merger Agreement is expected in the fourth quarter of 2017. BHE intends to acquire the remaining 19.97% minority interest positions in Oncor through transactions separate from the Merger Agreement.

Other Acquisitions

The Company completed various acquisitions totaling $588 million for the six-month period ended June 30, 2017 . The purchase price for each acquisition was allocated to the assets acquired and liabilities assumed, which related primarily to development and construction costs for the 110-megawatt Alamo 6 solar project, the remaining 25% interest in the Silverhawk natural gas-fueled generation facility at Nevada Power and residential real estate brokerage businesses. There were no other material assets acquired or liabilities assumed.

Integrated Resource Plan

In April 2017, PacifiCorp filed its 2017 Integrated Resource Plan ("IRP") with its state commissions. The IRP includes investments in renewable energy resources, upgrades to the existing wind fleet, and energy efficiency measures to meet future customer needs. Implementation of wind upgrades, new transmission, and new wind renewable resources will require an estimated $3.5 billion in capital investment from 2017 through 2020. PacifiCorp's forecast capital expenditures for 2018 through 2019 increased $723 million from the forecast included in BHE's 2016 Annual Report on Form 10-K as a result of its 2017 IRP.

Other Renewable Investments

The Company has invested in projects sponsored by third parties, commonly referred to as tax equity investments. Under the terms of these tax equity investments, the Company has entered into equity capital contribution agreements with the project sponsors that require contributions. The Company has made contributions of $170 million in 2015, $584 million in 2016 and $85 million through June 30, 2017 , and expects to contribute $317 million for the remainder of 2017 and $83 million in 2018 pursuant to these equity capital contribution agreements as the various projects achieve commercial operation. Once a project achieves commercial operation, the Company enters into a partnership agreement with the project sponsor that directs and allocates the operating profits and tax benefits from the project.

Contractual Obligations

As of June 30, 2017 , 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, 2016 other than the recent financing transactions and the renewable tax equity investments previously discussed.

Quad Cities Generating Station Operating Status

Exelon Generation Company, LLC ("Exelon Generation"), the operator of Quad Cities Generating Station Units 1 and 2 ("Quad Cities Station") of which MidAmerican Energy has a 25% ownership interest, announced on June 2, 2016, its intention to shut down Quad Cities Station on June 1, 2018, as a result of Illinois not passing adequate legislation and Quad Cities Station not clearing the 2019-2020 PJM Interconnection, L.L.C. capacity auction. MidAmerican Energy expressed to Exelon Generation its desire for the continued operation of the facility through the end of its operating license in 2032 and worked with Exelon Generation on solutions to that end. In December 2016, Illinois passed legislation creating a zero emission standard, which went into effect June 1, 2017. The zero emission standard requires the Illinois Power Agency to purchase zero emission credits and recover the costs from certain ratepayers in Illinois, subject to certain limitations. The proceeds from the zero emission credits will provide Exelon Generation additional revenue through 2027 as an incentive for continued operation of Quad Cities Station. For the nuclear assets already in rate base, MidAmerican Energy's customers will not be charged for the subsidy, and MidAmerican Energy will not receive additional revenue from the subsidy.

On February 14, 2017, two lawsuits were filed with the United States District Court for the Northern District of Illinois ("Northern District of Illinois") against the Illinois Power Agency alleging that the state’s zero emission credit program violates certain provisions of the U.S. Constitution. Both complaints argue that the Illinois zero emission credit program will distort the FERC’s energy and capacity market auction system of setting wholesale prices. As majority owner and operator of Quad Cities Station, Exelon Generation intervened in both suits and filed motions to dismiss in both matters. On July 14, 2017, the Northern District of Illinois granted the motions to dismiss. On July 17, 2017, the plaintiffs filed appeals with the United States Court of Appeals for the Seventh Circuit.

On January 9, 2017 the Electric Power Supply Association filed two requests with the FERC seeking to expand Minimum Price Offer Rule ("MOPR") provisions to apply to existing resources receiving zero emission credit compensation. If successful, an expanded MOPR could result in an increased risk of Quad Cities Station not clearing in future capacity auctions and Exelon Generation no longer receiving capacity revenues for the facility. As majority owner and operator of Quad Cities Station, Exelon Generation has filed protests at the FERC in response to each filing. The timing of the FERC’s decision with respect to both proceedings is currently unknown and the outcome of these matters is currently uncertain.

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 1 of each Registrant's Annual Report on Form 10-K for the year ended December 31, 2016 , and new regulatory matters occurring in 2017 .

PacifiCorp

In June 2017, PacifiCorp filed two applications each with the UPSC, IPUC and the WPSC for the Energy Vision 2020 project. The first application seeks approvals to construct or procure four new Wyoming wind resources with a total capacity of 860 megawatts and certain transmission facilities. PacifiCorp estimates that the combined wind and transmission projects will cost approximately $2 billion. The UPSC has set a procedural schedule with hearings to occur in March 2018, and schedules in Idaho and Wyoming will be set after the expiration of public notice periods in August 2017. The second application seeks approval of PacifiCorp's resource decision to upgrade or “repower” existing wind resources, as prudent and in the public interest. PacifiCorp estimates that the wind repowering project will cost approximately $1.13 billion. The UPSC has set a procedural schedule with hearings to occur in November 2017 with requested approval in December 2017. Schedules in Idaho and Wyoming will also be set after the expiration of public notice periods in August 2017. Both applications seek approval for the proposed ratemaking treatment associated with the projects.

Utah

In March 2017, PacifiCorp filed its annual Energy Balancing Account ("EBA") with the UPSC seeking approval to refund to customers $7 million in deferred net power costs for the period January 1, 2016 through December 31, 2016, reflecting the difference between base and actual net power costs in the 2016 deferral period. In April 2017, PacifiCorp revised its recommendation and requested approval to refund an additional $7 million to customers resulting in an interim rate reduction of $14 million. The rate change became effective on an interim basis May 1, 2017.

In March 2017, PacifiCorp filed its annual REC balancing account application with the UPSC seeking to refund to customers $1 million for the period January 1, 2016 through December 31, 2016 for the difference in base and actual renewable energy credits. The rate change became effective on an interim basis June 1, 2017.

As a result of the Utah Sustainable Transportation and Energy Plan legislation that was signed into law in March 2016, PacifiCorp filed an application in September 2016 seeking approval of a proposed five-year pilot program with an annual budget of $10 million authorized under the legislation to address clean-coal technology programs, commercial line extension programs, an electric vehicle incentive program and associated residential time of use rate pilot, and other programs authorized in legislation. The UPSC issued orders approving PacifiCorp's application in phases in December 2016, May 2017, and June 2017.

In November 2016, PacifiCorp filed cost of service analyses, as ordered by the UPSC, to quantify the cost shifting due to net metering. The UPSC ordered the analyses to comply with a 2014 law requiring the examination of whether the costs of net metering exceed the benefits to PacifiCorp and other customers. The filing includes a proposal for a new rate schedule for residential customer generators with a three-part rate based on the cost of serving this class of customer, which will mitigate future cost shifting. PacifiCorp proposed that the new rate schedule only apply to new net metering customers that submit applications after December 9, 2016. On December 9, 2016, PacifiCorp requested that the effective date for the start of a transitional tariff be suspended while it works with stakeholders on a collaborative process to resolve net metering rate design issues. The filing also requests an increase in the application fees for net metering. In February 2017, the UPSC ruled on motions to dismiss and requests for a show cause order for a regulatory rate review filed by various parties to the docket and denied the motions. The UPSC has set a procedural schedule with hearings to occur in August 2017.

Oregon

In March 2017, PacifiCorp submitted its filing for the annual Transitional Adjustment Mechanism ("TAM") filing in Oregon requesting an annual increase of $18 million, or an average price increase of 1.5%, based on forecasted net power costs and loads for calendar year 2018. Consistent with Oregon Senate Bill 1547, the filing includes an update of the impact of expiring production tax credits, which accounts for $6 million of the total rate adjustment. The filing was updated in July to reflect changes in contracts and market conditions. The updated filing is requesting an annual increase of $8 million, or an average price increase of 0.6%. The filing will be updated for changes in contracts and market conditions again in November 2017, before final rates become effective in January 2018.

Wyoming

In April 2017, PacifiCorp filed its annual Energy Cost Adjustment Mechanism ("ECAM") and REC and Sulfur Dioxide Revenue Adjustment Mechanism ("RRA") applications with the WPSC. The ECAM filing requests approval to refund to customers $5 million in deferred net power costs for the period January 1, 2016 through December 31, 2016, and the RRA application requests approval to refund to customers $1 million. In June 2017, the WPSC approved the ECAM and RRA rates on an interim basis until a final order is issued by the WPSC.

Washington

In August 2017, PacifiCorp submitted a compliance filing to implement the second-year rate increase approved as part of the two-year rate plan in the 2015 regulatory rate review. The compliance filing will include rates based on the $8 million, or 2.3%, increase ordered by the WUTC in September 2016. If approved by the WUTC, the rates would be effective September 2017.

Idaho

In January 2017, a $1 million, or 0.4%, decrease in base rates became effective as a result of a filing made with the IPUC to update net power costs in base rates in compliance with a prior rate plan stipulation.

In March 2017, PacifiCorp filed its annual ECAM application with the IPUC requesting recovery of $8 million for deferred costs in 2016. This filing includes recovery of the difference in actual net power costs to the base level in rates, an adder for recovery of the Lake Side 2 resource, recovery of Deer Creek longwall mine investment, and changes in production tax credits and renewable energy credits. The IPUC approved the ECAM application with rates effective June 1, 2017.

California

In April 2017, PacifiCorp filed an application with the CPUC for an overall rate increase of 1.3% to recover $3 million of costs recorded in the catastrophic events memorandum account over a two-year period effective April 1, 2018. The catastrophic events memorandum account includes costs for implementing drought-related fire hazard mitigation measures and storm damage and recovery efforts associated with the December 2016 and January 2017 winter storms.

In August 2017, PacifiCorp filed for a rate decrease of $1 million, or 1.1%, through its annual Energy Cost Adjustment Clause. If approved by the CPUC, the rates would be effective January 2018.

NV Energy (Nevada Power and Sierra Pacific)

Regulatory Rate Reviews

In June 2017, Nevada Power filed an electric regulatory rate review with the PUCN. The filing requested no incremental annual revenue relief. An order is expected by the end of 2017 and, if approved, would be effective January 1, 2018.

In June 2016, Sierra Pacific filed an electric regulatory rate review with the PUCN. The filing requested no incremental annual revenue relief. In October 2016, Sierra Pacific filed with the PUCN a settlement agreement resolving most, but not all, issues in the proceeding and reduced Sierra Pacific's electric revenue requirement by $3 million spread evenly to all rate classes. In December 2016, the PUCN approved the settlement agreement and established an additional six MW of net metering capacity under the grandfathered rates, which are those net metering rates that were in effect prior to January 2016; the order establishes cost-based rates and a value-based excess energy credit for customers who choose to install private generation after the six MW limitation is reached. The new rates were effective January 1, 2017. In January 2017, Sierra Pacific filed a petition for reconsideration relating to the creation of the additional six MW s of net metering at the grandfathered rates. Sierra Pacific believes the effects of the PUCN decision result in additional cost shifting to non-net metering customers and reduces the stipulated rate reduction for other customer classes. In June 2017, the PUCN denied the petition for reconsideration.

In June 2016, Sierra Pacific filed a gas regulatory rate review with the PUCN. The filing requested a slight decrease in its incremental annual revenue requirement. In October 2016, Sierra Pacific filed with the PUCN a settlement agreement resolving all issues in the proceeding and reduced Sierra Pacific's gas revenue requirement by $2 million . In December 2016, the PUCN approved the settlement agreement. The new rates were effective January 1, 2017.

Chapter 704B Applications

Chapter 704B of the Nevada Revised Statutes allows retail electric customers with an average annual load of one MW or more to file with the PUCN an application to purchase energy from alternative providers of a new electric resource and become distribution only service customers. On a case-by-case basis, the PUCN will assess the application and may deny or grant the application subject to conditions, including paying an impact fee, paying on-going charges and receiving approval for specific alternative energy providers and terms. The impact fee and on-going charges are assessed to alleviate the burden on other Nevada customers for the applicants' share of previously committed investments and long-term renewable contracts and are set at a level designed such that the remaining customers are not subjected to increased costs.

In May 2015, MGM Resorts International ("MGM") and Wynn Las Vegas, LLC ("Wynn"), filed applications with the PUCN to purchase energy from alternative providers of a new electric resource and become distribution only service customers of Nevada Power. In December 2015, the PUCN granted the applications subject to conditions, including paying an impact fee, on-going charges and receiving approval for specific alternative energy providers and terms. In December 2015, the applicants filed petitions for reconsideration. In January 2016, the PUCN granted reconsideration and updated some of the terms, including removing a limitation related to energy purchased indirectly from NV Energy. In September 2016, MGM and Wynn paid impact fees of $82 million and $15 million , respectively . In October 2016, MGM and Wynn became distribution only service customers and started procuring energy from another energy supplier. In April 2017, Wynn filed a motion with the PUCN seeking relief from the January 2016 order and requested the PUCN adopt an alternative impact fee and revise on-going charges associated with retirement of assets and high cost renewable contracts. In May 2017, a stipulation reached between MGM, Regulatory Operations Staff and the Bureau of Consumer Protection was filed requiring Nevada Power to credit $16 million as an offset against MGM's remaining impact fee obligation and, in June 2017, the PUCN approved the stipulation as filed.

In September 2016, Switch, Ltd. ("Switch"), a customer of the Nevada Utilities , filed an application with the PUCN to purchase energy from alternative providers of a new electric resource and become a distribution only service customer of Nevada Power and Sierra Pacific . In December 2016, the PUCN approved a stipulation agreement that allows Switch to purchase energy from alternative providers subject to conditions , including paying an impact fee to Nevada Power. In May 2017, Switch paid impact fees of $27 million and, in June 2017, Switch became a distribution only service customer and started procuring energy from another energy supplier.

In November 2016, Caesars Enterprise Service ("Caesars"), a customer of the Nevada Utilities , filed an application with the PUCN to purchase energy from alternative providers of a new electric resource and become a distribution only service customer of Nevada Power and Sierra Pacific. In March 2017, the PUCN approved the application allowing Caesars to purchase energy from alternative providers subject to conditions, including paying an impact fee. In March 2017, Caesars provided notice that it intends to pay the impact fee and proceed with purchasing energy from alternative providers.

In May 2017, Peppermill Resort Spa Casino ("Peppermill"), a customer of Sierra Pacific, filed an application with the PUCN to purchase energy from alternative providers of a new electric resource and become a distribution only service customer of Sierra Pacific.

Net Metering

Nevada enacted Senate Bill 374 ("SB 374") on June 5, 2015. The legislation required the Nevada Utilities to prepare cost-of-service studies and propose new rules and rates for customers who install distributed, renewable generating resources. In July 2015, the Nevada Utilities made filings in compliance with SB 374 and the PUCN issued final orders December 23, 2015.

The final orders issued by the PUCN establish separate rate classes for customers who install distributed, renewable generating facilities. The establishment of separate rate classes recognizes the unique characteristics, costs and services received by these partial requirements customers. The PUCN also established new, cost-based rates or prices for these new customer classes, including increases in the basic service charge and related reductions in energy charges. Finally, the PUCN established a separate value for compensating customers who produce and deliver excess energy to the Nevada Utilities. The valuation will consider eleven factors, including alternatives available to the Nevada Utilities. The PUCN established a gradual, five-step process for transition over four years to the new, cost-based rates.

In January 2016, the PUCN denied requests to stay the order issued December 23, 2015. The PUCN also voted to reopen the evidentiary proceeding to address the application of new net metering rules for customers who applied for net metering service before the issuance of the final order. In February 2016, the PUCN affirmed most of the provisions of the December 23, 2015 order and adopted a twelve-year transition plan for changing rates for net metering customers to cost-based rates for utility services and value-based pricing for excess energy. Subsequently, two solar industry interest groups filed petitions for judicial review of the PUCN order issued in February 2016. The petitions request that the court either modify the PUCN order or direct the PUCN to modify its decision in a manner that would maintain rates and rules of service applicable to net metering as existed prior to the December 23, 2015 order of the PUCN. Two of the three petitions filed by the solar industry interest groups have been dismissed. In September 2016, the state district court issued an order in the third petition. The court concluded that the PUCN failed to provide existing net metering customers adequate legal notice of the proceeding. The court affirmed the PUCN's decision to establish new net energy metering rates and apply those to new net metering customers. The Nevada state district court decision was appealed to the Nevada Supreme Court.

In July 2016, the Nevada Utilities filed applications with the PUCN to revert back to the original net metering rates for a period of twenty years for customers who installed or had an active application for distributed, renewable generating facilities as of December 31, 2015. In September 2016, the PUCN issued an order accepting the stipulation and approved the applications as modified by the stipulation. In December 2016, as a part of Sierra Pacific's regulatory rate review, the PUCN issued an order establishing an additional six MWs of net metering under the grandfathered rates in the Sierra Pacific service territory; the order establishes cost-based rates and a value-based excess energy credit for customers who choose to install private generation after the six MW limitation is reached. As mentioned above, Sierra Pacific filed a petition for reconsideration relating to the additional six MWs of net metering, which was denied in June 2017.

In March 2017, the Nevada Utilities filed a joint application with several solar companies to extend the period for eligible customers to opt into the grandfathered net metering rates. The PUCN voted to approve the application and give qualifying customers until July 2017 to make this election.

Nevada enacted Assembly Bill 405 ("AB 405") on June 15, 2017. The legislation, among other things, established net metering crediting rates for private solar customers with installed net metering systems less than 25 kilowatts. Under AB 405, private solar customers will be compensated at 95% of the rate the customer would have paid for a kilowatt-hour of electricity supplied by the Nevada Utilities for the first 80 MWs of cumulative installed capacity of all net metering systems in Nevada, 88% of the rate the customer would have paid for a kilowatt-hour of electricity supplied by the Nevada Utilities for the next 80 MWs of cumulative installed capacity in Nevada, 81% of the rate the customer would have paid for a kilowatt-hour of electricity supplied by the Nevada Utilities for the next 80 MWs of cumulative installed capacity in Nevada, and 75% of the rate the customer would have paid for a kilowatt-hour of electricity supplied by the Nevada Utilities for any additional installed rooftop solar capacity. In July 2017, the Nevada Utilities filed with the PUCN proposed amendments to their tariffs necessary to comply with the provisions of AB 405. The filing in July 2017 also included a proposed optional time of use rate tariff for both Nevada Power and Sierra Pacific.

Energy Choice Initiative

In November 2016, a majority of Nevada voters supported a ballot measure to amend Article 1 of the Nevada Constitution. If approved again in the general election of 2018, the proposed constitutional amendment would require the Nevada Legislature to create, on or before July 2023, an open and competitive retail electric market that includes provisions to reduce costs to customers, protect against service disconnections and unfair practices, and prohibit the granting of monopolies and exclusive franchises for the generation of electricity. The outcome of any customer choice initiative could have broad implications to the Nevada Utilities. The Governor issued an executive order establishing the Governor’s Committee on Energy Choice in which the Nevada Utilities have representation. The Nevada Utilities are engaged in the initiative process and with the Governor's Committee on Energy Choice but cannot assess or predict the outcome of the potential constitutional amendment or the financial impact, if any, at this time. The uncertainty created by the ballot initiative complicates both the short-term allocation of resources and long-term resource planning for the Nevada Utilities, including the ability to forecast load growth and the timing of resource additions. This uncertainty in planning is evidenced by a recent decision the PUCN issued denying Nevada Power’s proposed purchase of the South Point Energy Center, citing the unknown outcomes of the energy choice initiative as one of the factors considered in their decision.

ALP

General Tariff Applications

In November 2014, ALP filed a GTA requesting the AUC 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. ALP amended the GTA in June 2015 and in October 2015. In May 2016, the AUC issued its decision pertaining to the 2015-2016 GTA. ALP filed its 2015-2016 GTA compliance filing in July 2016 to comply with the AUC's decision and to provide customers with tariff relief through: (i) the discontinuance of construction work-in-progress ("CWIP") in rate base and the return to AFUDC accounting effective January 1, 2015, and (ii) the refund of previously collected CWIP in rate base as part of ALP's transmission tariffs during 2011-2014 less related returns. In October 2016, ALP amended its 2015-2016 GTA compliance filing made in July 2016 to reflect the impacts of the generic cost of capital decision issued in October 2016.

In December 2016, the AUC issued its decision with respect to ALP’s 2015-2016 GTA compliance filing made in July 2016, as amended. The AUC found that ALP has either complied with or the AUC has otherwise relieved ALP from its compliance with all its directions in its decision except for Directive 47, which dealt with the determination of the refund for previously collected CWIP-in-rate base and all related amounts. In January 2017, ALP filed its second compliance filing as directed by the AUC and requested a technical conference to explain the technical aspects of the filing.

In March 2017, the technical conference was held, and all key aspects of ALP’s approach and methodologies used in its second compliance filing to comply with AUC directives were reviewed and discussed. In April 2017, ALP filed with the AUC an amendment to its second compliance filing asking to remove C$7 million of recapitalized AFUDC associated with canceled projects that were not capitalized to rate base, and to increase the amount of income tax refund related to previously collected CWIP-in-rate base by C$4 million. As a result of this amendment, ALP’s forecast transmission tariffs were reduced from C$679 million to C$675 million for 2016, and remained unchanged at C$599 million for 2015, compared to the January 2017 second compliance filing, as amended.

During the second quarter 2017, ALP responded to information requests from the AUC with respect to its second compliance filing amendment filed in April 2017. Further direction or a final decision from the AUC is expected in the third quarter 2017. Once the AUC approves ALP’s second compliance filing, as amended, final transmission tariff rates for the 2015 and 2016 test years will be set, subject to further adjustment through the deferral account reconciliation process.

ALP updated and refiled its 2017-2018 GTA in August 2016 to reflect the findings and conclusions of the AUC in its 2015-2016 GTA decision issued in May 2016. In October 2016, ALP amended its 2017-2018 GTA to reflect the impacts of the generic cost of capital decision issued in October 2016 and other updates and revisions. The amendment requests the AUC to approve ALP's revenue requirement of C$891 million for 2017 and C$919 million for 2018. In November 2016, the AUC approved the 2017 interim refundable transmission tariff at C$70 million per month effective January 2017. In December 2016, the AUC approved ALP's request to enter into a negotiated settlement process. In January 2017, the parties successfully reached a negotiated settlement on all aspects of ALP’s 2017-2018 GTA and in February 2017, ALP filed with the AUC the 2017-2018 negotiated settlement application for approval. The application consists of negotiated reductions of C$16 million of operating expenses and C$40 million of transmission maintenance and information technology capital expenditures over the two years, as well as an increase to miscellaneous revenue of C$3 million. These reductions resulted in a C$24 million, or 1.3%, net decrease to the two-year total revenue requirement applied for in ALP’s 2017-2018 GTA amendment filed in October 2016. In addition, ALP proposed to provide significant tariff relief through the refund of previously collected accumulated depreciation surplus of C$130 million (C$125 million net of other related impacts). The negotiated settlement agreement also provides for additional potential reductions over the two years through a 50/50 cost savings sharing mechanism.

During the second quarter 2017, ALP responded to information requests from the AUC with respect to its 2017-2018 negotiated settlement agreement application filed in February 2017. Further direction or a final decision from the AUC is expected in 2017.

2018 Generic Cost of Capital Proceeding

In July 2017, the AUC denied the utilities’ request that the interim determinations of 8.5% return on equity and deemed capital structures for 2018 be made final, by stating that it is not prepared to finalize 2018 values in the absence of an evidentiary process and its intention to issue the generic cost of capital decision for 2018, 2019 and 2020 by the end of 2018 to reduce regulatory lag. The AUC also confirmed the process timelines with an oral hearing scheduled for March 2018.

Deferral Account Reconciliation Application

In April 2017, ALP filed its application with the AUC with respect to ALP’s 2014 projects and deferral accounts and specific 2015 projects. The application includes approximately C$2.0 billion in net capital additions. In June 2017, the AUC ruled that the scope of the deferral account proceeding would not be extended to consider the utilization of assets for which final cost approval is sought. However, the AUC will initiate a separate proceeding to address the issue of transmission asset utilization and how the corporate and property law principles applied in the Utility Asset Disposition (UAD) decision may relate.

Environmental Laws and Regulations

Each Registrant 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 each Registrant'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. Each Registrant believes it is in material compliance with all applicable laws and regulations, although many laws and regulations are subject to interpretation that may ultimately be resolved by the courts. Refer to "Liquidity and Capital Resources" of each respective Registrant in Part I, Item 2 of this Form 10-Q for discussion of each Registrant's forecast environmental-related capital expenditures. The discussion below contains material developments to those matters disclosed in Item 1 of each Registrant's Annual Report on Form 10-K for the year ended December 31, 2016 , and new environmental matters occurring in 2017 .

Clean Air Act Regulations

The Clean Air Act is a federal law administered by the EPA that provides a framework for protecting and improving the nation's air quality and controlling sources of air emissions. The implementation of new standards is generally outlined in SIPs, which are a collection of regulations, programs and policies to be followed. SIPs vary by state and are subject to public hearings and EPA approval. Some states may adopt additional or more stringent requirements than those implemented by the EPA. The major Clean Air Act programs most directly affecting the Registrants' operations are described below.

Regional Haze

The EPA's Regional Haze Rule, finalized in 1999, requires states to develop and implement plans to improve visibility in designated federally protected areas ("Class I areas"). Some of PacifiCorp's coal-fueled generating facilities in Utah, Wyoming, Arizona and Colorado and certain of Nevada Power's and Sierra Pacific's fossil-fueled generating facilities are subject to the Clean Air Visibility Rules. In accordance with the federal requirements, states are required to submit SIPs that address emissions from sources subject to best available retrofit technology ("BART") requirements and demonstrate progress towards achieving natural visibility requirements in Class I areas by 2064.

The state of Utah issued a regional haze 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 BART determinations for the nitrogen oxides and particulate matter portions of Utah's regional haze SIP in March 2013. 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 completed an alternative BART analysis for Hunter Units 1 and 2, and Huntington Units 1 and 2. The alternative BART analysis and revised regional haze SIP were submitted in June 2015 to the EPA for review and proposed action after a public comment period. The revised regional haze SIP included a state-enforceable requirement to cease operation of the Carbon Facility by August 15, 2015. PacifiCorp retired the Carbon Facility in December 2015. In January 2016, the EPA published two alternative proposals to either approve the Utah SIP as written or reject the Utah SIP relating to nitrogen oxides controls and require the installation of selective catalytic reduction ("SCR") controls at Hunter Units 1 and 2 and Huntington Units 1 and 2 within five years. EPA's final action on the Utah regional haze SIP was effective August 4, 2016. The EPA approved in part and disapproved in part the Utah regional haze SIP and issued a federal implementation plan ("FIP") requiring the installation of SCR controls at Hunter Units 1 and 2 and Huntington Units 1 and 2 within five years of the effective date of the rule. PacifiCorp and other parties have filed requests with the EPA to reconsider and stay that decision, and have also filed motions for stay and petitions for review with the Tenth Circuit asking the court to overturn the EPA’s actions. In June 2017, the state of Utah and PacifiCorp issued requests to the EPA to reconsider its decision in issuing the FIP. By letter dated July 14, 2017, from Administrator Scott Pruitt, the EPA indicated that based on existing and new evidence potentially relevant to the EPA’s evaluation of Utah’s 2015 SIP, the agency would reconsider its final rule and prepare a notice of proposed rulemaking and take public comment on its proposed action. On July 18, 2017, the EPA filed with the Tenth Circuit a motion to hold the pending appeals in abeyance pending agency reconsideration of the final rule. The Tenth Circuit initially requested that all parties file a response setting forth their opposition or nonopposition to the EPA’s motion to hold the cases in abeyance by July 28, 2017. However, on July 18, 2017, PacifiCorp asked the Tenth Circuit to take judicial notice of the EPA’s request to hold the appeals in abeyance and reaffirmed its request to stay the FIP. The Tenth Circuit ordered all parties to respond to both the EPA's motion for abeyance and the motions by PacifiCorp and others to take judicial notice of EPA's reconsideration by August 4, 2017. The EPA, on July 25, 2017, also filed an unopposed motion to extend the current deadline for the filing of its brief on the merits of the case from August 1, 2017, to August 29, 2017, to allow the court to rule on the pending motions.

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 FIP for the disapproved portions requiring SCR controls on Cholla Unit 4. In January 2015, permit applications and studies were submitted to amend the Cholla Title V permit, and subsequently the Arizona SIP to convert Cholla Unit 4 to a natural gas-fueled unit in 2025; after notice and comment, the Arizona Department of Environmental Quality submitted the amended Arizona SIP to the EPA, which approved the amendments to the Arizona regional haze SIP with an effective date of April 26, 2017.

The Navajo Generating Station, in which Nevada Power is a joint owner with an 11.3% ownership share, is also a source that is subject to the regional haze BART requirements. In January 2013, the EPA announced a proposed FIP addressing BART and an alternative for the Navajo Generating Station that includes a flexible timeline for reducing nitrogen oxides emissions. Nevada Power, along with the other owners of the facility, have been reviewing the EPA's proposal to determine its impact on the viability of the facility's future operations. The land lease for the Navajo Generating Station is subject to renewal in 2019. In the spring 2017, the owners of the Navajo Generating Station voted to shut down and demolish the plant on or before December 23, 2019; however, the owners agreed to continue operating the plant through 2019 with demolition to follow if the tribe approved a new lease by July 1, 2017. Subsequently, the Navajo Council approved the requested lease extension June 26, 2017, and on July 1, 2017, the Navajo Nation signed the replacement lease with the utility owners of the Navajo Generating Station. Two remaining owners, the U.S. Bureau of Reclamation and the City of Los Angeles, must approve the lease by December 1, 2017, to enable continued operations through 2019. The Navajo Nation, along with the U.S. Bureau of Reclamation and Peabody Energy have further indicated a desire to keep the plant and coal mine operating through at least 2030, which would require a new ownership structure for the facility. The utility owners have specified that a new ownership proposal must be put forward by October 1, 2017, in order to complete the transition prior to December 23, 2019. Nevada Power filed the Emissions Reduction and Capacity Replacement Plan in May 2014 that proposed to eliminate its ownership participation in the Navajo Generating Station in 2019, which was approved by the PUCN.

Climate Change

In December 2015, an international agreement was negotiated by 195 nations to create a universal framework for coordinated action on climate change in what is referred to as the Paris Agreement. The Paris Agreement reaffirms the goal of limiting global temperature increase well below 2 degrees Celsius, while urging efforts to limit the increase to 1.5 degrees Celsius; establishes commitments by all parties to make nationally determined contributions and pursue domestic measures aimed at achieving the commitments; commits all countries to submit emissions inventories and report regularly on their emissions and progress made in implementing and achieving their nationally determined commitments; and commits all countries to submit new commitments every five years, with the expectation that the commitments will get more aggressive. In the context of the Paris Agreement, the United States agreed to reduce greenhouse gas emissions 26% to 28% by 2025 from 2005 levels. After more than 55 countries representing more than 55% of global greenhouse gas emissions submitted their ratification documents, the Paris Agreement became effective November 4, 2016. Under the terms of the Paris Agreement, ratifying countries are bound for a three-year period and must provide one-year's notice of their intent to withdraw. The Clean Power Plan, which was finalized by the EPA in 2015 and is currently under review, was the primary basis for the United States' commitment under the Paris Agreement. On June 1, 2017, President Trump announced the United States would begin the four-year process of withdrawing from the Paris Agreement.

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. On August 3, 2015, the EPA issued 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" 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. The new source performance standards have been appealed to the D.C. Circuit and oral argument was scheduled to be heard April 17, 2017; however, the court cancelled the oral arguments March 30, 2017, and, on April 28, 2017, ordered that the cases be held in abeyance for 60 days, with supplemental briefs required to be filed May 15, 2017, regarding whether the cases should be remanded to the EPA rather than held in abeyance. Until such time as the court renders a final determination regarding the validity of the standards or the EPA rescinds the standards, any new fossil-fueled generating facilities constructed by the relevant Registrants will be required to meet the GHG new source performance standards.

Clean Power Plan

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 the "Best System of Emission Reduction." In August 2015, the final Clean Power Plan was released, which established the Best System of Emission Reduction as including: (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 in August 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 public comment period on the draft federal plan and proposed model trading rules closed January 21, 2016. States were required to submit their initial implementation plans by September 2016 but could request an extension to September 2018. However, on February 9, 2016, the United States Supreme Court ordered that the EPA's emission guidelines for existing sources be stayed pending the disposition of the challenges to the rule in the D.C. Circuit and any action on a writ of certiorari before the U.S. Supreme Court. Oral argument was heard before the full D.C. Circuit (with the exception of Chief Judge Merrick Garland) on September 27, 2016, and the court has not yet issued its decision. In accordance with an executive order issued March 28, 2017, the EPA signed a Federal Register notice March 28, 2017, announcing the EPA’s review of the rule and EPA filed a motion to hold the case in abeyance pending completion of the EPA’s review and any resulting rulemaking. On April 28, 2017, the D.C. Circuit issued an order holding the case in abeyance for 60 days and ordered the parties to file supplemental briefs addressing whether the case should be remanded to the EPA rather than held in abeyance. On June 8, 2017, the EPA sent its review of the Clean Power Plan to the Office of Management and Budget for interagency review. The full impacts of the final rule or the federal plan on the Registrants cannot be determined until the outcome of the pending litigation and subsequent appeals, the outcome of any issues should the case be remanded for further action by the EPA and the review of the rule and any subsequent action taken by the EPA in response to the Executive Order. 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.

Water Quality Standards

The federal Water Pollution Control Act ("Clean Water Act") establishes the framework for maintaining and improving water quality in the United States through a program that regulates, among other things, discharges to and withdrawals from waterways. The Clean Water Act requires that cooling water intake structures reflect the "best technology available for minimizing adverse environmental impact" to aquatic organisms. After significant litigation, the EPA released a proposed rule under §316(b) of the Clean Water Act to regulate cooling water intakes at existing facilities. The final rule was released in May 2014, and became effective in October 2014. Under the final rule, existing facilities that withdraw at least 25% of their water exclusively for cooling purposes and have a design intake flow of greater than two million gallons per day are required to reduce fish impingement (i.e., when fish and other aquatic organisms are trapped against screens when water is drawn into a facility's cooling system) by choosing one of seven options. Facilities that withdraw at least 125 million gallons of water per day from waters of the United States must also conduct studies to help their permitting authority determine what site-specific controls, if any, would be required to reduce entrainment of aquatic organisms (i.e., when organisms are drawn into the facility). PacifiCorp and MidAmerican Energy are assessing the options for compliance at their generating facilities impacted by the final rule and will complete impingement and entrainment studies. PacifiCorp's Dave Johnston generating facility and all of MidAmerican Energy's coal-fueled generating facilities, except Louisa, Ottumwa and Walter Scott, Jr. Unit 4, which have water cooling towers, withdraw more than 125 million gallons per day of water from waters of the United States for once-through cooling applications. PacifiCorp's Jim Bridger, Naughton, Gadsby, Hunter and Huntington generating facilities currently utilize closed cycle cooling towers but are designed to withdraw more than two million gallons of water per day. The standards are required to be met as soon as possible after the effective date of the final rule, but no later than eight years thereafter. The costs of compliance with the cooling water intake structure rule cannot be fully determined until the prescribed studies are conducted. In the event that PacifiCorp's or MidAmerican Energy's existing intake structures require modification, the costs are not anticipated to be significant to the consolidated financial statements. Nevada Power and Sierra Pacific do not utilize once-through cooling water intake or discharge structures at any of their generating facilities. All of the Nevada Power and Sierra Pacific generating stations are designed to have either minimal or zero discharge; therefore, they are not impacted by the §316(b) final rule.

In November 2015, the EPA published final effluent limitation guidelines and standards for the steam electric power generating sector which, among other things, regulate the discharge of bottom ash transport water, fly ash transport water, combustion residual leachate and non-chemical metal cleaning wastes. These guidelines, which had not been revised since 1982, were revised in response to the EPA's concerns that the addition of controls for air emissions has changed the effluent discharged from coal- and natural gas-fueled generating facilities. Under the guidelines, permitting authorities were required to include the new limits in each impacted facility's discharge permit upon renewal; the new limits were to have been met as soon as possible, beginning November 1, 2018 and implemented by December 31, 2023. On April 5, 2017, a request for reconsideration and administrative stay of the guidelines was filed with the EPA. The EPA granted the request for reconsideration on April 12, 2017, imposed an immediate administrative stay of compliance dates in the rule that had not passed judicial review, and requested that the court stay the pending litigation over the rule until September 12, 2017. On June 6, 2017, the EPA proposed to extend many of the compliance deadlines that would otherwise occur in 2018. The public comment period on EPA’s proposed extension of the deadlines closed July 5, 2017. While most of the issues raised by this rule are already being addressed through the coal combustion residuals rule and are not expected to impose significant additional requirements on the facilities, the impact of the rule cannot be fully determined until the reconsideration action is complete and any judicial review is concluded.

In April 2014, the EPA and the United States Army Corps of Engineers issued a joint proposal to address "waters of the United States" to clarify protection under the Clean Water Act for streams and wetlands. The proposed rule comes as a result of United States Supreme Court decisions in 2001 and 2006 that created confusion regarding jurisdictional waters that were subject to permitting under either nationwide or individual permitting requirements. The final rule was released in May 2015 but is currently under appeal in multiple courts and a nationwide stay on the implementation of the rule was issued in October 2015. On January 13, 2017, the U.S. Supreme Court granted a petition to address jurisdictional challenges to the rule. On June 27, 2017, the EPA initiated the repeal of the “waters of the United States” rule. The EPA plans to undertake a two-step process, with the first step to repeal the 2015 rule and the second step to carry out a notice-and-comment rulemaking in which a substantive re-evaluation of the definition of the “waters of the United States” will be undertaken. The proposed repeal of the rule has not yet been published in the Federal Register. Depending on the outcome of the appeal(s) and intended rulemaking, a variety of projects that otherwise would have qualified for streamlined permitting processes under nationwide or regional general permits would have been required to undergo more lengthy and costly individual permit procedures based on an extension of waters that will be deemed jurisdictional. On February 28, 2017, President Trump signed an Executive Order directing the EPA to review and rescind or revise the rule. Until the rule is reviewed and rescinded or fully litigated and finalized, the Registrants cannot determine whether projects that include construction and demolition will face more complex permitting issues, higher costs or increased requirements for compensatory mitigation.

New Accounting Pronouncements

For a discussion of new accounting pronouncements affecting the Company, refer to Note 2 of Notes to Consolidated Financial Statements in Part I, 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, 2016 . There have been no significant changes in the Company's assumptions regarding critical accounting estimates since December 31, 2016 .

PacifiCorp and its subsidiaries

Consolidated Financial Section

PART I


Item 1.	Financial Statements

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Shareholders of

PacifiCorp

Portland, Oregon

We have reviewed the accompanying consolidated balance sheet of PacifiCorp and subsidiaries ("PacifiCorp") as of June 30, 2017 , and the related consolidated statements of operations for the three-month and six-month periods ended June 30, 2017 and 2016 , and of changes in shareholders' equity and cash flows for the six-month periods ended June 30, 2017 and 2016 . These interim financial statements are the responsibility of PacifiCorp's management.

We have previously audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated balance sheet of PacifiCorp and subsidiaries as of December 31, 2016 , and the related consolidated statements of operations, comprehensive income, changes in shareholders' equity, and cash flows for the year then ended (not presented herein); and in our report dated February 24, 2017 , 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, 2016 is fairly stated, in all material respects, in relation to the consolidated balance sheet from which it has been derived.

/s/ Deloitte & Touche LLP

Portland, Oregon

August 4, 2017

PACIFICORP AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS (Unaudited)

(Amounts in millions)



	As of
	June 30,		December 31,
	2017		2016
ASSETS
Current assets:
Cash and cash equivalents	$	167	$	17
Accounts receivable, net	681		728
Income taxes receivable	—		17
Inventories:
Materials and supplies	231		228
Fuel	224		215
Regulatory assets	28		53
Other current assets	75		96
Total current assets	1,406		1,354

Property, plant and equipment, net	19,141		19,162
Regulatory assets	1,535		1,490
Other assets	378		388

Total assets	$	22,460	$	22,394

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

PACIFICORP AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS (Unaudited) (continued)

(Amounts in millions)



	As of
	June 30,			December 31,
	2017			2016
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable	$	397		$	408
Income taxes payable	160			—
Accrued employee expenses	85			67
Accrued interest	115			115
Accrued property and other taxes	100			63
Short-term debt	—			270
Current portion of long-term debt and capital lease obligations	92			58
Regulatory liabilities	61			54
Other current liabilities	169			164
Total current liabilities	1,179			1,199

Regulatory liabilities	1,020			978
Long-term debt and capital lease obligations	6,935			7,021
Deferred income taxes	4,868			4,880
Other long-term liabilities	914			926
Total liabilities	14,916			15,004

Commitments and contingencies (Note 7)

Shareholders' equity:
Preferred stock	2			2
Common stock - 750 shares authorized, no par value, 357 shares issued and outstanding	—			—
Additional paid-in capital	4,479			4,479
Retained earnings	3,075			2,921
Accumulated other comprehensive loss, net	(12		)	(12		)
Total shareholders' equity	7,544			7,390

Total liabilities and shareholders' equity	$	22,460		$	22,394

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

PACIFICORP AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)

(Amounts in millions)



	Three-Month Periods						Six-Month Periods
	Ended June 30,						Ended June 30,
	2017			2016			2017			2016

Operating revenue	$	1,245		$	1,233		$	2,526		$	2,485

Operating costs and expenses:
Energy costs	399			390			840			817
Operations and maintenance	258			265			506			528
Depreciation and amortization	202			193			398			383
Taxes, other than income taxes	48			46			99			94
Total operating costs and expenses	907			894			1,843			1,822

Operating income	338			339			683			663

Other income (expense):
Interest expense	(95		)	(95		)	(190		)	(190		)
Allowance for borrowed funds	4			4			8			8
Allowance for equity funds	7			7			14			14
Other, net	4			3			7			6
Total other income (expense)	(80		)	(81		)	(161		)	(162		)

Income before income tax expense	258			258			522			501
Income tax expense	83			82			168			160
Net income	$	175		$	176		$	354		$	341

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

PACIFICORP AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY (Unaudited)

(Amounts in millions)



										Accumulated
					Additional					Other			Total
	Preferred		Common		Paid-in		Retained			Comprehensive			Shareholders'
	Stock		Stock		Capital		Earnings			Loss, Net			Equity

Balance, December 31, 2015	$	2	$	—	$	4,479	$	3,033		$	(11	)	$	7,503
Net income	—		—		—		341			—			341
Common stock dividends declared	—		—		—		(250		)	—			(250		)
Balance, June 30, 2016	$	2	$	—	$	4,479	$	3,124		$	(11	)	$	7,594

Balance, December 31, 2016	$	2	$	—	$	4,479	$	2,921		$	(12	)	$	7,390
Net income	—		—		—		354			—			354
Common stock dividends declared	—		—		—		(200		)	—			(200		)
Balance, June 30, 2017	$	2	$	—	$	4,479	$	3,075		$	(12	)	$	7,544

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

PACIFICORP AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)

(Amounts in millions)



	Six-Month Periods
	Ended June 30,
	2017			2016
Cash flows from operating activities:
Net income	$	354		$	341
Adjustments to reconcile net income to net cash flows from operating activities:
Depreciation and amortization	398			383
Allowance for equity funds	(14		)	(14		)
Deferred income taxes and amortization of investment tax credits	(5		)	67
Changes in regulatory assets and liabilities	24			53
Other, net	1			—
Changes in other operating assets and liabilities:
Accounts receivable and other assets	60			55
Derivative collateral, net	(4		)	7
Inventories	(12		)	(38		)
Income taxes	171			27
Accounts payable and other liabilities	56			(84		)
Net cash flows from operating activities	1,029			797

Cash flows from investing activities:
Capital expenditures	(370		)	(415		)
Other, net	15			(9		)
Net cash flows from investing activities	(355		)	(424		)

Cash flows from financing activities:
Repayments of long-term debt and capital lease obligations	(53		)	(55		)
Net repayments of short-term debt	(270		)	(20		)
Common stock dividends	(200		)	(250		)
Other, net	(1		)	(1		)
Net cash flows from financing activities	(524		)	(326		)

Net change in cash and cash equivalents	150			47
Cash and cash equivalents at beginning of period	17			12
Cash and cash equivalents at end of period	$	167		$	59

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

PACIFICORP AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

( 1 ) General

PacifiCorp, which includes PacifiCorp and its subsidiaries, is a United States regulated electric utility company serving retail customers, including residential, commercial, industrial, irrigation and other customers in portions of Utah, Oregon, Wyoming, Washington, Idaho and California. PacifiCorp owns, or has interests in, a number of thermal, hydroelectric, wind-powered and geothermal generating facilities, as well as electric transmission and distribution assets. PacifiCorp also buys and sells electricity on the wholesale market with other utilities, energy marketing companies, financial institutions and other market participants. PacifiCorp is subject to comprehensive state and federal regulation. PacifiCorp's subsidiaries support its electric utility operations by providing coal mining services. PacifiCorp is an indirect subsidiary of Berkshire Hathaway Energy Company ("BHE"), a holding company based in Des Moines, Iowa that owns subsidiaries principally engaged in energy businesses. BHE is a consolidated subsidiary of Berkshire Hathaway Inc. ("Berkshire Hathaway").

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, 2017 and for the three- and six-month periods ended June 30, 2017 and 2016 . The Consolidated Statements of Comprehensive Income have been omitted as net income equals comprehensive income for the three- and six-month periods ended June 30, 2017 and 2016 . The results of operations for the three- and six-month periods ended June 30, 2017 and 2016 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 PacifiCorp's Annual Report on Form 10-K for the year ended December 31, 2016 describes the most significant accounting policies used in the preparation of the unaudited Consolidated Financial Statements. There have been no significant changes in PacifiCorp's assumptions regarding significant accounting estimates and policies during the six-month period ended June 30, 2017 .

( 2 ) New Accounting Pronouncements

In March 2017, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2017-07, which amends FASB Accounting Standards Codification ("ASC") Topic 715, "Compensation - Retirement Benefits." The amendments in this guidance require that an employer disaggregate the service cost component from the other components of net benefit cost and report the service cost component in the same line item as other compensation costs arising from services rendered by the pertinent employees during the period. The other components of net benefit cost are required to be presented in the statement of operations separately from the service cost component and outside the subtotal of operating income. Additionally, the guidance only allows the service cost component to be eligible for capitalization when applicable. This guidance is effective for interim and annual reporting periods beginning after December 15, 2017, with early adoption permitted. This guidance must be adopted retrospectively for the presentation of the service cost component and the other components of net benefit cost in the statement of operations and prospectively for the capitalization of the service cost component in the balance sheet. PacifiCorp plans to adopt this guidance effective January 1, 2018 and is currently evaluating the impact on its Consolidated Financial Statements and disclosures included within Notes to Consolidated Financial Statements.

In November 2016, the FASB issued ASU No. 2016-18, which amends FASB ASC Subtopic 230-10, “Statement of Cash Flows - Overall.” The amendments in this guidance require that a statement of cash flows explain the change during the period in the total of cash, cash equivalents, and amounts generally described as restricted cash or restricted cash equivalents. Amounts generally described as restricted cash and restricted cash equivalents should be included with cash and cash equivalents when reconciling the beginning-of-period and end-of-period total amounts shown on the statement of cash flows. This guidance is effective for interim and annual reporting periods beginning after December 15, 2017, with early adoption permitted, and is required to be adopted retrospectively. PacifiCorp plans to adopt this guidance effective January 1, 2018 and is currently evaluating the impact on its Consolidated Financial Statements and disclosures included within Notes to Consolidated Financial Statements.

In August 2016, the FASB issued ASU No. 2016-15, which amends FASB ASC Topic 230, "Statement of Cash Flows." The amendments in this guidance address the classification of eight specific cash flow issues within the statement of cash flows with the objective of reducing the existing diversity in practice. This guidance is effective for interim and annual reporting periods beginning after December 15, 2017, with early adoption permitted, and is required to be adopted retrospectively. PacifiCorp plans to adopt this guidance effective January 1, 2018 and does not believe the adoption of this guidance will have a material impact on its Consolidated Financial Statements.

In February 2016, the FASB issued ASU No. 2016-02, which creates FASB ASC Topic 842, "Leases" and supersedes Topic 840 "Leases." This guidance increases transparency and comparability among entities by recording lease assets and lease liabilities on the balance sheet and disclosing key information about leasing arrangements. A lessee should recognize in the balance sheet a liability to make lease payments (the lease liability) and a right-of-use asset representing its right to use the underlying asset for the lease term. The recognition, measurement, and presentation of expenses and cash flows arising from a lease by a lessee have not significantly changed from previous guidance. This guidance is effective for interim and annual reporting periods beginning after December 15, 2018, with early adoption permitted, and is required to be adopted using a modified retrospective approach. PacifiCorp plans to adopt this guidance effective January 1, 2019 and is currently evaluating the impact 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 August 2015, the FASB issued ASU No. 2015-14, which defers the effective date of ASU No. 2014-09 one year to interim and annual reporting periods beginning after December 15, 2017. During 2016, the FASB issued several ASUs that clarify the implementation guidance for ASU No. 2014-09 but do not change the core principle of the guidance. This guidance may be adopted retrospectively or under a modified retrospective method where the cumulative effect is recognized at the date of initial application. PacifiCorp plans to adopt this guidance effective January 1, 2018 under the modified retrospective method and is currently evaluating the impact on its Consolidated Financial Statements and disclosures included within Notes to Consolidated Financial Statements. PacifiCorp currently does not expect the timing and amount of revenue currently recognized to be materially different after adoption of the new guidance as a majority of revenue is recognized when PacifiCorp has the right to invoice as it corresponds directly with the value to the customer of PacifiCorp’s performance to date. PacifiCorp's current plan is to quantitatively disaggregate revenue in the required financial statement footnote by customer class and jurisdiction.

( 3 ) Property, Plant and Equipment, Net

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



		As of
		June 30,			December 31,
	Depreciable Life	2017			2016

Property, plant and equipment in-service	5-75 years	$	27,505		$	27,298
Accumulated depreciation and amortization		(9,074		)	(8,793		)
Net property, plant and equipment in-service		18,431			18,505
Construction work-in-progress		710			657
Total property, plant and equipment, net		$	19,141		$	19,162

( 4 ) Recent Financing Transactions

In June 2017, PacifiCorp extended, with lender consent, the maturity date to June 2020 for its $400 million unsecured credit facility by exercising the first of two available one-year extensions.

These credit facilities, which support PacifiCorp's commercial paper program and certain series of its tax-exempt bond obligations and provide for the issuance of letters of credit, have a variable interest rate based on the Eurodollar rate or a base rate, at PacifiCorp's option, plus a spread that varies based on PacifiCorp's credit ratings for its senior unsecured long-term debt securities. These credit facilities require PacifiCorp's ratio of consolidated debt, including current maturities, to total capitalization not exceed 0.65 to 1.0 as of the last day of each quarter.

( 5 ) Employee Benefit Plans

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



	Three-Month Periods						Six-Month Periods
	Ended June 30,						Ended June 30,
	2017			2016			2017			2016
Pension:
Service cost	$	—		$	1		$	—		$	2
Interest cost	13			13			25			27
Expected return on plan assets	(18		)	(19		)	(36		)	(38		)
Net amortization	3			9			7			17
Net periodic benefit (credit) cost	$	(2	)	$	4		$	(4	)	$	8

Other postretirement:
Service cost	$	—		$	—		$	1		$	1
Interest cost	4			4			7			8
Expected return on plan assets	(5		)	(5		)	(11		)	(11		)
Net amortization	(2		)	(2		)	(3		)	(3		)
Net periodic benefit credit	$	(3	)	$	(3	)	$	(6	)	$	(5	)

Employer contributions to the pension and other postretirement benefit plans are expected to be $5 million and $- million, respectively, during 2017 . As of June 30, 2017 , $2 million and $- million of contributions had been made to the pension and other postretirement benefit plans, respectively.

( 6 ) Risk Management and Hedging Activities

PacifiCorp is exposed to the impact of market fluctuations in commodity prices and interest rates. PacifiCorp is principally exposed to electricity, natural gas, coal and fuel oil commodity price risk as it has an obligation to serve retail customer load in its regulated service territories. PacifiCorp's 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 and wholesale electricity that is purchased and sold. 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 and future debt issuances. PacifiCorp does not engage in a material amount of proprietary trading activities.

PacifiCorp has established a risk management process that is designed to identify, assess, manage, monitor and report each of the various types of risk involved in its business. To mitigate a portion of its commodity price risk, PacifiCorp uses commodity derivative contracts, which may include forwards, options, swaps and other agreements, to effectively secure future supply or sell future production generally at fixed prices. PacifiCorp 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, PacifiCorp may from time to time enter into interest rate derivative contracts, such as interest rate swaps or locks, to mitigate PacifiCorp's exposure to interest rate risk. No interest rate derivatives were in place during the periods presented. PacifiCorp does not hedge all of its commodity price and interest rate risks, thereby exposing the unhedged portion to changes in market prices.

There have been no significant changes in PacifiCorp's accounting policies related to derivatives. Refer to Note 7 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 PacifiCorp'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, 2017
Not designated as hedging contracts ⁽¹⁾ :
Commodity assets	$	9		$	—	$	1		$	—		$	10
Commodity liabilities	(3		)	—		(22		)	(84		)	(109		)
Total	6			—		(21		)	(84		)	(99		)

Total derivatives	6			—		(21		)	(84		)	(99		)
Cash collateral receivable	—			—		15			58			73
Total derivatives - net basis	$	6		$	—	$	(6	)	$	(26	)	$	(26	)

As of December 31, 2016
Not designated as hedging contracts ⁽¹⁾ :
Commodity assets	$	24		$	2	$	1		$	—		$	27
Commodity liabilities	(6		)	—		(14		)	(84		)	(104		)
Total	18			2		(13		)	(84		)	(77		)

Total derivatives	18			2		(13		)	(84		)	(77		)
Cash collateral receivable	—			—		10			59			69
Total derivatives - net basis	$	18		$	2	$	(3	)	$	(25	)	$	(8	)


(1)	PacifiCorp's commodity derivatives are generally included in rates and as of June 30, 2017 and December 31, 2016 , a regulatory asset of $95 million and $73 million , respectively, was recorded related to the net derivative liability of $99 million and $77 million , respectively.

Not Designated as Hedging Contracts

The following table reconciles the beginning and ending balances of PacifiCorp'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,
	2017			2016			2017			2016

Beginning balance	$	103		$	144		$	73		$	133
Changes in fair value recognized in net regulatory assets	6			(45		)	30			(19		)
Net gains reclassified to operating revenue	1			2			13			10
Net losses reclassified to energy costs	(15		)	(12		)	(21		)	(35		)
Ending balance	$	95		$	89		$	95		$	89

Derivative Contract Volumes

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



	Unit of	June 30,		December 31,
	Measure	2017		2016

Electricity sales	Megawatt hours	(1	)	(3	)
Natural gas purchases	Decatherms	85		84
Fuel oil purchases	Gallons	5		11

Credit Risk

PacifiCorp is 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 PacifiCorp's counterparties have similar economic, industry or other characteristics and due to direct or indirect relationships among the counterparties. Before entering into a transaction, PacifiCorp analyzes the financial condition of each significant wholesale counterparty, establishes limits on the amount of unsecured credit to be extended to each counterparty and evaluates the appropriateness of unsecured credit limits on an ongoing basis. To further mitigate wholesale counterparty credit risk, PacifiCorp enters into netting and collateral arrangements that may include margining and cross-product netting agreements and obtains third-party guarantees, letters of credit and cash deposits. If required, PacifiCorp exercises 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 PacifiCorp's creditworthiness. These rights can vary by contract and by counterparty. As of June 30, 2017 , PacifiCorp's credit ratings from the three recognized credit rating agencies were investment grade.

The aggregate fair value of PacifiCorp's derivative contracts in liability positions with specific credit-risk-related contingent features totaled $102 million and $97 million as of June 30, 2017 and December 31, 2016 , respectively, for which PacifiCorp had posted collateral of $73 million and $69 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, 2017 and December 31, 2016 , PacifiCorp would have been required to post $26 million and $22 million , respectively, of additional collateral. PacifiCorp's collateral requirements could fluctuate considerably due to market price volatility, changes in credit ratings, changes in legislation or regulation, or other factors.

( 7 ) Fair Value Measurements

The carrying value of PacifiCorp'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. PacifiCorp 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 PacifiCorp 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 PacifiCorp's judgments about the assumptions market participants would use in pricing the asset or liability since limited market data exists. PacifiCorp develops these inputs based on the best information available, including its own data.

The following table presents PacifiCorp's financial 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, 2017
Assets:
Commodity derivatives	$	—	$	10		$	—	$	(4	)	$	6
Money market mutual funds ⁽²⁾	167		—			—		—			167
Investment funds	19		—			—		—			19
	$	186	$	10		$	—	$	(4	)	$	192

Liabilities - Commodity derivatives	$	—	$	(109	)	$	—	$	77		$	(32	)

As of December 31, 2016
Assets:
Commodity derivatives	$	—	$	27		$	—	$	(7	)	$	20
Money market mutual funds ⁽²⁾	13		—			—		—			13
Investment funds	17		—			—		—			17
	$	30	$	27		$	—	$	(7	)	$	50

Liabilities - Commodity derivatives	$	—	$	(104	)	$	—	$	76		$	(28	)


(1)	Represents netting under master netting arrangements and a net cash collateral receivable of $73 million and $69 million as of June 30, 2017 and December 31, 2016 , respectively.


(2)	Amounts are included in cash and cash equivalents, other current assets and other assets 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 PacifiCorp transacts. When quoted prices for identical contracts are not available, PacifiCorp uses forward price curves. Forward price curves represent PacifiCorp's estimates of the prices at which a buyer or seller could contract today for delivery or settlement at future dates. PacifiCorp 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 energy brokers, exchanges, direct communication with market participants and actual transactions executed by PacifiCorp. Market price quotations for certain major electricity and natural gas trading hubs are generally readily obtainable for the first six years; therefore, PacifiCorp's forward price curves for those locations and periods reflect observable market quotes. Market price quotations for other electricity and natural gas trading hubs are not as readily obtainable for the first six years. Given that limited market data exists for these contracts, as well as for those contracts that are not actively traded, PacifiCorp 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 6 for further discussion regarding PacifiCorp's risk management and hedging activities.

PacifiCorp's investments in money market mutual funds and investment funds are stated at fair value and are primarily accounted for as available-for-sale securities. When available, PacifiCorp uses a readily observable quoted market price or net asset value of an identical security in an active market 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.

PacifiCorp's long-term debt is carried at cost on the Consolidated Balance Sheets. The fair value of PacifiCorp'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 PacifiCorp'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 PacifiCorp's long-term debt (in millions):



	As of June 30, 2017				As of December 31, 2016
	Carrying		Fair		Carrying		Fair
	Value		Value		Value		Value

Long-term debt	$	7,004	$	8,260	$	7,052	$	8,204

( 8 ) Commitments and Contingencies

Legal Matters

PacifiCorp is party to a variety of legal actions arising out of the normal course of business. Plaintiffs occasionally seek punitive or exemplary damages. PacifiCorp does not believe that such normal and routine litigation will have a material impact on its consolidated financial results.

Environmental Laws and Regulations

PacifiCorp is subject to federal, state and local 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 PacifiCorp's current and future operations. PacifiCorp believes it is in material compliance with all applicable laws and regulations.

Hydroelectric Relicensing

PacifiCorp's Klamath hydroelectric system is currently operating under annual licenses with the Federal Energy Regulatory Commission ("FERC"). In February 2010, PacifiCorp, the United States Department of the Interior, the United States Department of Commerce, the state of California, the state of Oregon and various other governmental and non-governmental settlement parties signed the Klamath Hydroelectric Settlement Agreement ("KHSA").

Congress failed to pass legislation needed to implement the original KHSA. On April 6, 2016, PacifiCorp, the states of California and Oregon, and the United States Departments of the Interior and Commerce and other stakeholders executed an amendment to the KHSA. Consistent with the terms of the amended KHSA, on September 23, 2016, PacifiCorp and the Klamath River Renewal Corporation ("KRRC") jointly filed an application with the FERC to transfer the license for the four mainstem Klamath River hydroelectric generating facilities from PacifiCorp to the KRRC. Also on September 23, 2016, the KRRC filed an application with the FERC to surrender the license and decommission the facilities. The KRRC's license surrender application included a request for the FERC to refrain from acting on the surrender application until after the transfer of the license to the KRRC is effective.

Under the amended KHSA, PacifiCorp and its customers are protected from uncapped dam removal costs and liabilities. The KRRC must indemnify PacifiCorp from liabilities associated with dam removal. The amended KHSA also limits PacifiCorp's contribution to facilities removal costs to no more than $200 million , of which up to $184 million would be collected from PacifiCorp's Oregon customers with the remainder to be collected from PacifiCorp's California customers. California voters approved a water bond measure in November 2014 from which the state of California's contribution toward facilities removal costs are being drawn. In accordance with this bond measure, additional funding of up to $250 million for facilities removal costs was included in the California state budget in 2016, with the funding effective for at least five years. If facilities removal costs exceed the combined funding that will be available from PacifiCorp's Oregon and California customers and the state of California, sufficient funds would need to be provided by the KRRC or an entity other than PacifiCorp for removal to proceed.

If certain conditions in the amended KHSA are not satisfied and the license does not transfer to the KRRC, PacifiCorp will resume relicensing with the FERC.

Guarantees

PacifiCorp 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 PacifiCorp's consolidated financial results.

(9) Related Party Transactions

Berkshire Hathaway includes BHE and its subsidiaries in its United States federal income tax return. Consistent with established regulatory practice, PacifiCorp's provision for income taxes has been computed on a stand-alone basis, and substantially all of its

currently payable or receivable income taxes are remitted to or received from BHE. For the six-month periods ended June 30, 2017 and 2016, PacifiCorp made net cash payments for federal and state income taxes to BHE totaling $3 million and $65 million , respectively.


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 PacifiCorp 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 PacifiCorp's historical unaudited Consolidated Financial Statements and Notes to Consolidated Financial Statements in Part I, Item 1 of this Form 10‑Q. PacifiCorp's actual results in the future could differ significantly from the historical results.

Results of Operations for the Second Quarter and First Six Months of 2017 and 2016

Overview

Net income for the second quarter of 2017 was $175 million , a decrease of $1 million , or 1% , compared to 2016. Net income decreased due to higher depreciation and amortization of $9 million , partially offset by lower operations and maintenance expenses of $7 million and higher margins of $3 million . Margins increased due to higher retail customer volumes, lower natural gas-fueled generation, higher wheeling revenue, and higher wholesale revenue from higher volumes and short-term market prices, partially offset by lower average retail rates, higher purchased electricity costs from higher volumes and prices and higher coal costs. Retail customer volumes increased 2.4% due to higher commercial and industrial usage and an increase in the average number of residential and commercial customers primarily in Utah. Energy generated decreased 1% for the second quarter of 2017 compared to 2016 primarily due to lower natural gas-fueled generation, partially offset by higher hydroelectric and coal generation. Wholesale electricity sales volumes increased 25% and purchased electricity volumes increased 16%.

Net income for the first six months of 2017 was $354 million , an increase of $13 million , or 4% , compared to 2016. Net income increased primarily due to lower operations and maintenance expenses of $22 million and higher margins of $18 million , partially offset by higher depreciation and amortization of $15 million and higher property taxes of $3 million. Margins increased due to higher retail customer volumes, lower natural gas-fueled generation, higher wholesale revenue from higher volumes and short-term market prices, lower purchased electricity prices and higher wheeling revenue, partially offset by higher purchased electricity volumes, lower average retail rates and higher coal costs. Retail customer volumes increased 2.6% due to impacts of weather on residential customers in Oregon and Washington, higher industrial usage primarily in Utah and Idaho, higher commercial usage across the service territory and an increase in the average number of residential customers in Utah and Oregon and commercial customers in Utah, partially offset by lower residential usage in Utah and Oregon. Energy generated decreased 3% for the first six months of 2017 compared to 2016 primarily due to lower natural gas-fueled generation, partially offset by higher hydroelectric and coal generation. Wholesale electricity sales volumes increased 1% and purchased electricity volumes increased 21%.

Operating revenue and energy costs are the key drivers of PacifiCorp's results of operations as they encompass retail and wholesale electricity revenue and the direct costs associated with providing electricity to customers. PacifiCorp believes that a discussion of gross margin, representing operating revenue less energy costs, is therefore meaningful.

A comparison of PacifiCorp's key operating results is as follows:



	Second Quarter									First Six Months
	2017		2016		Change					2017		2016		Change
Gross margin (in millions):
Operating revenue	$	1,245	$	1,233	$	12		1	%	$	2,526	$	2,485	$	41		2	%
Energy costs	399		390		9			2	%	840		817		23			3	%
Gross margin	$	846	$	843	$	3		—	%	$	1,686	$	1,668	$	18		1	%

Sales (GWh):
Residential	3,577		3,502		75			2	%	8,038		7,762		276			4	%
Commercial ⁽¹⁾	4,264		4,141		123			3	%	8,520		8,319		201			2	%
Industrial, irrigation and other ⁽¹⁾	5,425		5,309		116			2	%	10,378		10,165		213			2	%
Total retail	13,266		12,952		314			2	%	26,936		26,246		690			3	%
Wholesale	1,362		1,086		276			25	%	3,012		2,980		32			1	%
Total sales	14,628		14,038		590			4	%	29,948		29,226		722			2	%

Average number of retail customers
(in thousands)	1,864		1,837		27			1	%	1,861		1,835		26			1	%

Average revenue per MWh:
Retail	$	87.65	$	89.96	$	(2.31	)	(3	)%	$	87.22	$	88.96	$	(1.74	)	(2	)%
Wholesale	$	23.99	$	22.89	$	1.10		5	%	$	29.92	$	23.93	$	5.99		25	%

Heating degree days	1,410		1,052		358			34	%	6,168		5,490		678			12	%
Cooling degree days	536		557		(21		)	(4	)%	538		557		(19		)	(3	)%

Sources of energy (GWh) ⁽²⁾ :
Coal	7,516		7,130		386			5	%	16,356		15,862		494			3	%
Natural gas	1,323		2,573		(1,250		)	(49	)%	3,161		4,899		(1,738		)	(35	)%
Hydroelectric ⁽³⁾	1,578		887		691			78	%	2,957		2,231		726			33	%
Wind and other ⁽³⁾	690		681		9			1	%	1,570		1,690		(120		)	(7	)%
Total energy generated	11,107		11,271		(164		)	(1	)%	24,044		24,682		(638		)	(3	)%
Energy purchased	4,237		3,663		574			16	%	7,822		6,489		1,333			21	%
Total	15,344		14,934		410			3	%	31,866		31,171		695			2	%

Average cost of energy per MWh:
Energy generated ⁽⁴⁾	$	18.22	$	19.18	(0.96		)	(5	)%	$	18.80	$	18.48	$	0.32		2	%
Energy purchased	$	34.50	$	34.18	0.32			1	%	$	37.85	$	40.42	$	(2.57	)	(6	)%


(1)	Prior period GWh amounts have been reclassified for consistency with the current period presentation.


(2)	GWh amounts are net of energy used by the related generating facilities.


(3)	All or some of the renewable energy attributes associated with generation from these generating facilities may be: (a) used in future years to comply with RPS or other regulatory requirements or (b) sold to third parties in the form of RECs or other environmental commodities.


(4)	The average cost per MWh of energy generated includes only the cost of fuel associated with the generating facilities.

Gross margin increased $3 million for the second quarter of 2017 compared to 2016 primarily due to:


•	$28 million of higher retail revenues due to increased customer volumes of 2.4% due to higher commercial and industrial customer usage and an increase in the average number of residential and commercial customers in Utah;


•	$18 million of lower natural gas costs primarily due to lower gas-fueled generation as gas prices were higher in 2017;


•	$8 million due to higher wheeling revenue; and


•	$8 million of higher wholesale revenue due to higher volumes and higher short-term market prices.

The increases above were partially offset by:


•	$21 million of lower average retail rates;


•	$21 million of higher purchased electricity costs due to higher volumes and prices;


•	$11 million of lower Demand Side Management ("DSM") revenues (offset in operating expenses), primarily driven by the recently implemented Utah Sustainable Transportation and Energy Plan ("STEP") program; and


•	$4 million of higher coal costs.

Operations and maintenance decreased $7 million , or 3% , for the second quarter of 2017 compared to 2016 primarily due to a decrease in DSM amortization expense (offset in revenues) driven by the establishment of the Utah STEP program and a decrease in pension expense primarily due to a current year plan change. These decreases were partially offset by higher injury and damage expenses, primarily due to a prior year accrual for insurance proceeds and current year settlements, and higher labor costs related to storm damage restoration.

Depreciation and amortization increased $9 million , or 5% , for the second quarter of 2017 compared to 2016 primarily due to higher plant-in-service.

Gross margin increased $18 million , or 1% , for the first six months of 2017 compared to 2016 primarily due to:

•

$64 million of higher retail revenues due to increased customer volumes of 2.6% from the impacts of weather on residential customers in Oregon and Washington, higher industrial usage primarily in Utah and Idaho, higher commercial usage across the service territory, and an increase in the average number of residential customers in Utah and Oregon and commercial customers in Utah, partially offset by lower residential usage in Utah and Oregon;


•	$21 million of lower natural gas costs primarily due to lower gas-fueled generation due to higher gas prices in 2017;


•	$19 million of higher wholesale revenue due to higher volumes and higher short-term market prices;


•	$16 million of lower average purchased electricity prices;


•	$9 million due to higher wheeling revenue; and


•	$7 million of higher net deferrals of incurred net power costs in accordance with established adjustment mechanisms.

The increases above were partially offset by:


•	$50 million of higher purchased electricity volumes;


•	$26 million of lower average retail rates;


•	$23 million of lower DSM revenues (offset in operating expenses), primarily driven by the recently implemented Utah STEP program; and


•	$17 million of higher coal costs, primarily due to higher volumes.

Operations and maintenance decreased $22 million , or 4% , for the first six months of 2017 compared to 2016 primarily due to a decrease in DSM amortization expense (offset in revenues) driven by the establishment of the Utah STEP program, and a decrease in pension expense primarily due to a current year plan change. These decreases were partially offset by higher injury and damage expenses, primarily due to a prior year accrual for insurance proceeds and current year settlements, and higher labor costs related to storm damage restoration.

Depreciation and amortization increased $15 million , or 4% , for the first six months of 2017 compared to 2016 primarily due to higher plant-in-service.

Taxes, other than income taxes increased $5 million , or 5% for the first six months of 2017 compared to 2016 due to higher assessed property values.

Income tax expense increased $8 million , or 5% , for the first six months of 2017 compared to 2016 and the effective tax rate was 32% for 2017 and 2016.

Liquidity and Capital Resources

As of June 30, 2017 , PacifiCorp's total net liquidity was as follows (in millions):



Cash and cash equivalents	$	167

Credit facilities	1,000
Less:
Short-term debt	—
Tax-exempt bond support	(92		)
Net credit facilities	908

Total net liquidity	$	1,075

Credit facilities:
Maturity dates	2020

Operating Activities

Net cash flows from operating activities for the six-month periods ended June 30, 2017 and 2016 were $1,029 million and $797 million , respectively. The change was primarily due to the payment for USA Power final judgment and post-judgment interest in the prior year, higher receipts from wholesale and retail customers, and prior year higher cash payments for income taxes, partially offset by increases in payments for purchased power.

The timing of PacifiCorp's income tax cash flows from period to period can be significantly affected by 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, 2017 and 2016 were $(355) million and $(424) million , respectively. The change reflects a current year decrease in capital expenditures of $45 million and current year distributions from an affiliate of $16 million compared to prior year contributions to an affiliate of $9 million. Refer to "Future Uses of Cash" for discussion of capital expenditures.

Financing Activities

Net cash flows from financing activities for the six-month period ended June 30, 2017 was $(524) million . Uses of cash consisted substantially of $270 million for the repayment of short-term debt, $200 million for common stock dividends paid to PPW Holdings LLC, and $50 million for the repayment of long-term debt.

Net cash flows from financing activities for the six-month period ended June 30, 2016 was $(326) million . Uses of cash consisted substantially of $250 million for common stock dividends paid to PPW Holdings LLC, $54 million for the repayment of long-term debt and $20 million for the repayment of short-term debt.

Short-term Debt

Regulatory authorities limit PacifiCorp to $1.5 billion of short-term debt. As of June 30, 2017 , PacifiCorp had no short-term debt outstanding. As of December 31, 2016 , PacifiCorp had $270 million of short-term debt outstanding at a weighted average interest rate of 0.96%.

Long-term Debt

PacifiCorp currently has regulatory authority from the OPUC and the IPUC to issue an additional $1.325 billion of long-term debt. PacifiCorp must make a notice filing with the WUTC prior to any future issuance.

Future Uses of Cash

PacifiCorp 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, capital contributions and other sources. These sources are expected to provide funds required for current operations, capital expenditures, debt retirements and other capital requirements. The availability and terms under which PacifiCorp has access to external financing depends on a variety of factors, including PacifiCorp's credit ratings, investors' judgment of risk and conditions in the overall capital markets, including the condition of the utility industry.

Capital Expenditures

PacifiCorp 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.

Historical and forecast capital expenditures, each of which exclude amounts for non-cash equity AFUDC and other non-cash items, are as follows (in millions):



	Six-Month Periods				Annual
	Ended June 30,				Forecast
	2016		2017		2017

Transmission system investment	$	48	$	49	$	122
Environmental	26		11		34
Wind investment	—		5		20
Operating and other	341		305		649
Total	$	415	$	370	$	825

PacifiCorp's historical and forecast capital expenditures include the following:


•	Transmission system investment primarily reflects main grid reinforcement costs and initial costs for the 140-mile 500 kV Aeolus-Bridger/Anticline transmission line, a major segment of PacifiCorp’s Energy Gateway Transmission expansion program expected to be placed in-service in 2020. Planned spending for the Aeolus-Bridger/Anticline line totals $21 million in 2017.

•

Environmental includes the installation of new or the replacement of existing emissions control equipment at certain generating facilities, 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.

•

Wind investment includes initial costs for new wind plant construction projects and repowering of certain existing wind plants. The repowering projects entail the replacement of significant components of older turbines. Planned spending for the repowering totals $10 million in 2017 and for the new wind-powered generating facilities totals $10 million in 2017. The repowering projects are expected to be placed in-service at various dates in 2019 and 2020. The new wind-powered generating facilities are also expected to be placed in-service in 2019 and 2020. The energy production from the repowered and new wind-powered generating facilities is expected to qualify for 100% of the federal renewable electricity production tax credit available for 10 years once the equipment is placed in-service.


•	Remaining investments relate to operating projects that consist of routine expenditures for generation, transmission, distribution and other infrastructure needed to serve existing and expected demand, including upgrades to customer meters in Oregon and Idaho.

Integrated Resource Plan

In April 2017, PacifiCorp filed its 2017 Integrated Resource Plan ("IRP") with its state commissions. The IRP includes investments in renewable energy resources, upgrades to the existing wind fleet, and energy efficiency measures to meet future customer needs. Implementation of wind upgrades, new transmission, and new wind renewable resources will require an estimated $3.5 billion in capital investment from 2017 through 2020. PacifiCorp's forecast capital expenditures for 2018 through 2019 increased $723 million from the forecast included in PacifiCorp's 2016 Annual Report on Form 10-K as a result of its 2017 IRP.

Request for Proposals

In compliance with the 2017 IRP filed in April 2017, PacifiCorp is preparing to issue its Request for Proposals ("RFP") for renewable resources in late August 2017 seeking cost-competitive bids for up to 1,270 MW of wind energy resources interconnecting with or delivering to PacifiCorp’s Wyoming system. PacifiCorp has identified plans to add at least 1,100 MW of new wind resources that will qualify for full federal production tax credits and achieve commercial operation by December 31, 2020, in conjunction with implementation of certain Wyoming transmission infrastructure projects within that same time frame. The draft 2017 RFP was filed with the UPSC in June 2017 and was distributed to parties in Oregon in July 2017. The Utah and the Oregon Independent Evaluators have been selected and approved by the respective commissions. The draft RFP will incorporate comments by parties during August 2017 with approval by the UPSC and the OPUC targeted for the end of August 2017. The WUTC was notified of the 2017 RFP and schedule. Bids will be due in October 2017.

Contractual Obligations

As of June 30, 2017 , there have been no material changes outside the normal course of business in contractual obligations from the information provided in Item 7 of PacifiCorp's Annual Report on Form 10-K for the year ended December 31, 2016 .

Regulatory Matters

PacifiCorp is subject to comprehensive regulation. Refer to "Regulatory Matters" in Berkshire Hathaway Energy's Part I, Item 2 of this Form 10-Q for discussion regarding PacifiCorp's current regulatory matters.

Environmental Laws and Regulations

PacifiCorp is subject to federal, state, local and foreign laws and regulations regarding air and water quality, RPS, 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 PacifiCorp'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. PacifiCorp 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. Environmental laws and regulations continue to evolve, and PacifiCorp is unable to predict the impact of the changing laws and regulations on its operations and financial results. Refer to "Liquidity and Capital Resources" for discussion of PacifiCorp's forecast environmental-related capital expenditures.

Refer to "Environmental Laws and Regulations" in Berkshire Hathaway Energy's Part I, Item 2 of this Form 10-Q for additional information regarding environmental laws.

New Accounting Pronouncements

For a discussion of new accounting pronouncements affecting PacifiCorp, refer to Note 2 of Notes to Consolidated Financial Statements in Part I, Item 1 of the 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, pension and other postretirement benefits, income taxes and revenue recognition-unbilled revenue. For additional discussion of PacifiCorp's critical accounting estimates, see Item 7 of PacifiCorp's Annual Report on Form 10-K for the year ended December 31, 2016 . There have been no significant changes in PacifiCorp's assumptions regarding critical accounting estimates since December 31, 2016 .

MidAmerican Funding, LLC and its subsidiaries and MidAmerican Energy Company

Consolidated Financial Section

PART I


Item 1.	Financial Statements

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Shareholder of

MidAmerican Energy Company

Des Moines, Iowa

We have reviewed the accompanying balance sheet of MidAmerican Energy Company ("MidAmerican Energy") as of June 30, 2017 , and the related statements of operations for the three-month and six-month periods ended June 30, 2017 and 2016 , and of changes in equity and cash flows for the six-month periods ended June 30, 2017 and 2016 . These interim financial statements are the responsibility of MidAmerican Energy's management.

Based on our reviews, we are not aware of any material modifications that should be made to such 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 balance sheet of MidAmerican Energy Company as of December 31, 2016 , and the related 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 24, 2017 , we expressed an unqualified opinion on those financial statements. In our opinion, the information set forth in the accompanying balance sheet as of December 31, 2016 is fairly stated, in all material respects, in relation to the balance sheet from which it has been derived.

/s/ Deloitte & Touche LLP

Des Moines, Iowa

August 4, 2017

MIDAMERICAN ENERGY COMPANY

BALANCE SHEETS (Unaudited)

(Amounts in millions)



	As of
	June 30,		December 31,
	2017		2016
ASSETS
Current assets:
Cash and cash equivalents	$	370	$	14
Receivables, net	268		285
Income taxes receivable	94		9
Inventories	234		264
Other current assets	22		35
Total current assets	988		607

Property, plant and equipment, net	13,042		12,821
Regulatory assets	1,222		1,161
Investments and restricted cash and investments	689		653
Other assets	200		217

Total assets	$	16,141	$	15,459

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

MIDAMERICAN ENERGY COMPANY

BALANCE SHEETS (Unaudited) (continued)

(Amounts in millions)



	As of
	June 30,		December 31,
	2017		2016
LIABILITIES AND SHAREHOLDER'S EQUITY
Current liabilities:
Accounts payable	$	147	$	303
Accrued interest	48		45
Accrued property, income and other taxes	140		137
Short-term debt	—		99
Current portion of long-term debt	350		250
Other current liabilities	156		159
Total current liabilities	841		993

Long-term debt	4,543		4,051
Deferred income taxes	3,638		3,572
Regulatory liabilities	899		883
Asset retirement obligations	528		510
Other long-term liabilities	294		290
Total liabilities	10,743		10,299

Commitments and contingencies (Note 8)

Shareholder's equity:
Common stock - 350 shares authorized, no par value, 71 shares issued and outstanding	—		—
Additional paid-in capital	561		561
Retained earnings	4,837		4,599
Total shareholder's equity	5,398		5,160

Total liabilities and shareholder's equity	$	16,141	$	15,459

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

MIDAMERICAN ENERGY COMPANY

STATEMENTS OF OPERATIONS (Unaudited)

(Amounts in millions)



	Three-Month Periods						Six-Month Periods
	Ended June 30,						Ended June 30,
	2017			2016			2017			2016
Operating revenue:
Regulated electric	$	537		$	481		$	970		$	880
Regulated gas and other	121			103			383			329
Total operating revenue	658			584			1,353			1,209

Operating costs and expenses:
Cost of fuel, energy and capacity	110			90			212			182
Cost of gas sold and other	62			47			234			182
Operations and maintenance	181			170			347			330
Depreciation and amortization	141			110			258			220
Property and other taxes	29			28			60			56
Total operating costs and expenses	523			445			1,111			970

Operating income	135			139			242			239

Other income (expense):
Interest expense	(53		)	(48		)	(106		)	(97		)
Allowance for borrowed funds	3			2			5			3
Allowance for equity funds	8			4			14			8
Other, net	2			2			8			5
Total other income (expense)	(40		)	(40		)	(79		)	(81		)

Income before income tax benefit	95			99			163			158
Income tax benefit	(39		)	(32		)	(76		)	(49		)

Net income	$	134		$	131		$	239		$	207

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

MIDAMERICAN ENERGY COMPANY

STATEMENTS OF CHANGES IN EQUITY (Unaudited)

(Amounts in millions)



	Common Stock		Retained Earnings			Accumulated Other Comprehensive Loss, Net			Total Equity

Balance, December 31, 2015	$	561	$	4,174		$	(30	)	$	4,705
Net income	—		207			—			207
Other comprehensive income	—		—			2			2
Dividend	—		(117		)	27			(90		)
Other equity transactions	$	—	$	(1	)	$	—		$	(1	)
Balance, June 30, 2016	$	561	$	4,263		$	(1	)	$	4,823

Balance, December 31, 2016	$	561	$	4,599		$	—		$	5,160
Net income	—		239			—			239
Other equity transactions	—		(1		)	—			(1		)
Balance, June 30, 2017	$	561	$	4,837		$	—		$	5,398

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

MIDAMERICAN ENERGY COMPANY

STATEMENTS OF CASH FLOWS (Unaudited)

(Amounts in millions)



	Six-Month Periods
	Ended June 30,
	2017			2016
Cash flows from operating activities:
Net income	$	239		$	207
Adjustments to reconcile net income to net cash flows from operating activities:
Depreciation and amortization	258			220
Deferred income taxes and amortization of investment tax credits	27			45
Changes in other assets and liabilities	19			21
Other, net	(17		)	(24		)
Changes in other operating assets and liabilities:
Receivables, net	17			(30		)
Inventories	30			(18		)
Derivative collateral, net	2			3
Contributions to pension and other postretirement benefit plans, net	(5		)	(3		)
Accounts payable	(80		)	(33		)
Accrued property, income and other taxes, net	(83		)	213
Other current assets and liabilities	2			8
Net cash flows from operating activities	409			609

Cash flows from investing activities:
Utility construction expenditures	(545		)	(506		)
Purchases of available-for-sale securities	(81		)	(54		)
Proceeds from sales of available-for-sale securities	77			55
Other, net	7			—
Net cash flows from investing activities	(542		)	(505		)

Cash flows from financing activities:
Proceeds from long-term debt	843			—
Repayments of long-term debt	(255		)	(4		)
Net repayments of short-term debt	(99		)	—
Net cash flows from financing activities	489			(4		)

Net change in cash and cash equivalents	356			100
Cash and cash equivalents at beginning of period	14			103
Cash and cash equivalents at end of period	$	370		$	203

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

MIDAMERICAN ENERGY COMPANY

NOTES TO FINANCIAL STATEMENTS

(Unaudited)


( 1 )	General

MidAmerican Energy Company ("MidAmerican Energy") is a public utility with electric and natural gas operations and is the principal subsidiary of MHC Inc. ("MHC"). MHC is a holding company that conducts no business other than the ownership of its subsidiaries and related corporate services. MHC's nonregulated subsidiaries include Midwest Capital Group, Inc. and MEC Construction Services Co. MHC is the direct, wholly owned subsidiary of MidAmerican Funding, LLC ("MidAmerican Funding"), which is an Iowa limited liability company with Berkshire Hathaway Energy Company ("BHE") as its sole member. BHE is a consolidated subsidiary of Berkshire Hathaway Inc. ("Berkshire Hathaway").

The unaudited 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 Financial Statements contain all adjustments (consisting only of normal recurring adjustments) considered necessary for the fair presentation of the unaudited Financial Statements as of June 30, 2017 , and for the three- and six-month periods ended June 30, 2017 and 2016 . The results of operations for the three- and six-month periods ended June 30, 2017 , are not necessarily indicative of the results to be expected for the full year.

The preparation of the unaudited 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 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 Financial Statements. Note 2 of Notes to Financial Statements included in MidAmerican Energy's Annual Report on Form 10-K for the year ended December 31, 2016 , describes the most significant accounting policies used in the preparation of the unaudited Financial Statements. There have been no significant changes in MidAmerican Energy's assumptions regarding significant accounting estimates and policies during the six-month period ended June 30, 2017 .


( 2 )	New Accounting Pronouncements

In March 2017, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2017-07, which amends FASB Accounting Standards Codification ("ASC") Topic 715, "Compensation - Retirement Benefits." The amendments in this guidance require that an employer disaggregate the service cost component from the other components of net benefit cost and report the service cost component in the same line item as other compensation costs arising from services rendered by the pertinent employees during the period. The other components of net benefit cost are required to be presented in the statement of operations separately from the service cost component and outside the subtotal of operating income. Additionally, the guidance only allows the service cost component to be eligible for capitalization when applicable. This guidance is effective for interim and annual reporting periods beginning after December 15, 2017, with early adoption permitted. This guidance must be adopted retrospectively for the presentation of the service cost component and the other components of net benefit cost in the statement of operations and prospectively for the capitalization of the service cost component in the balance sheet. MidAmerican Energy plans to adopt this guidance effective January 1, 2018, and is currently evaluating the impact on its Financial Statements and disclosures included within Notes to Financial Statements.

In November 2016, the FASB issued ASU No. 2016-18, which amends FASB ASC Subtopic 230-10, “Statement of Cash Flows - Overall.” The amendments in this guidance require that a statement of cash flows explain the change during the period in the total of cash, cash equivalents, and amounts generally described as restricted cash or restricted cash equivalents. Amounts generally described as restricted cash and restricted cash equivalents should be included with cash and cash equivalents when reconciling the beginning-of-period and end-of-period total amounts shown on the statement of cash flows. This guidance is effective for interim and annual reporting periods beginning after December 15, 2017, with early adoption permitted, and is required to be adopted retrospectively. MidAmerican Energy plans to adopt this guidance effective January 1, 2018, and is currently evaluating the impact on its Financial Statements and disclosures included within Notes to Financial Statements.

In August 2016, the FASB issued ASU No. 2016-15, which amends FASB ASC Topic 230, "Statement of Cash Flows." The amendments in this guidance address the classification of eight specific cash flow issues within the statement of cash flows with the objective of reducing the existing diversity in practice. This guidance is effective for interim and annual reporting periods beginning after December 15, 2017, with early adoption permitted, and is required to be adopted retrospectively. MidAmerican Energy plans to adopt this guidance effective January 1, 2018, and does not believe the adoption of this guidance will have a material impact on its Financial Statements.

In February 2016, the FASB issued ASU No. 2016-02, which creates FASB ASC Topic 842, "Leases" and supersedes Topic 840 "Leases." This guidance increases transparency and comparability among entities by recording lease assets and lease liabilities on the balance sheet and disclosing key information about leasing arrangements. A lessee should recognize in the balance sheet a liability to make lease payments (the lease liability) and a right-of-use asset representing its right to use the underlying asset for the lease term. The recognition, measurement, and presentation of expenses and cash flows arising from a lease by a lessee have not significantly changed from previous guidance. This guidance is effective for interim and annual reporting periods beginning after December 15, 2018, with early adoption permitted, and is required to be adopted using a modified retrospective approach. MidAmerican Energy plans to adopt this guidance effective January 1, 2019, and is currently evaluating the impact on its Financial Statements and disclosures included within Notes to Financial Statements.

In January 2016, the FASB issued ASU No. 2016-01, which amends FASB ASC Subtopic 825-10, "Financial Instruments - Overall." The amendments in this guidance address certain aspects of recognition, measurement, presentation and disclosure of financial instruments including a requirement that all investments in equity securities that do not qualify for equity method accounting or result in consolidation of the investee be measured at fair value with changes in fair value recognized in net income. This guidance is effective for interim and annual reporting periods beginning after December 15, 2017, with early adoption not permitted, and is required to be adopted prospectively by means of a cumulative-effect adjustment to the balance sheet as of the beginning of the fiscal year of adoption. MidAmerican Energy is currently evaluating the impact of adopting this guidance on its Financial Statements and disclosures included within Notes to 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 August 2015, the FASB issued ASU No. 2015-14, which defers the effective date of ASU No. 2014-09 one year to interim and annual reporting periods beginning after December 15, 2017. During 2016, the FASB issued several ASUs that clarify the implementation guidance for ASU No. 2014-09 but do not change the core principle of the guidance. This guidance may be adopted retrospectively or under a modified retrospective method where the cumulative effect is recognized at the date of initial application. MidAmerican Energy plans to adopt this guidance effective January 1, 2018 under the modified retrospective method and is currently evaluating the impact on its Financial Statements and disclosures included within Notes to Financial Statements. MidAmerican Energy currently does not expect the timing and amount of revenue currently recognized to be materially different after adoption of the new guidance as a majority of revenue is recognized when MidAmerican Energy has the right to invoice as it corresponds directly with the value to the customer of MidAmerican Energy’s performance to date. MidAmerican Energy's current plan is to quantitatively disaggregate revenue in the required financial statement footnote by jurisdiction for each segment.


( 3 )	Property, Plant and Equipment, Net

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



		As of
		June 30,			December 31,
	Depreciable Life	2017			2016
Utility plant in service, net:
Generation	20-70 years	$	11,308		$	11,282
Transmission	52-75 years	1,794			1,726
Electric distribution	20-75 years	3,260			3,197
Gas distribution	29-75 years	1,588			1,565
Utility plant in service		17,950			17,770
Accumulated depreciation and amortization		(5,660		)	(5,448		)
Utility plant in service, net		12,290			12,322
Nonregulated property, net:
Nonregulated property gross	20-50 years	7			7
Accumulated depreciation and amortization		(1		)	(1		)
Nonregulated property, net		6			6
		12,296			12,328
Construction work-in-progress		746			493
Property, plant and equipment, net		$	13,042		$	12,821

( 4 ) Recent Financing Transactions

Long-Term Debt

In February 2017, MidAmerican Energy redeemed in full through optional redemption its $250 million of 5.95% Senior Notes due July 2017.

Credit Facilities


( 5 )	Income Taxes

A reconciliation of the federal statutory income tax rate to MidAmerican Energy's effective income tax rate applicable to income before income tax benefit is as follows:



	Three-Month Periods				Six-Month Periods
	Ended June 30,				Ended June 30,
	2017		2016		2017		2016

Federal statutory income tax rate	35	%	35	%	35	%	35	%
Income tax credits	(67	)	(60	)	(73	)	(59	)
State income tax, net of federal income tax benefit	(4	)	(5	)	(2	)	(1	)
Effects of ratemaking	(5	)	(2	)	(7	)	(6	)
Effective income tax rate	(41	)%	(32	)%	(47	)%	(31	)%

Income tax credits relate primarily to production tax credits from MidAmerican Energy's wind-powered generating facilities. 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 BHE and subsidiaries in its United States federal income tax return. Consistent with established regulatory practice, MidAmerican Energy's provision for income taxes has been computed on a stand-alone basis, and substantially all of its currently payable or receivable income taxes are remitted to or received from BHE. MidAmerican Energy received net cash payments for income taxes from BHE totaling $7 million and $308 million for the six-month periods ended June 30, 2017 and 2016 , respectively.


( 6 )	Employee Benefit Plans

MidAmerican Energy sponsors a noncontributory defined benefit pension plan covering a majority of all employees of BHE and its domestic energy subsidiaries other than PacifiCorp and NV Energy, Inc. MidAmerican Energy also sponsors certain postretirement healthcare and life insurance benefits covering substantially all retired employees of BHE and its domestic energy subsidiaries other than PacifiCorp and NV Energy, Inc.

Net periodic benefit cost (credit) for the plans of MidAmerican Energy and the aforementioned affiliates included the following components (in millions):



	Three-Month Periods						Six-Month Periods
	Ended June 30,						Ended June 30,
	2017			2016			2017			2016
Pension:
Service cost	$	3		$	2		$	5		$	5
Interest cost	7			9			15			17
Expected return on plan assets	(11		)	(11		)	(22		)	(22		)
Net amortization	1			1			1			1
Net periodic benefit cost (credit)	$	—		$	1		$	(1	)	$	1

Other postretirement:
Service cost	$	1		$	2		$	2		$	3
Interest cost	2			3			4			5
Expected return on plan assets	(4		)	(4		)	(7		)	(7		)
Net amortization	(1		)	(1		)	(2		)	(2		)
Net periodic benefit credit	$	(2	)	$	—		$	(3	)	$	(1	)

Employer contributions to the pension and other postretirement benefit plans are expected to be $8 million and $1 million , respectively, during 2017 . As of June 30, 2017 , $4 million and $- million of contributions had been made to the pension and other postretirement benefit plans, respectively.


( 7 )	Fair Value Measurements

The carrying value of MidAmerican Energy'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. MidAmerican Energy has various financial assets and liabilities that are measured at fair value on the 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 MidAmerican Energy has the ability to access at the measurement date.

•


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

The following table presents MidAmerican Energy's financial assets and liabilities recognized on the 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, 2017:
Assets:
Commodity derivatives	$	—	$	2		$	2		$	(2	)	$	2
Money market mutual funds ⁽²⁾	370		—			—			—			370
Debt securities:
United States government obligations	161		—			—			—			161
International government obligations	—		4			—			—			4
Corporate obligations	—		36			—			—			36
Municipal obligations	—		2			—			—			2
Agency, asset and mortgage-backed obligations	—		1			—			—			1
Equity securities:
United States companies	270		—			—			—			270
International companies	7		—			—			—			7
Investment funds	14		—			—			—			14
	$	822	$	45		$	2		$	(2	)	$	867

Liabilities - commodity derivatives	$	—	$	(6	)	$	(3	)	$	3		$	(6	)



	Input Levels for Fair Value Measurements
	Level 1		Level 2			Level 3			Other ⁽¹⁾			Total
As of December 31, 2016:
Assets:
Commodity derivatives	$	—	$	9		$	1		$	(2	)	$	8
Money market mutual funds ⁽²⁾	1		—			—			—			1
Debt securities:
United States government obligations	161		—			—			—			161
International government obligations	—		3			—			—			3
Corporate obligations	—		36			—			—			36
Municipal obligations	—		2			—			—			2
Agency, asset and mortgage-backed obligations	—		2			—			—			2
Equity securities:
United States companies	250		—			—			—			250
International companies	5		—			—			—			5
Investment funds	9		—			—			—			9
	$	426	$	52		$	1		$	(2	)	$	477

Liabilities - commodity derivatives	$	—	$	(3	)	$	(3	)	$	3		$	(3	)


(1)	Represents netting under master netting arrangements and a net cash collateral receivable of $1 million and $1 million as of June 30, 2017 and December 31, 2016 , respectively.


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

Derivative contracts are recorded on the 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 MidAmerican Energy transacts. When quoted prices for identical contracts are not available, MidAmerican Energy uses forward price curves. Forward price curves represent MidAmerican Energy's estimates of the prices at which a buyer or seller could contract today for delivery or settlement at future dates. MidAmerican Energy 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 MidAmerican Energy. Market price quotations are generally readily obtainable for the applicable term of MidAmerican Energy's outstanding derivative contracts; therefore, MidAmerican Energy'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, MidAmerican Energy 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, related volatility, counterparty creditworthiness and duration of contracts.

MidAmerican Energy'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 MidAmerican Energy'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 MidAmerican Energy'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 MidAmerican Energy'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,
	Commodity Derivatives			Auction Rate Securities			Commodity Derivatives			Auction Rate Securities
2017:
Beginning balance	$	1		$	—		$	(2	)	$	—
Changes in fair value recognized in net regulatory assets	(2		)	—			—			—
Settlements	—			—			1			—
Ending balance	$	(1	)	$	—		$	(1	)	$	—

2016:
Beginning balance	$	(4	)	$	26		$	(6	)	$	26
Transfer to affiliate	—			—			(4		)	—
Changes in fair value recognized in OCI	—			2			—			3
Changes in fair value recognized in net regulatory assets	(3		)	—			(4		)	—
Redemptions	—			(10		)	—			(11		)
Settlements	5			—			12			—
Ending balance	$	(2	)	$	18		$	(2	)	$	18

MidAmerican Energy's long-term debt is carried at cost on the Balance Sheets. The fair value of MidAmerican Energy'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 MidAmerican Energy'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 MidAmerican Energy's long-term debt (in millions):



	As of June 30, 2017				As of December 31, 2016
	Carrying Value		Fair Value		Carrying Value		Fair Value

Long-term debt	$	4,893	$	5,438	$	4,301	$	4,735

( 8 ) Commitments and Contingencies

Natural Gas Commitments

Construction Commitments

Easements

Legal Matters

MidAmerican Energy is party to a variety of legal actions arising out of the normal course of business. Plaintiffs occasionally seek punitive or exemplary damages. MidAmerican Energy does not believe that such normal and routine litigation will have a material impact on its financial results.

Environmental Laws and Regulations

Transmission Rates

MidAmerican Energy's wholesale transmission rates are set annually using FERC-approved formula rates subject to true-up for actual cost of service. Prior to September 2016, the rates in effect were based on a 12.38% return on equity ("ROE"). In November 2013 and February 2015, a coalition of intervenors filed successive complaints with the FERC requesting that the 12.38% ROE no longer be found just and reasonable and sought to reduce the base ROE to 9.15% and 8.67% , respectively. MidAmerican Energy is authorized by the FERC to include a 0.50% adder beyond the base ROE effective January 2015. In September 2016, the FERC issued an order for the first complaint, which reduces the base ROE to 10.32% and requires refunds, plus interest, for the period from November 2013 through February 2015. Customer refunds relative to the first complaint occurred in February 2017. The FERC is expected to rule on the second complaint in 2017, covering the period from February 2015 through May 2016. MidAmerican Energy believes it is probable that the FERC will order a base ROE lower than 12.38% in the second complaint and, as of June 30, 2017 , has accrued a $9 million liability for refunds under the second complaint of amounts collected under the higher ROE from February 2015 through May 2016.


( 9 )	Components of Accumulated Other Comprehensive Income (Loss), Net

The following table shows the change in accumulated other comprehensive income (loss), net ("AOCI") by each component of other comprehensive income, net of applicable income taxes (in millions):



	Unrealized			Unrealized			Accumulated
	Losses on			Losses			Other
	Available-For-Sale			on Cash Flow			Comprehensive
	Securities			Hedges			Loss, Net

Balance, December 31, 2015	$	(3	)	$	(27	)	$	(30	)
Other comprehensive income	2			—			2
Dividend	—			27			27
Balance at June 30, 2016	$	(1	)	$	—		$	(1	)


( 10 )	Segment Information

MidAmerican Energy has identified two reportable segments: regulated electric and regulated gas. The regulated electric segment derives most of its revenue from regulated retail sales of electricity to residential, commercial, and industrial customers and from wholesale sales. The regulated gas segment derives most of its revenue from regulated retail sales of natural gas to residential, commercial, and industrial customers and also obtains revenue by transporting gas owned by others through its distribution system. Pricing for regulated electric and regulated gas sales are established separately by regulatory agencies; therefore, management also reviews each segment separately to make decisions regarding allocation of resources and in evaluating performance. Common operating costs, interest income, interest expense and income tax expense are allocated to each segment based on certain factors, which primarily relate to the nature of the cost.

The following tables provide information on a reportable segment basis (in millions):



	Three-Month Periods				Six-Month Periods
	Ended June 30,				Ended June 30,
	2017		2016		2017		2016
Operating revenue:
Regulated electric	$	537	$	481	$	970	$	880
Regulated gas	120		102		382		328
Other	1		1		1		1
Total operating revenue	$	658	$	584	$	1,353	$	1,209

Depreciation and amortization:
Regulated electric	$	130	$	100	$	237	$	199
Regulated gas	11		10		21		21
Total depreciation and amortization	$	141	$	110	$	258	$	220

Operating income:
Regulated electric	$	128	$	135	$	195	$	192
Regulated gas	7		4		47		47
Total operating income	$	135	$	139	$	242	$	239



	As of
	June 30, 2017		December 31, 2016
Total assets:
Regulated electric	$	14,871	$	14,113
Regulated gas	1,269		1,345
Other	1		1
Total assets	$	16,141	$	15,459

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Managers and Member of

MidAmerican Funding, LLC

Des Moines, Iowa

We have reviewed the accompanying consolidated balance sheet of MidAmerican Funding, LLC and subsidiaries ("MidAmerican Funding") as of June 30, 2017 , and the related consolidated statements of operations for the three-month and six-month periods ended June 30, 2017 and 2016 , and of changes in equity and cash flows for the six-month periods ended June 30, 2017 and 2016 . These interim financial statements are the responsibility of MidAmerican Funding's management.

We conducted our reviews in accordance with the standards of the Public Company Accounting Oversight Board (United States) and with auditing standards generally accepted in the United States of America applicable to reviews of interim financial information. 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) and with auditing standards generally accepted in the United States of America, 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.

We have previously audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) and in accordance with auditing standards generally accepted in the United States of America, the consolidated balance sheet of MidAmerican Funding, LLC and subsidiaries as of December 31, 2016 , 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 24, 2017 , 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, 2016 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 4, 2017

MIDAMERICAN FUNDING, LLC AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS (Unaudited)

(Amounts in millions)



	As of
	June 30,		December 31,
	2017		2016
ASSETS
Current assets:
Cash and cash equivalents	$	371	$	15
Receivables, net	268		287
Income taxes receivable	98		9
Inventories	234		264
Other current assets	22		35
Total current assets	993		610

Property, plant and equipment, net	13,056		12,835
Goodwill	1,270		1,270
Regulatory assets	1,222		1,161
Investments and restricted cash and investments	691		655
Other assets	201		216

Total assets	$	17,433	$	16,747

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

MIDAMERICAN FUNDING, LLC AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS (Unaudited) (continued)

(Amounts in millions)



	As of
	June 30,		December 31,
	2017		2016
LIABILITIES AND MEMBER'S EQUITY
Current liabilities:
Accounts payable	$	147	$	302
Accrued interest	55		52
Accrued property, income and other taxes	140		138
Note payable to affiliate	41		31
Short-term debt	—		99
Current portion of long-term debt	350		250
Other current liabilities	156		160
Total current liabilities	889		1,032

Long-term debt	4,869		4,377
Deferred income taxes	3,635		3,568
Regulatory liabilities	899		883
Asset retirement obligations	528		510
Other long-term liabilities	294		291
Total liabilities	11,114		10,661

Commitments and contingencies (Note 8)

Member's equity:
Paid-in capital	1,679		1,679
Retained earnings	4,640		4,407
Total member's equity	6,319		6,086

Total liabilities and member's equity	$	17,433	$	16,747

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

MIDAMERICAN FUNDING, LLC AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)

(Amounts in millions)



	Three-Month Periods						Six-Month Periods
	Ended June 30,						Ended June 30,
	2017			2016			2017			2016
Operating revenue:
Regulated electric	$	537		$	481		$	970		$	880
Regulated gas and other	122			104			385			331
Total operating revenue	659			585			1,355			1,211

Operating costs and expenses:
Cost of fuel, energy and capacity	110			90			212			182
Cost of gas sold and other	63			48			235			183
Operations and maintenance	180			169			347			330
Depreciation and amortization	141			110			258			220
Property and other taxes	29			28			60			56
Total operating costs and expenses	523			445			1,112			971

Operating income	136			140			243			240

Other income (expense):
Interest expense	(59		)	(55		)	(118		)	(109		)
Allowance for borrowed funds	3			2			5			3
Allowance for equity funds	8			4			14			8
Other, net	2			3			8			6
Total other income (expense)	(46		)	(46		)	(91		)	(92		)

Income before income tax benefit	90			94			152			148
Income tax benefit	(41		)	(33		)	(81		)	(52		)

Net income	$	131		$	127		$	233		$	200

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

MIDAMERICAN FUNDING, LLC AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY (Unaudited)

(Amounts in millions)



	Paid-in Capital		Retained Earnings		Accumulated Other Comprehensive Loss, Net			Total Equity

Balance, December 31, 2015	$	1,679	$	3,876	$	(30	)	$	5,525
Net income	—		200		—			200
Other comprehensive income	—		—		2			2
Transfer to affiliate	—		—		27			27
Balance, June 30, 2016	$	1,679	$	4,076	$	(1	)	$	5,754

Balance, December 31, 2016	$	1,679	$	4,407	$	—		$	6,086
Net income	—		233		—			233
Balance, June 30, 2017	$	1,679	$	4,640	$	—		$	6,319

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

MIDAMERICAN FUNDING, LLC AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)

(Amounts in millions)



	Six-Month Periods
	Ended June 30,
	2017			2016
Cash flows from operating activities:
Net income	$	233		$	200
Adjustments to reconcile net income to net cash flows from operating activities:
Depreciation and amortization	258			220
Deferred income taxes and amortization of investment tax credits	27			45
Changes in other assets and liabilities	19			21
Other, net	(17		)	(23		)
Changes in other operating assets and liabilities:
Receivables, net	19			(30		)
Inventories	30			(18		)
Derivative collateral, net	2			3
Contributions to pension and other postretirement benefit plans, net	(5		)	(3		)
Accounts payable	(79		)	(33		)
Accrued property, income and other taxes, net	(88		)	213
Other current assets and liabilities	2			9
Net cash flows from operating activities	401			604

Cash flows from investing activities:
Utility construction expenditures	(545		)	(506		)
Purchases of available-for-sale securities	(81		)	(54		)
Proceeds from sales of available-for-sale securities	77			55
Other, net	5			—
Net cash flows from investing activities	(544		)	(505		)

Cash flows from financing activities:
Proceeds from long-term debt	843			—
Repayments of long-term debt	(255		)	(4		)
Net change in note payable to affiliate	10			6
Net repayments of short-term debt	(99		)	—
Net cash flows from financing activities	499			2

Net change in cash and cash equivalents	356			101
Cash and cash equivalents at beginning of period	15			103
Cash and cash equivalents at end of period	$	371		$	204

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

MIDAMERICAN FUNDING, LLC AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)


( 1 )	General

MidAmerican Funding, LLC ("MidAmerican Funding") is an Iowa limited liability company with Berkshire Hathaway Energy Company ("BHE") as its sole member. BHE is a consolidated subsidiary of Berkshire Hathaway Inc. ("Berkshire Hathaway"). MidAmerican Funding's direct, wholly owned subsidiary is MHC Inc. ("MHC"), which constitutes substantially all of MidAmerican Funding's assets, liabilities and business activities except those related to MidAmerican Funding's long-term debt securities. MHC conducts no business other than the ownership of its subsidiaries and related corporate services. MHC's principal subsidiary is MidAmerican Energy Company ("MidAmerican Energy"), a public utility with electric and natural gas operations. Direct, wholly owned nonregulated subsidiaries of MHC are Midwest Capital Group, Inc. and MEC Construction Services Co.

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, 2017 , and for the three- and six-month periods ended June 30, 2017 and 2016 . The results of operations for the three- and six-month periods ended June 30, 2017 , 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 MidAmerican Funding's Annual Report on Form 10-K for the year ended December 31, 2016 , describes the most significant accounting policies used in the preparation of the unaudited Consolidated Financial Statements. There have been no significant changes in MidAmerican Funding's assumptions regarding significant accounting estimates and policies during the six-month period ended June 30, 2017 .


( 2 )	New Accounting Pronouncements

Refer to Note 2 of MidAmerican Energy's Notes to Financial Statements.


( 3 )	Property, Plant and Equipment, Net

Refer to Note 3 of MidAmerican Energy's Notes to Financial Statements. In addition to MidAmerican Energy's property, plant and equipment, net, MidAmerican Funding had as of June 30, 2017 and December 31, 2016 , nonregulated property gross of $21 million and $22 million , respectively, related accumulated depreciation and amortization of $9 million , and construction work-in-progress of $2 million and $1 million , respectively, which consisted primarily of a corporate aircraft owned by MHC.

( 4 ) Recent Financing Transactions

Refer to Note 4 of MidAmerican Energy's Notes to Financial Statements.

100


( 5 )	Income Taxes

A reconciliation of the federal statutory income tax rate to MidAmerican Funding's effective income tax rate applicable to income before income tax benefit is as follows:



	Three-Month Periods				Six-Month Periods
	Ended June 30,				Ended June 30,
	2017		2016		2017		2016

Federal statutory income tax rate	35	%	35	%	35	%	35	%
Income tax credits	(71	)	(63	)	(78	)	(63	)
State income tax, net of federal income tax benefit	(5	)	(5	)	(2	)	(2	)
Effects of ratemaking	(5	)	(2	)	(8	)	(6	)
Other, net			—		—		1
Effective income tax rate	(46	)%	(35	)%	(53	)%	(35	)%

Berkshire Hathaway includes BHE and subsidiaries in its United States federal income tax return. Consistent with established regulatory practice, MidAmerican Funding's and MidAmerican Energy's provisions for income taxes have been computed on a stand-alone basis, and substantially all of their currently payable or receivable income taxes are remitted to or received from BHE. MidAmerican Funding received net cash payments for income taxes from BHE totaling $8 million and $313 million for the six-month periods ended June 30, 2017 and 2016 , respectively.


( 6 )	Employee Benefit Plans

Refer to Note 6 of MidAmerican Energy's Notes to Financial Statements.


( 7 )	Fair Value Measurements

Refer to Note 7 of MidAmerican Energy's Notes to Financial Statements. MidAmerican Funding's long-term debt is carried at cost on the Consolidated Financial Statements. The fair value of MidAmerican Funding'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 MidAmerican Funding'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 MidAmerican Funding's long-term debt (in millions):



	As of June 30, 2017				As of December 31, 2016
	Carrying Value		Fair Value		Carrying Value		Fair Value

Long-term debt	$	5,219	$	5,867	$	4,627	$	5,164

( 8 ) Commitments and Contingencies

MidAmerican Funding is party to a variety of legal actions arising out of the normal course of business. Plaintiffs occasionally seek punitive or exemplary damages. MidAmerican Funding does not believe that such normal and routine litigation will have a material impact on its consolidated financial results.

Refer to Note 8 of MidAmerican Energy's Notes to Financial Statements.

101


( 9 )	Components of Accumulated Other Comprehensive Income (Loss), Net

Refer to Note 9 of MidAmerican Energy's Notes to Financial Statements.

( 10 ) Segment Information

MidAmerican Funding has identified two reportable segments: regulated electric and regulated gas. The regulated electric segment derives most of its revenue from regulated retail sales of electricity to residential, commercial, and industrial customers and from wholesale sales. The regulated gas segment derives most of its revenue from regulated retail sales of natural gas to residential, commercial, and industrial customers and also obtains revenue by transporting gas owned by others through its distribution system. Pricing for regulated electric and regulated gas sales are established separately by regulatory agencies; therefore, management also reviews each segment separately to make decisions regarding allocation of resources and in evaluating performance. Common operating costs, interest income, interest expense and income tax expense are allocated to each segment based on certain factors, which primarily relate to the nature of the cost. "Other" in the tables below consists of the financial results and assets of nonregulated operations, MHC and MidAmerican Funding.

The following tables provide information on a reportable segment basis (in millions):



	Three-Month Periods				Six-Month Periods
	Ended June 30,				Ended June 30,
	2017		2016		2017		2016
Operating revenue:
Regulated electric	$	537	$	481	$	970	$	880
Regulated gas	120		102		382		328
Other	2		2		3		3
Total operating revenue	$	659	$	585	$	1,355	$	1,211

Depreciation and amortization:
Regulated electric	$	130	$	100	$	237	$	199
Regulated gas	11		10		21		21
Total depreciation and amortization	$	141	$	110	$	258	$	220

Operating income:
Regulated electric	$	128	$	135	$	195	$	192
Regulated gas	7		4		47		47
Other	1		1		1		1
Total operating income	$	136	$	140	$	243	$	240



	As of
	June 30, 2017		December 31, 2016
Total assets ⁽¹⁾ :
Regulated electric	$	16,062	$	15,304
Regulated gas	1,348		1,424
Other	23		19
Total assets	$	17,433	$	16,747



(1)	Total assets by reportable segment reflect the assignment of goodwill to applicable reporting units.

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

MidAmerican Funding is an Iowa limited liability company whose sole member is BHE. MidAmerican Funding owns all of the outstanding common stock of MHC Inc., which owns all of the common stock of MidAmerican Energy, Midwest Capital Group, Inc. and MEC Construction Services Co. MidAmerican Energy is a public utility company headquartered in Des Moines, Iowa. MHC Inc., MidAmerican Funding and BHE are also headquartered in Des Moines, Iowa.

The following is management's discussion and analysis of certain significant factors that have affected the consolidated financial condition and results of operations of MidAmerican Funding and its subsidiaries and MidAmerican Energy as presented in this joint filing. Information in Management's Discussion and Analysis related to MidAmerican Energy, whether or not segregated, also relates to MidAmerican Funding. Information related to other subsidiaries of MidAmerican Funding pertains only to the discussion of the financial condition and results of operations of MidAmerican Funding. Where necessary, discussions have been segregated under the heading "MidAmerican Funding" to allow the reader to identify information applicable only to MidAmerican Funding. 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 historical unaudited Financial Statements and Notes to Financial Statements in Part I, Item 1 of this Form 10-Q. MidAmerican Energy's and MidAmerican Funding's actual results in the future could differ significantly from the historical results.

Results of Operations for the Second Quarter and First Six Months of 2017 and 2016

Overview

MidAmerican Energy -

MidAmerican Energy's net income for the second quarter of 2017 was $134 million , an increase of $3 million , or 2% , compared to 2016 due to higher margins of $39 million and higher recognized production tax credits of $5 million, partially offset by higher depreciation and amortization of $31 million, substantially from accruals for Iowa regulatory arrangements, and higher operations and maintenance expenses of $11 million due primarily to higher generation maintenance from wind turbine additions and higher demand-side management ("DSM") program costs recoverable in bill riders. The increase in electric margins of $36 million reflects higher wholesale revenue from higher sales prices and volumes, higher transmission revenue and higher retail customer volumes from industrial growth net of lower residential and commercial volumes due to milder temperatures, partially offset by higher coal-fueled generation and purchased power costs.

MidAmerican Energy's net income for the first six months of 2017 was $239 million , an increase of $32 million , or 15% , compared to 2016 due primarily to higher margins of $62 million and higher recognized production tax credits of $26 million, partially offset by higher depreciation and amortization of $38 million from accruals for Iowa regulatory arrangements and wind-powered generating facilities placed in-service in the second half of 2016, net of a reduction in depreciation rates in December 2016, and higher operations and maintenance expenses of $17 million due primarily to higher maintenance from additional wind turbines and higher DSM program costs recoverable in bill riders. The increase in electric margins of $60 million reflects higher wholesale revenue from higher sales prices and volumes, higher transmission revenue and higher retail customer volumes from industrial growth, net of lower residential and commercial volumes due to milder temperatures, and higher recoveries through bill riders, partially offset by higher coal-fueled generation and purchased power costs.

MidAmerican Funding -

MidAmerican Funding's net income for the second quarter of 2017 was $131 million , an increase of $4 million , or 3% , compared to 2016 . MidAmerican Funding's net income for the first six months of 2017 was $233 million , an increase of $33 million , or 17% , compared to 2016 .The increases were due primarily to the changes in MidAmerican Energy's earnings discussed above.

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Regulated Electric Gross Margin

A comparison of key operating results related to regulated electric gross margin is as follows:



	Second Quarter									First Six Months
	2017		2016		Change					2017		2016		Change
Gross margin (in millions):
Operating revenue	$	537	$	481	$	56		12	%	$	970	$	880	$	90		10	%
Cost of fuel, energy and capacity	110		90		20			22		212		182		30			16
Gross margin	$	427	$	391	$	36		9		$	758	$	698	$	60		9

Electricity Sales (GWh):
Residential	1,394		1,417		(23		)	(2	)%	2,963		3,049		(86		)	(3	)%
Commercial	882		888		(6		)	(1	)	1,809		1,836		(27		)	(1	)
Industrial	3,250		3,073		177			6		6,255		5,893		362			6
Other	382		385		(3		)	(1	)	774		786		(12		)	(2	)
Total retail	5,908		5,763		145			3		11,801		11,564		237			2
Wholesale	2,878		1,565		1,313			84		5,591		3,583		2,008			56
Total sales	8,786		7,328		1,458			20		17,392		15,147		2,245			15

Average number of retail customers (in thousands)	769		759		10			1	%	767		758		9			1	%

Average revenue per MWh:
Retail	$	75.19	$	75.07	$	0.12		—	%	$	67.78	$	67.01	$	0.77		1	%
Wholesale	$	24.37	$	20.80	$	3.57		17	%	$	23.43	$	19.83	$	3.60		18	%

Heating degree days	496		519		(23		)	(4	)%	3,159		3,361		(202		)	(6	)%
Cooling degree days	346		428		(82		)	(19	)%	346		429		(83		)	(19	)%

Sources of energy (GWh) ⁽¹⁾ :
Coal	3,703		2,378		1,325			56	%	6,665		5,289		1,376			26	%
Nuclear	927		948		(21		)	(2	)	1,859		1,884		(25		)	(1	)
Natural gas	10		180		(170		)	(94	)	17		208		(191		)	(92)
Wind and other ⁽²⁾	3,416		2,900		516			18		7,200		6,031		1,169			19
Total energy generated	8,056		6,406		1,650			26		15,741		13,412		2,329			17
Energy purchased	868		1,148		(280		)	(24	)	1,944		2,114		(170		)	(8	)
Total	8,924		7,554		1,370			18		17,685		15,526		2,159			14


(1)	GWh amounts are net of energy used by the related generating facilities.


(2)	All or some of the renewable energy attributes associated with generation from these generating facilities may be: (a) used in future years to comply with renewable portfolio standards or other regulatory requirements or (b) sold to third parties in the form of renewable energy credits or other environmental commodities.

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Regulated electric gross margin increased $36 million for the second quarter of 2017 compared to 2016 due primarily to:


(1)	Higher wholesale gross margin of $23 million due primarily to higher margins per unit from higher market prices and higher sales volumes enabled by greater availability of lower cost generation;


(2)	Higher Multi-Value Projects ("MVPs") transmission revenue of $6 million due to continued capital additions; and


(3)	Higher retail gross margin of $5 million due to -


•	an increase of $17 million primarily from non-weather-related usage factors, including higher industrial sales volumes;


•	an increase of $2 million from higher recoveries through bill riders;


•	a decrease of $3 million from higher retail energy costs due primarily to higher coal-fueled generation and higher purchased power costs; and


•	a decrease of $11 million from the impact of milder temperatures.

Regulated electric gross margin increased $60 million for the first six months of 2017 compared to 2016 due primarily to:


(1)	Higher wholesale gross margin of $44 million due primarily to higher margins per unit from higher market prices and higher sales volumes enabled by greater availability of lower cost generation;


(2)	Higher retail gross margin of $9 million due to -


•	an increase of $25 million primarily from non-weather-related usage factors, including higher industrial sales volumes;


•	an increase of $9 million from higher recoveries through bill riders;


•	a decrease of $12 million from higher retail energy costs due primarily to higher coal-fueled generation and higher purchased power costs; and


•	a decrease of $13 million from the impact of milder temperatures; and


(3)	Higher MVPs transmission revenue of $5 million due to continued capital additions.

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Regulated Gas Gross Margin

A comparison of key operating results related to regulated gas gross margin is as follows:



	Second Quarter									First Six Months
	2017		2016		Change					2017		2016		Change
Gross margin (in millions):
Operating revenue	$	120	$	102	$	18		18	%	$	382	$	328	$	54		16	%
Cost of gas sold	62		47		15			32		234		182		52			29
Gross margin	$	58	$	55	$	3		5		$	148	$	146	$	2		1

Natural gas throughput (000's Dth):
Residential	5,551		5,973		(422		)	(7)	%	26,669		28,301		(1,632		)	(6)	%
Commercial	2,740		3,067		(327		)	(11	)	13,009		13,889		(880		)	(6	)
Industrial	870		1,057		(187		)	(18	)	2,353		2,652		(299		)	(11	)
Other	6		6		—			—		27		25		2			8
Total retail sales	9,167		10,103		(936		)	(9	)	42,058		44,867		(2,809		)	(6	)
Wholesale sales	7,697		8,264		(567		)	(7	)	20,296		20,047		249			1
Total sales	16,864		18,367		(1,503		)	(8	)	62,354		64,914		(2,560		)	(4	)
Gas transportation service	20,288		17,965		2,323			13		45,647		42,030		3,617			9
Total gas throughput	37,152		36,332		820			2		108,001		106,944		1,057			1

Average number of retail customers (in thousands)	746		738		8			1	%	747		739		8			1	%
Average revenue per retail Dth sold	$	9.81	$	7.80	$	2.01		26	%	$	7.25	$	6.06	$	1.19		20	%
Average cost of natural gas per retail Dth sold	$	4.38	$	3.10	$	1.28		41	%	$	4.17	$	3.19	$	0.98		31	%

Combined retail and wholesale average cost of natural gas per Dth sold	$	3.69	$	2.59	$	1.10		42	%	$	3.75	$	2.81	$	0.94		33	%

Heating degree days	552		573		(21		)	(4)	%	3,361		3,545		(184		)	(5)	%

Regulated gas revenue includes purchased gas adjustment clauses through which MidAmerican Energy is allowed to recover the cost of gas sold from its retail gas utility customers. Consequently, fluctuations in the cost of gas sold do not directly affect gross margin or net income because regulated gas revenue reflects comparable fluctuations through the purchased gas adjustment clauses. For the second quarter of 2017 , MidAmerican Energy's combined retail and wholesale average per-unit cost of gas sold increased 42%, resulting in an increase of $18 million in gas revenue and cost of gas sold compared to 2016 , partially offset by lower gas sales. For the first six months of 2017 , MidAmerican Energy's combined retail and wholesale average per-unit cost of gas sold increased 33%, resulting in an increase of $58 million in gas revenue and cost of gas sold compared to 2016 , partially offset by lower gas sales.

Regulated gas gross margin increased $3 million for the second quarter of 2017 compared to 2016 due to -


(1)	a higher average per-unit margin of $2 million; and


(2)	higher recoveries of DSM program costs of $1 million.

Regulated gas gross margin increased $2 million for the first six months of 2017 compared to 2016 due primarily to -


(1)	a higher average per-unit margin of $2 million;


(2)	higher recoveries of DSM program costs of $2 million; and


(3)	lower retail sales volumes of $2 million from warmer winter temperatures.

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Operating Costs and Expenses

MidAmerican Energy -

Operations and maintenance increased $11 million for the second quarter of 2017 compared to 2016 due primarily to $5 million of higher DSM program costs, which is offset in operating revenue, and $4 million of higher wind-powered generation maintenance from additional wind turbines.

Operations and maintenance increased $17 million for the first six months of 2017 compared to 2016 due primarily to $9 million of higher DSM program costs, which is offset in operating revenue, and $7 million of higher wind-powered generation maintenance from additional wind turbines.

Depreciation and amortization increased $31 million for the second quarter of 2017 compared to 2016 due to accruals for Iowa regulatory arrangements totaling $29 million and utility plant additions, including wind-powered generating facilities placed in-service in the second half of 2016, partially offset by $8 million from lower depreciation rates implemented in December 2016.

Depreciation and amortization increased $38 million for the first six months of 2017 compared to 2016 due to accruals for Iowa regulatory arrangements totaling $34 million and utility plant additions, including wind-powered generating facilities placed in-service in the second half of 2016, partially offset by $17 million from lower depreciation rates implemented in December 2016.

Other Income (Expense)

MidAmerican Energy -

Interest expense increased $5 million and $9 million for the second quarter and first six months of 2017, respectively, compared to 2016 due to higher interest expense from the issuance of $850 million of first mortgage bonds in February 2017, partially offset by the redemption of a $250 million of 5.95% Senior Notes in February 2017.

Allowance for borrowed and equity funds increased $5 million and $8 million for the second quarter and first six months of 2017, respectively, compared to 2016 due primarily to higher construction work-in-progress balances related to wind-powered generation.

Other, net increased $3 million for the first six months of 2017 compared to 2016 due to higher returns on corporate-owned life insurance policies.

Income Tax Benefit

MidAmerican Energy -

MidAmerican Energy's income tax benefit increased $7 million for the second quarter of 2017 compared to 2016, and the effective tax rate was (41)% for 2017 and (32)% for 2016. For the first six months of 2017 compared to 2016, MidAmerican Energy's income tax benefit increased $27 million, and the effective tax rate was (47)% for 2017 and (31)% for 2016. The changes in the effective tax rates for 2017 compared to 2016 were substantially due to an increase in recognized production tax credits and the effects of ratemaking.

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. Wind-powered generating facilities are eligible for the credits for 10 years from the date the qualifying generating facilities were placed in service. Production tax credits recognized in the first six months of 2017 were $118 million, or $26 million higher than the first six months of 2016, while production tax credits earned in the first six months of 2017 were $157 million, or $27 million higher than the first six months of 2016 due primarily to wind-powered generation placed in-service in late 2016. The difference between production tax credits recognized and earned of $39 million as of June 30, 2017, will be reflected in earnings over the remainder of 2017.

107

MidAmerican Funding -

MidAmerican Funding's income tax benefit increased $8 million for the second quarter of 2017 compared to 2016, and the effective tax rate was (46)% for 2017 and (35)% for 2016. MidAmerican Funding's income tax benefit increased $29 million for the first six months of 2017 compared to 2016, and the effective tax rate was (53)% for 2017 and (35)% for 2016.The changes in the effective tax rates were principally due to the factors discussed for MidAmerican Energy.

Liquidity and Capital Resources

As of June 30, 2017 , MidAmerican Energy's total net liquidity was $1.06 billion consisting of $370 million of cash and cash equivalents and $905 million of credit facilities reduced by $220 million of the credit facilities reserved to support MidAmerican Energy's variable-rate tax-exempt bond obligations. As of June 30, 2017 , MidAmerican Funding's total net liquidity was $1.06 billion, including MHC Inc.'s $4 million credit facility.

Operating Activities

MidAmerican Energy's net cash flows from operating activities for the six-month periods ended June 30, 2017 and 2016 , were $409 million and $609 million , respectively. MidAmerican Funding's net cash flows from operating activities for the six-month periods ended June 30, 2017 and 2016 , were $401 million and $604 million , respectively. Cash flows from operating activities decreased due primarily to the timing of MidAmerican Energy's income tax cash flows with BHE and greater payments to vendors, partially offset by higher cash gross margins for MidAmerican Energy's regulated electric business, including fuel inventory reductions. MidAmerican Energy's income tax cash flows with BHE totaled net cash payments from BHE of $7 million and $308 million, respectively. Income tax cash flows for 2016 reflect the receipt of $106 million of income tax benefits generated in 2015. The timing of MidAmerican Energy's income tax cash flows from period to period can be significantly affected by the estimated federal income tax payment methods and assumptions for each payment date.

In December 2015, the Protecting Americans from Tax Hikes Act of 2015 ("PATH") was signed into law, extending bonus depreciation for qualifying property acquired and placed in service before January 1, 2020 (bonus depreciation rates will be 50% for 2015-2017, 40% in 2018, and 30% in 2019), with an additional year for certain longer lived assets. Production tax credits were extended and phased-out for wind power and other forms of non-solar renewable energy projects that begin construction before the end of 2019. Production tax credits are maintained at the following levels for projects for which construction begins before the end of the respective year as follows: at full value for 2016, at 80% of present value for 2017, at 60% of present value for 2018, and 40% of present value for 2019. As a result of PATH, MidAmerican Energy's cash flows from operations are expected to benefit due to bonus depreciation on qualifying assets placed in service through 2019 and production tax credits earned on qualifying wind projects through 2029.

Investing Activities

MidAmerican Energy's net cash flows from investing activities for the six-month periods ended June 30, 2017 and 2016 , were $(542) million and $(505) million , respectively. MidAmerican Funding's net cash flows from investing activities for the six-month periods ended June 30, 2017 and 2016 , were $(544) million and $(505) million , respectively. Net cash flows from investing activities consist almost entirely of utility construction expenditures, which increased due to higher environmental and other operating construction expenditures. Purchases and proceeds related to available-for-sale securities primarily consist of activity within the Quad Cities Generating Station nuclear decommissioning trust.

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Financing Activities

MidAmerican Energy's net cash flows from financing activities for the six-month periods ended June 30, 2017 and 2016 were $489 million and $(4) million , respectively. MidAmerican Funding's net cash flows from financing activities for the six-month periods ended June 30, 2017 and 2016 , were $499 million and $2 million , respectively. In February 2017, MidAmerican Energy issued $375 million of its 3.10% First Mortgage Bonds due May 2027 and $475 million of its 3.95% First Mortgage Bonds due August 2047. An amount equal to the net proceeds was used to finance capital expenditures, disbursed during the period from February 2, 2016 to February 1, 2017, with respect to investments in MidAmerican Energy's 551-megawatt Wind X and 2,000-megawatt Wind XI projects, which were previously financed with MidAmerican Energy's general funds. In February 2017, MidAmerican Energy redeemed in full through optional redemption its $250 million of 5.95% Senior Notes due July 2017. In January 2016, MidAmerican Energy repaid $4 million of variable-rate tax-exempt pollution control refunding revenue bonds due January 2016. Through its commercial paper program, MidAmerican Energy made payments totaling $99 million in 2017. MidAmerican Funding received $10 million and $6 million in 2017 and 2016, respectively, through its note payable with BHE.

Debt Authorizations and Related Matters

MidAmerican Energy has authority from the FERC to issue through February 28, 2019, commercial paper and bank notes aggregating $905 million at interest rates not to exceed the applicable London Interbank Offered Rate plus a spread of up to 400 basis points. MidAmerican Energy has a $900 million unsecured credit facility expiring in June 2020. MidAmerican Energy may request that the banks extend the credit facility up to two years. The credit facility, which supports MidAmerican Energy's commercial paper program and its variable-rate tax-exempt bond obligations and provides for the issuance of letters of credit, has a variable interest rate based on the Eurodollar rate or a base rate, at MidAmerican Energy's option, plus a spread that varies based on MidAmerican Energy's credit ratings for senior unsecured long-term debt securities. Additionally, MidAmerican Energy has a $5 million unsecured credit facility for general corporate purposes.

MidAmerican Energy currently has an effective registration statement with the United States Securities and Exchange Commission to issue an indeterminate amount of long-term debt securities through September 16, 2018. Additionally, MidAmerican Energy has authorization from the Illinois Commerce Commission to issue up to an aggregate of $500 million of additional long-term debt securities, of which $350 million expires March 15, 2018, and $150 million expires September 22, 2018.

In conjunction with the March 1999 merger, MidAmerican Energy committed to the IUB to use commercially reasonable efforts to maintain an investment grade rating on its long-term debt and to maintain its common equity level above 42% of total capitalization unless circumstances beyond its control result in the common equity level decreasing to below 39% of total capitalization. MidAmerican Energy must seek the approval of the IUB of a reasonable utility capital structure if MidAmerican Energy's common equity level decreases below 42% of total capitalization, unless the decrease is beyond the control of MidAmerican Energy. MidAmerican Energy is also required to seek the approval of the IUB if MidAmerican Energy's equity level decreases to below 39%, even if the decrease is due to circumstances beyond the control of MidAmerican Energy. If MidAmerican Energy's common equity level were to drop below the required thresholds, MidAmerican Energy's ability to issue debt could be restricted. As of June 30, 2017 , MidAmerican Energy's common equity ratio was 53% computed on a basis consistent with its commitment.

Future Uses of Cash

MidAmerican Energy and MidAmerican Funding have 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, and other sources. These sources are expected to provide funds required for current operations, capital expenditures, debt retirements and other capital requirements. The availability and terms under which MidAmerican Energy and MidAmerican Funding have access to external financing depends on a variety of factors, including their credit ratings, investors' judgment of risk and conditions in the overall capital markets, including the condition of the utility industry.

Utility Construction Expenditures

MidAmerican Energy's primary need for capital is utility construction expenditures. 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.

109

MidAmerican Energy's forecast utility construction expenditures, which exclude amounts for non-cash equity AFUDC and other non-cash items, are approximately $1.9 billion for 2017 and include:

•

$761 million for the construction of 2,000 MW (nominal ratings) of wind-powered generating facilities expected to be placed in service in 2017 through 2019. In August 2016, the IUB issued an order approving ratemaking principles related to MidAmerican Energy's construction of up to 2,000 MW (nominal ratings) of additional wind-powered generating facilities expected to be placed in service in 2017 through 2019. The ratemaking principles establish a cost cap of $3.6 billion, including AFUDC, and a fixed rate of return on equity of 11.0% over the proposed 40-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. Additionally, the ratemaking principles modify the revenue sharing mechanism currently in effect. The revised sharing mechanism will be effective in 2018 and will be triggered each year by actual equity returns above the weighted average return on equity for MidAmerican Energy calculated annually. Pursuant to the change in revenue sharing, MidAmerican Energy will share 100% of the revenue in excess of this trigger with customers. Such revenue sharing will reduce coal and nuclear generation rate base, which is intended to mitigate future base rate increases. Each of these projects is expected to qualify for 100% of production tax credits currently available.

•

$474 million for the repowering of certain existing wind-powered generating facilities in Iowa. This project entails the replacement of significant components of the oldest turbines in MidAmerican Energy’s fleet. The energy production from such repowered facilities is expected to qualify for 100% of the federal production tax credits available for ten years following completion. MidAmerican Energy is in the process of seeking approval of a tariff revision that would exclude from its energy adjustment clause any future federal production tax credits related to these repowered facilities.


•	$36 million for transmission MVP investments. MidAmerican Energy has approval from the Midcontinent Independent System Operator, Inc. for the construction of four MVPs located in Iowa and Illinois, which, when complete, will add approximately 250 miles of 345 kV transmission line to MidAmerican Energy's transmission system.


•	Remaining costs primarily relate to routine expenditures for generation, transmission, distribution and other infrastructure needed to serve existing and expected demand.

Contractual Obligations

As of June 30, 2017 , there have been no material changes outside the normal course of business in MidAmerican Energy's and MidAmerican Funding's contractual obligations from the information provided in Item 7 of their Annual Report on Form 10-K for the year ended December 31, 2016 .

Regulatory Matters

MidAmerican Energy is subject to comprehensive regulation. Refer to "Regulatory Matters" in Berkshire Hathaway Energy's Part I, Item 2 of this Form 10-Q for discussion regarding MidAmerican Energy's current regulatory matters.

Quad Cities Generating Station Operating Status

110

Environmental Laws and Regulations

MidAmerican Energy is subject to federal, state and local laws and regulations regarding air and water quality, 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 its current and future operations. In addition to imposing continuing compliance obligations and capital expenditure requirements, 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 and local agencies. All such laws and regulations are subject to a range of interpretation, which may ultimately be resolved by the courts. Environmental laws and regulations continue to evolve, and MidAmerican Energy is unable to predict the impact of the changing laws and regulations on its operations and consolidated financial results. MidAmerican Energy believes it is in material compliance with all applicable laws and regulations. Refer to "Liquidity and Capital Resources" for discussion of MidAmerican Energy's forecast environmental-related capital expenditures.

Refer to "Environmental Laws and Regulations" in Berkshire Hathaway Energy's Part I, Item 2 of this Form 10-Q for additional information regarding environmental laws and regulations.

New Accounting Pronouncements

For a discussion of new accounting pronouncements affecting MidAmerican Energy and MidAmerican Funding, refer to Note 2 of Notes to Consolidated Financial Statements in Part I, 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 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 MidAmerican Energy's and MidAmerican Funding's critical accounting estimates, see Item 7 of their Annual Report on Form 10-K for the year ended December 31, 2016 . There have been no significant changes in MidAmerican Energy's and MidAmerican Funding's assumptions regarding critical accounting estimates since December 31, 2016 .

111

Nevada Power Company and its subsidiaries

Consolidated Financial Section

112

PART I


Item 1.	Financial Statements

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Shareholder of

Nevada Power Company

Las Vegas, Nevada

We have reviewed the accompanying consolidated balance sheet of Nevada Power Company and subsidiaries ("Nevada Power") as of June 30, 2017 , and the related consolidated statements of operations for the three-month and six-month periods ended June 30, 2017 and 2016 , and of changes in shareholder's equity and cash flows for the six-month periods ended June 30, 2017 and 2016 . These interim financial statements are the responsibility of Nevada Power's management.

We have previously audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated balance sheet of Nevada Power Company and subsidiaries as of December 31, 2016 , and the related consolidated statements of operations, changes in shareholder's equity, and cash flows for the year then ended (not presented herein); and in our report dated February 24, 2017 , 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, 2016 is fairly stated, in all material respects, in relation to the consolidated balance sheet from which it has been derived.

/s/ Deloitte & Touche LLP

Las Vegas, Nevada

August 4, 2017

113

NEVADA POWER COMPANY AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS (Unaudited)

(Amounts in millions, except share data)



	As of
	June 30,			December 31,
	2017			2016
ASSETS
Current assets:
Cash and cash equivalents	$	10		$	279
Accounts receivable, net	322			243
Inventories	58			73
Regulatory assets	37			20
Other current assets	45			38
Total current assets	472			653

Property, plant and equipment, net	6,925			6,997
Regulatory assets	1,133			1,000
Other assets	37			39

Total assets	$	8,567		$	8,689

LIABILITIES AND SHAREHOLDER'S EQUITY
Current liabilities:
Accounts payable	$	223		$	187
Accrued interest	50			50
Accrued property, income and other taxes	111			93
Regulatory liabilities	38			37
Current portion of long-term debt and financial and capital lease obligations	347			17
Customer deposits	77			78
Other current liabilities	31			39
Total current liabilities	877			501

Long-term debt and financial and capital lease obligations	2,736			3,049
Regulatory liabilities	427			416
Deferred income taxes	1,505			1,474
Other long-term liabilities	284			277
Total liabilities	5,829			5,717

Commitments and contingencies (Note 9)

Shareholder's equity:
Common stock - $1.00 stated value; 1,000 shares authorized, issued and outstanding	—			—
Other paid-in capital	2,308			2,308
Retained earnings	433			667
Accumulated other comprehensive loss, net	(3		)	(3		)
Total shareholder's equity	2,738			2,972

Total liabilities and shareholder's equity	$	8,567		$	8,689

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

114

NEVADA POWER COMPANY AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)

(Amounts in millions)



	Three-Month Periods						Six-Month Periods
	Ended June 30,						Ended June 30,
	2017			2016			2017			2016

Operating revenue	$	574		$	525		$	966		$	924

Operating costs and expenses:
Cost of fuel, energy and capacity	238			199			403			367
Operating and maintenance	92			100			181			199
Depreciation and amortization	78			76			154			151
Property and other taxes	9			9			19			20
Total operating costs and expenses	417			384			757			737

Operating income	157			141			209			187

Other income (expense):
Interest expense	(44		)	(47		)	(88		)	(95		)
Allowance for borrowed funds	—			1			—			2
Allowance for equity funds	—			2			1			3
Other, net	7			5			13			10
Total other income (expense)	(37		)	(39		)	(74		)	(80		)

Income before income tax expense	120			102			135			107
Income tax expense	43			36			48			38
Net income	$	77		$	66		$	87		$	69

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

115

NEVADA POWER COMPANY AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDER'S EQUITY (Unaudited)

(Amounts in millions, except shares)



									Accumulated
				Other					Other			Total
	Common Stock			Paid-in		Retained			Comprehensive			Shareholder's
	Shares	Amount		Capital		Earnings			Loss, Net			Equity

Balance, December 31, 2015	1,000	$	—	$	2,308	$	858		$	(3	)	$	3,163
Net income	—	—		—		69			—			69
Dividends declared	—	—		—		(270		)	—			(270		)
Balance, June 30, 2016	1,000	$	—	$	2,308	$	657		$	(3	)	$	2,962

Balance, December 31, 2016	1,000	$	—	$	2,308	$	667		$	(3	)	$	2,972
Net income	—	—		—		87			—			87
Dividends declared	—	—		—		(322		)	—			(322		)
Other equity transactions	—	—		—		1			—			1
Balance, June 30, 2017	1,000	$	—	$	2,308	$	433		$	(3	)	$	2,738

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

116

NEVADA POWER COMPANY AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)

(Amounts in millions)



	Six-Month Periods
	Ended June 30,
	2017			2016
Cash flows from operating activities:
Net income	$	87		$	69
Adjustments to reconcile net income to net cash flows from operating activities:
Gain on nonrecurring items	(1		)	—
Depreciation and amortization	154			151
Deferred income taxes and amortization of investment tax credits	34			25
Allowance for equity funds	(1		)	(3		)
Changes in regulatory assets and liabilities	13			17
Deferred energy	(25		)	31
Amortization of deferred energy	7			(42		)
Other, net	(2		)	4
Changes in other operating assets and liabilities:
Accounts receivable and other assets	(84		)	(70		)
Inventories	7			2
Accrued property, income and other taxes	18			10
Accounts payable and other liabilities	48			50
Net cash flows from operating activities	255			244

Cash flows from investing activities:
Capital expenditures	(139		)	(181		)
Acquisitions	(77		)	—
Other, net	4			—
Net cash flows from investing activities	(212		)	(181		)

Cash flows from financing activities:
Proceeds from issuance of long-term debt	91			—
Repayments of long-term debt and financial and capital lease obligations	(81		)	(217		)
Dividends paid	(322		)	(270		)
Net cash flows from financing activities	(312		)	(487		)

Net change in cash and cash equivalents	(269		)	(424		)
Cash and cash equivalents at beginning of period	279			536
Cash and cash equivalents at end of period	$	10		$	112

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

117

NEVADA POWER COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

( 1 ) Organization and Operations

Nevada Power Company, together with its subsidiaries ("Nevada Power"), is a wholly owned subsidiary of NV Energy, Inc. ("NV Energy"), a holding company that also owns Sierra Pacific Power Company ("Sierra Pacific") and certain other subsidiaries. Nevada Power is a United States regulated electric utility company serving retail customers, including residential, commercial and industrial customers, primarily in the Las Vegas, North Las Vegas, Henderson and adjoining areas. NV Energy is an indirect wholly owned subsidiary of Berkshire Hathaway Energy Company ("BHE"). BHE is a holding company based in Des Moines, Iowa that owns subsidiaries principally engaged in energy businesses. BHE is a consolidated subsidiary of Berkshire Hathaway Inc. ("Berkshire Hathaway").

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, 2017 and for the three- and six-month periods ended June 30, 2017 and 2016 . The Consolidated Statements of Comprehensive Income have been omitted as net income equals comprehensive income for the three- and six-month periods ended June 30, 2017 and 2016 . The results of operations for the three- and six-month periods ended June 30, 2017 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 Nevada Power's Annual Report on Form 10-K for the year ended December 31, 2016 describes the most significant accounting policies used in the preparation of the unaudited Consolidated Financial Statements. There have been no significant changes in Nevada Power's assumptions regarding significant accounting estimates and policies during the six-month period ended June 30, 2017 .

( 2 ) New Accounting Pronouncements

In March 2017, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2017-07, which amends FASB Accounting Standards Codification ("ASC") Topic 715, "Compensation - Retirement Benefits." The amendments in this guidance require that an employer disaggregate the service cost component from the other components of net benefit cost and report the service cost component in the same line item as other compensation costs arising from services rendered by the pertinent employees during the period. The other components of net benefit cost are required to be presented in the statement of operations separately from the service cost component and outside the subtotal of operating income. Additionally, the guidance only allows the service cost component to be eligible for capitalization when applicable. This guidance is effective for interim and annual reporting periods beginning after December 15, 2017, with early adoption permitted. This guidance must be adopted retrospectively for the presentation of the service cost component and the other components of net benefit cost in the statement of operations and prospectively for the capitalization of the service cost component in the balance sheet. Nevada Power plans to adopt this guidance effective January 1, 2018 and is currently evaluating the impact on its Consolidated Financial Statements and disclosures included within Notes to Consolidated Financial Statements.

In November 2016, the FASB issued ASU No. 2016-18, which amends FASB ASC Subtopic 230-10, “Statement of Cash Flows - Overall.” The amendments in this guidance require that a statement of cash flows explain the change during the period in the total of cash, cash equivalents, and amounts generally described as restricted cash or restricted cash equivalents. Amounts generally described as restricted cash and restricted cash equivalents should be included with cash and cash equivalents when reconciling the beginning-of-period and end-of-period total amounts shown on the statement of cash flows. This guidance is effective for interim and annual reporting periods beginning after December 15, 2017, with early adoption permitted, and is required to be adopted retrospectively. Nevada Power plans to adopt this guidance effective January 1, 2018 and is currently evaluating the impact on its Consolidated Financial Statements and disclosures included within Notes to Consolidated Financial Statements.

118

In August 2016, the FASB issued ASU No. 2016-15, which amends FASB ASC Topic 230, "Statement of Cash Flows." The amendments in this guidance address the classification of eight specific cash flow issues within the statement of cash flows with the objective of reducing the existing diversity in practice. This guidance is effective for interim and annual reporting periods beginning after December 15, 2017, with early adoption permitted, and is required to be adopted retrospectively. Nevada Power plans to adopt this guidance effective January 1, 2018 and does not believe the adoption of this guidance will have a material impact on its Consolidated Financial Statements.

In February 2016, the FASB issued ASU No. 2016-02, which creates FASB ASC Topic 842, "Leases" and supersedes Topic 840 "Leases." This guidance increases transparency and comparability among entities by recording lease assets and lease liabilities on the balance sheet and disclosing key information about leasing arrangements. A lessee should recognize in the balance sheet a liability to make lease payments (the lease liability) and a right-of-use asset representing its right to use the underlying asset for the lease term. The recognition, measurement, and presentation of expenses and cash flows arising from a lease by a lessee have not significantly changed from previous guidance. This guidance is effective for interim and annual reporting periods beginning after December 15, 2018, with early adoption permitted, and is required to be adopted using a modified retrospective approach. Nevada Power plans to adopt this guidance effective January 1, 2019 and is currently evaluating the impact 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 August 2015, the FASB issued ASU No. 2015-14, which defers the effective date of ASU No. 2014-09 one year to interim and annual reporting periods beginning after December 15, 2017. During 2016, the FASB issued several ASUs that clarify the implementation guidance for ASU No. 2014-09 but do not change the core principle of the guidance. This guidance may be adopted retrospectively or under a modified retrospective method where the cumulative effect is recognized at the date of initial application. Nevada Power plans to adopt this guidance effective January 1, 2018 under the modified retrospective method and is currently evaluating the impact on its Consolidated Financial Statements and disclosures included within Notes to Consolidated Financial Statements. Nevada Power currently does not expect the timing and amount of revenue currently recognized to be materially different after adoption of the new guidance as a majority of revenue is recognized when Nevada Power has the right to invoice as it corresponds directly with the value to the customer of Nevada Power’s performance to date. Nevada Power's current plan is to quantitatively disaggregate revenue in the required financial statement footnote by customer class.

( 3 ) Property, Plant and Equipment, Net

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



		As of
	Depreciable Life	June 30,			December 31,
	Depreciable Life	2017			2016
Utility plant:
Generation	30 - 55 years	$	3,741		$	4,271
Distribution	20 - 65 years	3,279			3,231
Transmission	45 - 65 years	1,861			1,846
General and intangible plant	5 - 65 years	773			738
Utility plant		9,654			10,086
Accumulated depreciation and amortization		(2,791		)	(3,205		)
Utility plant, net		6,863			6,881
Other non-regulated, net of accumulated depreciation and amortization	45 years	2			2
Plant, net		6,865			6,883
Construction work-in-progress		60			114
Property, plant and equipment, net		$	6,925		$	6,997

119

Acquisitions

In April 2017, Nevada Power purchased the remaining 25% interest in the Silverhawk natural gas-fueled generating facility for $77 million . The PUCN approved the purchase of the facility in Nevada Power’s triennial Integrated Resource Plan filing in December 2015. The purchase price was allocated to the assets acquired, consisting primarily of generation utility plant, and no significant liabilities were assumed.

( 4 ) Regulatory Matters

Deferred Energy

Nevada statutes permit regulated utilities to adopt deferred energy accounting procedures. The intent of these procedures is to ease the effect on customers of fluctuations in the cost of purchased natural gas, fuel and electricity and are subject to annual prudency review by the Public Utilities Commission of Nevada ("PUCN"). Under deferred energy accounting, to the extent actual fuel and purchased power costs exceed fuel and purchased power costs recoverable through current rates that excess is not recorded as a current expense on the Consolidated Statements of Operations but rather is deferred and recorded as a regulatory asset on the Consolidated Balance Sheets. Conversely, a regulatory liability is recorded to the extent fuel and purchased power costs recoverable through current rates exceed actual fuel and purchased power costs. These excess amounts are reflected in quarterly adjustments to rates and recorded as cost of fuel, energy and capacity in future time periods.

Chapter 704B Applications

In September 2016, Switch, Ltd. ("Switch"), a customer of Nevada Power , filed an application with the PUCN to purchase energy from alternative providers of a new electric resource and become a distribution only service customer of Nevada Power . In December 2016, the PUCN approved a stipulation agreement that allows Switch to purchase energy from alternative providers subject to conditions , including paying an impact fee to Nevada Power. In May 2017, Switch paid impact fees of $27 million and, in June 2017, Switch became a distribution only service customer and started procuring energy from another energy supplier.

In November 2016, Caesars Enterprise Service ("Caesars"), a customer of Nevada Power , filed an application with the PUCN to purchase energy from alternative providers of a new electric resource and become a distribution only service customer of Nevada Power. In March 2017, the PUCN approved the application allowing Caesars to purchase energy from alternative providers subject to conditions, including paying an impact fee. In March 2017, Caesars provided notice that it intends to pay the impact fee and proceed with purchasing energy from alternative providers.

120

Emissions Reduction and Capacity Replacement Plan ("ERCR Plan")

In March 2017, Nevada Power retired Reid Gardner Unit 4, a 257 -MW coal-fueled generating facility. The early retirement was approved by the PUCN in December 2016 as a part of Nevada Power's second amendment to the ERCR Plan. The remaining net book value of $151 million was moved from property, plant and equipment, net to noncurrent regulatory assets on the Consolidated Balance Sheet as of June 30, 2017 , in compliance with the ERCR Plan. Refer to Note 9 for additional information on the ERCR Plan.

( 5 ) Recent Financing Transactions

In January 2017, Nevada Power (1) issued a notice to the bondholders for the repurchase of the remaining outstanding amounts of its $38 million Pollution Control Revenue Bonds, Series 2006 and $38 million Pollution Control Revenue Bonds, Series 2006A and (2) redeemed the Pollution Control Revenue Bonds, Series 2006A, aggregate principal amount outstanding plus accrued interest with the use of cash on hand. In February 2017, Nevada Power redeemed the Pollution Control Revenue Bonds, Series 2006, aggregate principal amount outstanding plus accrued interest with the use of cash on hand.

In May 2017, Nevada Power entered into a Financing Agreement with Clark County, Nevada (the "Clark Issuer") whereby the Clark Issuer loaned to Nevada Power the proceeds from the issuance, on behalf of Nevada Power, of $39.5 million of its 1.60% tax-exempt Pollution Control Refunding Revenue Bonds, Series 2017, due 2036 ("Series 2017 Bonds"). The Series 2017 Bonds are subject to mandatory purchase by Nevada Power in May 2020, and on and after the purchase date, the interest rate may be adjusted from time to time.

In May 2017, Nevada Power entered into a Financing Agreement with the Coconino County, Arizona Pollution Control Corporation (the "Coconino Issuer") whereby the Coconino Issuer loaned to Nevada Power the proceeds from the issuance, on behalf of Nevada Power, of $40 million of its 1.80% tax-exempt Pollution Control Refunding Revenue Bonds, Series 2017A, due 2032 and $13 million of its 1.60% tax-exempt Pollution Control Refunding Revenue Bonds, Series 2017B, due 2039 (collectively, the "Series 2017AB Bonds"). The Series 2017AB Bonds are subject to mandatory purchase by Nevada Power in May 2020, and on and after the purchase date, the interest rate may be adjusted from time to time.

To provide collateral security for its obligations, Nevada Power issued its General and Refunding Mortgage Notes, Series AA, No. AA-1 in the amount of $39.5 million and No. AA-2 in the amount of $53 million (collectively, the "Series AA Notes").The obligation of Nevada Power to make any payment of the principal and interest on any Series AA Notes is discharged to the extent Nevada Power has made payment on the Series 2017 Bonds and the Series 2017AB Bonds.

The collective proceeds from the tax-exempt bond issuances were used to refund at par value, plus accrued interest, the Clark Issuer's $39.5 million of Pollution Control Refunding Revenue Bonds, Series 2006 and the Coconino Issuer's $40 million of Pollution Control Refunding Revenue Bonds, Series 2006A and $13 million of Pollution Control Refunding Revenue Bonds, Series 2006B, each previously issued on behalf of Nevada Power.

In June 2017, Nevada Power amended its $400 million secured credit facility, extending the maturity date to June 2020 with two one-year extension options subject to lender consent. The amended credit facility, which is for general corporate purposes and provides for the issuances of letters of credit, has a variable interest rate based on the Eurodollar rate or a base rate, at Nevada Power's option, plus a spread that varies based on Nevada Power's credit ratings for its senior secured long-term debt securities. The amended credit facility requires Nevada Power's ratio of consolidated debt, including current maturities, to total capitalization not to exceed 0.65 to 1.0 as of the last day of each quarter.

( 6 ) Employee Benefit Plans

Nevada Power is a participant in benefit plans sponsored by NV Energy. The NV Energy Retirement Plan includes a qualified pension plan ("Qualified Pension Plan") and a supplemental executive retirement plan and a restoration plan (collectively, "Non‑Qualified Pension Plans") that provide pension benefits for eligible employees. The NV Energy Comprehensive Welfare Benefit and Cafeteria Plan provides certain postretirement health care and life insurance benefits for eligible retirees ("Other Postretirement Plans") on behalf of Nevada Power. Nevada Power contributed $1 million to the Non-Qualified Pension Plans for the six-month period ended June 30, 2017 . Amounts attributable to Nevada Power were allocated from NV Energy based upon the current, or in the case of retirees, previous, employment location. Offsetting regulatory assets and liabilities have been recorded related to the amounts not yet recognized as a component of net periodic benefit costs that will be included in regulated rates. Net periodic benefit costs not included in regulated rates are included in accumulated other comprehensive loss, net.

121

Amounts payable to NV Energy are included on the Consolidated Balance Sheets and consist of the following (in millions):



	As of
	June 30,			December 31,
	2017			2016
Qualified Pension Plan -
Other long-term liabilities	$	(26	)	$	(24	)

Non-Qualified Pension Plans:
Other current liabilities	(1		)	(1		)
Other long-term liabilities	(9		)	(9		)

Other Postretirement Plans -
Other long-term liabilities	(4		)	(4		)

( 7 ) Risk Management and Hedging Activities

Nevada Power is exposed to the impact of market fluctuations in commodity prices and interest rates. Nevada Power is principally exposed to electricity, natural gas and coal market fluctuations primarily through Nevada Power's obligation to serve retail customer load in its regulated service territory. Nevada Power's 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 and wholesale electricity that is purchased and sold. 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. The actual cost of fuel and purchased power is recoverable through the deferred energy mechanism. Interest rate risk exists on variable-rate debt and future debt issuances. Nevada Power does not engage in proprietary trading activities.

Nevada Power has established a risk management process that is designed to identify, assess, manage, monitor and report each of the various types of risk involved in its business. To mitigate a portion of its commodity price risk, Nevada Power 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. Nevada Power 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, Nevada Power may from time to time enter into interest rate derivative contracts, such as interest rate swaps or locks, to mitigate Nevada Power's exposure to interest rate risk. Nevada Power does not hedge all of its commodity price and interest rate risks, thereby exposing the unhedged portion to changes in market prices.

There have been no significant changes in Nevada Power's accounting policies related to derivatives. Refer to Note 8 for additional information on derivative contracts.

The following table, which excludes contracts that have been designated as normal under the normal purchases or normal sales exception afforded by GAAP, summarizes the fair value of Nevada Power'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
	Current			Long-term
	Liabilities			Liabilities			Total
As of June 30, 2017
Commodity liabilities ⁽¹⁾	$	(3	)	$	(1	)	$	(4	)

As of December 31, 2016
Commodity liabilities ⁽¹⁾	$	(7	)	$	(7	)	$	(14	)


(1)	Nevada Power's commodity derivatives not designated as hedging contracts are included in regulated rates and as of June 30, 2017 and December 31, 2016 , a regulatory asset of $4 million and $14 million , respectively, was recorded related to the derivative liability of $4 million and $14 million , respectively.

122

Derivative Contract Volumes

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



		As of
	Unit of	June 30,	December 31,
	Measure	2017	2016

Electricity sales	Megawatt hours	—	(2	)
Natural gas purchases	Decatherms	123	114

Credit Risk

Nevada Power is 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 Nevada Power's counterparties have similar economic, industry or other characteristics and due to direct and indirect relationships among the counterparties. Before entering into a transaction, Nevada Power analyzes 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, Nevada Power enters 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, Nevada Power exercises 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 unsecured debt as reported by one or more of the three recognized credit rating agencies. These derivative contracts may either specifically provide rights to demand cash or other security in the event of a credit rating downgrade ("credit-risk-related contingent features") or provide the right for counterparties to demand "adequate assurance," in the event of a material adverse change in creditworthiness. These rights can vary by contract and by counterparty. As of June 30, 2017 , credit ratings from the three recognized credit rating agencies were investment grade.

The aggregate fair value of Nevada Power's derivative contracts in liability positions with specific credit-risk-related contingent features was $2 million as of June 30, 2017 and December 31, 2016 , which represents the amount of collateral to be posted if all credit risk related contingent features for derivative contracts in liability positions had been triggered. Nevada Power's collateral requirements could fluctuate considerably due to market price volatility, changes in credit ratings, changes in legislation or regulation or other factors.


( 8 )	Fair Value Measurements

The carrying value of Nevada Power'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. Nevada Power has various financial assets and liabilities that are measured at fair value on the Consolidated Balance Sheets 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 Nevada Power has the ability to access at the measurement date.

•


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

123

The following table presents Nevada Power's financial 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			Total
As of June 30, 2017
Assets - investment funds	$	2	$	—	$	—		$	2

Liabilities - commodity derivatives	$	—	$	—	$	(4	)	$	(4	)

As of December 31, 2016
Assets:
Money market mutual funds ⁽¹⁾	$	220	$	—	$	—		$	220
Investment funds	6		—		—			6
	$	226	$	—	$	—		$	226

Liabilities - commodity derivatives	$	—	$	—	$	(14	)	$	(14	)


(1)	Amounts are included in cash and cash equivalents 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 Nevada Power transacts. When quoted prices for identical contracts are not available, Nevada Power uses forward price curves. Forward price curves represent Nevada Power's estimates of the prices at which a buyer or seller could contract today for delivery or settlement at future dates. Nevada Power bases its forward price curves upon internally developed models, with internal and external fundamental data inputs. Market price quotations for certain electricity and natural gas trading hubs are not as readily obtainable due to markets that are not active. Given that limited market data exists for these contracts, Nevada Power uses forward price curves derived from internal models based on perceived pricing relationships to major trading hubs that are based on unobservable inputs. The model incorporates a mid-market pricing convention (the mid‑point price between bid and ask prices) as a practical expedient for valuing its assets and liabilities measured and reported at fair value. The determination of the fair value for derivative contracts not only includes counterparty risk, but also the impact of Nevada Power's nonperformance risk on its liabilities, which as of June 30, 2017 and December 31, 2016 , had an immaterial impact to the fair value of its derivative contracts. As such, Nevada Power considers its derivative contracts to be valued using Level 3 inputs. Refer to Note 7 for further discussion regarding Nevada Power's risk management and hedging activities.

Nevada Power's investments in money market mutual funds and equity securities are accounted for as available-for-sale securities and are stated at fair value. 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.

The following table reconciles the beginning and ending balances of Nevada Power's commodity derivative 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,
	2017			2016			2017			2016

Beginning balance	$	(14	)	$	(22	)	$	(14	)	$	(22	)
Changes in fair value recognized in regulatory assets	(1		)	(2		)	(2		)	(5		)
Settlements	11			2			12			5
Ending balance	$	(4	)	$	(22	)	$	(4	)	$	(22	)

124

Nevada Power's long-term debt is carried at cost on the Consolidated Balance Sheets. The fair value of Nevada Power'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 Nevada Power'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 Nevada Power's long‑term debt (in millions):



	As of June 30, 2017				As of December 31, 2016
	Carrying		Fair		Carrying		Fair
	Value		Value		Value		Value

Long-term debt	$	2,598	$	3,067	$	2,581	$	3,040


( 9 )	Commitments and Contingencies

Environmental Laws and Regulations

Nevada Power is subject to federal, state and local 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 Nevada Power's current and future operations. Nevada Power believes it is in material compliance with all applicable laws and regulations.

Senate Bill 123

In June 2013, the Nevada State Legislature passed Senate Bill No. 123 ("SB 123"), which included the retirement of coal plants and replacing the capacity with renewable facilities and other generating facilities. In May 2014, Nevada Power filed its Emissions Reduction Capacity Replacement Plan ("ERCR Plan") in compliance with SB 123. In July 2015, Nevada Power filed an amendment to its ERCR Plan with the PUCN which was approved in September 2015. In June 2015, the Nevada State Legislature passed Assembly Bill No. 498, which modified the capacity replacement components of SB 123.

Consistent with the ERCR Plan, Nevada Power acquired a 272 -MW natural gas co-generating facility in 2014, acquired a 210 -MW natural gas peaking facility in 2014, constructed a 15 -MW solar photovoltaic facility in 2015, contracted two renewable power purchase agreements with 100 -MW solar photovoltaic generating facilities in 2015, contracted a renewable power purchase agreement with 100 -MW solar photovoltaic generating facility in 2016 and acquired the remaining 130 MW, 25% , of the Silverhawk natural gas-fueled generating facility in April 2017, of which 54 MW were approved as part of the ERCR Plan. Nevada Power has the option to acquire 35 MW of nameplate renewable energy capacity in the future under the ERCR Plan, subject to PUCN approval. Nevada Power retired Reid Gardner Units 1, 2, and 3, 300 MW of coal-fueled generation, in 2014 and Reid Gardner Unit 4, 257 MW of coal-fueled generation, in March 2017. These transactions are related to Nevada Power's compliance with SB 123, resulting in the retirement of 812 MW of coal-fueled generation by 2019.

Legal Matters

Nevada Power is party to a variety of legal actions arising out of the normal course of business. Plaintiffs occasionally seek punitive or exemplary damages. Nevada Power does not believe that such normal and routine litigation will have a material impact on its consolidated financial results.

125

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

General

Nevada Power's revenues and operating income are subject to fluctuations during the year due to impacts that seasonal weather, rate changes, and customer usage patterns have on demand for electric energy and resources. Nevada Power is a summer peaking utility experiencing its highest retail energy sales in response to the demand for air conditioning. The variations in energy usage due to varying weather, customer growth and other energy usage patterns, including energy efficiency and conservation measures, necessitates a continual balancing of loads and resources and purchases and sales of energy under short- and long-term energy supply contracts. As a result, the prudent management and optimization of available resources has a direct effect on the operating and financial performance of Nevada Power. Additionally, the timely recovery of purchased power, fuel costs and other costs and the ability to earn a fair return on investments through rates are essential to the operating and financial performance of Nevada Power.

The following is management's discussion and analysis of certain significant factors that have affected the consolidated financial condition and results of operations of Nevada Power 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 Nevada Power's historical unaudited Consolidated Financial Statements and Notes to Consolidated Financial Statements in Part I, Item 1 of this Form 10-Q. Nevada Power's actual results in the future could differ significantly from the historical results.

Results of Operations for the Second Quarter and First Six Months of 2017 and 2016

Net income for the second quarter of 2017 was $77 million , an increase of $11 million , or 17% , compared to 2016 due to higher margins from impact fees and revenue relating to customers becoming distribution only service customers, a refinement of the unbilled revenue estimate, customer growth and lower interest on deferred charges. The increase in net income was partially offset by lower commercial and industrial retail revenue from customers purchasing energy from alternative providers and becoming distribution only service customers.

Net income for the first six months of 2017 was $87 million , an increase of $18 million , or 26% , compared to 2016 due to higher margins from impact fees and revenue relating to customers becoming distribution only service customers, a refinement of the unbilled revenue estimate, lower interest on deferred charges and long-term debt, customer growth, and decreased planned maintenance and other generating costs. The increase in net income was partially offset by lower commercial and industrial retail revenue from customers purchasing energy from alternative providers and becoming distribution only service customers.

Operating revenue and cost of fuel, energy and capacity are key drivers of Nevada Power's results of operations as they encompass retail and wholesale electricity revenue and the direct costs associated with providing electricity to customers. Nevada Power believes that a discussion of gross margin, representing operating revenue less cost of fuel, energy and capacity, is therefore meaningful.

126

A comparison of Nevada Power's key operating results is as follows:



	Second Quarter										First Six Months
	2017		2016		Change						2017		2016		Change
Gross margin (in millions):
Operating revenue	$	574	$	525	$	49		9		%	$	966	$	924	$	42		5		%
Cost of fuel, energy and capacity	238		199		39			20			403		367		36			10
Gross margin	$	336	$	326	$	10		3			$	563	$	557	$	6		1

GWh sold:
Residential	2,482		2,415		67			3		%	4,000		3,988		12			—		%
Commercial	1,178		1,176		2			—			2,152		2,160		(8		)	—
Industrial	1,640		1,972		(332		)	(17	)		3,087		3,623		(536		)	(15	)
Other	45		47		(2		)	(4	)		94		96		(2		)	(2	)
Total fully bundled ⁽¹⁾	5,345		5,610		(265		)	(5	)		9,333		9,867		(534		)	(5	)
Distribution only service	430		102		328			*			750		186		564			*
Total retail	5,775		5,712		63			1			10,083		10,053		30			—
Wholesale	46		46		—			—			155		101		54			53
Total GWh sold	5,821		5,758		63			1			10,238		10,154		84			1

Average number of retail customers (in thousands):
Residential	809		795		14			2		%	807		793		14			2		%
Commercial	106		105		1			1			106		105		1			1
Industrial	2		2		—			—			2		2		—			—
Total	917		902		15			2			915		900		15			2

Average retail revenue per MWh:
Fully bundled ⁽¹⁾	$	103.85	$	91.59	$	12.26		13		%	$	99.56	$	91.52	$	8.04		9		%

Heating degree days	16		39		(23		)	(59	)	%	791		829		(38		)	(5	)	%
Cooling degree days	1,378		1,315		63			5		%	1,489		1,379		110			8		%

Sources of energy (GWh) ⁽²⁾ :
Natural gas	3,286		3,801		(515		)	(14	)	%	5,746		6,912		(1,166		)	(17	)	%
Coal	309		356		(47		)	(13	)		815		541		274			51
Renewables	22		13		9			69			38		21		17			81
Total energy generated	3,617		4,170		(553		)	(13	)		6,599		7,474		(875		)	(12	)
Energy purchased	1,976		1,707		269			16			3,165		2,939		226			8
Total	5,593		5,877		(284		)	(5	)		9,764		10,413		(649		)	(6	)

Average total cost of energy per MWh ⁽³⁾ :	$	42.54	$	33.88	$	8.66		26		%	$	41.29	$	35.29	$	6.00		17		%

* Not meaningful


(1)	Fully bundled includes sales to customers for combined energy, transmission and distribution services.


(2)	GWh amounts are net of energy used by the related generating facilities.


(3)	The average total cost of energy per MWh includes the cost of fuel, purchased power and deferrals and does not include other costs.

127

Gross margin increased $10 million , or 3% , for the second quarter of 2017 compared to 2016 due to:


•	$9 million in higher other retail revenue primarily from impact fees and revenue relating to customers becoming distribution only service customers;


•	$9 million from a refinement of the unbilled revenue estimate;


•	$5 million due to customer growth; and


•	$2 million in higher transmission revenue primarily due to customers becoming distribution only service customers.

The increase in gross margin was offset by:


•	$8 million in lower commercial and industrial retail revenue from customers purchasing energy from alternative providers and becoming distribution only service customers and


•	$6 million in lower energy efficiency program rate revenue, which is offset in operating and maintenance expense.

Operating and maintenance decreased $8 million , or 8% , for the second quarter of 2017 compared to 2016 primarily due to lower energy efficiency program costs, which are fully recovered in operating revenue.

Other income (expense) is favorable $2 million , or 5% , for the second quarter of 2017 compared to 2016 primarily due to lower interest expense on deferred charges.

Income tax expense increased $7 million , or 19% , for the second quarter of 2017 compared to 2016 due to higher pre-tax income. The effective tax rate was 36% in 2017 and 35% in 2016 .

Gross margin increased $6 million , or 1% , for the first six months of 2017 compared to 2016 due to:


•	$11 million in higher other retail revenue primarily from impact fees and revenue relating to customers becoming distribution only service customers;


•	$9 million from a refinement of the unbilled revenue estimate;


•	$5 million due to customer growth; and


•	$3 million in higher transmission revenue primarily due to customers becoming distribution only service customers.

The increase in gross margin was offset by:


•	$12 million in lower energy efficiency program rate revenue, which is offset in operating and maintenance expense and


•	$9 million in lower commercial and industrial retail revenue from customers purchasing energy from alternative providers and becoming distribution only service customers.

Operating and maintenance decreased $18 million , or 9% , for the first six months of 2017 compared to 2016 due to lower energy efficiency program costs, which are fully recovered in operating revenue, lower planned maintenance and other generating costs and decreased expenses related to uncollectible accounts.

Depreciation and amortization increased $3 million , or 2% , for the first six months of 2017 compared to 2016 primarily due to higher plant placed in-service.

Other income (expense) is favorable $6 million , or 8% , for the first six months of 2017 compared to 2016 due to lower interest expense on deferred charges and the redemption of $210 million Series M, 5.950% General and Refunding Mortgage Notes in 2016.

Income tax expense increased $10 million , or 26% , for the first six months of 2017 compared to 2016 due to higher pre-tax income. The effective tax rate was 36% in 2017 and 2016 .

128

Liquidity and Capital Resources

As of June 30, 2017 , Nevada Power's total net liquidity was $410 million consisting of $10 million in cash and cash equivalents and $400 million of a credit facility.

Operating Activities

Net cash flows from operating activities for the six-month periods ended June 30, 2017 and 2016 were $255 million and $244 million , respectively. The change was due to receipt of impact fees, lower interest payments on long-term debt, decreased renewable energy program costs and lower inventory purchases, partially offset by decreased collections from customers from lower retail rates as a result of deferred energy adjustment mechanisms and energy efficiency programs, higher payments for fuel costs and increased deferred operating costs related to Las Vegas and Sun Peak generating stations.

In December 2015, the Protecting Americans from Tax Hikes Act of 2015 ("PATH") was signed into law, extending bonus depreciation for qualifying property acquired and placed in-service before January 1, 2020 (bonus depreciation rates will be 50% for 2015-2017, 40% in 2018, and 30% in 2019), with an additional year for certain longer lived assets. Investment tax credits were extended and phased-down for solar projects that are under construction before the end of 2021 (investment tax credit rates are 30% through 2019, 26% in 2020 and 22% in 2021; they revert to the statutory rate of 10% thereafter). As a result of PATH, Nevada Power's cash flows from operations are expected to benefit due to bonus depreciation on qualifying assets placed in-service through 2019 and investment tax credits (once the net operating loss is fully utilized) earned on qualifying projects through 2021.

The timing of Nevada Power's income tax cash flows from period to period can be significantly affected by 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, 2017 and 2016 were $(212) million and $(181) million , respectively. The change was due to the acquisition of the remaining 25% in the Silverhawk generating station, partially offset by decreased capital expenditures.

Financing Activities

Net cash flows from financing activities for the six-month periods ended June 30, 2017 and 2016 were $(312) million and $(487) million , respectively. The change was due to lower repayments of long-term debt and proceeds from issuance of long-term debt, partially offset by higher dividends paid to NV Energy, Inc. in 2017.

Ability to Issue Debt

Nevada Power's ability to issue debt is primarily impacted by its financing authority from the PUCN. As of June 30, 2017 , Nevada Power has financing authority from the PUCN consisting of the ability to: (1) issue new long-term debt securities of up to $1.3 billion ; (2) refinancing authority up to $1.2 billion of long-term debt securities; and (3) maintain a revolving credit facility of up to $1.3 billion . Nevada Power's revolving credit facility contains a financial maintenance covenant which Nevada Power was in compliance with as of June 30, 2017 .

129

Future Uses of Cash

Nevada Power 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 use of its secured revolving credit facility, capital contributions and other sources. These sources are expected to provide funds required for current operations, capital expenditures, debt retirements and other capital requirements. The availability and terms under which Nevada Power has access to external financing depends on a variety of factors, including Nevada Power's credit ratings, investors' judgment of risk and conditions in the overall capital markets, including the condition of the utility industry.

Capital Expenditures

Nevada Power 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 and associated operating costs are generally incorporated into Nevada Power's regulated retail rates. Expenditures for certain assets may ultimately include acquisition of existing assets.

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



	Six-Month Periods				Annual
	Ended June 30,				Forecast
	2016		2017		2017

Generation development	$	1	$	—	$	—
Distribution	58		28		58
Transmission system investment	16		5		16
Other	106		106		172
Total	$	181	$	139	$	246

Nevada Power's approved forecast capital expenditures include investments related to operating projects that consist of routine expenditures for transmission, distribution, generation and other infrastructure needed to serve existing and expected demand.

Contractual Obligations

As of June 30, 2017 , there have been no material changes outside the normal course of business in contractual obligations from the information provided in Item 7 of Nevada Power's Annual Report on Form 10-K for the year ended December 31, 2016 .

130

Regulatory Matters

Nevada Power is subject to comprehensive regulation. Refer to "Regulatory Matters" in Berkshire Hathaway Energy's Part I, Item 2 of this Form 10-Q for discussion regarding Nevada Power's current regulatory matters.

Environmental Laws and Regulations

Nevada Power is subject to federal, state and local laws and regulations regarding air and water quality, RPS, 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 Nevada Power's current and future operations. In addition to imposing continuing compliance obligations and capital expenditure requirements, 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 and local agencies. All such laws and regulations are subject to a range of interpretation, which may ultimately be resolved by the courts. Environmental laws and regulations continue to evolve, and Nevada Power is unable to predict the impact of the changing laws and regulations on its operations and consolidated financial results. Nevada Power believes it is in material compliance with all applicable laws and regulations. Refer to "Liquidity and Capital Resources" for discussion of Nevada Power's forecasted environmental-related capital expenditures.

Refer to "Environmental Laws and Regulations" in Berkshire Hathaway Energy's Part I, Item 2 of this Form 10-Q for additional information regarding environmental laws.

New Accounting Pronouncements

For a discussion of new accounting pronouncements affecting Nevada Power, refer to Note 2 of Notes to Consolidated Financial Statements in Nevada Power's Part I, 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 long-lived assets, income taxes and revenue recognition - unbilled revenue. For additional discussion of Nevada Power's critical accounting estimates, see Item 7 of Nevada Power's Annual Report on Form 10‑K for the year ended December 31, 2016 . There have been no significant changes in Nevada Power's assumptions regarding critical accounting estimates since December 31, 2016 .

131

Sierra Pacific Power Company and its subsidiaries

Consolidated Financial Section

132

PART I


Item 1.	Financial Statements

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Shareholder of

Sierra Pacific Power Company

Las Vegas, Nevada

We have reviewed the accompanying consolidated balance sheet of Sierra Pacific Power Company and subsidiaries ("Sierra Pacific") as of June 30, 2017 , and the related consolidated statements of operations for the three-month and six-month periods ended June 30, 2017 and 2016 , and of changes in shareholder's equity and cash flows for the six-month periods ended June 30, 2017 and 2016 . These interim financial statements are the responsibility of Sierra Pacific's management.

We have previously audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated balance sheet of Sierra Pacific Power Company and subsidiaries as of December 31, 2016 , and the related consolidated statements of operations, changes in shareholder's equity, and cash flows for the year then ended (not presented herein); and in our report dated February 24, 2017 , 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, 2016 is fairly stated, in all material respects, in relation to the consolidated balance sheet from which it has been derived.

/s/ Deloitte & Touche LLP

Las Vegas, Nevada

August 4, 2017

133

SIERRA PACIFIC POWER COMPANY AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS (Unaudited)

(Amounts in millions, except share data)



	As of
	June 30,			December 31,
	2017			2016
ASSETS
Current assets:
Cash and cash equivalents	$	4		$	55
Accounts receivable, net	92			117
Inventories	45			45
Regulatory assets	27			25
Other current assets	15			13
Total current assets	183			255

Property, plant and equipment, net	2,841			2,822
Regulatory assets	403			410
Other assets	7			6

Total assets	$	3,434		$	3,493

LIABILITIES AND SHAREHOLDER'S EQUITY
Current liabilities:
Accounts payable	$	81		$	146
Accrued interest	14			14
Accrued property, income and other taxes	10			10
Regulatory liabilities	18			69
Current portion of long-term debt and financial and capital lease obligations	1			1
Customer deposits	15			16
Other current liabilities	16			12
Total current liabilities	155			268

Long-term debt and financial and capital lease obligations	1,152			1,152
Regulatory liabilities	222			221
Deferred income taxes	639			617
Other long-term liabilities	123			127
Total liabilities	2,291			2,385

Commitments and contingencies (Note 8)

Shareholder's equity:
Common stock - $3.75 stated value, 20,000,000 shares authorized and 1,000 issued and outstanding	—			—
Other paid-in capital	1,111			1,111
Retained earnings (deficit)	33			(2		)
Accumulated other comprehensive loss, net	(1		)	(1		)
Total shareholder's equity	1,143			1,108

Total liabilities and shareholder's equity	$	3,434		$	3,493

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

134

SIERRA PACIFIC POWER COMPANY AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)

(Amounts in millions)



	Three-Month Periods						Six-Month Periods
	Ended June 30,						Ended June 30,
	2017			2016			2017			2016
Operating revenue:
Electric	$	160		$	162		$	319		$	332
Natural gas	17			19			51			66
Total operating revenue	177			181			370			398

Operating costs and expenses:
Cost of fuel, energy and capacity	61			65			117			135
Natural gas purchased for resale	6			7			22			37
Operating and maintenance	40			45			81			86
Depreciation and amortization	28			29			56			58
Property and other taxes	6			7			12			13
Total operating costs and expenses	141			153			288			329

Operating income	36			28			82			69

Other income (expense):
Interest expense	(11		)	(14		)	(22		)	(30		)
Allowance for borrowed funds	—			1			—			1
Allowance for equity funds	—			—			1			1
Other, net	1			—			2			1
Total other income (expense)	(10		)	(13		)	(19		)	(27		)

Income before income tax expense	26			15			63			42
Income tax expense	9			5			22			15
Net income	$	17		$	10		$	41		$	27

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

135

SIERRA PACIFIC POWER COMPANY AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDER'S EQUITY (Unaudited)

(Amounts in millions, except shares)



									Accumulated
				Other		Retained			Other			Total
	Common Stock			Paid-in		Earnings			Comprehensive			Shareholder's
	Shares	Amount		Capital		(Deficit)			Loss, Net			Equity

Balance, December 31, 2015	1,000	$	—	$	1,111	$	(35	)	$	—		$	1,076
Net income	—	—		—		27			—			27
Dividends declared	—	—		—		(40		)	—			(40		)
Balance, June 30, 2016	1,000	$	—	$	1,111	$	(48	)	$	—		$	1,063

Balance, December 31, 2016	1,000	$	—	$	1,111	$	(2	)	$	(1	)	$	1,108
Net income	—	—		—		41			—			41
Dividends declared	—	—		—		(5		)	—			(5		)
Other equity transactions	—	—		—		(1		)	—			(1		)
Balance, June 30, 2017	1,000	$	—	$	1,111	$	33		$	(1	)	$	1,143

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

136

SIERRA PACIFIC POWER COMPANY AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)

(Amounts in millions)



	Six-Month Periods
	Ended June 30,
	2017			2016
Cash flows from operating activities:
Net income	$	41		$	27
Adjustments to reconcile net income to net cash flows from operating activities:
Depreciation and amortization	56			58
Allowance for equity funds	(1		)	(1		)
Deferred income taxes and amortization of investment tax credits	23			15
Changes in regulatory assets and liabilities	7			(9		)
Deferred energy	(20		)	44
Amortization of deferred energy	(34		)	(21		)
Other, net	(1		)	1
Changes in other operating assets and liabilities:
Accounts receivable and other assets	24			29
Inventories	—			(3		)
Accrued property, income and other taxes	1			—
Accounts payable and other liabilities	(54		)	2
Net cash flows from operating activities	42			142

Cash flows from investing activities:
Capital expenditures	(87		)	(92		)
Net cash flows from investing activities	(87		)	(92		)

Cash flows from financing activities:
Proceeds from issuance of long-term debt, net of costs	—			1,095
Repayments of long-term debt and financial and capital lease obligations	(1		)	(1,137		)
Dividends paid	(5		)	(40		)
Other, net	—			(5		)
Net cash flows from financing activities	(6		)	(87		)

Net change in cash and cash equivalents	(51		)	(37		)
Cash and cash equivalents at beginning of period	55			106
Cash and cash equivalents at end of period	$	4		$	69

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

137

SIERRA PACIFIC POWER COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

( 1 ) Organization and Operations

Sierra Pacific Power Company, together with its subsidiaries ("Sierra Pacific"), is a wholly owned subsidiary of NV Energy, Inc. ("NV Energy"), a holding company that also owns Nevada Power Company ("Nevada Power") and certain other subsidiaries. Sierra Pacific is a United States regulated electric utility company serving retail customers, including residential, commercial and industrial customers and regulated retail natural gas customers primarily in northern Nevada. NV Energy is an indirect wholly owned subsidiary of Berkshire Hathaway Energy Company ("BHE"). BHE is a holding company based in Des Moines, Iowa that owns subsidiaries principally engaged in energy businesses. BHE is a consolidated subsidiary of Berkshire Hathaway Inc. ("Berkshire Hathaway").

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, 2017 and for the three- and six-month periods ended June 30, 2017 and 2016 . The Consolidated Statements of Comprehensive Income have been omitted as net income equals comprehensive income for the three- and six-month periods ended June 30, 2017 and 2016 . The results of operations for the three- and six-month periods ended June 30, 2017 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 Sierra Pacific's Annual Report on Form 10-K for the year ended December 31, 2016 describes the most significant accounting policies used in the preparation of the unaudited Consolidated Financial Statements. There have been no significant changes in Sierra Pacific's assumptions regarding significant accounting estimates and policies during the six-month period ended June 30, 2017 .

( 2 ) New Accounting Pronouncements

In March 2017, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2017-07, which amends FASB Accounting Standards Codification ("ASC") Topic 715, "Compensation - Retirement Benefits." The amendments in this guidance require that an employer disaggregate the service cost component from the other components of net benefit cost and report the service cost component in the same line item as other compensation costs arising from services rendered by the pertinent employees during the period. The other components of net benefit cost are required to be presented in the statement of operations separately from the service cost component and outside the subtotal of operating income. Additionally, the guidance only allows the service cost component to be eligible for capitalization when applicable. This guidance is effective for interim and annual reporting periods beginning after December 15, 2017, with early adoption permitted. This guidance must be adopted retrospectively for the presentation of the service cost component and the other components of net benefit cost in the statement of operations and prospectively for the capitalization of the service cost component in the balance sheet. Sierra Pacific plans to adopt this guidance effective January 1, 2018 and is currently evaluating the impact on its Consolidated Financial Statements and disclosures included within Notes to Consolidated Financial Statements.

In November 2016, the FASB issued ASU No. 2016-18, which amends FASB ASC Subtopic 230-10, “Statement of Cash Flows - Overall.” The amendments in this guidance require that a statement of cash flows explain the change during the period in the total of cash, cash equivalents, and amounts generally described as restricted cash or restricted cash equivalents. Amounts generally described as restricted cash and restricted cash equivalents should be included with cash and cash equivalents when reconciling the beginning-of-period and end-of-period total amounts shown on the statement of cash flows. This guidance is effective for interim and annual reporting periods beginning after December 15, 2017, with early adoption permitted, and is required to be adopted retrospectively. Sierra Pacific plans to adopt this guidance effective January 1, 2018 and is currently evaluating the impact on its Consolidated Financial Statements and disclosures included within Notes to Consolidated Financial Statements.

138

In August 2016, the FASB issued ASU No. 2016-15, which amends FASB ASC Topic 230, "Statement of Cash Flows." The amendments in this guidance address the classification of eight specific cash flow issues within the statement of cash flows with the objective of reducing the existing diversity in practice. This guidance is effective for interim and annual reporting periods beginning after December 15, 2017, with early adoption permitted, and is required to be adopted retrospectively. Sierra Pacific plans to adopt this guidance effective January 1, 2018 and does not believe the adoption of this guidance will have a material impact on its Consolidated Financial Statements.

In February 2016, the FASB issued ASU No. 2016-02, which creates FASB ASC Topic 842, "Leases" and supersedes Topic 840 "Leases." This guidance increases transparency and comparability among entities by recording lease assets and lease liabilities on the balance sheet and disclosing key information about leasing arrangements. A lessee should recognize in the balance sheet a liability to make lease payments (the lease liability) and a right-of-use asset representing its right to use the underlying asset for the lease term. The recognition, measurement, and presentation of expenses and cash flows arising from a lease by a lessee have not significantly changed from previous guidance. This guidance is effective for interim and annual reporting periods beginning after December 15, 2018, with early adoption permitted, and is required to be adopted using a modified retrospective approach. Sierra Pacific plans to adopt this guidance effective January 1, 2019 and is currently evaluating the impact 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 August 2015, the FASB issued ASU No. 2015-14, which defers the effective date of ASU No. 2014-09 one year to interim and annual reporting periods beginning after December 15, 2017. During 2016, the FASB issued several ASUs that clarify the implementation guidance for ASU No. 2014-09 but do not change the core principle of the guidance. This guidance may be adopted retrospectively or under a modified retrospective method where the cumulative effect is recognized at the date of initial application. Sierra Pacific plans to adopt this guidance effective January 1, 2018 under the modified retrospective method and is currently evaluating the impact on its Consolidated Financial Statements and disclosures included within Notes to Consolidated Financial Statements. Sierra Pacific currently does not expect the timing and amount of revenue currently recognized to be materially different after adoption of the new guidance as a majority of revenue is recognized when Sierra Pacific has the right to invoice as it corresponds directly with the value to the customer of Sierra Pacific’s performance to date. Sierra Pacific's current plan is to quantitatively disaggregate revenue in the required financial statement footnote by segment and customer class.

139

( 3 ) Property, Plant and Equipment, Net

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



		As of
	Depreciable Life	June 30,			December 31,
	Depreciable Life	2017			2016
Utility plant:
Electric generation	25 - 60 years	$	1,140		$	1,137
Electric distribution	20 - 100 years	1,436			1,417
Electric transmission	50 - 100 years	774			771
Electric general and intangible plant	5 - 70 years	176			164
Natural gas distribution	35 - 70 years	385			381
Natural gas general and intangible plant	5 - 70 years	14			15
Common general	5 - 70 years	283			267
Utility plant		4,208			4,152
Accumulated depreciation and amortization		(1,479		)	(1,442		)
Utility plant, net		2,729			2,710
Other non-regulated, net of accumulated depreciation and amortization	70 years	5			5
Plant, net		2,734			2,715
Construction work-in-progress		107			107
Property, plant and equipment, net		$	2,841		$	2,822

( 4 ) Regulatory Matters

Deferred Energy

Regulatory Rate Review

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Chapter 704B Applications

In September 2016, Switch, Ltd. ("Switch"), a customer of Sierra Pacific , filed an application with the PUCN to purchase energy from alternative providers of a new electric resource and become a distribution only service customer of Sierra Pacific . In December 2016, the PUCN approved a stipulation agreement that allows Switch to purchase energy from alternative providers subject to conditions . In June 2017, Switch became a distribution only service customer and started procuring energy from another energy supplier.

In November 2016, Caesars Enterprise Service ("Caesars"), a customer of Sierra Pacific , filed an application with the PUCN to purchase energy from alternative providers of a new electric resource and become a distribution only service customer of Sierra Pacific. In March 2017, the PUCN approved the application allowing Caesars to purchase energy from alternative providers subject to conditions, including paying an impact fee. In March 2017, Caesars provided notice that it intends to pay the impact fee and proceed with purchasing energy from alternative providers.

( 5 ) Recent Financing Transactions

( 6 ) Employee Benefit Plans

Sierra Pacific is a participant in benefit plans sponsored by NV Energy. The NV Energy Retirement Plan includes a qualified pension plan ("Qualified Pension Plan") and a supplemental executive retirement plan and a restoration plan (collectively, "Non‑Qualified Pension Plans") that provide pension benefits for eligible employees. The NV Energy Comprehensive Welfare Benefit and Cafeteria Plan provides certain postretirement health care and life insurance benefits for eligible retirees ("Other Postretirement Plans") on behalf of Sierra Pacific. Sierra Pacific contributed $4 million to the Other Postretirement Plans for the six-month period ended June 30, 2017 . Amounts attributable to Sierra Pacific were allocated from NV Energy based upon the current, or in the case of retirees, previous, employment location. Offsetting regulatory assets and liabilities have been recorded related to the amounts not yet recognized as a component of net periodic benefit costs that will be included in regulated rates. Net periodic benefit costs not included in regulated rates are included in accumulated other comprehensive loss, net.

141

Amounts payable to NV Energy are included on the Consolidated Balance Sheets and consist of the following (in millions):



	As of
	June 30,			December 31,
	2017			2016
Qualified Pension Plan -
Other long-term liabilities	$	(13	)	$	(12	)

Non-Qualified Pension Plans:
Other current liabilities	(1		)	(1		)
Other long-term liabilities	(9		)	(9		)

Other Postretirement Plans -
Other long-term liabilities	(24		)	(28		)

( 7 ) Fair Value Measurements

The carrying value of Sierra Pacific'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. Sierra Pacific has various financial assets and liabilities that are measured at fair value on the Consolidated Balance Sheets 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 Sierra Pacific has the ability to access at the measurement date.

•


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

The following table presents Sierra Pacific's financial 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		Total
As of June 30, 2017
Assets - investment funds	$	—	$	—	$	—	$	—

As of December 31, 2016
Assets:
Money market mutual funds ⁽¹⁾	$	35	$	—	$	—	$	35
Investment funds	1		—		—		1
	$	36	$	—	$	—	$	36


(1)	Amounts are included in cash and cash equivalents on the Consolidated Balance Sheets. The fair value of these money market mutual funds approximates cost.

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Sierra Pacific's investments in money market mutual funds and equity securities are accounted for as available-for-sale securities and are stated at fair value. 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.

Sierra Pacific's long-term debt is carried at cost on the Consolidated Balance Sheets. The fair value of Sierra Pacific'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 Sierra Pacific'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 Sierra Pacific's long-term debt (in millions):



	As of June 30, 2017				As of December 31, 2016
	Carrying		Fair		Carrying		Fair
	Value		Value		Value		Value

Long-term debt	$	1,121	$	1,204	$	1,119	$	1,191


( 8 )	Commitments and Contingencies

Environmental Laws and Regulations

Sierra Pacific is subject to federal, state and local 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 Sierra Pacific's current and future operations. Sierra Pacific believes it is in material compliance with all applicable laws and regulations.

Legal Matters

Sierra Pacific is party to a variety of legal actions arising out of the normal course of business. Plaintiffs occasionally seek punitive or exemplary damages. Sierra Pacific does not believe that such normal and routine litigation will have a material impact on its consolidated financial results.

( 9 ) Segment Information

Sierra Pacific has identified two reportable operating segments: regulated electric and regulated natural gas. The regulated electric segment derives most of its revenue from regulated retail sales of electricity to residential, commercial, and industrial customers and from wholesale sales. The regulated natural gas segment derives most of its revenue from regulated retail sales of natural gas to residential, commercial, and industrial customers and also obtains revenue by transporting natural gas owned by others through its distribution system. Pricing for regulated electric and regulated natural gas sales are established separately by the PUCN; therefore, management also reviews each segment separately to make decisions regarding allocation of resources and in evaluating performance.

Sierra Pacific believes presenting gross margin allows the reader to assess the impact of Sierra Pacific's regulatory treatment and its overall regulatory environment on a consistent basis and is meaningful. Gross margin is calculated as operating revenue less cost of fuel, energy and capacity and natural gas purchased for resale ("cost of sales").

143

The following tables provide information on a reportable segment basis (in millions):



	Three-Month Periods				Six-Month Periods
	Ended June 30,				Ended June 30,
	2017		2016		2017		2016
Operating revenue:
Regulated electric	$	160	$	162	$	319	$	332
Regulated gas	17		19		51		66
Total operating revenue	$	177	$	181	$	370	$	398

Cost of sales:
Regulated electric	$	61	$	65	$	117	$	135
Regulated gas	6		7		22		37
Total cost of sales	$	67	$	72	$	139	$	172

Gross margin:
Regulated electric	$	99	$	97	$	202	$	197
Regulated gas	11		12		29		29
Total gross margin	$	110	$	109	$	231	$	226

Operating and maintenance:
Regulated electric	$	36	$	40	$	72	$	76
Regulated gas	4		5		9		10
Total operating and maintenance	$	40	$	45	$	81	$	86

Depreciation and amortization:
Regulated electric	$	24	$	25	$	49	$	50
Regulated gas	4		4		7		8
Total depreciation and amortization	$	28	$	29	$	56	$	58

Operating income:
Regulated electric	$	34	$	26	$	70	$	59
Regulated gas	2		2		12		10
Total operating income	$	36	$	28	$	82	$	69

Interest expense:
Regulated electric	$	10	$	13	$	20	$	27
Regulated gas	1		1		2		3
Total interest expense	$	11	$	14	$	22	$	30

144



	As of
	June 30,		December 31,
	2017		2016
Total assets:
Regulated electric	$	3,117	$	3,119
Regulated gas	306		314
Regulated common assets ⁽¹⁾	11		60
Total assets	$	3,434	$	3,493


(1)	Consists principally of cash and cash equivalents not included in either the regulated electric or regulated natural gas segments.

145

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

General

Sierra Pacific's revenues and operating income are subject to fluctuations during the year due to impacts that seasonal weather, rate changes, and customer usage patterns have on demand for electric energy and resources. Sierra Pacific is a summer peaking utility experiencing its highest retail energy sales in response to the demand for air conditioning. The variations in energy usage due to varying weather, customer growth and other energy usage patterns, including energy efficiency and conservation measures, necessitates a continual balancing of loads and resources and purchases and sales of energy under short- and long-term energy supply contracts. As a result, the prudent management and optimization of available resources has a direct effect on the operating and financial performance of Sierra Pacific. Additionally, the timely recovery of purchased power, fuel costs and other costs and the ability to earn a fair return on investments through rates are essential to the operating and financial performance of Sierra Pacific.

The following is management's discussion and analysis of certain significant factors that have affected the consolidated financial condition and results of operations of Sierra Pacific 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 Sierra Pacific's historical unaudited Consolidated Financial Statements and Notes to Consolidated Financial Statements in Part I, Item 1 of this Form 10-Q. Sierra Pacific's actual results in the future could differ significantly from the historical results.

Results of Operations for the Second Quarter and First Six Months of 2017 and 2016

Overview

Net income for the second quarter of 2017 was $17 million , an increase of $7 million , or 70% , compared to 2016 due to lower compensation and other operating costs, higher electric margins primarily from increased customer usage due to the impacts of weather and a decrease in interest expense from lower rates on outstanding debt balances.

Net income for the first six months of 2017 was $41 million , an increase of $14 million , or 52% , compared to 2016 due to a decrease in interest expense from lower rates on outstanding debt balances, higher electric margins primarily from increased customer usage due to the impacts of weather and lower compensation and other operating costs.

Operating revenue, cost of fuel, energy and capacity and natural gas purchased for resale are key drivers of Sierra Pacific's results of operations as they encompass retail and wholesale electricity and natural gas revenue and the direct costs associated with providing electricity and natural gas to customers. Sierra Pacific believes that a discussion of gross margin, representing operating revenue less cost of fuel, energy and capacity and natural gas purchased for resale, is therefore meaningful.

146

A comparison of Sierra Pacific's key operating results is as follows:

Electric Gross Margin



	Second Quarter										First Six Months
	2017		2016		Change						2017		2016		Change
Gross margin (in millions):
Operating electric revenue	$	160	$	162	$	(2	)	(1	)	%	$	319	$	332	$	(13	)	(4	)	%
Cost of fuel, energy and capacity	61		65		(4		)	(6	)		117		135		(18		)	(13	)
Gross margin	$	99	$	97	$	2		2			$	202	$	197	$	5		3

GWh sold:
Residential	538		495		43			9		%	1,168		1,104		64			6		%
Commercial	742		738		4			1			1,421		1,387		34			2
Industrial	805		750		55			7			1,549		1,488		61			4
Other	4		4		—			—			8		8		—			—
Total fully bundled ⁽¹⁾	2,089		1,987		102			5			4,146		3,987		159			4
Distribution only service	345		334		11			3			693		673		20			3
Total retail	2,434		2,321		113			5			4,839		4,660		179			4
Wholesale	107		146		(39		)	(27	)		289		334		(45		)	(13	)
Total GWh sold	2,541		2,467		74			3			5,128		4,994		134			3

Average number of retail customers (in thousands):
Residential	295		292		3			1		%	294		291		3			1		%
Commercial	47		46		1			2			47		46		1			2
Total	342		338		4			1			341		337		4			1

Average revenue per MWh:
Retail fully bundled ⁽¹⁾	$	71.32	$	75.84	$	(4.52	)	(6	)	%	$	70.61	$	77.09	$	(6.48	)	(8	)	%
Wholesale	$	49.81	$	46.89	$	2.92		6			$	49.97	$	50.35	$	(0.38	)	(1	)

Heating degree days	572		484		88			18		%	2,705		2,444		261			11		%
Cooling degree days	331		292		39			13		%	331		292		39			13		%

Sources of energy (GWh) ⁽²⁾ :
Natural gas	996		991		5			1		%	2,006		1,980		26			1		%
Coal	102		85		17			20			102		299		(197		)	(66	)
Renewables	14		—		14			*			19		—		19			*
Total energy generated	1,112		1,076		36			3			2,127		2,279		(152		)	(7	)
Energy purchased	1,201		1,089		112			10			2,624		2,233		391			18
Total	2,313		2,165		148			7			4,751		4,512		239			5

Average total cost of energy per MWh ⁽³⁾ :	$	26.41	$	30.24	$	(3.83	)	(13	)	%	$	24.70	$	29.93	$	(5.23	)	(17	)	%

* Not meaningful


(1)	Fully bundled includes sales to customers for combined energy, transmission and distribution services.


(2)	GWh amounts are net of energy used by the related generating facilities.


(3)	The average total cost of energy per MWh includes the cost of fuel, purchased power and deferrals and does not include other costs.

147

Natural Gas Gross Margin



	Second Quarter										First Six Months
	2017		2016		Change						2017		2016		Change
Gross margin (in millions):
Operating natural gas revenue	$	17	$	19	$	(2	)	(11	)	%	$	51	$	66	$	(15	)	(23	)	%
Natural gas purchased for resale	6		7		(1		)	(14	)		22		37		(15		)	(41	)
Gross margin	$	11	$	12	$	(1	)	(8	)		$	29	$	29	$	—		—

Dth sold:
Residential	1,572		1,368		204			15		%	6,031		5,231		800			15		%
Commercial	832		691		141			20			3,028		2,723		305			11
Industrial	351		291		60			21			1,011		864		147			17
Total retail	2,755		2,350		405			17			10,070		8,818		1,252			14

Average number of retail customers (in thousands)	164		161		3			2		%	164		161		3			2		%
Average revenue per retail Dth sold	$	6.05	$	7.92	$	(1.87	)	(24	)	%	$	4.98	$	7.28	$	(2.30	)	(32	)	%
Average cost of natural gas per retail Dth sold	$	4.26	$	3.54	$	0.72		20		%	$	4.19	$	4.24	$	(0.05	)	(1	)	%
Heating degree days	572		484		88			18		%	2,705		2,444		261			11		%

Electric gross margin increased $2 million , or 2% , for the second quarter of 2017 compared to 2016 primarily due to higher customer usage from the impacts of weather.

Operating and maintenance decreased $5 million , or 11% , for the second quarter of 2017 compared to 2016 due to lower compensation and other operating costs.

Other income (expense) is favorable $3 million , or 23% , for the second quarter of 2017 compared to 2016 primarily due to a decrease in interest expense from lower rates on outstanding debt balances.

Income tax expense increased $4 million , or 80% , for the second quarter of 2017 compared to 2016 due to higher pre-tax income. The effective tax rate was 35% in 2017 and 33% in 2016 .

Electric gross margin increased $5 million , or 3% , for the first six months of 2017 compared to 2016 due to:


•	$4 million higher customer usage from the impacts of weather and


•	$2 million in higher transmission revenue.

The increase in gross margin was partially offset by:


•	$2 million in decreased wholesale revenue.

Operating and maintenance decreased $5 million , or 6% , for the first six months of 2017 compared to 2016 due to lower compensation and other operating costs.

Depreciation and amortization decreased $2 million , or 3% , for the first six months of 2017 compared to 2016 primarily due to regulatory amortizations.

Other income (expense) is favorable $8 million , or 30% , for the first six months of 2017 compared to 2016 primarily due to a decrease in interest expense from lower rates on outstanding debt balances.

Income tax expense increased $7 million , or 47% , for the first six months of 2017 compared to 2016 due to higher pre-tax income. The effective tax rate was 35% in 2017 and 36% in 2016 .

148

Liquidity and Capital Resources

As of June 30, 2017 , Sierra Pacific's total net liquidity was as follows (in millions):



Cash and cash equivalents	$	4

Credit facility	250
Less:
Tax-exempt bond support	(80		)
Net credit facility	170

Total net liquidity	$	174

Operating Activities

Net cash flows from operating activities for the six-month periods ended June 30, 2017 and 2016 were $42 million and $142 million , respectively. The change was due to higher payments for fuel costs, decreased collections from customers due to lower retail rates as a result of deferred energy adjustment mechanisms and higher contributions to retirement plans, partially offset by lower interest payments on long-term debt.

In December 2015, the Protecting Americans from Tax Hikes Act of 2015 ("PATH") was signed into law, extending bonus depreciation for qualifying property acquired and placed in-service before January 1, 2020 (bonus depreciation rates will be 50% for 2015-2017, 40% in 2018, and 30% in 2019), with an additional year for certain longer lived assets. Investment tax credits were extended and phased-down for solar projects that are under construction before the end of 2021 (investment tax credit rates are 30% through 2019, 26% in 2020 and 22% in 2021; they revert to the statutory rate of 10% thereafter). As a result of PATH, Sierra Pacific's cash flows from operations are expected to benefit due to bonus depreciation on qualifying assets placed in-service through 2019 and investment tax credits (once the net operating loss is fully utilized) earned on qualifying projects through 2021.

The timing of Sierra Pacific's income tax cash flows from period to period can be significantly affected by 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, 2017 and 2016 were $(87) million and $(92) million , respectively. The change was due to decreased capital expenditures.

Financing Activities

Net cash flows from financing activities for the six-month periods ended June 30, 2017 and 2016 were $(6) million and $(87) million , respectively. The change was due to lower repayments of long-term debt and lower dividends paid to NV Energy, Inc. in 2017, partially offset by lower proceeds from issuance of long-term debt.

Ability to Issue Debt

Sierra Pacific's ability to issue debt is primarily impacted by its financing authority from the PUCN. As of June 30, 2017 , Sierra Pacific has financing authority from the PUCN consisting of the ability to: (1) issue additional long-term debt securities of up to $350 million ; (2) refinance up to $55 million of long-term debt securities; and (3) maintain a revolving credit facility of up to $600 million . Sierra Pacific's revolving credit facility contains a financial maintenance covenant which Sierra Pacific was in compliance with as of June 30, 2017 .

149

Future Uses of Cash

Sierra Pacific 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 use of its secured revolving credit facility, capital contributions and other sources. These sources are expected to provide funds required for current operations, capital expenditures, debt retirements and other capital requirements. The availability and terms under which Sierra Pacific has access to external financing depends on a variety of factors, including Sierra Pacific's credit ratings, investors' judgment of risk and conditions in the overall capital markets, including the condition of the utility industry.

Capital Expenditures

Sierra Pacific 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 and associated operating costs are generally incorporated into Sierra Pacific's regulated retail rates. Expenditures for certain assets may ultimately include acquisition of existing assets.

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



	Six-Month Periods				Annual
	Ended June 30,				Forecast
	2016		2017		2017

Distribution	$	40	$	38	$	90
Transmission system investment	10		6		17
Other	42		43		86
Total	$	92	$	87	$	193

Sierra Pacific's forecast capital expenditures include investments that relate to operating projects that consist of routine expenditures for transmission, distribution, generation and other infrastructure needed to serve existing and expected demand.

Contractual Obligations

As of June 30, 2017 , there have been no material changes outside the normal course of business in contractual obligations from the information provided in Item 7 of Sierra Pacific's Annual Report on Form 10-K for the year ended December 31, 2016 .

Regulatory Matters

Sierra Pacific is subject to comprehensive regulation. Refer to "Regulatory Matters" in Berkshire Hathaway Energy's Part I, Item 2 of this Form 10-Q for discussion regarding Sierra Pacific's current regulatory matters.

Environmental Laws and Regulations

Sierra Pacific is subject to federal, state and local laws and regulations regarding air and water quality, RPS, 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 Sierra Pacific's current and future operations. In addition to imposing continuing compliance obligations and capital expenditure requirements, 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 and local agencies. All such laws and regulations are subject to a range of interpretation, which may ultimately be resolved by the courts. Environmental laws and regulations continue to evolve, and Sierra Pacific is unable to predict the impact of the changing laws and regulations on its operations and consolidated financial results. Sierra Pacific believes it is in material compliance with all applicable laws and regulations. Refer to "Liquidity and Capital Resources" for discussion of Sierra Pacific's forecasted environmental-related capital expenditures.

150

Refer to "Environmental Laws and Regulations" in Berkshire Hathaway Energy's Part I, Item 2 of this Form 10-Q for additional information regarding environmental laws and regulations.

New Accounting Pronouncements

For a discussion of new accounting pronouncements affecting Sierra Pacific, refer to Note 2 of Notes to Consolidated Financial Statements in Sierra Pacific's Part I, 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 long-lived assets, income taxes and revenue recognition - unbilled revenue. For additional discussion of Sierra Pacific's critical accounting estimates, see Item 7 of Sierra Pacific's Annual Report on Form 10‑K for the year ended December 31, 2016 . There have been no significant changes in Sierra Pacific's assumptions regarding critical accounting estimates since December 31, 2016 .

151


Item 3.	Quantitative and Qualitative Disclosures About Market Risk

For quantitative and qualitative disclosures about market risk affecting the Registrants, see Item 7A of each Registrant's Annual Report on Form 10-K for the year ended December 31, 2016 . Each Registrant's exposure to market risk and its management of such risk has not changed materially since December 31, 2016 . Refer to Note 9 of the Notes to Consolidated Financial Statements of Berkshire Hathaway Energy in Part I, Item 1 of this Form 10-Q, Note 6 of the Notes to Consolidated Financial Statements of PacifiCorp in Part I, Item 1 of this Form 10-Q and Note 7 of the Notes to Consolidated Financial Statements of Nevada Power in Part I, Item 1 of this Form 10-Q for disclosure of the respective Registrant's derivative positions as of June 30, 2017 .


Item 4.	Controls and Procedures

At the end of the period covered by this Quarterly Report on Form 10-Q, each of Berkshire Hathaway Energy Company, PacifiCorp, MidAmerican Funding, LLC, MidAmerican Energy Company, Nevada Power Company and Sierra Pacific Power Company carried out separate evaluations, under the supervision and with the participation of each such entity's management, including its Chief Executive Officer (principal executive officer) and its Chief Financial Officer (principal financial officer), or persons performing similar functions, of the effectiveness of the design and operation of its disclosure controls and procedures (as defined in Rule 13a-15(e) promulgated under the Securities Exchange Act of 1934, as amended). Based upon these evaluations, management of each such entity, including its Chief Executive Officer (principal executive officer) and its Chief Financial Officer (principal financial officer), or persons performing similar functions, in each case, concluded that the disclosure controls and procedures for such entity were effective to ensure that information required to be disclosed by such entity in the reports that it files or submits under the Securities Exchange Act of 1934, as amended, 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 its management, including its Chief Executive Officer (principal executive officer) and its Chief Financial Officer (principal financial officer), or persons performing similar functions, in each case, as appropriate to allow timely decisions regarding required disclosure by it. Each such entity hereby states that there has been no change in its internal control over financial reporting during the quarter ended June 30, 2017 that has materially affected, or is reasonably likely to materially affect, its internal control over financial reporting.

152

PART II


Item 1.	Legal Proceedings

Not applicable.


Item 1A.	Risk Factors

There has been no material change to each Registrant's risk factors from those disclosed in Item 1A of each Registrant's Annual Report on Form 10-K for the year ended December 31, 2016 .


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 Berkshire Hathaway Energy's and PacifiCorp'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.

153

SIGNATURES

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



	BERKSHIRE HATHAWAY ENERGY COMPANY

Date: August 4, 2017	/s/ Patrick J. Goodman
	Patrick J. Goodman
	Executive Vice President and Chief Financial Officer
	(principal financial and accounting officer)

	PACIFICORP

Date: August 4, 2017	/s/ Nikki L. Kobliha
	Nikki L. Kobliha
	Vice President, Chief Financial Officer and Treasurer
	(principal financial and accounting officer)

	MIDAMERICAN FUNDING, LLC
	MIDAMERICAN ENERGY COMPANY

Date: August 4, 2017	/s/ Thomas B. Specketer
	Thomas B. Specketer
	Vice President and Controller
	of MidAmerican Funding, LLC
	and Vice President and Chief Financial Officer
	of MidAmerican Energy Company
	(principal financial and accounting officer)

	NEVADA POWER COMPANY

Date: August 4, 2017	/s/ E. Kevin Bethel
	E. Kevin Bethel
	Senior Vice President and Chief Financial Officer
	(principal financial and accounting officer)

	SIERRA PACIFIC POWER COMPANY

Date: August 4, 2017	/s/ E. Kevin Bethel
	E. Kevin Bethel
	Senior Vice President and Chief Financial Officer
	(principal financial and accounting officer)

154

EXHIBIT INDEX


Exhibit No.	Description

BERKSHIRE HATHAWAY ENERGY


10.1	$1,000,000,000 Credit Agreement, dated as of May 11, 2017, among Berkshire Hathaway Energy Company, as Borrower, the Banks, Financial Institutions and Other Institutional Lenders, as Initial Lenders, and The Bank of Tokyo-Mitsubishi UFJ, LTD., as Administrative Agent.


15.1	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.

PACIFICORP


15.2	Awareness Letter of Independent Registered Public Accounting Firm.


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


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


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


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

BERKSHIRE HATHAWAY ENERGY AND PACIFICORP


10.2	$600,000,000 Credit Agreement, dated as of June 30, 2017, among PacifiCorp, as Borrower, the Banks, Financial Institutions and Other Institutional Lenders, as Initial Lenders, JPMorgan Chase Bank, N.A., as Administrative Agent, and the LC Issuing Banks.


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

MIDAMERICAN ENERGY


15.3	Awareness Letter of Independent Registered Public Accounting Firm.


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


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


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


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

BERKSHIRE HATHAWAY ENERGY AND MIDAMERICAN ENERGY


10.3	$900,000,000 Credit Agreement, dated as of June 30, 2017, among MidAmerican Energy Company, as Borrower, the Banks, Financial Institutions and Other Institutional Lenders, as Initial Lenders, Mizuho Bank, LTD., as Administrative Agent, and the LC Issuing Banks.

155

Exhibit No. Description

MIDAMERICAN FUNDING


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


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


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


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

NEVADA POWER


15.4	Awareness Letter of Independent Registered Public Accounting Firm.


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


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


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


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

BERKSHIRE HATHAWAY ENERGY AND NEVADA POWER


4.1	Financing Agreement dated May 1, 2017 between Clark County, Nevada and Nevada Power Company (relating to Clark County, Nevada's $39,500,000 Pollution Control Refunding Revenue Bonds (Nevada Power Company Project) Series 2017) (incorporated by reference to Exhibit 4.1 to the Nevada Power Company Current Report on Form 8-K dated May 25, 2017).

4.2

Financing Agreement dated May 1, 2017 between the Coconino County, Arizona Pollution Control Corporation and Nevada Power Company (relating to the Coconino County, Arizona Pollution Control Corporation's $53,000,000 Pollution Control Refunding Revenue Bonds (Nevada Power Company Projects) Series 2017A and 2017B) (incorporated by reference to Exhibit 4.2 to the Nevada Power Company Current Report on Form 8-K dated May 25, 2017).


4.3	Officer’s Certificate establishing the terms of Nevada Power Company’s General and Refunding Mortgage Notes, Series AA (Nos. AA-1 and AA-2) (incorporated by reference to Exhibit 4.3 to the Nevada Power Company Current Report on Form 8-K dated May 25, 2017).


10.4	$400,000,000 Second Amended and Restated Credit Agreement, dated as of June 30, 2017, among Nevada Power Company, as Borrower, the Banks, Financial Institutions and Other Institutional Lenders, as Initial Lenders, Wells Fargo Bank, National Association, as Administrative Agent, and the LC Issuing Banks.

SIERRA PACIFIC


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


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


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


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

BERKSHIRE HATHAWAY ENERGY AND SIERRA PACIFIC


10.5	$250,000,000 Second Amended and Restated Credit Agreement, dated as of June 30, 2017, among Sierra Pacific Power Company, as Borrower, the Banks, Financial Institutions and Other Institutional Lenders, as Initial Lenders, Wells Fargo Bank, National Association, as Administrative Agent, and the LC Issuing Banks.

156

Exhibit No. Description

ALL REGISTRANTS

101

The following financial information from each respective Registrant's Quarterly Report on Form 10-Q for the quarter ended June 30, 2017 , 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.

157

EXECUTION VERSION

______________________________________________________________________________________

U.S. $1,000,000,000

364-DAY CREDIT AGREEMENT

Dated as of May 11, 2017

Among

BERKSHIRE HATHAWAY ENERGY COMPANY

as the Borrower

THE INITIAL LENDERS NAMED HEREIN

as Initial Lenders

and

THE BANK OF TOKYO-MITSUBISHI UFJ, LTD.

as Administrative Agent



THE BANK OF TOKYO-MITSUBISHI UFJ, LTD. MIZUHO BANK, LTD.	J.P. MORGAN CHASE BANK, N.A. WELLS FARGO SECURITIES, LLC

Joint Lead Arrangers and Joint Bookrunners



MIZUHO BANK, LTD. JPMORGAN CHASE BANK, N.A. WELLS FARGO BANK, NATIONAL ASSOCIATION Syndication Agents	BARCLAYS BANK PLC CITIBANK, N.A. U.S. BANK NATIONAL ASSOCIATION Documentation Agents

1DMSLIBRARY01\30343127.v8



	TABLE OF CONTENTS
		Page
Article I DEFINITIONS AND ACCOUNTING TERMS		1
Section 1.01.	Certain Defined Terms.	1
Section 1.02.	Computation of Time Periods.	20
Section 1.03.	Accounting Terms.	20
Section 1.04.	Classification of Loans and Borrowings.	21
Section 1.05.	Other Interpretive Provisions.	21
Article II AMOUNTS AND TERMS OF THE EXTENSIONS OF CREDIT		21
Section 2.01.	The Revolving Loans.	21
Section 2.02.	Making the Revolving Loans.	21
Section 2.03.	[Reserved]	23
Section 2.04.	[Reserved]	23
Section 2.05.	Fees.	23
Section 2.06.	[Reserved]	23
Section 2.07.	[Reserved]	23
Section 2.08.	Termination or Reduction of the Commitments.	23
Section 2.09.	Repayment of Loans.	24
Section 2.10.	Evidence of Indebtedness.	24
Section 2.11.	Interest on Loans.	25
Section 2.12.	Interest Rate Determination.	26
Section 2.13.	Conversion of Revolving Loans.	26
Section 2.14.	Optional Prepayments of Loans.	27
Section 2.15.	Increased Costs.	27
Section 2.16.	Illegality.	29
Section 2.17.	Payments and Computations.	29
Section 2.18.	Taxes.	30
Section 2.19.	Sharing of Payments, Etc.	34
Section 2.20.	Mitigation Obligations; Replacement of Lenders.	35
Section 2.21.	Defaulting Lenders.	36
Article III CONDITIONS PRECEDENT		37
Section 3.01.	Conditions Precedent to Effectiveness.	37
Section 3.02.	Conditions Precedent to each Extension of Credit.	39
Article IV REPRESENTATIONS AND WARRANTIES		39
Section 4.01.	Representations and Warranties of the Borrower.	39
Article V COVENANTS OF THE BORROWER		42
Section 5.01.	Affirmative Covenants.	42
Section 5.02.	Negative Covenants.	45
Section 5.03.	Financial Covenant.	48
Article VI EVENTS OF DEFAULT		48
Section 6.01.	Events of Default.	48



Article VII THE ADMINISTRATIVE AGENT		50
Section 7.01.	Appointment and Authority.	50
Section 7.02.	Rights as a Lender.	50
Section 7.03.	Exculpatory Provisions.	50
Section 7.04.	Reliance by Administrative Agent.	51
Section 7.05.	Resignation of Administrative Agent.	52
Section 7.06.	Non-Reliance on Administrative Agent and Other Lenders.	53
Section 7.07.	Indemnification.	53
Section 7.08.	No Other Duties, etc.	54
Article VIII MISCELLANEOUS		54
Section 8.01.	Amendments, Etc.	54
Section 8.02.	Notices, Etc.	55
Section 8.03.	No Waiver; Remedies.	56
Section 8.04.	Costs and Expenses; Indemnification.	56
Section 8.05.	Right of Set-off.	58
Section 8.06.	Binding Effect.	59
Section 8.07.	Assignments and Participations.	59
Section 8.08.	Confidentiality.	63
Section 8.09.	Governing Law.	64
Section 8.10.	Severability.	64
Section 8.11.	Execution in Counterparts.	64
Section 8.12.	Jurisdiction, Etc.	64
Section 8.13.	Waiver of Jury Trial.	65
Section 8.14.	USA Patriot Act.	65
Section 8.15.	No Fiduciary Duty.	66
Section 8.16.	Acknowledgement and Consent to Bail-In of EEA Financial Institutions.	66



EXHIBITS AND SCHEDULES

EXHIBIT A	---------------	Form of Notice of Borrowing
EXHIBIT B	---------------	Form of Assignment and Assumption
EXHIBIT F-1	---------------	Form of U.S. Tax Compliance Certificate (For Foreign Lenders That Are Not Partnerships For U.S. Federal Income Tax Purposes)
EXHIBIT F-2	---------------	Form of U.S. Tax Compliance Certificate (For Foreign Participants That Are Not Partnerships For U.S. Federal Income Tax Purposes)
EXHIBIT F-3	---------------	Form of U.S. Tax Compliance Certificate (For Foreign Participants That Are Partnerships For U.S. Federal Income Tax Purposes)
EXHIBIT F-4	---------------	Form of U.S. Tax Compliance Certificate (For Foreign Lenders That Are Partnerships For U.S. Federal Income Tax Purposes)

SCHEDULE I	---------------	List of Commitment Amounts and Applicable Lending Offices
SCHEDULE II	---------------	List of Material Subsidiaries
SCHEDULE III	---------------	List of Certain Preferred Securities and Junior Subordinated Debentures

364-DAY CREDIT AGREEMENT

364-DAY CREDIT AGREEMENT, dated as of May 11, 2017 (as amended, restated, supplemented or otherwise modified from time to time, this “ Agreement ”), among BERKSHIRE HATHAWAY ENERGY COMPANY, an Iowa corporation (the “ Borrower ”), the banks, financial institutions and other institutional lenders listed on the signatures pages hereof (the “ Initial Lenders ”) and THE BANK OF TOKYO-MITSUBISHI UFJ, LTD. (“ MUFG ”), as administrative agent (in such capacity, the “ Administrative Agent ”) for the Lenders (as hereinafter defined).

ARTICLE I
DEFINITIONS AND ACCOUNTING TERMS

SECTION 1.01. Certain Defined Terms.

As used in this Agreement, the following terms shall have the following meanings (such meanings to be equally applicable to both the singular and plural forms of the terms defined):

“ Administrative Agent ” has the meaning specified in the first paragraph of this Agreement.

“ Administrative Questionnaire ” means an administrative questionnaire in a form supplied by the Administrative Agent.

“ Affiliate” means, with respect to a specified Person, another Person that directly, or indirectly through one or more intermediaries, controls or is controlled by or is under common control with the Person specified. For purposes of this definition, the term “control” (including the terms “controlled by” and “under common control with”) of a Person means the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of such Person, whether through the ability to exercise voting power, by contract or otherwise.

“ Agent Fee Letter ” means the letter agreement, dated May 3, 2017 among the Borrower and the Administrative Agent, as amended, restated, supplemented or otherwise modified from time to time.

“ Agent Parties ” has the meaning specified in Section 8.02(d)(ii).

“ Agent’s Account” means the account of the Administrative Agent designated from time to time in a written notice to the Lenders and the Borrower as the account to which the Lenders are to fund Borrowings and the Borrower is to make payments under this Agreement.

“ Anti-Corruption Laws ” means all laws, rules, and regulations of any jurisdiction applicable to the Borrower or any Subsidiary of the Borrower or their respective activities from time to time concerning or relating to bribery or corruption, including, without limitation, (i) the United States Foreign Corrupt Practices Act of 1977, as amended from

time to time, and the applicable regulations thereunder, and (ii) to the extent applicable, the United Kingdom’s Bribery Act 2010, as amended from time to time.

“ Applicable Law” means (i) all applicable common law and principles of equity and (ii) all applicable provisions of all (A) constitutions, statutes, rules, regulations and orders of all Governmental Authorities, (B) Governmental Approvals and (C) orders, decisions, judgments and decrees of all courts (whether at law or in equity or admiralty) and arbitrators.

“ Applicable Lending Office” means, with respect to each Lender, such Lender’s Domestic Lending Office in the case of a Base Rate Loan and such Lender’s Eurodollar Lending Office in the case of a Eurodollar Rate Revolving Loan.

“ Applicable Margin” means, with respect to any Base Rate Loan and any Eurodollar Rate Revolving Loan, at all times during which any Applicable Rating Level set forth below is in effect, the rate per annum (except as provided below) for such Loan set forth below next to such Applicable Rating Level:



Applicable Rating Level	Applicable Margin for Eurodollar Rate Revolving Loans	Applicable Margin for Base Rate Loans
1	0.750%	0.000%
2	0.875%	0.000%
3	1.000%	0.000%
4	1.125%	0.125%
5	1.375%	0.375%

provided , that the Applicable Margins set forth above shall be increased, for each Applicable Rating Level, upon the occurrence and during the continuance of any Event of Default by 2.00% per annum. Any change in the Applicable Margin resulting from a change in the Applicable Rating Level shall become effective upon the date of announcement of any change in the Moody’s Rating or the S&P Rating that results in such change in the Applicable Rating Level.

“ Applicable Rating Level ” at any time shall be determined in accordance with the then-applicable S&P Rating or the then-applicable Moody’s Rating as follows:



S&P Rating/Moody’s Rating	Applicable Rating Level
S&P Rating A+ or higher or Moody’s Rating A1 or higher	1
S&P Rating A or Moody’s Rating A2	2
S&P Rating A- or Moody’s Rating A3	3
S&P Rating BBB+ or Moody’s Rating Baa1	4
S&P Rating BBB or below or Moody’s Rating Baa2 or below or unrated	5

The Applicable Rating Level for any day shall be determined based upon the higher of the S&P Rating and the Moody’s Rating in effect on such day. If the S&P Rating and the Moody’s Rating are not the same ( i.e. , a “split rating”), the higher (better) of such ratings shall control, unless the ratings differ by more than one level, in which case the rating one level below the higher of the two ratings shall control.

“ Approved Fund ” means any Fund that is administered or managed by (i) a Lender, (ii) an Affiliate of a Lender or (iii) an entity or an Affiliate of an entity that administers or manages a Lender.

“ Assignment and Assumption ” means an assignment and assumption entered into by a Lender and an Eligible Assignee (with the consent of any party whose consent is required by Section 8.07), and accepted by the Administrative Agent, in substantially the form of Exhibit B or any other form approved by the Administrative Agent.

“ Available Commitments ” means, on any day, the aggregate unused Commitments, computed after giving effect to all Extensions of Credit made or to be made on such day, the application of proceeds therefrom and all prepayments and repayments of Revolving Loans made on such day.

“ Bail-In Action ” means the exercise of any Write-Down and Conversion Powers by the applicable EEA Resolution Authority in respect of any liability of an EEA Financial Institution.

“ Bail-In Legislation ” means, with respect to any EEA Member Country implementing Article 55 of Directive 2014/59/EU of the European Parliament and of the Council of the European Union, the implementing law for such EEA Member Country from time to time which is described in the EU Bail-In Legislation Schedule.

“ Bankruptcy Event ” means, with respect to any Person, such Person becomes the subject of a bankruptcy or insolvency proceeding, or has had a receiver, conservator, trustee, administrator, custodian, assignee for the benefit of creditors or similar Person charged with reorganization or liquidation of its business or assets (including the Federal Deposit Insurance Corporation or any other Governmental Authority acting in a similar capacity) appointed for it, provided that a Bankruptcy Event shall not result solely by virtue of any ownership interest, or the acquisition of any ownership interest, in such Person or a direct or indirect parent company of such Person by a Governmental Authority if and for so long as such ownership interest does not result in or provide such Person with immunity from the jurisdiction of courts within the United States or from the enforcement of judgments or writs of attachment on its assets or permit such Person (or such Governmental Authority) to reject, repudiate, disavow or disaffirm any contracts or agreements made with such Lender.

“ Base Rate” means a fluctuating interest rate per annum in effect from time to time, which rate per annum shall at all times be equal to the highest of:


(i)	the rate of interest announced by the Administrative Agent from time to time as the Administrative Agent’s reference rate;


(ii)	1/2 of 1% per annum above the NYFRB Rate in effect on such date; and

(iii)

the rate of interest per annum (rounded upwards to the nearest 1/100 of 1%) appearing on the Service equal to the one-month London interbank offered rate for deposits in Dollars as determined at approximately 11:00 a.m. (London time) on such day (or if such day is not a Business Day, on the next preceding Business Day), plus 1%; provided , however , if more than one rate is specified on the Service, the applicable rate shall be the arithmetic mean of all such rates plus 1%

; provided , that in no event shall the Base Rate be less than 0%.

“ Base Rate Loan” means a Loan that bears interest as provided in Section 2.11(a).

“ Berkshire Hathaway ” means Berkshire Hathaway Inc.

“ BHE Shareholders ” means the holders of the common stock of the Borrower.

“ Borrower ” has the meaning specified in the first paragraph of this Agreement.

“ Borrowing ” means a borrowing by the Borrower consisting of simultaneous Revolving Loans of the same Type, having the same Interest Period and ratably made or Converted on the same day by each of the Lenders pursuant to Section 2.02 or 2.13, as the case may be. All Revolving Loans to the Borrower of the same Type, having the same Interest Period and made or Converted on the same day shall be deemed a single Borrowing hereunder until repaid or next Converted.

“ Borrowing Date ” means the date of any Borrowing.

“ Business Day ” means a day of the year on which banks are not required or authorized by law to close in New York City or Los Angeles and, if the applicable Business Day relates to any Eurodollar Rate Revolving Loans, “ Business Day ” also includes a day on which dealings are carried on in the London interbank market.

“ Change in Law ” means the occurrence, after the date of this Agreement, of any of the following: (i) the adoption of any law, rule, regulation or treaty, (ii) any change in any law, rule, regulation or treaty or in the administration, interpretation, implementation or application thereof by any Governmental Authority or (iii) the making or issuance of any request, rule, guideline or directive (whether or not having the force of law) by any Governmental Authority; provided that notwithstanding anything herein to the contrary, (x) the Dodd-Frank Wall Street Reform and Consumer Protection Act and all requests, rules, guidelines or directives (whether or not having the force of law) thereunder or issued in connection therewith and (y) all requests, rules, guidelines or directives (whether or not having the force of law) promulgated by the Bank for International Settlements, the Basel

Committee on Banking Supervision (or any successor or similar authority) or the United States or foreign regulatory authorities, in each case pursuant to Basel III, shall in each case be deemed to be a “ Change in Law ”, regardless of the date enacted, adopted or issued.

“ Change of Control ” has the meaning specified in Section 6.01(h).

“ Closing Date ” means May 11, 2017.

“ Commitment ” means, for each Lender, the obligation of such Lender to make Revolving Loans to the Borrower hereunder in an aggregate amount no greater than the amount set forth on Schedule I hereto or, if such Lender has entered into any Assignment and Assumption, set forth for such Lender in the Register maintained by the Administrative Agent pursuant to Section 8.07(c), in each such case as such amount may be from time to time reduced pursuant to Section 2.08.

“ Commitment Fee Rate ” means, at any time, the rate per annum set forth below next to the Applicable Rating Level in effect at such time:



Applicable Rating Level	Commitment Fee Rate
1	0.050%
2	0.060%
3	0.075%
4	0.100%
5	0.125%

A change in the Commitment Fee Rate resulting from a change in the Applicable Rating Level shall become effective upon the date of public announcement of a change in the Moody’s Rating or the S&P Rating that results in a change in the Applicable Rating Level.

“ Commitment Percentage ” means, as to any Lender as of any date of determination, the percentage describing such Lender’s pro rata share of the Commitments set forth initially on Schedule I hereto or in the Register from time to time; provided that in the case of Section 2.21 when a Defaulting Lender shall exist, “ Commitment Percentage ” means the percentage of the total Commitments (disregarding any Defaulting Lender’s Commitment) represented by such Lender’s Commitment. If the Commitments have terminated or expired, the Commitment Percentages shall be determined based upon the Commitments most recently in effect, giving effect to any assignments and to any Lender’s status as a Defaulting Lender at the time of determination.

“ Commitments ” means the aggregate of each Lender’s Commitment hereunder.

“ Communications ” has the meaning specified in Section 8.02(d)(ii).

“ Confidential Information ” means information that the Borrower furnishes to the Administrative Agent, the Joint Lead Arrangers or any Lender in a writing designated as confidential, but does not include any such information that is or becomes generally available to the public or that is or becomes available to the Administrative Agent, the Joint Lead Arrangers or such Lender from a source other than the Borrower that has no obligation to maintain the confidentiality of such information.

“ Consolidated Assets ” means, on any date of determination, the total of all assets (including revaluations thereof as a result of commercial appraisals, price level restatement or otherwise) appearing on the consolidated balance sheet of the Borrower and its Consolidated Subsidiaries most recently delivered to the Lenders pursuant to Section 5.01(h) as of such date of determination.

“ Consolidated Capital” means the sum (without duplication) of (i) Consolidated Debt of the Borrower (without giving effect to the proviso in clause (i) of the definition of Consolidated Debt), (ii) consolidated equity of all classes (whether common, preferred, mandatorily convertible preferred or preference) of the Borrower and (iii) the total face or principal amount of the Preferred Securities.

“ Consolidated Debt ” of the Borrower means (i) the total principal amount of all Debt of the Borrower and its Consolidated Subsidiaries; provided that Guaranties of Debt and obligations in respect of the Preferred Securities (to the extent constituting Debt) shall not be included in such total principal amount, plus (ii) the total face or principal amount of the Subsidiary Preferred Securities.

“ Consolidated Subsidiary ” means, with respect to any Person at any time, any Subsidiary or other Person the accounts of which would be consolidated with those of such first Person in its consolidated financial statements in accordance with GAAP.

“ Convert ”, “ Conversion ” and “ Converted ” each refers to a conversion of Revolving Loans of one Type into Revolving Loans of the other Type, or the selection of a new, or the renewal of the same, Interest Period for Eurodollar Rate Revolving Loans, pursuant to Section 2.12 or 2.13.

“ Credit Party ” means the Administrative Agent or any Lender.

arising from the qualification of an arrangement as a lease due to that arrangement conveying the right to use or to control the use of property, plant or equipment under the application of the Financial Accounting Standards Board’s Accounting Standards Codification Topic 840 – Leases paragraph 840-10-15-6 (or the Accounting Standards Codification Topic 842 – Leases paragraphs 842-10-15-3 through 5), nor shall Debt include Debt of any variable interest entity consolidated by PacifiCorp under the requirements of Topic 810 – Consolidation.

“ Debtor Relief Laws ” means the Bankruptcy Code of the United States of America, and all other liquidation, conservatorship, bankruptcy, assignment for the benefit of creditors, moratorium, rearrangement, receivership, insolvency, reorganization, or similar debtor relief laws of the United States or other applicable jurisdictions from time to time in effect.

“ Default ” means any Event of Default or any event that would constitute an Event of Default but for the requirement that notice be given or time elapse or both.

“ Defaulting Lender ” means, subject to Section 2.21(b), any Lender that (i) has failed, within two Business Days after the date required to be funded or paid, to (A) fund all or any portion of its Loans or (B) pay over to any Credit Party any other amount required to be paid by it under this Agreement, unless, in the case of clause (A) above, such failure is the result of such Lender’s good faith determination that one or more conditions precedent to funding (each of which conditions precedent, together with any applicable default, shall be specifically identified in writing) has not been satisfied, as notified by such Lender to the Administrative Agent and the Borrower in such writing, (ii) has notified the Borrower or any Credit Party in writing that it does not intend to comply with any of its funding obligations under this Agreement or has made a public statement to the effect that it does not intend to comply with its funding obligations under this Agreement (unless such writing or public statement relates to such Lender’s obligation to fund a Loan hereunder and such position is based on such Lender’s good faith determination that a condition precedent (which condition precedent, together with any applicable default, shall be specifically identified in such writing or public statement) to funding a Loan under this Agreement cannot be satisfied), (iii) has failed, within three Business Days after written request by the Administrative Agent or the Borrower, acting in good faith, to confirm in writing to such requesting party that it will comply with its obligations to fund prospective Loans, provided that such Lender shall cease to be a Defaulting Lender pursuant to clause (iii) upon such requesting party’s receipt of such written confirmation in form and substance reasonably satisfactory to it and the Administrative Agent, or (iv) has become the subject of a (A) Bankruptcy Event or (B) Bail-In Action. Any determination by the Administrative Agent that a Lender is a Defaulting Lender under any one or more of clauses (i) through (iv) above shall be conclusive and binding absent manifest error, and such Lender shall be deemed to be a Defaulting Lender (subject to Section 2.21(b)) upon delivery of written notice of such determination to the Borrower and each Lender.

“ Dollars ” and the symbol “$” mean lawful currency of the United States of America.

“ Domestic Lending Office ” means, with respect to any Lender, the office of such Lender specified as its “Domestic Lending Office” opposite its name on Schedule I hereto or in the Assignment and Assumption pursuant to which it became a Lender, or such other office of such Lender as such Lender may from time to time specify in writing to the Borrower and the Administrative Agent.

“ EEA Financial Institution ” means (a) any institution established in any EEA Member Country which is subject to the supervision of an EEA Resolution Authority, (b) any entity established in an EEA Member Country which is a parent of an institution described in clause (a) of this definition, or (c) any institution established in an EEA Member Country which is a subsidiary of an institution described in clauses (a) or (b) of this definition and is subject to consolidated supervision with its parent.

“ EEA Member Country ” means any of the member states of the European Union, Iceland, Liechtenstein, and Norway.

“ EEA Resolution Authority ” means any public administrative authority or any Person entrusted with public administrative authority of any EEA Member Country (including any delegee) having responsibility for the resolution of any EEA Financial Institution.

“ Eligible Assignee ” means any Person that meets the requirements to be an assignee under Section 8.07(b)(iii), (v) and (vi) (subject to such consents, if any, as may be required under Section 8.07(b)(iii)).

“ Environmental Law ” means any federal, state, local or foreign statute, law, ordinance, rule, regulation, code, order, judgment, decree or judicial or agency interpretation, policy or guidance relating to pollution or protection of the environment, health, safety or natural resources, including, without limitation, those relating to the use, handling, transportation, treatment, storage, disposal, release or discharge of Hazardous Materials.

“ ERISA ” means the Employee Retirement Income Security Act of 1974, as amended from time to time, and the regulations promulgated and rulings issued thereunder.

“ ERISA Affiliate ” means, with respect to any Person, each trade or business (whether or not incorporated) that is considered to be a single employer with such entity within the meaning of Section 414(b), (c), (m) or (o) of the Internal Revenue Code.

Title I of ERISA), whether or not waived, or the filing of any request for or receipt of a minimum funding waiver under Section 412 of the Internal Revenue Code with respect to any Pension Plan or Multiemployer Plan, or a determination that any Pension Plan is, or is reasonably expected to be, in at-risk status under Title IV of ERISA; (iii) the filing of a notice of intent to terminate any Pension Plan, if such termination would require material additional contributions in order to be considered a standard termination within the meaning of Section 4041(b) of ERISA, the filing under Section 4041(c) of ERISA of a notice of intent to terminate any Pension Plan, or the termination of any Pension Plan under Section 4041(c) of ERISA; (iv) the institution of proceedings, or the occurrence of an event or condition that would reasonably be expected to constitute grounds for the institution of proceedings by the PBGC, under Section 4042 of ERISA, for the termination of, or the appointment of a trustee to administer, any Pension Plan; (v) the complete or partial withdrawal of the Borrower or any of its ERISA Affiliates from a Multiemployer Plan, the reorganization or insolvency under Title IV of ERISA of any Multiemployer Plan, or the receipt by the Borrower or any of its ERISA Affiliates of any notice that a Multiemployer Plan is in endangered or critical status under Section 305 of ERISA; (vi) the failure by the Borrower or any of its ERISA Affiliates to comply with ERISA or the related provisions of the Internal Revenue Code with respect to any Pension Plan; (vii) the Borrower or any of its ERISA Affiliates incurring any liability under Title IV of ERISA with respect to any Pension Plan (other than premiums due and not delinquent under Section 4007 of ERISA); or (viii) the failure by the Borrower or any of its Subsidiaries to comply with Applicable Law with respect to any Foreign Plan.

“ EU Bail-In Legislation Schedule ” means the EU Bail-In Legislation Schedule published by the Loan Market Association (or any successor Person), as in effect from time to time.

“ Eurocurrency Liabilities ” has the meaning assigned to that term in Regulation D of the Board of Governors of the Federal Reserve System, as in effect from time to time.

“ Eurodollar Lending Office ” means, with respect to any Lender, the office of such Lender specified as its “Eurodollar Lending Office” opposite its name on Schedule I hereto or in the Assignment and Assumption pursuant to which it became a Lender (or, if no such office is specified, its Domestic Lending Office), or such other office of such Lender as such Lender may from time to time specify in writing to the Borrower and the Administrative Agent.

“ Eurodollar Rate ” means, for any Interest Period for each Eurodollar Rate Revolving Loan comprising part of the same Borrowing, the rate of interest per annum (rounded upward to the nearest 1/100 of 1%) as calculated by ICE Benchmark Administration Limited (or any other person which takes over the administration of that rate) and obtained through a nationally recognized service such as the Dow Jones Market Service (Telerate), Reuters or other such service then being used by the Administrative Agent to ascertain such rates of interest (in each case, the “ Service ”) as the London interbank offered rate for deposits in Dollars at approximately 11:00 a.m. (London time) two Business Days before the first

day of such Interest Period for a period equal to such Interest Period, but in no event less than 0%.

“ Eurodollar Rate Reserve Percentage ” of any Lender for any Interest Period for each Eurodollar Rate Revolving Loan means the reserve percentage applicable to such Lender during such Interest Period (or if more than one such percentage shall be so applicable, the daily average of such percentages for those days in such Interest Period during which any such percentage shall be so applicable) under regulations issued from time to time by the Board of Governors of the Federal Reserve System (or any successor) for determining the maximum reserve requirement (including, without limitation, any emergency, supplemental or other marginal reserve requirement) then applicable to such Lender with respect to liabilities or assets consisting of or including Eurocurrency Liabilities (or with respect to any other category of liabilities that includes deposits by reference to which the interest rate on Eurodollar Rate Revolving Loans is determined) having a term equal to such Interest Period.

“ Eurodollar Rate Revolving Loan ” means a Revolving Loan that bears interest as provided in Section 2.11(b).

“ Events of Default ” has the meaning specified in Section 6.01.

“ Excluded Taxes ” means any of the following Taxes imposed on or with respect to a Recipient or required to be withheld or deducted from a payment to a Recipient, (i) Taxes imposed on or measured by net income (however denominated), franchise Taxes, and branch profits Taxes, in each case, (A) imposed as a result of such Recipient being organized under the laws of, or having its principal office or, in the case of any Lender, its Applicable Lending Office located in, the jurisdiction imposing such Tax (or any political subdivision thereof) or (B) that are Other Connection Taxes, (ii) in the case of a Lender, withholding Taxes imposed on amounts payable to or for the account of such Lender with respect to an applicable interest in a Loan or Commitment pursuant to a law in effect on the date on which (A) such Lender acquires such interest in the Loan or Commitment (other than pursuant to an assignment request by the Borrower under Section 2.20(b)) or (B) such Lender changes its Applicable Lending Office, except in each case to the extent that, pursuant to Section 2.18, amounts with respect to such Taxes were payable either to such Lender's assignor immediately before such Lender became a party hereto or to such Lender immediately before it changed its Applicable Lending Office, (iii) Taxes attributable to such Recipient’s failure to comply with Section 2.18(g) and (iv) any Taxes imposed under FATCA.

“ Extension of Credit ” means the making of a Borrowing. For purposes of this Agreement, a Conversion shall not constitute an Extension of Credit.

into in connection with the implementation of such Sections of the Internal Revenue Code and any fiscal or regulatory legislation, rules or practices adopted pursuant to any such intergovernmental agreement.

“ Federal Funds Effective Rate ” means, for any day, the rate calculated by the NYFRB based on such day’s Federal funds transactions by depositary institutions (as determined in such manner as the NYFRB shall set forth on its public website from time to time) and published on the next succeeding Business Day by the NYFRB as the Federal funds effective rate.

“ Fee Letters ” means (i) the engagement letter dated as of May 3, 2017, among the Borrower, certain of the Joint Lead Arrangers and the Administrative Agent, and (ii) the Agent Fee Letter, in each case, as amended, restated, supplemented or otherwise modified from time to time.

“ Foreign Lender ” means a Lender that is not a U.S. Person.

“ Foreign Plan ” means any pension, profit-sharing, deferred compensation, or other employee benefit plan, program or arrangement (other than a Pension Plan or a Multiemployer Plan) maintained by any Subsidiary of the Borrower that, under applicable local foreign law, is required to be funded through a trust or other funding vehicle.

“ Fund ” means any Person (other than a natural Person) that is (or will be) engaged in making, purchasing, holding or otherwise investing in commercial loans and similar extensions of credit in the ordinary course of its activities.

“ GAAP ” has the meaning specified in Section 1.03.

“ Governmental Approval ” means any authorization, consent, approval, license or exemption of, registration or filing with, or report or notice to, any Governmental Authority.

“ Governmental Authority ” means the government of the United States of America or any other nation, or of any political subdivision thereof, whether state or local, and any agency, authority, instrumentality, regulatory body, court, central bank or other entity exercising executive, legislative, judicial, taxing, regulatory or administrative powers or functions of or pertaining to government (including any supra-national bodies such as the European Union or the European Central Bank).

of such Debt, (B) to purchase, sell or lease (as lessee or lessor) property, or to purchase or sell services, primarily for the purpose of enabling the debtor to make payment of such Debt or to assure the holder of such Debt against loss, (C) to supply funds to or in any other manner invest in the debtor (including any agreement to pay for property or services irrespective of whether such property is received or such services are rendered) or (D) otherwise to assure a creditor against loss; provided that the term “Guaranty” shall not include endorsements for collection or deposit in the ordinary course of business or the grant of a Lien in connection with Project Finance Debt.

“ Hazardous Materials ” means (i) petroleum and petroleum products, byproducts or breakdown products, radioactive materials, asbestos-containing materials, polychlorinated biphenyls and radon gas and (ii) any other chemicals, materials or substances designated, classified or regulated as hazardous or toxic or as a pollutant or contaminant under any Environmental Law.

“ Indemnified Party ” has the meaning specified in Section 8.04(b).

“ Indemnified Taxes ” means (i) Taxes, other than Excluded Taxes, imposed on or with respect to any payment made by or on account of any obligation of the Borrower under any Loan Document and (ii) to the extent not otherwise described in (i), Other Taxes.

“ Initial Lenders ” has the meaning specified in the first paragraph of this Agreement.

“ Interest Period ” means, for each Eurodollar Rate Revolving Loan comprising part of the same Borrowing, the period commencing on the date of such Eurodollar Rate Revolving Loan or the date of the Conversion of any Base Rate Revolving Loan into such Eurodollar Rate Revolving Loan and ending on the last day of the period selected by the Borrower pursuant to the provisions below and, thereafter, with respect to Eurodollar Rate Revolving Loans, each subsequent period commencing on the last day of the immediately preceding Interest Period and ending on the last day of the period selected by the Borrower pursuant to the provisions below. The duration of each such Interest Period shall be one, two, three or six months or such other period acceptable to all the Lenders, as the Borrower may, upon notice received by the Administrative Agent not later than 12:00 noon (New York City Time) on the third Business Day prior to the first day of such Interest Period, select; provided, however, that:


(i)	the Borrower may not select any Interest Period that ends after the latest Termination Date in effect at such time;


(ii)	Interest Periods commencing on the same date for Eurodollar Rate Revolving Loans comprising part of the same Borrowing shall be of the same duration;


(iii)	whenever the last day of any Interest Period would otherwise occur on a day other than a Business Day, the last day of such Interest Period shall be extended to occur on the next succeeding Business Day, provided, however, that, if such extension would cause the last day of such Interest Period to

occur in the next following calendar month, the last day of such Interest Period shall occur on the next preceding Business Day; and


(iv)	whenever the first day of any Interest Period occurs on a day of an initial calendar month for which there is no numerically corresponding day in the calendar month that succeeds such initial calendar month by the number of months equal to the number of months in such Interest Period, such Interest Period shall end on the last Business Day of such succeeding calendar month.

“ Internal Revenue Code ” means the Internal Revenue Code of 1986, as amended from time to time, and the regulations promulgated and rulings issued thereunder.

“ Investment ” in any Person means (i) any direct or indirect loan, advance or other extension of credit made to such Person (excluding commission, travel and similar advances to officers and employees made in the ordinary course of business), (ii) any capital contribution to such Person, (iii) any purchase of an ownership interest in such Person, (iv) any purchase of all or substantially all of the assets of such Person or (v) any purchase of assets constituting a business unit of such Person. For purposes of this definition, the Dollar value of any Investment made by any Person shall be the amount of capital invested by such Person in such Investment.

“ IRS ” means the United States Internal Revenue Service.

“ Joint Lead Arrangers ” means MUFG, Mizuho Bank, Ltd., JPMorgan Chase Bank and Wells Fargo Securities, LLC.

“ Lenders ” means the Initial Lenders and each Person that shall become party hereto pursuant to an Assignment and Assumption, other than any such Person that ceases to be a party hereto pursuant to an Assignment and Assumption.

“ Lien ” means any lien, security interest or other charge or encumbrance of any kind, or any other type of preferential arrangement, including, without limitation, the lien or retained security title of a conditional vendor and any easement, right of way or other encumbrance on title to real property.

“ Loan Documents ” means, collectively, (i) this Agreement, (ii) the Fee Letters and (iii) any promissory note issued pursuant to Section 2.10(d).

“ Loans ” means the loans made by the Lenders to the Borrower pursuant to this Agreement.

“ Margin Regulations ” means Regulations T, U and X of the Board of Governors of the Federal Reserve System, as in effect from time to time.

“ Margin Stock ” has the meaning specified in the Margin Regulations.

“ Material Adverse Effect ” means a material adverse effect on (i) on the business, operations, properties, financial condition, assets or liabilities (including, without limitation, contingent liabilities) of the Borrower and its Subsidiaries, taken as a whole, (ii) the ability of the Borrower to perform its obligations under the Loan Documents or (iii) the ability of the Administrative Agent or any Lender to enforce its rights under the Loan Documents.

“ Material Subsidiaries ” means MidAmerican Energy Company, PacifiCorp, NV Energy, Inc., Nevada Power Company, Sierra Pacific Power Company and any other Subsidiary of the Borrower with respect to which (x) the Borrower’s percentage ownership interest in such Subsidiary multiplied by (y) the book value of the Consolidated Assets of such Subsidiary represents at least 15% of the Consolidated Assets of the Borrower as reflected in the latest financial statements of the Borrower delivered pursuant to clause (i) or (ii) of Section 5.01(h).

“ Moody’s ” means Moody’s Investors Service, Inc.

“ Moody’s Rating ” means, on any date of determination, the rating most recently announced by Moody’s with respect to any senior unsecured, non-credit enhanced Debt of the Borrower or, if such rating is not available, the corporate credit rating of the Borrower most recently announced by Moody’s.

“ MUFG ” has the meaning specified in the first paragraph of this Agreement.

“ Multiemployer Plan ” means any “multiemployer plan” (as such term is defined in Section 4001(a)(3) of ERISA), which is contributed to by (or to which there is or may be an obligation to contribute of) the Borrower or any of its ERISA Affiliates or with respect to which the Borrower or any of its ERISA Affiliates has, or could reasonably be expected to have, any liability.

“ New York City Time ” means the time in New York, New York.

“ Non-Consenting Lender ” means any Lender that does not approve any consent, waiver or amendment that (i) requires the approval of all affected Lenders in accordance with the terms of Section 8.01 and (ii) has been approved by the Required Lenders.

“ Non-Defaulting Lender ” means, at the time of determination, a Lender that is not a Defaulting Lender.

“ Notice of Borrowing ” has the meaning specified in Section 2.02(a).

“ NYFRB ” means the Federal Reserve Bank of New York.

York City Time) on such day received by the Administrative Agent from a Federal funds broker of recognized standing selected by it; provided, further , that if any of the aforesaid rates shall be less than zero, such rate shall be deemed to be zero for purposes of this Agreement.

“ OFAC ” means The Office of Foreign Assets Control of the U.S. Department of the Treasury.

“ Other Connection Taxes ” means, with respect to any Recipient, Taxes imposed as a result of a present or former connection between such Recipient and the jurisdiction imposing such Tax (other than connections arising solely from such Recipient having executed, delivered, become a party to, performed its obligations under, received payments under, received or perfected a security interest under, engaged in any other transaction pursuant to or enforced any Loan Document).

“ Other Taxes ” means all present or future stamp, court or documentary, intangible, recording, filing or similar Taxes that arise from any payment made under, from the execution, delivery, performance, enforcement or registration of, from the receipt or perfection of a security interest under, or otherwise with respect to, any Loan Document, except any such Taxes imposed with respect to an assignment (other than an assignment made pursuant to Section 2.20).

“ Outstanding Credits ” means, on any date of determination, the aggregate principal amount of all Loans outstanding on such date. The Outstanding Credits with respect to any Lender at any time shall be its Commitment Percentage of the total Outstanding Credits at such time.

“ Overnight Bank Funding Rate ” means, for any day, the rate comprised of both overnight Federal funds and overnight Eurodollar borrowings by U.S.-managed banking offices of depository institutions (as such composite rate shall be determined by the NYFRB as set forth on its public website from time to time) and published on the next succeeding Business Day by the NYFRB as an overnight bank funding rate (from and after such date as the NYFRB shall commence to publish such composite rate).

“ Participant ” has the meaning assigned to such term in Section 8.07(d).

“ Participant Register ” has the meaning specified in Section 8.07(d).

“ Patriot Act ” has the meaning specified in Section 8.14.

“ PBGC ” means the Pension Benefit Guaranty Corporation (or any successor).

or any of its ERISA Affiliates has or may have an obligation to contribute (or is deemed under Section 4069 of ERISA to have maintained or contributed to or to have had an obligation to contribute to, or otherwise to have liability with respect to) such plan.

“ Permitted Liens ” means such of the following as to which no enforcement, collection, execution, levy or foreclosure proceeding shall have been commenced: (i) Liens for taxes, assessments and governmental charges or levies to the extent not required to be paid under Section 5.01(a) hereof; (ii) Liens imposed by law, such as materialmen’s, mechanics’, carriers’, workmen’s and repairmen’s Liens, and other similar Liens arising in the ordinary course of business; (iii) Liens incurred or deposits made to secure obligations under workers’ compensation laws or similar legislation or to secure public or statutory obligations; (iv) easements, rights of way and other encumbrances on title to real property that do not render title to the property encumbered thereby unmarketable, including zoning and landmarking restrictions; (v) any judgment Lien, unless an Event of Default under Section 6.01(e) shall have occurred and be continuing with respect thereto; (vi) any Lien on any asset of any Person existing at the time such Person is acquired by, or merged or consolidated with or into, the Borrower or any Subsidiary of the Borrower and not created in contemplation of such event; (vii) pledges and deposits made in the ordinary course of business to secure the performance of bids, trade contracts (other than for Debt), operating leases and surety and appeal bonds, performance bonds and other obligations of a like nature incurred in the ordinary course of business; (viii) Liens upon or in any real property or equipment acquired, constructed, improved or held by the Borrower or any Subsidiary in the ordinary course of business to secure the purchase price of such property or equipment or to secure Debt incurred solely for the purpose of financing the acquisition, construction or improvement of such property or equipment, or Liens existing on such property or equipment at the time of its acquisition (other than any such Liens created in contemplation of such acquisition that were not incurred to finance the acquisition of such property), (ix) Liens securing Project Finance Debt, (x) any Lien on the Borrower’s or any Material Subsidiary’s interest in Pollution Bonds or cash or cash equivalents securing (A) the obligation of the Borrower or any Material Subsidiary to reimburse the issuer of a Pollution LC for a drawing on such Pollution LC for the purpose of purchasing Pollution Bonds or (B) the obligation of the Borrower or any Material Subsidiary to reimburse or repay amounts advanced under any facility entered into to provide liquidity or credit support for any issue of Pollution Bonds; and (xi) extensions, renewals or replacements of any Lien described in clause (vi), (vii), (viii), (ix) or (x) for the same or a lesser amount, provided, however, that no such Lien shall extend to or cover any properties (other than after-acquired property already within the scope of the relevant Lien grant) not theretofore subject to the Lien being extended, renewed or replaced.

“ Person ” means any natural Person, corporation, limited liability company, trust, joint venture, association, company, partnership, Governmental Authority or other entity.

“ Platform ” has the meaning specified in Section 8.02(d)(i).

“ Pollution Bonds ” means bonds issued for the purpose of financing all or any part of the cost of facilities acquired or constructed for use by the Borrower or any Material Subsidiary; provided that, the interest on such bonds is exempt from tax under the Internal Revenue Code as in effect when the debt evidenced by such bonds is incurred.

“ Pollution LC ” means a letter of credit issued for the purpose of (i) supporting payments of principal of and interest on Pollution Bonds or (ii) providing funds to purchase Pollution Bonds from the holders thereof.

“ Preferred Securities ” means, collectively, (i) any series of preferred securities issued to the BHE Shareholders or any controlled Affiliates of Berkshire Hathaway and, without duplication, any junior subordinated debentures issued by the Borrower in connection with any such preferred securities to the trust issuing such preferred securities, in each case set forth on Schedule III hereto, and (ii) any other series of preferred securities issued to BHE Shareholders or any controlled Affiliates of Berkshire Hathaway and other junior subordinated debentures or similar instruments issued by the Borrower in connection with any such preferred securities to the trust issuing such preferred securities, in each case of this clause (ii), with material terms and conditions substantially similar to, or not materially more burdensome on the Borrower than, the preferred securities and related junior subordinated debentures described in clause (i).

“ Project Finance Debt ” means Debt of any Subsidiary of the Borrower (i) that is (A) not recourse to the Borrower other than with respect to Liens granted by the Borrower on direct or indirect equity interests in such Subsidiary to secure such Debt and limited Guaranties of, or equity commitments with respect to, such Debt by the Borrower, which Liens, limited Guaranties and equity commitments are of a type consistent with other limited recourse project financings, and other than customary contractual carve-outs to the non-recourse nature of such Debt consistent with other limited recourse project financings, and (B) incurred in connection with the acquisition, development, construction or improvement of any project, single purpose or other fixed assets of such Subsidiary, including Debt assumed in connection with the acquisition of such assets, or (ii) that represents an extension, renewal, replacement or refinancing of the foregoing, provided that, in the case of a replacement or refinancing, the principal amount of such new Debt shall not exceed the principal amount of the Debt being replaced or refinanced plus 10% of such principal amount.

“ Rating Decline ” means the occurrence of the following on, or within 90 days after, the earlier of (i) the occurrence of a Change of Control and (ii) the earlier of (x) the date of public notice of the occurrence of a Change of Control and (y) the date of the public notice of the Borrower’s (or its direct or indirect parent company’s) intention to effect a Change of Control, which 90-day period will be extended so long as the S&P Rating or Moody’s Rating is under publicly announced consideration for possible downgrading by S&P or Moody’s, as applicable: the S&P Rating is reduced to any rating level below BBB+ or the Moody’s Rating is reduced to any rating level below Baa1 (or both the S&P Rating and the Moody’s Rating become unavailable).

“ Recipient ” means (i) the Administrative Agent and (ii) any Lender, as applicable.

“ Register ” has the meaning specified in Section 8.07(c).

“ Related Parties ” means, with respect to any Person, such Person’s Affiliates and the partners, directors, officers, employees, agents, trustees, administrators, managers, advisors and representatives of such Person and of such Person’s Affiliates.

“ Removal Effective Date ” has the meaning specified in Section 7.05(b).

“ Reportable Compliance Event ” means that the Borrower or any of its Subsidiaries becomes a Sanctioned Person, or is charged by indictment, criminal complaint or similar charging instrument, arraigned, or custodially detained in connection with any Anti-Corruption Law or any predicate crime to any Anti-Corruption Law.

“ Required Lenders ” means at any time Lenders owed in excess of 50% of the then aggregate unpaid principal amount of the Revolving Loans, or, if there are no Outstanding Credits, Lenders having in excess of 50% in interest of the Commitments (without giving effect to any termination in whole of the Commitments pursuant to Section 6.01). The Commitments and outstanding Loans for any Defaulting Lender shall be disregarded in determining Required Lenders at any time.

“ Resignation Effective Date ” has the meaning specified in Section 7.05(a).

“ Revolving Loan ” means a Loan by a Lender to the Borrower pursuant to Section 2.02 as part of a Borrowing and refers to a Base Rate Revolving Loan or a Eurodollar Rate Revolving Loan.

“ Sanctioned Country ” means, at any time, a country, region or territory that is the subject or target of comprehensive Sanctions (at the time of this Agreement, Cuba, Iran, North Korea, Sudan, Syria and Crimea).

“ Sanctioned Person ” means, at any time, (a) any Person listed in any Sanctions-related list of designated Persons maintained by OFAC, the U.S. Department of State or the U.S. Department of the Treasury, or maintained by the United Nations Security Council, the European Union or Her Majesty’s Treasury of the United Kingdom, as may be amended, supplemented or substituted from time to time, (b) any Person organized or ordinarily resident or located in a Sanctioned Country or (c) any Person controlled by, or acting on behalf of, any such Person described in clause (a) or (b). For purposes of this definition, “control” of a Person shall mean the direct or indirect (x) ownership of, or power to vote, 25% or more of the issued and outstanding equity interests having ordinary voting power for the election of directors of such Person or other Persons performing similar functions for such Person, or (y) power to direct or cause the direction of the management and policies of such Person whether by ownership of equity interests, contract or otherwise.

“ Sanctions ” means economic or financial sanctions or trade embargoes imposed, administered or enforced from time to time by (a) the U.S. government, including those administered by OFAC, the U.S. Department of State or the U.S. Department of Treasury, or (b) the United Nations Security Council, the European Union, Her Majesty’s Treasury of the United Kingdom.

“ S&P” means S&P Global Ratings, a business unit of S&P Global, Inc.

“ S&P Rating ” means, on any date of determination, the rating most recently announced by S&P with respect to any senior unsecured, non-credit enhanced Debt of the Borrower or, if such rating is not available, the corporate credit rating of the Borrower most recently announced by S&P.

“ SEC ” means the U.S. Securities and Exchange Commission.

“ Service ” has the meaning set forth in the definition of “Eurodollar Rate”.

“ Subsidiary ” of any Person means any corporation, partnership, joint venture, limited liability company, trust or estate of which (or in which) more than 50% of (i) the issued and outstanding capital stock having ordinary voting power to elect a majority of the board of directors of such corporation (irrespective of whether at the time capital stock of any other class or classes of such corporation shall or might have voting power upon the occurrence of any contingency), (ii) the interest in the capital or profits of such limited liability company, partnership or joint venture or (iii) the beneficial interest in such trust or estate is at the time directly or indirectly owned or controlled by such Person, by such Person and one or more of its other Subsidiaries or by one or more of such Person’s other Subsidiaries.

“ Subsidiary Preferred Securities ” means, collectively, the 7.00% and 6.00% Series of Serial Preferred Stock of PacifiCorp.

“ Taxes ” means all present or future taxes, levies, imposts, duties, deductions, withholdings (including backup withholding), assessments, fees or other charges imposed by any Governmental Authority, including any interest, additions to tax or penalties applicable thereto.

“ Termination Date ” means the earlier to occur of (i) May 10, 2018 and (ii) the date of termination in whole of the Commitments available to the Borrower pursuant to Section 2.08 or 6.01.

“ Type ” refers to the distinction between Loans bearing interest at the Base Rate and Loans bearing interest at the Eurodollar Rate.

“ U.S. Person ” means any Person that is a “United States Person” as defined in Section 7701(a)(30) of the Internal Revenue Code.

“ U.S. Tax Compliance Certificate ” has the meaning assigned to such term in Section 2.18(g)(ii).

“ Withholding Agent ” means the Borrower and the Administrative Agent.

“ Write-Down and Conversion Powers ” means, with respect to any EEA Resolution Authority, the write-down and conversion powers of such EEA Resolution Authority from time to time under the Bail-In Legislation for the applicable EEA Member Country, which write-down and conversion powers are described in the EU Bail-In Legislation Schedule.

SECTION 1.02. Computation of Time Periods.

In this Agreement in the computation of periods of time from a specified date to a later specified date, the word “from” means “from and including” and the words “to” and “until” each mean “to but excluding”.

SECTION 1.03. Accounting Terms.

All accounting terms not specifically defined herein shall be construed in accordance with generally accepted accounting principles as in effect from time to time (“ GAAP ”). If any “Accounting Change” (as defined below) shall occur and such change results in a change in the calculation of financial covenants, standards or terms in this Agreement, and either the Borrower or the Required Lenders (through the Administrative Agent) shall request the same to the other parties hereto in writing, the Borrower and the Administrative Agent shall enter into negotiations to amend the affected provisions of this Agreement with the desired result that the criteria for evaluating the Borrower’s consolidated financial condition and results of operations shall be substantially the same after such Accounting Change as if such Accounting Change had not been made. Once such request has been made, until such time as such an amendment shall have been executed and delivered by the Borrower, the Administrative Agent and the Required Lenders, all financial covenants, standards and terms in this Agreement shall continue to be calculated or construed as if such Accounting Change had not occurred. “ Accounting Change ” means a change in accounting principles required by the promulgation of any final rule, regulation, pronouncement or opinion by the Financial Accounting Standards Board of the American Institute of Certified Public Accountants or, if applicable, the SEC (or successors thereto or agencies with similar functions).

SECTION 1.04. Classification of Loans and Borrowings.

For purposes of this Agreement, Loans may be classified and referred to by Type ( e.g. , a “Eurodollar Rate Loan”). Borrowings also may be classified and referred to by Type ( e.g. , a “Eurodollar Rate Borrowing”).

SECTION 1.05. Other Interpretive Provisions.

As used herein, except as otherwise specified herein, (i) references to any Person include its successors and assigns and, in the case of any Governmental Authority, any Person

succeeding to its functions and capacities; (ii) references to any Applicable Law include amendments, supplements and successors thereto; (iii) references to specific sections, articles, annexes, schedules and exhibits are to this Agreement; (iv) words importing any gender include the other gender; (v) the singular includes the plural and the plural includes the singular; (vi) the words “including”, “include” and “includes” shall be deemed to be followed by the words “without limitation”; (vii) captions and headings are for ease of reference only and shall not affect the construction hereof; and (viii) references to any time of day shall be to New York City Time unless otherwise specified.

ARTICLE II
AMOUNTS AND TERMS OF THE EXTENSIONS OF CREDIT

SECTION 2.01. The Revolving Loans.

(a) Each Lender severally agrees, on the terms and conditions hereinafter set forth, to make Revolving Loans to the Borrower from time to time on any Business Day during the period from the date hereof until the Termination Date applicable to such Lender in an aggregate outstanding amount not to exceed at any time such Lender’s Available Commitment at such time. Within the limits of each Lender’s Commitment and as hereinabove and hereinafter provided, including without limitation Section 2.01(b), the Borrower may request a Borrowing hereunder, and repay or prepay Revolving Loans pursuant to Section 2.14 and utilize the resulting increase in the Available Commitments for further Extensions of Credit in accordance with the terms hereof.

(b) In no event shall the Borrower be entitled to request or receive a Borrowing that (i) would exceed the Available Commitments or (ii) would cause the Outstanding Credits to exceed the Commitments.

SECTION 2.02. Making the Revolving Loans.

to the Lenders after 12:00 noon (New York City Time) but no later than 1:00 P.M. (New York City Time), before 3:00 P.M. (New York City Time)) on the applicable Borrowing Date, make available for the account of its Applicable Lending Office to the Administrative Agent at the Agent’s Account, in same day funds, such Lender’s ratable portion of the Borrowing to be made on such Borrowing Date. After the Administrative Agent’s receipt of such funds and upon fulfillment of the applicable conditions set forth in Article III, the Administrative Agent will promptly make such funds available to the Borrower no later than 3:30 P.M. (New York City Time) in such manner as the Borrower shall have specified in the applicable Notice of Borrowing.

(b) Anything in subsection (a) above to the contrary notwithstanding, (i) the Borrower may not select Eurodollar Rate Revolving Loans for any Borrowing if the aggregate amount of such Borrowing is less than $1,000,000 or if the obligation of the Lenders to make Eurodollar Rate Revolving Loans shall then be suspended pursuant to Section 2.12(b), 2.13 or 2.16, and (ii) Borrowings of more than one Type may be outstanding at the same time; provided , however , there shall be not more than 10 Borrowings at any one time outstanding.

(c) Each Notice of Borrowing shall be irrevocable and binding on the Borrower. In the case of any Borrowing that the related Notice of Borrowing specifies is to comprise Eurodollar Rate Revolving Loans, the Borrower shall indemnify each Lender against any loss, cost or expense incurred by such Lender as a result of any failure to fulfill on or before the date specified in such Notice of Borrowing for such Borrowing the applicable conditions set forth in Article III, including, without limitation, any loss (including loss of anticipated profits), cost or expense incurred by reason of the liquidation or reemployment of deposits or other funds acquired by such Lender to fund the Revolving Loan to be made by such Lender as part of such Borrowing when such Revolving Loan, as a result of such failure, is not made on such date.

(d) Unless the Administrative Agent shall have received written notice from a Lender prior to any Borrowing Date or, in the case of a Base Rate Loan, prior to the time of Borrowing, that such Lender will not make available to the Administrative Agent such Lender’s Loan as part of the Borrowing to be made on such Borrowing Date, the Administrative Agent may, but shall not be required to, assume that such Lender has made such portion available to the Administrative Agent on such Borrowing Date in accordance with subsection (a) of this Section 2.02, and the Administrative Agent may (but it shall not be required to), in reliance upon such assumption, make available to the Borrower on such date a corresponding amount. If and to the extent that such Lender shall not have so made such Loan available to the Administrative Agent, such Lender and the Borrower severally agree to repay to the Administrative Agent forthwith on demand such corresponding amount, together with interest thereon, for each day from the date such amount is made available to the Borrower until the date such amount is repaid to the Administrative Agent, at (i) in the case of the Borrower, the interest rate applicable at the time to Loans comprising such Borrowing and (ii) in the case of such Lender, the Federal Funds Effective Rate. If such Lender shall repay to the Administrative Agent such corresponding amount, such amount so repaid shall constitute such Lender’s Loan as part of such Borrowing for purposes of this Agreement.

(e) The failure of any Lender to make the Loan to be made by it as part of any Borrowing shall not relieve any other Lender of its obligation, if any, hereunder to make its Loan on the date of such Borrowing, but no Lender shall be responsible for the failure of any other Lender to make the Loan to be made by such other Lender on the date of any Borrowing.

SECTION 2.03. [Reserved]

SECTION 2.04. [Reserved]

SECTION 2.05. Fees.

(a) The Borrower agrees to pay to the Administrative Agent for the account of each Lender a commitment fee on the aggregate unused amount of such Lender’s Commitment (i) from the date hereof, in the case of each Initial Lender, and (ii) from the effective date specified in the Assignment and Assumption pursuant to which it became a Lender, in the case of each other Lender, in each case until the latest Termination Date applicable to such Lender, payable quarterly in arrears on the last day of each March, June, September and December, commencing June 30, 2017, and ending on such Termination Date. The commitment fee for any period will be equal to the Commitment Fee Rate in effect from time to time during such period, times an amount equal to the Commitments minus the aggregate principal amount of Loans outstanding during such period.

(b) The Borrower agrees to pay the fees payable by the Borrower in such amounts and on such terms as set forth in the Fee Letters.

(c) The Borrower shall pay to the Administrative Agent, for its own account, the annual administrative fee at the times and in the amount set forth in the Agent Fee Letter.

SECTION 2.06. [Reserved]

SECTION 2.07. [Reserved]

SECTION 2.08. Termination or Reduction of the Commitments.

(b) The Borrower may terminate the unused amount of the Commitment of any Lender that is a Defaulting Lender upon not less than three Business Days’ prior notice to the Administrative Agent (which shall promptly notify the Lenders thereof), and in such event the provisions of Section 2.21(a)(ii) will apply to all amounts thereafter paid by the Borrower for the account of such Defaulting Lender under this Agreement (whether on account of principal, interest, fees, indemnity or other amounts); provided that (i) no Event of Default shall have occurred and be continuing, and (ii) such termination shall not be deemed to be a waiver or release of any claim the Borrower, the Administrative Agent or any Lender may have against such Defaulting Lender.

(d) Once terminated, a Commitment or any portion thereof may not be reinstated.

SECTION 2.09. Repayment of Loans.

(b) If at any time the aggregate principal amount of Outstanding Credits exceeds the Commitments, the Borrower shall pay or prepay so much of the Borrowings as shall be necessary in order that the Outstanding Credits will not exceed the Commitments.

SECTION 2.10. Evidence of Indebtedness.

(a) Each Lender shall maintain in accordance with its usual practice an account or accounts evidencing the indebtedness to such Lender resulting from each Loan made by such Lender from time to time, including the amounts of principal and interest payable and paid to such Lender from time to time under this Agreement.

(b) The Administrative Agent shall maintain accounts in which it will record (i) the amount of each Loan made hereunder, the Type of each Loan made and the Interest Period applicable thereto, (ii) the amount of any principal or interest due and payable or to become due and payable from the Borrower to each Lender hereunder and (iii) the amount of any sum received by the Administrative Agent hereunder from the Borrower and each Lender’s share thereof.

(c) The entries made in the accounts maintained pursuant to subsections (a) and (b) of this Section 2.10 shall, to the extent permitted by Applicable Law, be prima facie evidence of the existence and amounts of the obligations therein recorded; provided , however , that the failure of any Lender or the Administrative Agent to maintain such accounts or any error therein shall not in any manner affect the obligations of the Borrower to repay the Loans and interest thereon in accordance with their terms.

(d) Any Lender may request that any Loans made by it be evidenced by one or more promissory notes. In such event, the Borrower shall prepare, execute and deliver to such Lender one or more promissory notes payable to such Lender (or, if requested by such Lender, to such Lender and its assignees) and in a form reasonably satisfactory to the Administrative Agent. Thereafter, the Loans evidenced by such promissory notes and interest thereon shall at all times (including after assignment pursuant to Section 8.07) be represented by one or more promissory notes in such form payable to the payee named therein.

SECTION 2.11. Interest on Loans.

The Borrower shall pay interest on the unpaid principal amount of each Loan from the date of such Loan until such principal amount shall be paid in full, at the following rates per annum:

(a) Base Rate Loans . During such periods as such Loan is a Base Rate Revolving Loan, a rate per annum equal at all times to the sum of (x) the Base Rate plus (y) the Applicable Margin for Base Rate Loans in effect from time to time, payable in arrears quarterly on the last day of each March, June, September and December during such periods and on the date such Base Rate Loan shall be Converted or paid in full.

(b) Eurodollar Rate Revolving Loans . During such periods as such Revolving Loan is a Eurodollar Rate Revolving Loan, a rate per annum equal at all times during each Interest Period for such Revolving Loan to the sum of (x) the Eurodollar Rate for such Interest Period for such Revolving Loan plus (y) the Applicable Margin for Eurodollar Rate Revolving Loans in effect from time to time, payable in arrears on the last day of such Interest Period and, if such Interest Period has a duration of more than three months, on each day that occurs during such Interest Period every three months from the first day of such Interest Period and on the date such Eurodollar Rate Revolving Loan shall be Converted or paid in full.

(c) Additional Interest on Eurodollar Rate Revolving Loans . The Borrower shall pay to each Lender, so long as such Lender shall be required under regulations of the Board of Governors of the Federal Reserve System to maintain reserves with respect to liabilities or assets consisting of or including Eurocurrency Liabilities, additional interest on the unpaid principal amount of each Eurodollar Rate Revolving Loan of such Lender, from the date of such Revolving Loan until such principal amount is paid in full, at an interest rate per annum equal at all times to the remainder obtained by subtracting (i) the Eurodollar Rate for the Interest Period for such Revolving Loan from (ii) the rate obtained by dividing such Eurodollar Rate by a percentage equal to 100% minus the Eurodollar Rate Reserve Percentage of such Lender for such Interest Period, payable on each date on which interest is payable on such Revolving Loan. Such additional interest shall be determined by such Lender and notified to the Borrower through the Administrative Agent.

SECTION 2.12. Interest Rate Determination.

(a) The Administrative Agent shall give prompt notice to the Borrower and the Lenders of the applicable interest rate determined by the Administrative Agent for purposes of Section

2.11(a) or (b), and, if applicable, the rate for the purpose of determining the applicable interest rate under Section 2.11(c).

(b) If, with respect to any Eurodollar Rate Revolving Loans, (i) the Required Lenders notify the Administrative Agent that the Eurodollar Rate for any Interest Period for such Revolving Loans will not adequately reflect the cost to such Required Lenders of making, funding or maintaining their respective Eurodollar Rate Revolving Loans for such Interest Period, or (ii) the Administrative Agent determines that adequate and fair means do not exist for ascertaining the applicable interest rate on the basis provided for in the definition of Eurodollar Rate, the Administrative Agent shall forthwith so notify the Borrower and the Lenders, whereupon (A) each Eurodollar Rate Revolving Loan will automatically, on the last day of the then existing Interest Period therefor, Convert into a Base Rate Revolving Loan, and (B) the obligation of the Lenders to make, or to Convert Revolving Loans into, Eurodollar Rate Revolving Loans shall be suspended until the Administrative Agent shall notify the Borrower and the Lenders that the circumstances causing such suspension no longer exist.

SECTION 2.13. Conversion of Revolving Loans.

(a) Voluntary. The Borrower may on any Business Day, upon notice given to the Administrative Agent not later than 12:00 noon (New York City Time) on the third Business Day prior to the date of the proposed Conversion and subject to the provisions of Sections 2.12 and 2.16, Convert all or any part of Revolving Loans of one Type comprising the same Borrowing into Revolving Loans of the other Type or of the same Type but having a new Interest Period; provided , however , that any Conversion of Eurodollar Rate Revolving Loans into Base Rate Revolving Loans shall be made only on the last day of an Interest Period for such Eurodollar Rate Revolving Loans, any Conversion of Base Rate Revolving Loans into Eurodollar Rate Revolving Loans shall be in an amount not less than the minimum amount specified in Section 2.02(b) and no Conversion of any Revolving Loans shall result in more separate Borrowings than permitted under Section 2.02(b). Each such notice of a Conversion shall, within the restrictions specified above, specify (i) the date of such Conversion, (ii) the Revolving Loans to be Converted, and (iii) if such Conversion is into Eurodollar Rate Revolving Loans, the duration of the initial Interest Period for each such Revolving Loan. Each notice of Conversion shall be irrevocable and binding on the Borrower.

(b) Mandatory.

(i) If the Borrower shall fail to select the Type of any Revolving Loan or the duration of any Interest Period for any Borrowing comprising Eurodollar Rate Revolving Loans in accordance with the provisions contained in the definition of “Interest Period” in Section 1.01 and Section 2.13(a), or if any proposed Conversion of a Borrowing that is to comprise Eurodollar Rate Revolving Loans upon Conversion shall not occur as a result of the circumstances described in subsection (c) below, or if an Event of Default has occurred and is continuing and Eurodollar Rate Revolving Loans are outstanding, the Administrative Agent will forthwith so notify the Borrower and the Lenders, and (i) such Revolving Loans will automatically, on the last day of the then existing Interest Period therefor, Convert into Base

Rate Loans and (ii) the obligation of the Lenders to make, or to Convert Revolving Loans into, Eurodollar Rate Revolving Loans shall be suspended.

(ii) On the date on which the aggregate unpaid principal amount of Eurodollar Rate Revolving Loans comprising any Borrowing shall be reduced, by payment or prepayment or otherwise, to less than $10,000,000, such Revolving Loans shall automatically Convert into Base Rate Revolving Loans.

(c) Failure to Convert. Each notice of Conversion given pursuant to subsection (a) above shall be irrevocable and binding on the Borrower. In the case of any Borrowing that is to comprise Eurodollar Rate Revolving Loans upon Conversion, the Borrower agrees to indemnify each Lender against any loss, cost or expense incurred by such Lender if, as a result of the failure of the Borrower to satisfy any condition to such Conversion (including, without limitation, the occurrence of any Default), such Conversion does not occur. The Borrower’s obligations under this subsection (c) shall survive the repayment of all other amounts owing to the Lenders and the Administrative Agent under this Agreement and the termination of the Commitments.

(d) Limitation on Certain Conversions. Notwithstanding any other provision of this Agreement to the contrary, the Borrower may not borrow Revolving Loans at the Eurodollar Rate or Convert Revolving Loans resulting in Eurodollar Rate Revolving Loans at any time an Event of Default has occurred and is continuing.

SECTION 2.14. Optional Prepayments of Loans.

The Borrower may prepay Loans, (i) upon at least two Business Days’ notice, in the case of Eurodollar Rate Revolving Loans, and (ii) upon notice not later than 12:00 noon (New York City Time) on the date of prepayment, in the case of Base Rate Revolving Loans, to the Administrative Agent stating the proposed date and aggregate principal amount of the prepayment, and, if such notice is given, the Borrower shall prepay the outstanding principal amount of the Loans comprising part of the same Borrowing in whole or ratably in part, without penalty, together with accrued interest to the date of such prepayment on the principal amount prepaid; provided , however , that (x) each partial prepayment shall be in an aggregate principal amount of $1,000,000 or an integral multiple of $100,000 in excess thereof and (y) in the event of any such prepayment of a Eurodollar Rate Loan, the Borrower shall be obligated to reimburse the Lenders in respect thereof pursuant to Section 8.04(c).

SECTION 2.15. Increased Costs.

(a) Increased Costs Generally. If any Change in Law shall:

(i) impose, modify or deem applicable any reserve, assessment, special deposit, compulsory loan, insurance charge or similar requirement against assets of, deposits with or for the account of, or credit extended or participated in by, any Lender (except any reserve requirement reflected in the Eurodollar Rate Reserve Percentage);

(ii) other than (A) Indemnified Taxes and (B) Excluded Taxes, subject any Recipient to any Taxes on, or change the basis of taxation of payments to any Recipient in respect of, its loans, loan principal, letters of credit, commitments, or other obligations, or its deposits, reserves, other liabilities or capital attributable thereto; or

(iii) impose on any Lender or the London interbank market any other condition, cost or expense (other than Taxes) affecting this Agreement or Loans made by such Lender;

and the result of any of the foregoing shall be to increase the cost to such Lender or such other Recipient of making, converting to, continuing or maintaining any Loan or of maintaining its obligation to make any such Loan or to reduce the amount of any sum received or receivable by such Lender or other Recipient hereunder (whether of principal, interest or any other amount) then, upon the good faith request of such Lender or other Recipient, the Borrower will pay to such Lender or other Recipient, as the case may be, such additional amount or amounts as will compensate such Lender or other Recipient, as the case may be, for such additional costs incurred or reduction suffered.

(b) Capital Requirements. If any Lender determines that any Change in Law affecting such Lender or any lending office of such Lender or such Lender’s holding company, if any, regarding capital or liquidity requirements, has or would have the effect of reducing the rate of return on such Lender’s capital or on the capital of such Lender’s holding company, if any, as a consequence of this Agreement, the Commitments of such Lender or the Loans made by such Lender to a level below that which such Lender or such Lender’s holding company could have achieved but for such Change in Law (taking into consideration such Lender’s policies and the policies of such Lender’s holding company with respect to capital adequacy and liquidity), then from time to time the Borrower will pay to such Lender such additional amount or amounts as will compensate such Lender or such Lender’s holding company for any such reduction suffered.

(c) Certificates for Reimbursement. A certificate of a Lender setting forth the amount or amounts necessary to compensate such Lender or its holding company, as specified in subsection (a) or (b) of this Section and delivered to the Borrower, shall be conclusive absent manifest error. The Borrower shall pay such Lender promptly upon demand the amount shown as due on any such certificate.

(d) Delay in Requests. Failure or delay on the part of any Lender to demand compensation pursuant to this Section shall not constitute a waiver of such Lender’s right to demand such compensation; provided that the Borrower shall not be required to compensate a Lender pursuant to this Section for any increased costs incurred or reductions suffered more than 180 days prior to the date that such Lender notifies the Borrower of the Change in Law giving rise to such increased costs or reductions, and of such Lender’s intention to claim compensation therefor (except that, if the Change in Law giving rise to such increased costs or reductions is retroactive, then the 180-day period referred to above shall be extended to include the period of retroactive effect thereof).

SECTION 2.16. Illegality.

If due to any Change in Law it shall become unlawful or impossible for any Lender (or its Eurodollar Lending Office) to make, maintain or fund its Eurodollar Rate Revolving Loans, and such Lender shall so notify the Administrative Agent, the Administrative Agent shall forthwith give notice thereof to the other Lenders and the Borrower, whereupon, until such Lender notifies the Borrower and the Administrative Agent that the circumstances giving rise to such suspension no longer exist, the obligation of such Lender to make Eurodollar Rate Revolving Loans, or to Convert outstanding Revolving Loans into Eurodollar Rate Revolving Loans, shall be suspended. Before giving any notice to the Administrative Agent pursuant to this Section 2.16, such Lender shall use reasonable efforts (consistent with its internal policy and legal and regulatory restrictions applicable to such Lender) to designate a different Eurodollar Lending Office if such designation would avoid the need for giving such notice and would not, in the judgment of such Lender, be otherwise disadvantageous to such Lender. If such notice is given, each Eurodollar Rate Revolving Loan of such Lender then outstanding shall be converted to a Base Rate Revolving Loan either (i) on the last day of the then current Interest Period applicable to such Eurodollar Rate Revolving Loan if such Lender may lawfully continue to maintain and fund such Revolving Loan to such day or (ii) immediately if such Lender shall determine that it may not lawfully continue to maintain and fund such Revolving Loan to such day.

SECTION 2.17. Payments and Computations.

(a) The Borrower shall make each payment to be made by it hereunder not later than 1:00 P.M. (New York City Time) on the day when due in Dollars to the Administrative Agent at the Agent’s Account in same day funds without condition or deduction for any counterclaim, defense, recoupment or setoff. The Administrative Agent will promptly thereafter cause to be distributed like funds relating to the payment of principal or interest or commitment fees ratably (other than amounts payable pursuant to Section 2.02(c), 2.11(c), 2.13(c), 2.15, 2.18, 2.21 or 8.04(c)) to the Lenders for the account of their respective Applicable Lending Offices, and like funds relating to the payment of any other amount payable to any Lender to such Lender for the account of its Applicable Lending Office, in each case to be applied in accordance with the terms of this Agreement. Upon its acceptance of an Assignment and Assumption and recording of the information contained therein in the Register pursuant to Section 8.07(c), from and after the effective date specified in such Assignment and Assumption, the Administrative Agent shall make all payments hereunder in respect of the interest assigned thereby to the Lender assignee thereunder, and the parties to such Assignment and Assumption shall make all appropriate adjustments in such payments for periods prior to such effective date directly between themselves.

(b) The Borrower hereby authorizes each Lender, if and to the extent payment owed to such Lender is not made when due hereunder, after any applicable grace period, to charge from time to time against any or all of the Borrower’s accounts with such Lender any amount so due.

(c) All computations of interest based on the rate referred to in clause (i) of the definition of the “Base Rate” contained in Section 1.01 shall be made by the Administrative Agent on

the basis of a year of 365 or 366 days, as the case may be, and all computations of interest based on the Eurodollar Rate, the Federal Funds Effective Rate, NYFRB Rate or the rate referred to in clause (iii) of the definition of the “Base Rate” and of commitment fees shall be made by the Administrative Agent on the basis of a year of 360 days, in each case for the actual number of days (including the first day but excluding the last day) occurring in the period for which such interest or commitment fees are payable. Each determination by the Administrative Agent of an interest rate hereunder shall be conclusive and binding for all purposes, absent manifest error.

(d) Whenever any payment hereunder shall be stated to be due on a day other than a Business Day, such payment shall be made on the next succeeding Business Day, and such extension of time shall in such case be included in the computation of payment of interest or commitment fees, as the case may be; provided, however, that, if such extension would cause payment of interest on or principal of Eurodollar Rate Revolving Loans to be made in the next following calendar month or on a date after the Termination Date, such payment shall be made on the next preceding Business Day.

(e) Unless the Administrative Agent shall have received notice from the Borrower prior to the date on which any payment is due to a Lender hereunder that the Borrower will not make such payment in full, the Administrative Agent may assume that the Borrower has made such payment in full to the Administrative Agent on such date, and the Administrative Agent may, in reliance upon such assumption, cause to be distributed to each Lender on such due date an amount equal to the amount then due such Lender. If and to the extent that the Borrower shall not have so made such payment in full to the Administrative Agent, each Lender shall repay to the Administrative Agent forthwith on demand such amount distributed to such Lender together with interest thereon, for each day from the date such amount is distributed to such Lender until the date such Lender repays such amount to the Administrative Agent, at the Federal Funds Effective Rate.

SECTION 2.18. Taxes.

(a) Defined Terms. For purposes of this Section 2.18 and for the avoidance of doubt, the term “Applicable Law” includes FATCA.

(b) Payments Free of Taxes. Any and all payments by or on account of any obligation of the Borrower under any Loan Document shall be made without deduction or withholding for any Taxes, except as required by Applicable Law. If any Applicable Law (as determined in the good faith discretion of an applicable Withholding Agent) requires the deduction or withholding of any Tax from any such payment by a Withholding Agent, then the applicable Withholding Agent shall be entitled to make such deduction or withholding and shall timely pay the full amount deducted or withheld to the relevant Governmental Authority in accordance with Applicable Law and, if such Tax is an Indemnified Tax, then the sum payable by the Borrower shall be increased as necessary so that after such deduction or withholding has been made (including such deductions and withholdings applicable to additional sums payable under this Section) the applicable Recipient receives an amount equal to the sum it would have received had no such deduction or withholding been made.

(c) Payment of Other Taxes by the Borrower. The Borrower shall timely pay to the relevant Governmental Authority in accordance with Applicable Law, or at the option of the Administrative Agent timely reimburse it for the payment of, any Other Taxes.

(d) Indemnification by the Borrower. The Borrower shall indemnify each Recipient, within 30 days after demand therefor, for the full amount of any Indemnified Taxes (including Indemnified Taxes imposed or asserted on or attributable to amounts payable under this Section) payable or paid by such Recipient or required to be withheld or deducted from a payment to such Recipient and any reasonable expenses arising therefrom or with respect thereto, whether or not such Indemnified Taxes were correctly or legally imposed or asserted by the relevant Governmental Authority. A certificate as to the amount of such payment or liability delivered to the Borrower by a Lender (with a copy to the Administrative Agent), or by the Administrative Agent on its own behalf or on behalf of a Lender, shall be conclusive absent manifest error.

(e) Indemnification by the Lenders. Each Lender shall severally indemnify the Administrative Agent, within 30 days after demand therefor, for any Indemnified Taxes attributable to such Lender (but only to the extent that the Borrower has not already indemnified the Administrative Agent for such Indemnified Taxes and without limiting the obligation of the Borrower to do so). Each Lender shall severally indemnify the Administrative Agent and the Borrower, within 30 days after demand therefor, for (i) any Taxes attributable to such Lender’s failure to comply with the provisions of Section 8.07(d) relating to the maintenance of a Participant Register and (ii) any Excluded Taxes attributable to such Lender, in each case, that are payable or paid by the Administrative Agent or the Borrower in connection with any Loan Document, and any reasonable expenses arising therefrom or with respect thereto, whether or not such Taxes were correctly or legally imposed or asserted by the relevant Governmental Authority. A certificate as to the amount of such payment or liability delivered to any Lender by the Administrative Agent or the Borrower shall be conclusive absent manifest error. Each Lender hereby authorizes the Administrative Agent or the Borrower to set off and apply any and all amounts at any time owing to such Lender under any Loan Document or otherwise payable by the Administrative Agent or the Borrower to the Lender from any other source against any amount due to the Administrative Agent or the Borrower under this subsection (e).

(f) Evidence of Payments. As soon as practicable after any payment of Taxes by the Borrower to a Governmental Authority pursuant to this Section 2.18, the Borrower shall deliver to the Administrative Agent the original or a certified copy of a receipt issued by such Governmental Authority evidencing such payment, a copy of the return reporting such payment or other evidence of such payment reasonably satisfactory to the Administrative Agent.

documentation prescribed by Applicable Law or reasonably requested by the Borrower or the Administrative Agent as will enable the Borrower or the Administrative Agent to determine whether or not such Lender is subject to backup withholding or information reporting requirements. Notwithstanding anything to the contrary in the preceding two sentences, the completion, execution and submission of such documentation (other than such documentation set forth in Section 2.18(g)(ii)(A), (ii)(B) and (ii)(D) below) shall not be required if in the Lender’s reasonable judgment such completion, execution or submission would subject such Lender to any material unreimbursed cost or expense or would materially prejudice the legal or commercial position of such Lender.

(ii) Without limiting the generality of the foregoing,

(A) any Lender that is a U.S. Person shall deliver to the Borrower and the Administrative Agent on or prior to the date on which such Lender becomes a Lender under this Agreement (and from time to time thereafter upon the reasonable request of the Borrower or the Administrative Agent), an executed IRS Form W-9 certifying that such Lender is exempt from U.S. federal backup withholding tax;

(B) any Foreign Lender shall, to the extent it is legally entitled to do so, deliver to the Borrower and the Administrative Agent (in such number of copies as shall be requested by the recipient) on or prior to the date on which such Foreign Lender becomes a Lender under this Agreement (and from time to time thereafter upon the reasonable request of the Borrower or the Administrative Agent), whichever of the following is applicable:

(i) in the case of a Foreign Lender claiming the benefits of an income tax treaty to which the United States is a party (x) with respect to payments of interest under any Loan Document, an executed IRS Form W-8BEN-E or IRS Form W-8BEN establishing an exemption from, or reduction of, U.S. federal withholding Tax pursuant to the “interest” article of such tax treaty and (y) with respect to any other applicable payments under any Loan Document, an executed IRS Form W-8BEN-E or IRS Form W-8BEN establishing an exemption from, or reduction of, U.S. federal withholding Tax pursuant to the “business profits” or “other income” article of such tax treaty;

(ii) an executed IRS Form W-8ECI;

(iii) in the case of a Foreign Lender claiming the benefits of the exemption for portfolio interest under Section 881(c) of the Internal Revenue Code, (x) a certificate substantially in the form of Exhibit F-1 to the effect that such Foreign Lender is not a “bank” within the meaning of Section 881(c)(3)(A) of the Internal Revenue Code, a “10 percent shareholder” of the Borrower within the meaning of Section 881(c)(3)(B) of the Internal Revenue Code, or a “controlled foreign corporation” described in Section 881(c)(3)(C) of the Internal Revenue Code (a “ U.S. Tax Compliance Certificate ”) and (y) an executed IRS Form W-8BEN-E or IRS Form W-8BEN; or

(iv) to the extent a Foreign Lender is not the beneficial owner, an executed IRS Form W-8IMY, accompanied by an executed IRS Form W-8ECI, IRS Form W-8BEN-E or IRS Form W-8BEN, a U.S. Tax Compliance Certificate substantially in the form of Exhibit F-2 or Exhibit F-3, IRS Form W-9, and/or other certification documents from each beneficial owner, as applicable; provided that if the Foreign Lender is a partnership and one or more direct or indirect partners of such Foreign Lender are claiming the portfolio interest exemption, such Foreign Lender may provide a U.S. Tax Compliance Certificate substantially in the form of Exhibit F-4 on behalf of each such direct and indirect partner;

(C) any Foreign Lender shall, to the extent it is legally entitled to do so, deliver to the Borrower and the Administrative Agent (in such number of copies as shall be requested by the recipient) on or prior to the date on which such Foreign Lender becomes a Lender under this Agreement (and from time to time thereafter upon the reasonable request of the Borrower or the Administrative Agent), executed originals of any other form prescribed by Applicable Law as a basis for claiming exemption from or a reduction in withholding Tax, duly completed, together with such supplementary documentation as may be prescribed by Applicable Law to permit the Borrower or the Administrative Agent to determine the withholding or deduction required to be made; and

(D) if a payment made to a Lender under any Loan Document would be subject to U.S. federal withholding Tax imposed by FATCA if such Lender were to fail to comply with the applicable reporting requirements of FATCA (including those contained in Section 1471(b) or 1472(b) of the Internal Revenue Code, as applicable), such Lender shall deliver to the Borrower and the Administrative Agent at the time or times prescribed by law and at such time or times reasonably requested by the Borrower or the Administrative Agent such documentation prescribed by Applicable Law (including as prescribed by Section 1471(b)(3)(C)(i) of the Internal Revenue Code) and such additional documentation reasonably requested by the Borrower or the Administrative Agent as may be necessary for the Borrower and the Administrative Agent to comply with their obligations under FATCA and to determine that such Lender has complied with such Lender’s obligations under FATCA or to determine the amount to deduct and withhold from such payment. Solely for purposes of this clause (D), “FATCA” shall include any amendments made to FATCA after the date of this Agreement.

Each Lender agrees that if any form or certification it previously delivered expires or becomes obsolete or inaccurate in any respect, it shall update such form or certification or promptly notify the Borrower and the Administrative Agent in writing of its legal inability to do so.

the Taxes giving rise to such refund), net of all reasonable out-of-pocket expenses (including Taxes) of such indemnified party and without interest (other than any interest paid by the relevant Governmental Authority with respect to such refund). Such indemnifying party, upon the request of such indemnified party, shall repay to such indemnified party the amount paid over pursuant to this subsection (h) (plus any penalties, interest or other charges imposed by the relevant Governmental Authority) in the event that such indemnified party is required to repay such refund to such Governmental Authority. Notwithstanding anything to the contrary in this subsection (h), in no event will the indemnified party be required to pay any amount to an indemnifying party pursuant to this subsection (h) the payment of which would place the indemnified party in a less favorable net after-Tax position than the indemnified party would have been in if the Tax subject to indemnification and giving rise to such refund had not been deducted, withheld or otherwise imposed and the indemnification payments or additional amounts with respect to such Tax had never been paid. This subsection shall not be construed to require any indemnified party to make available its Tax returns (or any other information relating to its Taxes that it deems confidential) to the indemnifying party or any other Person.

(i) Survival. Each party’s obligations under this Section 2.18 shall survive the resignation or replacement of the Administrative Agent or any assignment of rights by, or the replacement of, a Lender, the termination of the Commitments and the repayment, satisfaction or discharge of all obligations under any Loan Document.

SECTION 2.19. Sharing of Payments, Etc.

If any Lender shall, by exercising any right of setoff or counterclaim or otherwise, obtain payment in respect of any principal of or interest on any of its Loans or other obligations hereunder resulting in such Lender receiving payment of a proportion of the aggregate amount of its Loans and accrued interest thereon or other such obligations greater than its Commitment Percentage thereof as provided herein, then the Lender receiving such greater proportion shall (i) notify the Administrative Agent of such fact, and (ii) purchase (for cash at face value) participations in the Loans and such other obligations of the other Lenders, or make such other adjustments as shall be equitable, so that the benefit of all such payments shall be shared by the Lenders ratably in accordance with the aggregate amount of principal of and accrued interest on their respective Loans and other amounts owing them; provided that:

(A) if any such participations are purchased and all or any portion of the payment giving rise thereto is recovered, such participations shall be rescinded and the purchase price restored to the extent of such recovery, without interest; and

(B) the provisions of this Section shall not be construed to apply to (x) any payment made by the Borrower pursuant to and in accordance with the express terms of this Agreement (including the application of funds arising from the existence of a Defaulting Lender and any payment made pursuant to Section 2.02(c), 2.11(c), 2.13(c), 2.15, 2.18, 2.21 or 8.04(c) or, in respect of Eurodollar Rate Revolving Loans converted into Base Rate Revolving Loans, pursuant to Section 2.16), or (y) any payment obtained by a Lender as consideration for the assignment of or sale of a participation in any of its Loans to any assignee or participant,

other than to the Borrower or any Subsidiary thereof (as to which the provisions of this Section shall apply).

The Borrower consents to the foregoing and agrees, to the extent it may effectively do so under Applicable Law, that any Lender acquiring a participation pursuant to the foregoing arrangements may exercise against the Borrower rights of setoff and counterclaim with respect to such participation as fully as if such Lender were a direct creditor of the Borrower in the amount of such participation.

SECTION 2.20. Mitigation Obligations; Replacement of Lenders.

(a) Designation of a Different Lending Office. If any Lender requests compensation under Section 2.15, or the Borrower is required to pay any Indemnified Taxes or additional amounts to any Lender or any Governmental Authority for the account of any Lender pursuant to Section 2.18, then such Lender shall (at the request of the Borrower) use reasonable efforts to designate a different Applicable Lending Office for funding or booking its Loans hereunder or to assign its rights and obligations hereunder to another of its offices, branches or Affiliates, if, in the judgment of such Lender, such designation or assignment (i) would eliminate or reduce amounts payable pursuant to Section 2.15 or 2.18, as the case may be, in the future, and (ii) would not subject such Lender to any unreimbursed cost or expense and would not otherwise be disadvantageous to such Lender. The Borrower hereby agrees to pay all reasonable costs and expenses incurred by any Lender in connection with any such designation or assignment.

(b) Replacement of Lenders. If any Lender requests compensation under Section 2.15, or the Borrower is required to pay any Indemnified Taxes or additional amounts to any Lender or any Governmental Authority for the account of any Lender pursuant to Section 2.18 and, in each case, such Lender has declined or is unable to designate a different Applicable Lending Office in accordance with subsection (a) above, or if any Lender is a Defaulting Lender or a Non-Consenting Lender, then the Borrower may, at its sole expense and effort, upon notice to such Lender and the Administrative Agent, require such Lender to assign and delegate, without recourse (in accordance with and subject to the restrictions contained in, and consents required by, Section 8.07), all of its interests, rights (other than its existing rights to payments pursuant to Section 2.15 or Section 2.18) and obligations under this Agreement and the related Loan Documents to an Eligible Assignee that shall assume such obligations (which assignee may be another Lender, if such Lender accepts such assignment); provided that:

(i) the Borrower shall have paid to the Administrative Agent the assignment fee (if any) specified in Section 8.07(b)(iv);

(ii) such Lender shall have received payment of an amount equal to the outstanding principal of its Loans, together with all applicable accrued interest thereon, accrued fees and all other amounts payable to it hereunder and under the other Loan Documents (including any amounts under Section 8.04(c)) from the assignee (to the extent of such outstanding principal amounts and accrued interest and fees) or the Borrower (in the case of all other amounts);

(iii) in the case of any such assignment resulting from a claim for compensation under Section 2.15 or payments required to be made pursuant to Section 2.18, such assignment will result in a reduction in such compensation or payments thereafter;

(iv) such assignment shall not conflict with Applicable Law;

(v) in the case of any assignment resulting from a Lender becoming a Non-Consenting Lender, the applicable assignee shall have consented to the applicable extension, amendment, waiver or consent; and

(vi) No Default shall have occurred and be continuing.

A Lender shall not be required to make any such assignment or delegation if, prior thereto, as a result of a waiver by such Lender or otherwise, the circumstances entitling the Borrower to require such assignment and delegation cease to apply.

SECTION 2.21. Defaulting Lenders.

(a) Defaulting Lender Adjustments. Notwithstanding anything to the contrary contained in this Agreement, if any Lender becomes a Defaulting Lender, then, until such time as such Lender is no longer a Defaulting Lender, to the extent permitted by Applicable Law:

(i) Waivers and Amendments. Such Defaulting Lender’s right to approve or disapprove any amendment, waiver or consent with respect to this Agreement shall be restricted as set forth in the definition of Required Lenders and in Section 8.01.

amount of any Loans in respect of which such Defaulting Lender has not fully funded its appropriate share, and (y) such Loans were made at a time when the conditions set forth in Section 3.02 were satisfied or waived, such payment shall be applied solely to pay the Loans of all Non-Defaulting Lenders on a pro rata basis prior to being applied to the payment of any Loans of such Defaulting Lender until such time as all Loans are held by the Lenders pro rata in accordance with the Commitments. Any payments, prepayments or other amounts paid or payable to a Defaulting Lender that are applied (or held) to pay amounts owed by a Defaulting Lender shall be deemed paid to and redirected by such Defaulting Lender, and each Lender irrevocably consents hereto.

(iii) Certain Fees. No Defaulting Lender shall be entitled to receive any commitment fee for any period during which that Lender is a Defaulting Lender (and the Borrower shall not be required to pay any such fee that otherwise would have been required to have been paid to that Defaulting Lender).

(iv) [Reserved].

(v) [Reserved] .

(vi) Reduction of Available Commitments. The Borrower may terminate the Available Commitment of any Lender that is a Defaulting Lender in accordance with Section 2.08(b).

(b) Defaulting Lender Cure. If the Borrower and the Administrative Agent agree in writing that a Lender is no longer a Defaulting Lender, the Administrative Agent will so notify the parties hereto, whereupon as of the effective date specified in such notice and subject to any conditions set forth therein, that Lender will, to the extent applicable, purchase at par that portion of outstanding Loans of the other Lenders or take such other actions as the Administrative Agent may determine to be necessary to cause the Loans to be held pro rata by the Lenders in accordance with the Commitments, whereupon such Lender will cease to be a Defaulting Lender; provided that no adjustments will be made retroactively with respect to fees accrued or payments made by or on behalf of the Borrower while that Lender was a Defaulting Lender; and provided , further , that except to the extent otherwise expressly agreed in writing by the affected parties, no change hereunder from Defaulting Lender to Lender will constitute a waiver or release of any claim of any party hereunder arising from that Lender’s having been a Defaulting Lender.

ARTICLE III
CONDITIONS PRECEDENT

SECTION 3.01. Conditions Precedent to Effectiveness.

The obligation of each Lender to make the initial Extension of Credit to be made by it hereunder shall become effective on and as of the first date on which the following conditions precedent have been satisfied:

(a) The Administrative Agent shall have received on or before such date of effectiveness the following, each dated such day (except as noted otherwise below), in form and substance reasonably satisfactory to the Administrative Agent and, to the extent requested by the Administrative Agent, in sufficient copies (except with respect to the promissory notes described in paragraph (ii) below) for each Lender:

(i) A fully executed version of this Agreement and the other Loan Documents;

(ii) Promissory notes payable to each Lender that has requested the same prior to such date pursuant to Section 2.10(d), duly executed by the Borrower.

(iii) (A) A copy of the articles of incorporation or other organizational documents of the Borrower and each amendment thereto, certified by the Secretary of State of Iowa as being a true and correct copy thereof, and (B) a certificate from the Secretary of State of Iowa (dated not more than 10 days prior to the date hereof) attesting to the continued existence and good standing of the Borrower in that State.

(iv) Certified copies of the resolutions of the board of directors of the Borrower approving this Agreement and the other Loan Documents and of all documents evidencing other necessary corporate action and Governmental Approvals required for the execution, delivery and performance by the Borrower of this Agreement and the other Loan Documents.

(v) A certificate of the Secretary or Assistant Secretary of the Borrower certifying (A) the names and true signatures of the officers of the Borrower authorized to sign this Agreement and the other documents to be delivered by the Borrower hereunder, and (B) that attached thereto are true and correct copies of the bylaws of the Borrower as in effect on such date.

(vi) A favorable opinion of in-house counsel for the Borrower, in form and substance reasonably acceptable to the Administrative Agent.

(vii) A favorable opinion of New York counsel for the Borrower, in form and substance reasonably acceptable to the Administrative Agent.

(b) On such date, the following statements shall be true and the Administrative Agent shall have received for the account of each Lender a certificate signed by a duly authorized officer of the Borrower, dated such date, stating that:

(i) The representations and warranties of the Borrower contained in this Agreement are true and correct on and as of the date of such effectiveness as though made on and as of such date, and

(ii) No event has occurred and is continuing that constitutes a Default.

(c) The Borrower shall have paid all accrued fees and expenses of the Administrative Agent, the Joint Lead Arrangers and the Lenders payable on the date hereof (including the

accrued fees and expenses of counsel to the Administrative Agent to the extent then due and payable).

(d) The Administrative Agent shall have received all documentation and information required by regulatory authorities under applicable “know your customer” and anti-money laundering rules and regulations, including without limitation the Patriot Act, to the extent such documentation or information is requested by the Administrative Agent on behalf of the Lenders reasonably in advance of the date hereof.

(e) The Administrative Agent shall have received such other approvals or documents as the Administrative Agent or any Lender shall have reasonably requested through the Administrative Agent reasonably in advance of the date hereof.

SECTION 3.02. Conditions Precedent to each Extension of Credit.

The obligation of each Lender to make each Extension of Credit to be made by it hereunder (other than in connection with any Borrowing that would not increase the aggregate principal amount of Loans outstanding immediately prior to the making of such Borrowing) shall be subject to the following statements being true on the date of such Borrowing (and each of the giving of the applicable Notice of Borrowing and the acceptance by the Borrower of the proceeds of any such Extension of Credit shall constitute a representation and warranty by the Borrower that on the date of such Extension of Credit such statements are true):

(i) The representations and warranties of the Borrower contained in Section 4.01 (other than the representations and warranties in the first sentence of Section 4.01(g), in Section 4.01(i) and in the first sentence of Section 4.01(n)) are true and correct in all material respects (without duplication of any materiality qualifiers) on and as of the date of such Extension of Credit, before and after giving effect to such Extension of Credit and to the application of the proceeds therefrom, as though made on and as of such date, and

(ii) No event has occurred and is continuing, or would result from such Extension of Credit or from the application of the proceeds therefrom, that constitutes a Default.

ARTICLE IV
REPRESENTATIONS AND WARRANTIES

SECTION 4.01. Representations and Warranties of the Borrower.

The Borrower represents and warrants as follows:

(a) The Borrower is a corporation duly organized, validly existing and in good standing under the laws of the State of Iowa and is duly qualified to do business and is in good standing as a foreign corporation under the laws of each state in which the ownership of its properties or the conduct of its business makes such qualification necessary, except where the failure to be so qualified would not reasonably be expected to have a Material Adverse Effect, and each

Material Subsidiary is duly organized, validly existing and in good standing under the laws of the jurisdiction in which it is incorporated or otherwise organized.

(b) The execution, delivery and performance by the Borrower of each Loan Document, and the consummation of the transactions contemplated hereby and thereby, are within the Borrower’s corporate powers and have been duly authorized by all necessary corporate action. Each Loan Document has been duly executed and delivered by the Borrower.

(d) The execution, delivery and performance by Borrower of the Loan Documents will not (i) violate (A) the articles of incorporation or bylaws (or comparable documents) of Borrower or any of its Material Subsidiaries or (B) any Applicable Law, (ii) be in conflict with, or result in a breach of or constitute a default under, any contract, agreement, indenture or instrument to which the Borrower or any of its Material Subsidiaries is a party or by which any of its or their respective properties is bound or (iii) result in the creation or imposition of any Lien on the property of Borrower or any of its Material Subsidiaries other than Permitted Liens and Liens required under this Agreement, except to the extent such conflict, breach or default referred to in the preceding clause (ii), individually or in the aggregate, would not reasonably be expected to have a Material Adverse Effect.

(e) Each Loan Document is the legal, valid and binding obligation of the Borrower, enforceable against the Borrower in accordance with its terms, except as limited by bankruptcy and similar laws affecting the enforcement of creditors’ rights generally and by the application of general equitable principles.

(f) The Borrower and each Material Subsidiary are in compliance with all Applicable Laws (including Environmental Laws), except to the extent that failure to comply would not reasonably be expected to have a Material Adverse Effect.

(g) There is no action, suit, proceeding, claim or dispute pending or, to the Borrower’s knowledge, threatened against or affecting the Borrower or any of its Material Subsidiaries, or any of its or their respective properties or assets, before any Governmental Authority that, individually or in the aggregate, could reasonably be expected to have a Material Adverse Effect. There is no injunction, writ, preliminary restraining order or any other order of any nature issued by any Governmental Authority directing that any material aspect of the transactions expressly provided for in any of the Loan Documents not be consummated as herein or therein provided.

the fiscal year then ended. The consolidated balance sheet of the Borrower and its Consolidated Subsidiaries as at March 31, 2017, and the related consolidated statements of income, cash flows and stockholders’ equity for the fiscal quarter ended on such date, copies of which have heretofore been furnished to the Administrative Agent and each Lender, present fairly in all material respects the consolidated financial condition of the Borrower and its Consolidated Subsidiaries as at such date, and the consolidated results of their operations and cash flows for the fiscal quarter then ended (subject to normal year-end audit adjustments). All such financial statements, including the related schedules and notes thereto, have been prepared in accordance with GAAP applied consistently throughout the periods involved (except as may be disclosed therein).

(i) Since December 31, 2016, no event has occurred that could reasonably be expected to have a Material Adverse Effect.

(j) The Borrower and each Material Subsidiary have filed or caused to be filed all U.S. Federal and other material tax returns that are required by Applicable Law to be filed, and have paid all taxes shown to be due and payable on said returns or on any assessments made against it or any of its property; other than (i) with respect to taxes the amount or validity of which is currently being contested in good faith by appropriate proceedings and with respect to which reserves in conformity with GAAP have been provided on the books of the Borrower or the applicable Material Subsidiary, as the case may be, or (ii) to the extent that the failure to do so could not reasonably be expected to result in a Material Adverse Effect.

(k) No ERISA Event has occurred other than as would not, either individually or in the aggregate, be reasonably expected to have a Material Adverse Effect. There are no actions, suits or claims pending against or involving a Pension Plan (other than routine claims for benefits) or, to the knowledge of the Borrower or any of its ERISA Affiliates, threatened, that would reasonably be expected to be asserted successfully against any Pension Plan and, if so asserted successfully, would reasonably be expected either singly or in the aggregate to have a Material Adverse Effect. No lien imposed under the Internal Revenue Code or ERISA on the assets of the Borrower or any of its ERISA Affiliates exists or is likely to arise with respect to any Pension Plan. The Borrower and each of its Subsidiaries have complied with foreign law applicable to its Foreign Plans, except to the extent that failure to comply would not reasonably be expected to have a Material Adverse Effect.

(l) The Borrower is not engaged in the business of extending credit for the purpose of buying or carrying Margin Stock, and no proceeds of any Loan will be used to extend credit to others for the purpose of buying or carrying any Margin Stock. Following the application of the proceeds of any Extension of Credit, not more than 25% of the value of the assets of the Borrower and the Material Subsidiaries that are subject to the restrictions of Section 5.02(a) or (c) constitute Margin Stock.

(m) Neither the Borrower nor any Subsidiary is an “investment company” or a company “controlled” by an “investment company”, as such terms are defined in the Investment Company Act of 1940, as amended.

(n) There are no claims, liabilities, investigations, litigation, notices of violation or liability, administrative proceedings, judgments or orders, whether asserted, pending or threatened, relating to any liability under or compliance with any applicable Environmental Law, against the Borrower or any Material Subsidiary or relating to any real property currently or formerly owned, leased or operated by the Borrower or any Material Subsidiary, that would reasonably be expected to have a Material Adverse Effect. No Hazardous Materials have been or are present or are being spilled, discharged or released on, in, under or from property (real, personal or mixed) currently or formerly owned, leased or operated by the Borrower or any Material Subsidiary in any quantity or manner violating, or resulting in liability under, any applicable Environmental Law, which violation or liability would reasonably be expected to have a Material Adverse Effect.

(o) No written statement or information furnished by or on behalf of the Borrower to the Administrative Agent or any Lender in connection with the syndication or negotiation of this Agreement or delivered pursuant hereto, in each case as of the date such statement or information is made or delivered, as applicable, contained or contains, any material misstatement of fact or intentionally omitted or omits to state any material fact necessary to make the statements therein, in the light of the circumstances under which they were, are, or will be made, not misleading.

(p) Each Material Subsidiary as of the date hereof is set forth on Schedule II.

(q) The Borrower has implemented and maintains in effect policies and procedures designed to promote compliance by the Borrower, its Subsidiaries and their respective directors, officers and employees with Anti-Corruption Laws and applicable Sanctions, and the Borrower, its Subsidiaries and, to the knowledge of the Borrower, their respective officers, directors and employees and their respective agents that will act in any capacity in connection with or benefit from the credit facility established hereby, are in compliance with Anti-Corruption Laws and applicable Sanctions in all material respects. None of the Borrower or any Subsidiary is a Sanctioned Person. No Borrowing, use of proceeds or other transaction contemplated by this Agreement will violate any Anti-Corruption Law or applicable Sanctions.

ARTICLE V
COVENANTS OF THE BORROWER

SECTION 5.01. Affirmative Covenants.

So long as any Loan or any other amount payable hereunder shall remain unpaid or any Lender shall have any Commitment hereunder, the Borrower will:

neither the Borrower nor any Material Subsidiary shall be required to pay or discharge any such tax, assessment, charge or claim that is being contested in good faith and by proper proceedings and as to which adequate reserves are being maintained in accordance with GAAP.

(b) Preservation of Existence, Etc. Preserve and maintain, and cause each Material Subsidiary to preserve and maintain, its corporate, partnership or limited liability company (as the case may be) existence and all rights (charter and statutory) and franchises, except to the extent the failure to maintain such rights and franchises would not reasonably be expected to have a Material Adverse Effect; provided , however , that the Borrower and any Material Subsidiary may consummate any merger or consolidation permitted under Section 5.02(b).

(c) Compliance with Laws, Etc. Comply, and cause each Material Subsidiary to comply, with Applicable Law (with such compliance to include, without limitation, compliance with Environmental Laws, the Patriot Act, Anti-Corruption Laws and Sanctions), except to the extent the failure to do so would not reasonably be expected to have a Material Adverse Effect.

(d) Inspection Rights . At any reasonable time and from time to time, permit the Administrative Agent or any Lender or any designated agents or representatives thereof, at all reasonable times and to the extent permitted by Applicable Law, to examine and make copies of and abstracts from the records and books of account of, and visit the properties of, the Borrower and any Material Subsidiary and to discuss the affairs, finances and accounts of the Borrower and any Material Subsidiary with any of their officers or directors and with their independent certified public accountants (at which discussion, if the Borrower or such Material Subsidiary so requests, a representative of the Borrower or such Material Subsidiary shall be permitted to be present, and if such accountants should require that a representative of the Borrower be present, the Borrower agrees to provide a representative to attend such discussion); provided that (i) such designated agents or representatives shall agree to any reasonable confidentiality obligations proposed by the Borrower and shall follow the guidelines and procedures generally imposed upon like visitors to the Borrower’s facilities, and (ii) unless an Event of Default shall have occurred and be continuing, such visits and inspections shall occur not more than once in any fiscal quarter.

(e) Keeping of Books . Keep, and cause each Material Subsidiary to keep, proper books of record and account, in which full and correct entries shall be made of all financial transactions and the assets and business of the Borrower and each such Material Subsidiary in accordance with GAAP.

(f) Maintenance of Properties, Etc. Maintain and preserve, and cause each Material Subsidiary to maintain and preserve, all of its properties that are material to the conduct of its business in good working order and condition, ordinary wear and tear excepted.

Standard ”); provided , however , that the Borrower and each Material Subsidiary may self-insure to the same extent as other companies engaged in similar businesses and owning similar properties and to the extent consistent with prudent business practice; and provided , further , that if the Industry Standard is such that the insurance coverage then being maintained by Borrower and its Material Subsidiaries is below the Industry Standard, Borrower shall only be required to use its reasonable best efforts to obtain the necessary insurance coverage such that its and its Material Subsidiaries’ insurance coverage equals or is greater than the Industry Standard.

(h) Reporting Requirements . Furnish to the Lenders:

(i) within 60 days after the end of each of the first three quarters of each fiscal year of the Borrower, a copy of the consolidated balance sheet of the Borrower and its Consolidated Subsidiaries as of the end of such quarter and consolidated statements of income and cash flows of the Borrower and its Consolidated Subsidiaries for the period commencing at the end of the previous fiscal year and ending with the end of such quarter, duly certified (subject to year-end audit adjustments) by the chief financial officer, chief accounting officer, treasurer or assistant treasurer of the Borrower as having been prepared in accordance with generally accepted accounting principles and a certificate of the chief financial officer, chief accounting officer, treasurer or assistant treasurer of the Borrower as to compliance with the terms of this Agreement and setting forth in reasonable detail the calculations necessary to demonstrate compliance with Section 5.03, provided that in the event of any change in GAAP used in the preparation of such financial statements, the Borrower shall also provide, if necessary for the determination of compliance with Section 5.03, a statement of reconciliation conforming such financial statements to GAAP in effect on the date hereof;

(ii) within 120 days after the end of each fiscal year of the Borrower, a copy of the annual audit report for such year for the Borrower and its Consolidated Subsidiaries, containing a consolidated balance sheet of the Borrower and its Consolidated Subsidiaries as of the end of such fiscal year and consolidated statements of income and cash flows of the Borrower and its Consolidated Subsidiaries for such fiscal year, in each case accompanied by an opinion by Deloitte & Touche LLP or other independent public accountants of nationally recognized standing, and a certificate of the chief financial officer, chief accounting officer, treasurer or assistant treasurer of the Borrower as to compliance with the terms of this Agreement and setting forth in reasonable detail the calculations necessary to demonstrate compliance with Section 5.03, provided that in the event of any change in GAAP used in the preparation of such financial statements, the Borrower shall also provide, if necessary for the determination of compliance with Section 5.03, a statement of reconciliation conforming such financial statements to GAAP in effect on the date hereof;

(iii) within five days after the chief financial officer or treasurer of the Borrower obtains knowledge of the occurrence of any Default, a statement of the chief financial officer or treasurer of the Borrower setting forth details of such Default and the action that the Borrower has taken and proposes to take with respect thereto;

(iv) within ten Business Days after the Borrower or any of its ERISA Affiliates knows or has reason to know that (A) the Borrower or any of its ERISA Affiliates has failed to comply with ERISA or the related provisions of the Internal Revenue Code with respect to any Pension Plan, and such noncompliance will, or could reasonably be expected to, result in material liability to the Borrower or its Subsidiaries, and/or (B) any ERISA Event (other than an ERISA Event as defined in clause (vi) of the definition of “ERISA Event”) has occurred, a certificate of the chief financial officer of the Borrower describing such ERISA Event and the action, if any, proposed to be taken with respect to such ERISA Event and a copy of any notice filed with the PBGC or the IRS pertaining to such ERISA Event and all notices received by the Borrower or such ERISA Affiliate from the PBGC or any other governmental agency with respect thereto;

(v) promptly after the commencement thereof, notice of all actions and proceedings before, and orders by, any Governmental Authority affecting the Borrower or any Material Subsidiary of the type described in Section 4.01(g);

(vi) together with the financial statements delivered in paragraphs (i) and (ii) of this Section 5.01(h), if Schedule II shall no longer set forth a complete and correct list of all Material Subsidiaries as of the last date of the period for which such financial statements were prepared, an updated Schedule II setting forth all Material Subsidiaries as of the last date of such period for which such financial statements have been prepared;

(vii) promptly upon the occurrence of a Reportable Compliance Event, notice of such occurrence; and

(viii) such other information respecting the Borrower or any of its Subsidiaries as any Lender through the Administrative Agent may from time to time reasonably request.

If the financial statements required to be delivered pursuant to Section 5.01(h)(i) or 5.01(h)(ii) are included in any Form 10-K or 10-Q filed by the Borrower, the Borrower’s obligation to deliver such documents or information to the Administrative Agent shall be deemed to be satisfied upon (x) delivery of a copy of the relevant form to the Administrative Agent within the time period required by such Section or (y) the relevant form being available on EDGAR and the delivery of a notice to the Administrative Agent (which notice may be delivered by electronic mail and/or included in the applicable compliance certificate delivered pursuant to Section 5.01(h)(i) or 5.01(h)(ii)) that such form is so available, in each case within the time period required by such Section.

(i) Use of Proceeds . Use the proceeds of the Borrowings for working capital and other general corporate purposes.

SECTION 5.02. Negative Covenants.

So long as any Loan or any other amount payable hereunder shall remain unpaid or any Lender shall have any Commitment hereunder, the Borrower agrees that it will not:

(a) Liens, Etc. Create or suffer to exist, or cause or permit any Material Subsidiary to create or suffer to exist, any Lien on or with respect to any of its properties, including, without limitation, equity interests held by such Person in any Subsidiary of such Person, whether now owned or hereafter acquired, other than (i) Permitted Liens; (ii) Liens created by or pursuant to (A) the Mortgage and Deed of Trust, dated as of January 9, 1989, as amended, modified or supplemented, of PacifiCorp, entered into with The Bank of New York Mellon Trust Company, N.A. (as successor trustee to JPMorgan Chase Bank, N.A.), (B) the Indenture, dated as of February 8, 2002, as amended, modified or supplemented, between MidAmerican Energy Company and The Bank of New York Mellon Trust Company, N.A. (successor to The Bank of New York), as trustee, (C) the Indenture, dated as of October 1, 2006, as amended, modified or supplemented, between MidAmerican Energy Company and The Bank of New York Mellon Trust Company, N.A. (successor to The Bank of New York Trust Company, N.A.), as trustee, (D) the Indenture, dated as of September 9, 2013, as amended, modified or supplemented, between MidAmerican Energy Company and The Bank of New York Mellon Trust Company, N.A., as trustee, (E) the General and Refunding Mortgage Indenture, dated as of May 1, 2001, as amended, modified or supplemented, between Nevada Power Company and The Bank of New York Mellon Trust Company, N.A. (successor to The Bank of New York Mellon), as trustee, (F) the General and Refunding Mortgage Indenture, dated as of May 1, 2001, as amended, modified or supplemented, between Sierra Pacific Power Company and The Bank of New York Mellon Trust Company, N.A. (successor to The Bank of New York Mellon), as trustee, or (G) any other first mortgage indenture or similar agreement or instrument pursuant to which a Material Subsidiary may issue bonds, notes or similar instruments secured by a lien on all or a substantial portion of its fixed assets, so long as under the terms of such indenture or similar agreement or instrument no “cross-default” or similar “event of default” (howsoever designated) in respect of any bonds, notes, or other instruments issued thereunder will be triggered by reference to a Default; and (iii) Liens, in addition to the foregoing, securing obligations not greater than the greater of (A) 3.0% of consolidated shareholders’ equity of all classes (whether common, preferred, mandatorily convertible preferred or preference) of the Borrower and (B) $100,000,000.

Administrative Agent shall have received, and be reasonably satisfied with, all documentation and information required by regulatory authorities under applicable “know your customer” and anti-money laundering rules and regulations, including without limitation the Patriot Act, to the extent such documentation or information is requested by the Administrative Agent on behalf of the Lenders prior to the date of such proposed transaction.

(c) Sales, Etc. of Assets . Sell, lease, transfer or otherwise dispose of, or cause or permit any Subsidiary of the Borrower to sell, lease, transfer or otherwise dispose of, any assets, or grant any option or other right to purchase, lease or otherwise acquire any assets, except (i) sales in the ordinary course of its business, (ii) dispositions of assets required to be sold to comply with Applicable Laws, (iii) dispositions of short-term, readily marketable investments purchased for cash management purposes with funds not representing the proceeds of other asset sales, (iv) sales, leases, transfers or dispositions of assets to any Person that is not a wholly-owned Subsidiary of the Borrower that in the aggregate during any 12-month period do not exceed 10% of the Consolidated Assets of the Borrower and its Subsidiaries, whether in one transaction or a series of transactions, provided that any such sales, leases, transfers or dispositions will be disregarded for purposes of such 10% limitation (and, for the avoidance of doubt, be deemed to be permitted hereunder) if the net proceeds thereof, within 18 months of such sale, lease, transfer or disposition, as applicable, are (A) used to retire Debt of the Borrower and its Subsidiaries (other than Debt that is subordinated to the Debt hereunder) or (B) invested in assets in similar or related lines of business (including geographic extensions thereof) of the Borrower and its Subsidiaries as of the Closing Date, (v) sales, leases, transfers and dispositions made to the Borrower or a wholly-owned Subsidiary of the Borrower and (vi) a disposition by the Borrower of all or substantially all of its assets to any Person so long as the requirements set forth in Section 5.02(b) are satisfied as if such disposition were a merger or consolidation in which the Borrower is not the surviving entity.

(d) Restrictive Agreements . Enter into, or cause or permit any Material Subsidiary (and intermediate holding companies, if any, between such Material Subsidiary and the Borrower) to enter into, any agreement(or any amendment, supplement or other modification of an existing agreement) after the date hereof, which agreement (or which amendment, supplement or other modification) imposes any restriction (other than restrictions imposed by Applicable Law or Governmental Authorities, and restrictions entered into in connection with the incurrence of Project Finance Debt) on the ability of any Material Subsidiary to make payments, directly or indirectly, to the Borrower, if such restriction has or would reasonably be expected to have a Material Adverse Effect.

(e) Investments. Make, or permit any of its Subsidiaries to make, any Investment in any Person that is not engaged in a line of business that is similar or related to any business (including any geographical extensions thereof) engaged in by the Borrower or any of its Subsidiaries as of the date hereof if (i) such Investment, when combined with all such Investments, would equal or be greater than 15% of the Consolidated Assets of the Borrower and its Subsidiaries, or (ii) a Default has occurred and is continuing or would result from the making of such Investment (determined, for purposes of compliance with Section 5.03, on a pro forma basis as if such payment had been made on the last day of the Borrower’s fiscal quarter

then most recently ended and for which financial statements have been delivered pursuant to Section 5.01(h)).

(f) Use of Proceeds . Use the proceeds of any Extension of Credit to buy or carry Margin Stock in violation of the Margin Regulations.

(g) Compliance with Anti-Corruption Laws and Sanctions . The Borrower will not, directly or, to the knowledge of the Borrower, indirectly, use the proceeds of any Borrowing, or lend, contribute or otherwise make available such proceeds to any subsidiary, joint venture partner or other Person (i) in furtherance of an offer, payment, promise to pay, or authorization of the payment or giving of money, or anything else of value, to any Person in violation of any Anti-Corruption Laws, (ii) for the purpose of funding, financing or facilitating any activities, business or transaction of or with any Sanctioned Person, or in any Sanctioned Country, or (iii) in any manner that would result in the violation of any Sanctions by the Borrower or any of its Subsidiaries or, to the knowledge of the Borrower, any other party (including each Credit Party) to this Agreement or the other Loan Documents.

SECTION 5.03. Financial Covenant.

So long as any Loan shall remain unpaid or any Lender shall have any Commitment hereunder, the Borrower will maintain a ratio of Consolidated Debt to Consolidated Capital of not greater than 0.700 to 1.00 as of the last day of each fiscal quarter.

ARTICLE VI
EVENTS OF DEFAULT

SECTION 6.01. Events of Default.

If any of the following events (“ Events of Default ”) shall occur and be continuing:

(b) Any representation or warranty made by the Borrower herein or by the Borrower (or any of its officers) in connection with this Agreement shall prove to have been incorrect in any material respect when made; or

(c) (i) The Borrower shall fail to perform or observe any term, covenant or agreement contained in Section 5.01(b), 5.02 or 5.03, or (ii) the Borrower shall fail to perform or observe any other term, covenant or agreement contained in this Agreement or any other Loan Document if such failure shall remain unremedied for 30 days after written notice thereof shall have been given to the Borrower by the Administrative Agent or any Lender; or

(d) The Borrower or any Material Subsidiary shall fail to pay any principal of or premium or interest on any Debt (other than Debt under this Agreement) that is outstanding in a principal

amount in excess of $100,000,000 in the aggregate when the same becomes due and payable (whether by scheduled maturity, required prepayment, acceleration, demand or otherwise), and such failure shall continue after the applicable grace period, if any, specified in the agreement or instrument relating to such Debt; or any other event shall occur or condition shall exist under any agreement or instrument relating to any such Debt and shall continue after the applicable grace period, if any, specified in such agreement or instrument, if the effect of such event or condition is to accelerate, or to permit the acceleration of, the maturity of such Debt; or any such Debt shall be declared to be due and payable, or required to be prepaid or redeemed (other than by a regularly scheduled required prepayment or redemption), prior to the stated maturity thereof; or

(e) Any judgment or order for the payment of money in excess of $100,000,000 to the extent not paid or insured shall be rendered against the Borrower or any Material Subsidiary and either (i) enforcement proceedings shall have been commenced by any creditor upon such judgment or order or (ii) there shall be any period of 30 consecutive days during which a stay of enforcement of such judgment or order, by reason of a pending appeal or otherwise, shall not be in effect; or

(f) The Borrower or any Material Subsidiary shall generally not pay its debts as such debts become due, or shall admit in writing its inability to pay its debts generally, or shall make a general assignment for the benefit of creditors; or any proceeding shall be instituted by or against the Borrower or any Material Subsidiary seeking to adjudicate it a bankrupt or insolvent, or seeking liquidation, winding up, reorganization, arrangement, adjustment, protection, relief, or composition of it or its debts under any law relating to bankruptcy, insolvency or reorganization or relief of debtors, or seeking the entry of an order for relief or the appointment of a receiver, trustee, custodian or other similar official for it or for any substantial part of its property and, in the case of any such proceeding instituted against it (but not instituted by it), either such proceeding shall remain undismissed or unstayed for a period of 60 days, or any of the actions sought in such proceeding (including, without limitation, the entry of an order for relief against, or the appointment of a receiver, trustee, custodian or other similar official for, it or for any substantial part of its property) shall occur; or the Borrower or any Material Subsidiary shall take any corporate action to authorize any of the actions set forth above in this subsection (f); or

(g) An ERISA Event shall have occurred that, when taken together with all other ERISA Events that have occurred, has resulted in, or is reasonably likely to result in, a Material Adverse Effect; or

(h) Berkshire Hathaway shall fail to own, directly or indirectly, at least 50% of the issued and outstanding shares of common stock of the Borrower, calculated on a fully diluted basis (a “ Change of Control ”); provided that, such failure shall not constitute an Event of Default unless and until a Rating Decline has occurred;

terminate, and (ii) shall at the request, or may with the consent, of the Required Lenders, by notice to the Borrower, declare the outstanding Borrowings, all interest thereon and all other amounts payable under this Agreement to be forthwith due and payable, whereupon the outstanding Borrowings, all such interest and all such amounts shall become and be forthwith due and payable by the Borrower, without presentment, demand, protest or further notice of any kind, all of which are hereby expressly waived by the Borrower; provided , however , that in the event of an actual or deemed entry of an order for relief with respect to the Borrower under the Bankruptcy Code of the United States of America, (A) the obligation of each Lender to make Extensions of Credit shall automatically be terminated and (B) the outstanding Borrowings, all such interest and all such amounts shall automatically become and be due and payable, without presentment, demand, protest or any notice of any kind, all of which are hereby expressly waived by the Borrower.

ARTICLE VII
THE ADMINISTRATIVE AGENT

SECTION 7.01. Appointment and Authority.

Each Lender hereby irrevocably appoints MUFG to act on its behalf as the Administrative Agent hereunder and under the other Loan Documents and authorizes the Administrative Agent to take such actions on its behalf and to exercise such powers as are delegated to the Administrative Agent by the terms hereof or thereof, together with such actions and powers as are reasonably incidental thereto. The provisions of this Article are solely for the benefit of the Administrative Agent and the Lenders, and the Borrower shall not have rights as a third-party beneficiary of any of such provisions. It is understood and agreed that the use of the term “agent” herein or in any other Loan Document (or any other similar term) with reference to the Administrative Agent is not intended to connote any fiduciary or other implied (or express) obligations arising under agency doctrine of any Applicable Law. Instead such term is used as a matter of market custom, and is intended to create or reflect only an administrative relationship between contracting parties.

SECTION 7.02. Rights as a Lender.

The Person serving as the Administrative Agent hereunder shall have the same rights and powers in its capacity as a Lender as any other Lender and may exercise the same as though it were not the Administrative Agent, and the term “Lender” or “Lenders” shall, unless otherwise expressly indicated or unless the context otherwise requires, include the Person serving as the Administrative Agent hereunder in its individual capacity. Such Person and its Affiliates may accept deposits from, lend money to, own securities of, act as the financial advisor or in any other advisory capacity for, and generally engage in any kind of business with, the Borrower or any Subsidiary or other Affiliate thereof as if such Person were not the Administrative Agent hereunder and without any duty to account therefor to the Lenders.

SECTION 7.03. Exculpatory Provisions.

(a) The Administrative Agent shall not have any duties or obligations except those expressly set forth herein and in the other Loan Documents, and its duties hereunder shall be administrative in nature. Without limiting the generality of the foregoing, the Administrative Agent:

(i) shall not be subject to any fiduciary or other implied duties, regardless of whether a Default has occurred and is continuing;

(ii) shall not have any duty to take any discretionary action or exercise any discretionary powers, except discretionary rights and powers expressly contemplated hereby or by the other Loan Documents that the Administrative Agent is required to exercise as directed in writing by the Required Lenders (or such other number or percentage of the Lenders as shall be expressly provided for herein or in the other Loan Documents); provided that the Administrative Agent shall not be required to take any action that, in its opinion or the opinion of its counsel, may expose the Administrative Agent to liability or that is contrary to any Loan Document or Applicable Law, including for the avoidance of doubt any action that may be in violation of the automatic stay under any Debtor Relief Law or that may effect a forfeiture, modification or termination of property of a Defaulting Lender in violation of any Debtor Relief Law; and

(iii) shall not, except as expressly set forth herein or in the other Loan Documents, have any duty to disclose, and shall not be liable for the failure to disclose, any information relating to the Borrower or any of its Affiliates that is communicated to or obtained by the Person serving as the Administrative Agent or any of its Affiliates in any capacity.

(b) The Administrative Agent shall not be liable for any action taken or not taken by it (i) with the consent or at the request of the Required Lenders (or such other number or percentage of the Lenders as shall be necessary, or as the Administrative Agent shall believe in good faith shall be necessary, under the circumstances as provided in Sections 6.01 and 8.01), or (ii) in the absence of its own gross negligence or willful misconduct as determined by a court of competent jurisdiction by final and nonappealable judgment. The Administrative Agent shall be deemed not to have knowledge of any Default unless and until notice describing such Default is given to the Administrative Agent in writing by the Borrower or a Lender.

(c) The Administrative Agent shall not be responsible for or have any duty to ascertain or inquire into (i) any statement, warranty or representation made in or in connection with this Agreement or any other Loan Document, (ii) the contents of any certificate, report or other document delivered hereunder or thereunder or in connection herewith or therewith, (iii) the performance or observance of any of the covenants, agreements or other terms or conditions set forth herein or therein or the occurrence of any Default, (iv) the validity, enforceability, effectiveness or genuineness of this Agreement, any other Loan Document or any other agreement, instrument or document, or (v) the satisfaction of any condition set forth in Article III or elsewhere herein, other than to confirm receipt of items expressly required to be delivered to the Administrative Agent.

SECTION 7.04. Reliance by Administrative Agent.

The Administrative Agent shall be entitled to rely upon, and shall not incur any liability for relying upon, any notice, request, certificate, consent, statement, instrument, document or other writing (including any electronic message, Internet or intranet website posting or other distribution) believed by it to be genuine and to have been signed, sent or otherwise authenticated by the proper Person. The Administrative Agent also may rely upon any statement made to it orally or by telephone and believed by it to have been made by the proper Person, and shall not incur any liability for relying thereon. In determining compliance with any condition hereunder to the making of a Loan, that by its terms must be fulfilled to the satisfaction of any Lender, the Administrative Agent may presume that such condition is satisfactory to such Lender unless the Administrative Agent shall have received notice to the contrary from such Lender prior to the making of such Loan. The Administrative Agent may consult with legal counsel (who may be counsel for the Borrower), independent accountants and other experts selected by it, and shall not be liable for any action taken or not taken by it in accordance with the advice of any such counsel, accountants or experts.

SECTION 7.05. Resignation of Administrative Agent.

(a) The Administrative Agent may at any time give notice of its resignation to the Lenders and the Borrower. Upon receipt of any such notice of resignation, the Required Lenders shall have the right, in consultation with the Borrower, to appoint a successor, which shall be (i) a commercial bank with an office in the United States having a combined capital and surplus of at least $500,000,000, or an Affiliate of any such bank with an office in the United States and (ii) subject to the approval of the Borrower so long as no Default shall have occurred and be continuing (such approval not to be unreasonably withheld or delayed). If no such successor shall have been so appointed by the Required Lenders and shall have accepted such appointment within 30 days after the retiring Administrative Agent gives notice of its resignation (or such earlier day as shall be agreed by the Required Lenders) (the “ Resignation Effective Date ”), then the retiring Administrative Agent may (but shall not be obligated to), on behalf of the Lenders, appoint a successor Administrative Agent meeting the qualifications set forth above. Whether or not a successor has been appointed, such resignation shall become effective in accordance with such notice on the Resignation Effective Date.

(b) If the Person serving as Administrative Agent is a Defaulting Lender pursuant to clause (d) of the definition thereof, the Required Lenders may, to the extent permitted by Applicable Law, by notice in writing to the Borrower and such Person remove such Person as Administrative Agent and, in consultation with the Borrower, appoint a successor, which shall be (i) a commercial bank with an office in the United States having a combined capital and surplus of at least $500,000,000, or an Affiliate of any such bank with an office in the United States and (ii) subject to the approval of the Borrower so long as no Default shall have occurred and be continuing (such approval not to be unreasonably withheld or delayed). If no such successor shall have been so appointed by the Required Lenders and shall have accepted such appointment within 30 days (or such earlier day as shall be agreed by the Required Lenders) (the “ Removal Effective Date ”), then such removal shall nonetheless become effective in accordance with such notice on the Removal Effective Date.

(c) With effect from the Resignation Effective Date or the Removal Effective Date (as applicable) (1) the retiring or removed Administrative Agent shall be discharged from its duties and obligations hereunder and under the other Loan Documents and (2) except for any indemnity payments owed to the retiring or removed Administrative Agent, all payments, communications and determinations provided to be made by, to or through the Administrative Agent shall instead be made by or to each Lender directly, until such time, if any, as the Required Lenders appoint a successor Administrative Agent as provided for above. Upon the acceptance of a successor’s appointment as Administrative Agent hereunder, such successor shall succeed to and become vested with all of the rights, powers, privileges and duties of the retiring or removed Administrative Agent (other than any rights to indemnity payments owed to the retiring or removed Administrative Agent), and the retiring or removed Administrative Agent shall be discharged from all of its duties and obligations hereunder or under the other Loan Documents. The fees payable by the Borrower to a successor Administrative Agent shall be the same as those payable to its predecessor unless otherwise agreed between the Borrower and such successor. After the retiring or removed Administrative Agent’s resignation or removal hereunder and under the other Loan Documents, the provisions of this Article and Section 8.04 shall continue in effect for the benefit of such retiring or removed Administrative Agent, its sub‑agents and their respective Related Parties in respect of any actions taken or omitted to be taken by any of them while the retiring or removed Administrative Agent was acting as Administrative Agent.

SECTION 7.06. Non-Reliance on Administrative Agent and Other Lenders.

Each Lender acknowledges that it has, independently and without reliance upon the Administrative Agent or any other Lender or any of their Related Parties and based on such documents and information as it has deemed appropriate, made its own credit analysis and decision to enter into this Agreement. Each Lender also acknowledges that it will, independently and without reliance upon the Administrative Agent or any other Lender or any of their Related Parties and based on such documents and information as it shall from time to time deem appropriate, continue to make its own decisions in taking or not taking action under or based upon this Agreement, any other Loan Document or any related agreement or any document furnished hereunder or thereunder.

SECTION 7.07. Indemnification.

as proven in a court of competent jurisdiction by final and nonappealable judgment. Without limitation of the foregoing, each Lender agrees to reimburse the Administrative Agent promptly upon demand for its Commitment Percentage of any costs and expenses (including, without limitation, fees and reasonable expenses of counsel) payable by the Borrower under Section 8.04, to the extent that the Administrative Agent is not promptly reimbursed for such costs and expenses by the Borrower (and without limiting its obligation to do so) after request therefor. The failure of any Lender to reimburse the Administrative Agent promptly upon demand for its Commitment Percentage of any amount required to be paid by the Lender to the Administrative Agent as provided herein shall not relieve any other Lender of its obligation hereunder to reimburse the Administrative Agent for its Commitment Percentage of such amount, but no Lender shall be responsible for the failure of any other Lender to reimburse the Administrative Agent for such other Lender’s Commitment Percentage of such amount. Without prejudice to the survival of any other agreement of any Lender hereunder, the agreement and obligations of each Lender contained in this Section 7.07 shall survive the payment in full of principal, interest and all other amounts payable hereunder.

SECTION 7.08. No Other Duties, etc.

Anything herein to the contrary notwithstanding, none of the Joint Lead Arrangers, the “Joint Bookrunners”, the “Syndication Agents” or the “Documentation Agents” listed on the cover page hereof shall have any powers, duties or responsibilities under this Agreement or any other Loan Document, except in its capacity, as applicable, as the Administrative Agent or a Lender hereunder or thereunder.

ARTICLE VIII
MISCELLANEOUS

SECTION 8.01. Amendments, Etc.

treatment of the Lenders; and provided further that (x) no amendment, waiver or consent shall, unless in writing and signed by the Administrative Agent in addition to the Lenders required above to take such action, affect the rights or duties of the Administrative Agent under this Agreement and (y) no amendment, waiver or consent shall, unless in writing and signed by the Administrative Agent and the Required Lenders, amend or waive Section 2.21. Notwithstanding the foregoing, any provision of this Agreement may be amended by an agreement in writing entered into by the Borrower, the Required Lenders and the Administrative Agent if by the terms of such agreement the Commitment of each Non-Consenting Lender shall terminate upon the effectiveness of such amendment (but such Non-Consenting Lender shall continue to be entitled to the benefits of Sections 2.15, 2.18 and 8.04), and such Non-Consenting Lender shall have received or at the time of such termination receive payment of an amount equal to the outstanding principal of its Loans, together with all applicable accrued interest thereon, accrued fees and all other amounts then payable to it hereunder and under the other Loan Documents.

SECTION 8.02. Notices, Etc.

(a) Notices Generally. Except in the case of notices and other communications expressly permitted to be given by telephone (and except as provided in subsection (b) below), all notices and other communications provided for herein shall be in writing and shall be delivered by hand or overnight courier service, mailed by certified or registered mail or sent by facsimile as follows:

(i) if to the Borrower, to it at 666 Grand Avenue, Suite 500, Des Moines, Iowa 50309-2580, Attention: Calvin D. Haack, Vice President and Treasurer (Facsimile No.: (515) 242-4295; Telephone No.: (515) 281-2904);

(ii) if to the Administrative Agent, to The Bank of Tokyo-Mitsubishi UFJ, Ltd. at 1221 Avenue of the Americas, New York, New York 10020-1104, Attention: Lawrence Blat, (Telephone No.: (212) 405-6621, Email: lawrenceblat@mufgsecurities.com and AgencyDesk@us.sc.mufg.jp) with a copy to: Jeffrey Fesenmaier 445 South Figueroa Street, Los Angeles, CA, 90071 (Email: jfesenmaier@us.mufg.jp);

(iii) if to any Initial Lender, at its Domestic Lending Office specified opposite its name on Schedule I hereto, and if to any other Lender, at its Domestic Lending Office specified in the Assignment and Assumption pursuant to which it became a Lender.

Notices sent by hand or overnight courier service, or mailed by certified or registered mail, shall be deemed to have been given when received; notices sent by facsimile shall be deemed to have been given when sent (except that, if not given during normal business hours for the recipient, shall be deemed to have been given at the opening of business on the next business day for the recipient). Notices delivered through electronic communications, to the extent provided in subsection (b) below, shall be effective as provided in said subsection (b).

(b) Electronic Communications. Notices and other communications to the Lenders hereunder may be delivered or furnished by electronic communication (including e‑mail and Internet or intranet websites) pursuant to procedures approved by the Administrative Agent, provided that the foregoing shall not apply to notices to any Lender pursuant to Section 2.02 if

such Lender has notified the Administrative Agent that it is incapable of receiving notices under such Section by electronic communication. The Administrative Agent or the Borrower may, in its discretion, agree to accept notices and other communications to it hereunder by electronic communications pursuant to procedures approved by it; provided that approval of such procedures may be limited to particular notices or communications.

Unless the Administrative Agent otherwise prescribes, (i) notices and other communications sent to an e-mail address shall be deemed received upon the sender’s receipt of an acknowledgement from the intended recipient (such as by the “return receipt requested” function, as available, return e-mail or other written acknowledgement), and (ii) notices or communications posted to an Internet or intranet website shall be deemed received upon the deemed receipt by the intended recipient, at its e-mail address as described in the foregoing clause (i), of notification that such notice or communication is available and identifying the website address therefor; provided that, for both clauses (i) and (ii) above, if such notice, email or other communication is not sent during the normal business hours of the recipient, such notice or communication shall be deemed to have been sent at the opening of business on the next business day for the recipient.

(c) Change of Address, etc. Any party hereto may change its address or facsimile number for notices and other communications hereunder by notice to the other parties hereto.

(d) Platform.

(i) The Borrower agrees that the Administrative Agent may, but shall not be obligated to, make the Communications (as defined below) available to the Lenders by posting the Communications on Debt Domain, Intralinks, Syndtrak or a substantially similar electronic transmission system (the “ Platform ”).

(ii) The Platform is provided “as is” and “as available.” The Agent Parties (as defined below) do not warrant the adequacy of the Platform and expressly disclaim liability for errors or omissions in the Communications. No warranty of any kind, express, implied or statutory, including, without limitation, any warranty of merchantability, fitness for a particular purpose, non-infringement of third-party rights or freedom from viruses or other code defects, is made by any Agent Party in connection with the Communications or the Platform. In no event shall the Administrative Agent or any of its Related Parties (collectively, the “ Agent Parties ”) have any liability to the Borrower, any Lender or any other Person or entity for damages of any kind, including, without limitation, direct or indirect, special, incidental or consequential damages, losses or expenses (whether in tort, contract or otherwise) arising out of the Borrower’s or the Administrative Agent’s transmission of communications through the Platform except to the extent that such damages are found in a judgment by a court of competent jurisdiction by final and nonappealable judgment to have resulted from such Agent Party’s gross negligence or willful misconduct. “ Communications ” means, collectively, any notice, demand, communication, information, document or other material provided by or on behalf of the Borrower pursuant to any Loan Document or the transactions contemplated therein which is distributed to the Administrative

Agent or any Lender by means of electronic communications pursuant to this Section, including through the Platform.

SECTION 8.03. No Waiver; Remedies.

No failure on the part of any Lender or the Administrative Agent to exercise, and no delay in exercising, any right hereunder shall operate as a waiver thereof; nor shall any single or partial exercise of any such right preclude any other or further exercise thereof or the exercise of any other right. The remedies herein provided are cumulative and not exclusive of any remedies provided by law.

SECTION 8.04. Costs and Expenses; Indemnification.

(a) The Borrower agrees to pay promptly upon demand all reasonable out-of-pocket costs and expenses of the Administrative Agent, the Joint Lead Arrangers and their respective Affiliates in connection with the preparation, negotiation, execution, delivery, administration, modification and amendment of this Agreement and the other documents to be delivered hereunder, including, without limitation, (A) all due diligence, syndication (including printing, distribution and bank meetings), transportation, computer, duplication, appraisal, consultant, and audit expenses and (B) the reasonable fees and expenses of counsel for the Administrative Agent with respect thereto and with respect to advising the Administrative Agent as to its rights and responsibilities under this Agreement. The Borrower further agrees to pay promptly upon demand all reasonable costs and expenses of the Administrative Agent and the Lenders, if any, (A) in connection with the enforcement (whether through negotiations, legal proceedings or otherwise) of this Agreement and the other Loan Documents, including its rights under this Section, or (B) in connection with the Loans made hereunder, including all such reasonable out-of-pocket expenses incurred during any workout, restructuring or negotiations in respect of such Loans, including, without limitation, reasonable fees and expenses of one outside counsel for the Administrative Agent and the Lenders taken as a whole in connection with the enforcement of rights under this Section 8.04(a) (and, with respect to matters referred to in clause (A) of this sentence only, separate counsel for the Administrative Agent and any Lender to the extent needed to avoid an actual or potential conflict of interest).

(b) The Borrower shall indemnify the Administrative Agent (and any sub-agent thereof), the Joint Lead Arrangers and each Lender, and each Related Party of any of the foregoing Persons (each, an “ Indemnified Party ”) from and against any and all claims, damages, losses and liabilities, joint or several, to which any such Indemnified Party may become subject, in each case arising out of or in connection with or relating to (including, without limitation, in connection with any investigation, litigation or proceeding or preparation of a defense in connection therewith) this Agreement, any of the transactions contemplated herein or the actual or proposed use of the proceeds of the Extensions of Credit, and shall reimburse any Indemnified Party for any and all reasonable expenses (including, without limitation, reasonable fees and expenses of counsel) as they are incurred in connection with the investigation of or preparation for or defense of any pending or threatened claim or any action or proceeding arising therefrom, whether or not such Indemnified Party is a party (but if not a party thereto, then only with respect to such proceedings where such Indemnified Party (i) is subject to legal process or other

compulsion of law, (ii) believes in good faith that it will be so subject, or (iii) believes in good faith that it is necessary or appropriate for it to resist any legal process or other compulsion of law which is purported to be asserted against it) and whether or not such claim, action or proceeding is initiated or brought by or on behalf of the Borrower or any of its Affiliates and whether or not any of the transactions contemplated hereby are consummated or this Agreement is terminated, except to the extent such claim, damage, loss, liability or expense is found in a judgment by a court of competent jurisdiction by final and nonappealable judgment to have resulted from such Indemnified Party’s gross negligence, bad faith or willful misconduct. In the case of an investigation, litigation or other proceeding to which the indemnity in this Section 8.04(b) applies, such indemnity shall be effective whether or not such investigation, litigation or proceeding is brought by the Borrower, its directors, shareholders or creditors or an Indemnified Party or any other Person or any Indemnified Party is otherwise a party thereto and whether or not the transactions contemplated hereby are consummated. The Borrower agrees not to assert any claim against the Administrative Agent, any Lender, any of their respective Affiliates, or any of their respective directors, officers, employees, attorneys and agents, on any theory of liability, for special, indirect, consequential or punitive damages arising out of or otherwise relating to this Agreement, any of the transactions contemplated herein or the actual or proposed use of the proceeds of the Extensions of Credit. This Section 8.04(b) shall not apply with respect to Taxes that are Indemnified Taxes, Excluded Taxes or Taxes that are covered by Section 2.15(a)(ii).

(c) If any payment of principal of, or Conversion of, any Eurodollar Rate Revolving Loan is made by the Borrower to or for the account of a Lender other than on the last day of the Interest Period for such Revolving Loan, as a result of a payment or Conversion pursuant to Section 2.09, 2.12(b), 2.13, 2.14, 2.15 or 2.16, acceleration of the maturity of the outstanding Borrowings pursuant to Section 6.01, assignment to another Lender upon demand of the Borrower pursuant to Section 2.20(b) or for any other reason (in the case of any such payment or Conversion), the Borrower shall, promptly upon demand by such Lender (with a copy of such demand to the Administrative Agent), pay to the Administrative Agent for the account of such Lender any amounts required to compensate such Lender for any additional losses, costs or expenses that it may reasonably incur as a result of such payment or Conversion, including, without limitation, any loss (other than loss of Applicable Margin), cost or expense incurred by reason of the liquidation or reemployment of deposits or other funds acquired by any Lender to fund or maintain such Loan.

(d) Without prejudice to the survival of any other agreement of the Borrower hereunder, the agreements and obligations of the Borrower contained in Sections 2.15, 2.16, 2.19 and 8.04 shall survive the payment in full of principal, interest and all other amounts payable hereunder.

(e) The Borrower agrees that no Indemnified Party shall have any liability (whether direct or indirect, in contract or tort or otherwise) to the Borrower or its respective security holders or creditors related to or arising out of or in connection with this Agreement, the Extensions of Credit or the use or proposed use of the proceeds thereof, any of the transactions contemplated by any of the foregoing or in the loan documentation and the performance by an Indemnified Party by any of the foregoing except to the extent that any loss, claim, damage,

liability or expense is found in a judgment by a court of competent jurisdiction by final and nonappealable judgment to have resulted from such Indemnified Party’s gross negligence or willful misconduct.

(f) In the event that an Indemnified Party is requested or required to appear as a witness in any action brought by or on behalf of or against the Borrower or any of its Affiliates in which such Indemnified Party is not named as a defendant, the Borrower agrees to reimburse such Indemnified Party for all reasonable expenses incurred by it in connection with such Indemnified Party’s appearing and preparing to appear as such a witness, including, without limitation, the fees and disbursements of its legal counsel.

SECTION 8.05. Right of Set-off.

Upon (i) the occurrence and during the continuance of any Event of Default and (ii) the making of the request or the granting of the consent specified by Section 6.01 to authorize the Administrative Agent to declare the outstanding Borrowings due and payable pursuant to the provisions of Section 6.01, each Lender and each of their respective Affiliates is hereby authorized at any time and from time to time, to the fullest extent permitted by Applicable Law, to set off and apply any and all deposits (general or special, time or demand, provisional or final, in whatever currency) at any time held, and other obligations (in whatever currency) at any time owing, by such Lender or any such Affiliate, to or for the credit or the account of the Borrower against any and all of the obligations of the Borrower now or hereafter existing under this Agreement or any other Loan Document to such Lender or its Affiliates, irrespective of whether or not such Lender or such Affiliate shall have made any demand under this Agreement or any other Loan Document and although such obligations of the Borrower may be contingent or unmatured or are owed to a branch, office or Affiliate of such Lender different from the branch, office or Affiliate holding such deposit or obligated on such indebtedness; provided that in the event that any Defaulting Lender shall exercise any such right of setoff, (x) all amounts so set off shall be paid over immediately to the Administrative Agent for further application in accordance with the provisions of Section 2.21 and, pending such payment, shall be segregated by such Defaulting Lender from its other funds and deemed held in trust for the benefit of the Administrative Agent and the Lenders, and (y) the Defaulting Lender shall provide promptly to the Administrative Agent a statement describing in reasonable detail the obligations of the Borrower owing to such Defaulting Lender as to which it exercised such right of setoff. The rights of each Lender and their respective Affiliates under this Section are in addition to other rights and remedies (including other rights of setoff) that such Lender or its Affiliates may have. Each Lender agrees to notify the Borrower and the Administrative Agent promptly after any such setoff and application; provided that the failure to give such notice shall not affect the validity of such setoff and application.

SECTION 8.06. Binding Effect.

respective successors and assigns, except that the Borrower shall not have the right to assign its rights hereunder or any interest herein without the prior written consent of all of the Lenders.

SECTION 8.07. Assignments and Participations.

(a) Successors and Assigns Generally. The provisions of this Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns permitted hereby, except that the Borrower may not assign or otherwise transfer any of its rights or obligations hereunder without the prior written consent of the Administrative Agent and each Lender, and no Lender may assign or otherwise transfer any of its rights or obligations hereunder except (i) to an assignee in accordance with the provisions of subsection (b) of this Section, (ii) by way of participation in accordance with the provisions of subsection (d) of this Section, or (iii) by way of pledge or assignment of a security interest subject to the restrictions of subsection (e) of this Section (and any other attempted assignment or transfer by any party hereto shall be null and void). Nothing in this Agreement, expressed or implied, shall be construed to confer upon any Person (other than the parties hereto, their respective successors and assigns permitted hereby, Participants to the extent provided in subsection (d) of this Section and, to the extent expressly contemplated hereby, the Related Parties of each of the Administrative Agent and the Lenders) any legal or equitable right, remedy or claim under or by reason of this Agreement.

(b) Assignments by Lenders. Any Lender may at any time assign to one or more assignees all or a portion of its rights and obligations under this Agreement (including all or a portion of its Commitment and the Loans at the time owing to it); provided that any such assignment shall be subject to the following conditions:

(i) Minimum Amounts.

(A) in the case of an assignment of the entire remaining amount of the assigning Lender’s Commitment and/or the Loans at the time owing to it or contemporaneous assignments to related Approved Funds that equal at least the amount specified in subsection (b)(i)(B) of this Section in the aggregate or in the case of an assignment to a Lender, an Affiliate of a Lender or an Approved Fund, no minimum amount need be assigned; and

(B) in any case not described in subsection (b)(i)(A) of this Section, the aggregate amount of the Commitment (which for this purpose includes Loans outstanding thereunder) or, if the applicable Commitment is not then in effect, the principal outstanding balance of the Loans of the assigning Lender subject to each such assignment (determined as of the date the Assignment and Assumption with respect to such assignment is delivered to the Administrative Agent or, if “Trade Date” is specified in the Assignment and Assumption, as of the Trade Date) shall not be less than $5,000,000, or an integral multiple of $1,000,000 in excess thereof, unless each of the Administrative Agent and, so long as no Default has occurred and is continuing, the Borrower otherwise consents (each such consent not to be unreasonably withheld or delayed).

(ii) Proportionate Amounts. Each partial assignment shall be made as an assignment of a proportionate part of all the assigning Lender’s rights and obligations under this Agreement with respect to the Loan or the Commitment assigned.

(iii) Required Consents. No consent shall be required for any assignment except to the extent required by subsection (b)(i)(B) of this Section and, in addition:

(A) the consent of the Borrower (such consent not to be unreasonably withheld or delayed) shall be required unless (x) an Event of Default has occurred and is continuing at the time of such assignment, or (y) such assignment is to a Lender or an Affiliate of a Lender; provided that the Borrower shall be deemed to have consented to any such assignment unless it shall object thereto by written notice to the Administrative Agent within ten Business Days after having received written notice thereof; and

(B) the consent of the Administrative Agent (such consent not to be unreasonably withheld or delayed) shall be required for assignments if such assignment is to a Person that is not a Lender with a Commitment or an Affiliate of such Lender.

(iv) Assignment and Assumption. The parties to each assignment shall execute and deliver to the Administrative Agent an Assignment and Assumption, together with a processing and recordation fee of $3,500; provided that the Administrative Agent may, in its sole discretion, elect to waive such processing and recordation fee in the case of any assignment. The assignee, if it is not a Lender, shall deliver to the Administrative Agent an Administrative Questionnaire.

(v) No Assignment to Certain Persons. No such assignment shall be made to (A) the Borrower or any of the Borrower’s Affiliates (except for any Affiliate of Berkshire Hathaway not controlled directly or indirectly by the Borrower that is a commercial lender acquiring rights and obligations under this Agreement in the ordinary course of its business) or Subsidiaries or (B) to any Defaulting Lender or any of its Subsidiaries, or any Person who, upon becoming a Lender hereunder, would constitute any of the foregoing Persons described in this clause (B).

(vi) No Assignment to Natural Persons. No such assignment shall be made to a natural Person.

Administrative Agent, the applicable pro rata share of Loans previously requested but not funded by the Defaulting Lender, to each of which the applicable assignee and assignor hereby irrevocably consent), to (x) pay and satisfy in full all payment liabilities then owed by such Defaulting Lender to the Administrative Agent and each other Lender hereunder (and interest accrued thereon), and (y) acquire (and fund as appropriate) its full pro rata share of all Loans in accordance with its Commitment Percentage. Notwithstanding the foregoing, in the event that any assignment of rights and obligations of any Defaulting Lender hereunder shall become effective under Applicable Law without compliance with the provisions of this subsection, then the assignee of such interest shall be deemed to be a Defaulting Lender for all purposes of this Agreement until such compliance occurs.

Subject to acceptance and recording thereof by the Administrative Agent pursuant to subsection (c) of this Section, from and after the effective date specified in each Assignment and Assumption, the assignee thereunder shall be a party to this Agreement and, to the extent of the interest assigned by such Assignment and Assumption, have the rights and obligations of a Lender under this Agreement, and the assigning Lender thereunder shall, to the extent of the interest assigned by such Assignment and Assumption, be released from its obligations under this Agreement (and, in the case of an Assignment and Assumption covering all of the assigning Lender’s rights and obligations under this Agreement, such Lender shall cease to be a party hereto) but shall continue to be entitled to the benefits of Sections 2.15, 2.18 and 8.04 with respect to facts and circumstances occurring prior to the effective date of such assignment; provided , that except to the extent otherwise expressly agreed by the affected parties, no assignment by a Defaulting Lender will constitute a waiver or release of any claim of any party hereunder arising from that Lender’s having been a Defaulting Lender. Any assignment or transfer by a Lender of rights or obligations under this Agreement that does not comply with this subsection shall be treated for purposes of this Agreement as a sale by such Lender of a participation in such rights and obligations in accordance with subsection (d) of this Section.

(c) Register. The Administrative Agent, acting solely for this purpose as a non-fiduciary agent of the Borrower, shall maintain at its address referred to in Section 8.02 a copy of each Assignment and Assumption delivered to it and a register for the recordation of the names and addresses of the Lenders, and the Commitments and Termination Date of, and principal amounts (and stated interest) of the Loans owing to, each Lender pursuant to the terms hereof from time to time (the “ Register ”). The entries in the Register shall be conclusive absent manifest error, and the Borrower, the Administrative Agent and the Lenders shall treat each Person whose name is recorded in the Register pursuant to the terms hereof as a Lender hereunder for all purposes of this Agreement. The Register shall be available for inspection by the Borrower and any Lender, at any reasonable time and from time to time upon reasonable prior notice.

under this Agreement (including all or a portion of its Commitment and/or the Loans owing to it); provided that (i) such Lender’s obligations under this Agreement shall remain unchanged, (ii) such Lender shall remain solely responsible to the other parties hereto for the performance of such obligations, and (iii) the Borrower, the Administrative Agent and Lenders shall continue to deal solely and directly with such Lender in connection with such Lender’s rights and obligations under this Agreement. For the avoidance of doubt, each Lender shall be responsible for the indemnity under Section 7.07 with respect to any payments made by such Lender to its Participant(s).

Any agreement or instrument pursuant to which a Lender sells such a participation shall provide that such Lender shall retain the sole right to enforce this Agreement and to approve any amendment, modification or waiver of any provision of this Agreement; provided that such agreement or instrument may provide that such Lender will not, without the consent of the Participant, agree to any amendment, modification or waiver described in Section 8.01 requiring the consent of each Lender directly affected thereby that directly affects such Participant. The Borrower agrees that each Participant shall be entitled to the benefits of Sections 2.15, 2.18 and 8.04(c) (subject to the requirements and limitations therein, including the requirements under Section 2.18(g) (it being understood that the documentation required under Section 2.18(g) shall be delivered to the participating Lender or the applicable Withholding Agent to the extent required by Applicable Law)) to the same extent as if it were a Lender and had acquired its interest by assignment pursuant to subsection (b) of this Section; provided that such Participant (A) agrees to be subject to the provisions of Section 2.20 as if it were an assignee under subsection (b) of this Section; and (B) shall not be entitled to receive any greater payment under Section 2.15 or 2.18, with respect to any participation, than its participating Lender would have been entitled to receive. Each Lender that sells a participation agrees, at the Borrower’s request and expense, to use reasonable efforts to cooperate with the Borrower to effectuate the provisions of Section 2.20(b) with respect to any Participant. To the extent permitted by law, each Participant also shall be entitled to the benefits of Section 8.05 as though it were a Lender; provided that such Participant agrees to be subject to Section 2.19 as though it were a Lender. Each Lender that sells a participation shall, acting solely for this purpose as a non-fiduciary agent of the Borrower, maintain a register on which it enters the name and address of each Participant and the principal amounts (and stated interest) of each Participant’s interest in the Loans or other obligations under the Loan Documents (the “ Participant Register ”); provided that no Lender shall have any obligation to disclose all or any portion of the Participant Register (including the identity of any Participant or any information relating to a Participant’s interest in any Commitments, Loans or its other obligations under any Loan Document) to any Person except to the extent that such disclosure is necessary to establish that such Commitment, Loan or other obligation is in registered form under Section 5f.103-1(c) of the United States Treasury Regulations or to comply with other requirements under applicable tax law. The entries in the Participant Register shall be conclusive absent manifest error, and such Lender shall treat each Person whose name is recorded in the Participant Register as the owner of such participation for all purposes of this Agreement notwithstanding any notice to the contrary. For the avoidance of doubt, the Administrative Agent (in its capacity as Administrative Agent) shall have no responsibility for maintaining a Participant Register.

(e) Certain Pledges. Any Lender may at any time pledge or assign a security interest in all or any portion of its rights under this Agreement to secure obligations of such Lender, including any pledge or assignment to secure obligations to a Federal Reserve Bank or any other central banking authority; provided that no such pledge or assignment shall release such Lender from any of its obligations hereunder or substitute any such pledgee or assignee for such Lender as a party hereto.

SECTION 8.08. Confidentiality.

Neither the Administrative Agent nor any Lender shall disclose any Confidential Information to any other Person without the consent of the Borrower, other than (i) to the Administrative Agent’s or such Lender’s Affiliates and their officers, directors, employees, agents and advisors, to the Administrative Agent or a Lender and, as contemplated by Section 8.07, to actual or prospective assignees and participants, and then only on a confidential basis, (ii) as required by any law, rule or regulation or judicial process, (iii) to any rating agency when required by it, provided , that, prior to any such disclosure, such rating agency, commercial paper dealer or provider shall undertake to preserve the confidentiality of any Confidential Information received by it from such Lender, (iv) as requested or required by any state, federal or foreign authority or examiner regulating banks, banking or other financial institutions, (v) to any direct, indirect, actual or prospective counterparty (and its advisor) to any swap, derivative or securitization transaction related to the obligations under this Agreement on a confidential basis, (vi) to any credit insurance provider relating to the Borrower and its obligations on a confidential basis and (vii) pursuant to a request or requirement from a regulatory authority (governmental or non-governmental self-regulatory authority) having jurisdiction over a Lender; provided that unless prohibited by Applicable Law, each Lender and the Administrative Agent agree, prior to disclosure thereof, to notify the Borrower of any request for disclosure of any such Confidential Information (x) by any Governmental Authority or representative thereof (other than any such request in connection with an examination of such Lender or the Administrative Agent by such Governmental Authority) or (y) pursuant to legal process.

SECTION 8.09. Governing Law.

EACH LOAN DOCUMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK (INCLUDING SECTION 5-1401 OF THE GENERAL OBLIGATIONS LAW OF THE STATE OF NEW YORK), WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES THAT WOULD REQUIRE APPLICATION OF ANOTHER LAW.

SECTION 8.10. Severability.

In the event any one or more of the provisions contained in this Agreement should be held invalid, illegal or unenforceable in any respect, the validity, legality and enforceability of the remaining provisions contained herein shall not in any way be affected or impaired hereby.

SECTION 8.11. Execution in Counterparts.

This Agreement may be executed in any number of counterparts and by different parties hereto in separate counterparts, each of which when so executed shall be deemed to be an original and all of which taken together shall constitute one and the same agreement. Delivery of an executed counterpart of a signature page to this Agreement by telecopier or other electronic transmission (including by e-mail with a PDF attachment of an executed counterpart) shall be effective as delivery of an original executed counterpart of this Agreement.

SECTION 8.12. Jurisdiction, Etc.

(a) Each party hereto hereby irrevocably and unconditionally agrees that it will not commence any action, litigation or proceeding of any kind or description, whether in law or equity, whether in contract or in tort or otherwise, against the Administrative Agent, any Lender or any Related Party of the foregoing in any way relating to this Agreement or any other Loan Document or the transactions relating hereto or thereto, in any forum other than the courts of the State of New York sitting in the Borough of Manhattan in New York City, and of the United States District Court of the Southern District of New York sitting in the Borough of Manhattan in New York City, and any appellate court from any thereof, and each of the parties hereto irrevocably and unconditionally submits to the jurisdiction of such courts and agrees that all claims in respect of any such action, litigation or proceeding may be heard and determined in such New York State court or, to the fullest extent permitted by applicable law, in such federal court. Each party hereto agrees that a final judgment in any such action, litigation or proceeding shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by law.

(b) The Borrower irrevocably and unconditionally waives, to the fullest extent permitted by Applicable Law, any objection that it may now or hereafter have to the laying of venue of any action or proceeding arising out of or relating to this Agreement or any other Loan Document in any court referred to in paragraph (a) of this Section. Each of the parties hereto hereby irrevocably waives, to the fullest extent permitted by applicable law, the defense of an inconvenient forum to the maintenance of such action or proceeding in any such court.

(c) Each party hereto irrevocably consents to service of process in the manner provided for notices in Section 8.02. Nothing in this Agreement will affect the right of any party hereto to serve process in any other manner permitted by Applicable Law.

SECTION 8.13. Waiver of Jury Trial.

AGENT AND THE LENDERS HEREBY AGREE THAT ANY SUCH CLAIM, DEMAND, ACTION, CAUSE OF ACTION, OR PROCEEDING SHALL BE DECIDED BY A COURT TRIAL WITHOUT A JURY AND THAT ANY PARTY HERETO MAY FILE AN ORIGINAL COUNTERPART OR A COPY OF THIS SECTION WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT OF THE OTHER PARTY OR PARTIES HERETO TO WAIVER OF ITS OR THEIR RIGHT TO TRIAL BY JURY. EACH PARTY HERETO (i) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PERSON HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PERSON WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (ii) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION.

SECTION 8.14. USA Patriot Act.

Each Lender that is subject to the Patriot Act and the Administrative Agent (for itself and not on behalf of any Lender) hereby notifies the Borrower that pursuant to the requirements of the USA Patriot Act (Title III of Pub. L. 107-56 (signed into law as of October 26, 2001)) (as amended, restated, modified or otherwise supplemented from time to time, the “ Patriot Act ”), it is required to obtain, verify and record information that identifies the Borrower, which information includes the name and address of the Borrower and other information that will allow such Lender or the Administrative Agent, as applicable, to identify the Borrower in accordance with the Patriot Act. The Borrower shall, and shall cause each of its Subsidiaries to, provide to the extent commercially reasonable, such information and take such actions as are reasonably requested by the Administrative Agent or any Lender in order to assist the Administrative Agent and the Lenders in maintaining compliance with the Patriot Act.

SECTION 8.15. No Fiduciary Duty.

Documents and not as the agent or fiduciary of the Borrower, its management, securities holders or creditors. The Borrower acknowledges and agrees that it has consulted its own legal and financial advisors to the extent it deemed appropriate and that it is responsible for making its own independent judgment with respect to such transactions and the process leading thereto. The Borrower agrees that it will not claim that any Lender Party has rendered advisory services of any nature or respect, or owes a fiduciary or similar duty to the Borrower, in connection with the transactions contemplated by the Loan Documents or the process leading thereto.

SECTION 8.16. Acknowledgement and Consent to Bail-In of EEA Financial Institutions .

Notwithstanding anything to the contrary in any Loan Document or in any other agreement, arrangement or understanding among any such parties, each party hereto acknowledges that any liability of any EEA Financial Institution arising under any Loan Document may be subject to the write-down and conversion powers of an EEA Resolution Authority and agrees and consents to, and acknowledges and agrees to be bound by:

(a) the application of any Write-Down and Conversion Powers by an EEA Resolution Authority to any such liabilities arising hereunder which may be payable to it by any party hereto that is an EEA Financial Institution; and

(b) the effects of any Bail-In Action on any such liability, including, if applicable:

(i) a reduction in full or in part or cancellation of any such liability;

(ii) a conversion of all, or a portion of, such liability into shares or other instruments of ownership in such EEA Financial Institution, its parent entity, or a bridge institution that may be issued to it or otherwise conferred on it, and that such shares or other instruments of ownership will be accepted by it in lieu of any rights with respect to any such liability under this Agreement or any other Loan Document; or

(iii) the variation of the terms of such liability in connection with the exercise of the write-down and conversion powers of any EEA Resolution Authority.

[Remainder of page intentionally left blank.]

BERKSHIRE HATHAWAY ENERGY COMPANY,
as Borrower

By______________________________________

Calvin D. Haack
Vice President and Treasurer

Signature Page to Berkshire Hathaway Energy Company 364-Day Credit Agreement

THE BANK OF TOKYO-MITSUBISHI UFJ,
LTD., as Administrative Agent and a Lender

By_____________________________________
Name:
Title:

Signature Page to Berkshire Hathaway Energy Company 364-Day Credit Agreement

MIZUHO BANK, LTD.

By______________________________________

Name:

Title:

Signature Page to Berkshire Hathaway Energy Company 364-Day Credit Agreement

JPMORGAN CHASE BANK, N.A.

By__________________________

Name:

Title:

Signature Page to Berkshire Hathaway Energy Company 364-Day Credit Agreement

WELLS FARGO BANK, NATIONAL ASSOCIATION

By___________________________

Name:

Title:

Signature Page to Berkshire Hathaway Energy Company 364-Day Credit Agreement

CITIBANK, N.A.

By___________________________

Name:

Title:

Signature Page to Berkshire Hathaway Energy Company 364-Day Credit Agreement

U.S. BANK NATIONAL ASSOCIATION

By___________________________

Name:

Title:

Signature Page to Berkshire Hathaway Energy Company 364-Day Credit Agreement

BARCLAYS BANK PLC

By___________________________

Name:

Title:

Signature Page to Berkshire Hathaway Energy Company 364-Day Credit Agreement

EXHIBIT A

(to the Credit Agreement)

FORM OF NOTICE OF BORROWING

The Bank of Tokyo-Mitsubishi UFJ, Ltd., as Administrative Agent

for the Lenders party

to the Credit Agreement

referred to below

Attention: Agency Group

[Date]

Ladies and Gentlemen:

The undersigned, Berkshire Hathaway Energy Company, refers to the 364-Day Credit Agreement, dated as of May 11, 2017 (as amended, restated, supplemented or otherwise modified from time to time, the “ Credit Agreement ,” the terms defined therein being used herein as therein defined), among the undersigned and the Lenders party thereto, and The Bank of Tokyo-Mitsubishi UFJ, Ltd., as Administrative Agent and hereby gives you notice, irrevocably, pursuant to Section 2.02(a) of the Credit Agreement that the undersigned hereby requests a Borrowing under the Credit Agreement, and in that connection sets forth below the information relating to such Borrowing (the “ Proposed Borrowing ”) as required by Section 2.02(a) of the Credit Agreement:

(i) The Business Day of the Proposed Borrowing is __________________, 20__.

(ii) The Type of Loans comprising the Proposed Borrowing is [Base Rate Loans][Eurodollar Rate Revolving Loans].

(iii) The aggregate amount of the Proposed Borrowing is $___________________.

[(iv) The initial Interest Period for each Eurodollar Rate Revolving Loan made as part of the Proposed Borrowing is _____ month[s].]

The undersigned hereby certifies that the following statements are true on the date hereof, and will be true on the date of the Proposed Borrowing:

Borrowing and to the application of the proceeds therefrom, as though made on the date hereof; and

(B) no event has occurred and is continuing, or would result from the Proposed Borrowing or from the application of the proceeds therefrom, that constitutes a Default.

Very truly yours,

BERKSHIRE HATHAWAY ENERGY COMPANY

By______________________________________

Name:

Title:

EXHIBIT B

(to the Credit Agreement)

ASSIGNMENT AND ASSUMPTION

This Assignment and Assumption (the “ Assignment and Assumption ”) is dated as of the Effective Date set forth below and is entered into by and between [the][each] ¹ Assignor identified in item 1 below ([the][each, an] “ Assignor ”) and [the][each] ² Assignee identified in item 2 below ([the][each, an] “ Assignee ”). [It is understood and agreed that the rights and obligations of [the Assignors][the Assignees] ³ hereunder are several and not joint.] ⁴ Capitalized terms used but not defined herein shall have the meanings given to them in the Credit Agreement identified below (as amended, the “ Credit Agreement ”), receipt of a copy of which is hereby acknowledged by [the][each] Assignee. The Standard Terms and Conditions set forth in Annex 1 attached hereto are hereby agreed to and incorporated herein by reference and made a part of this Assignment and Assumption as if set forth herein in full.

For an agreed consideration, [the][each] Assignor hereby irrevocably sells and assigns to [the Assignee][the respective Assignees], and [the][each] Assignee hereby irrevocably purchases and assumes from [the Assignor][the respective Assignors], subject to and in accordance with the Standard Terms and Conditions and the Credit Agreement, as of the Effective Date inserted by the Administrative Agent as contemplated below (i) all of [the Assignor’s][the respective Assignors’] rights and obligations in [its capacity as a Lender][their respective capacities as Lenders] under the Credit Agreement and any other documents or instruments delivered pursuant thereto to the extent related to the amount and percentage interest identified below of all of such outstanding rights and obligations of [the Assignor][the respective Assignors] under the respective facilities identified below (including without limitation any letters of credit and guarantees included in such facilities), and (ii) to the extent permitted to be assigned under applicable law, all claims, suits, causes of action and any other right of [the Assignor (in its capacity as a Lender)][the respective Assignors (in their respective capacities as Lenders)] against any Person, whether known or unknown, arising under or in connection with the Credit Agreement, any other documents or instruments delivered pursuant thereto or the loan transactions governed thereby or in any way based on or related to any of the foregoing, including, but not limited to, contract claims, tort claims, malpractice claims, statutory claims and all other claims at law or in equity related to the rights and obligations sold and assigned pursuant to clause (i) above (the rights and obligations sold and assigned by [the][any] Assignor to [the][any] Assignee pursuant to clauses (i) and (ii) above being referred to herein collectively as [the][an] “ Assigned Interest ”). Each such sale and assignment is without recourse to [the][any] Assignor and, except as expressly provided in this Assignment and Assumption, without representation or warranty by [the][any] Assignor.

_____________________________________________________________________________________________

¹ For bracketed language here and elsewhere in this form relating to the Assignor(s), if the assignment is from a single Assignor, choose the first bracketed language. If the assignment is from multiple Assignors, choose the second bracketed language.

² For bracketed language here and elsewhere in this form relating to the Assignee(s), if the assignment is to a single Assignee, choose the first bracketed language. If the assignment is to multiple Assignees, choose the second bracketed language.

³ Select as appropriate.

⁴ Include bracketed language if there are either multiple Assignors or multiple Assignees.

1. Assignor[s]: ________________________________

________________________________

[Assignor [is] [is not] a Defaulting Lender]

2. Assignee[s]: ________________________________

________________________________

[for each Assignee, indicate [Affiliate][Approved Fund] of [ identify Lender ]]

3. Borrower(s): Berkshire Hathaway Energy Company

4. Administrative Agent: The Bank of Tokyo-Mitsubishi UFJ, Ltd., as the administrative agent under the Credit Agreement

5. Credit Agreement: The $1,000,000,000 364-Day Credit Agreement dated as of May 11, 2017, among Berkshire Hathaway Energy Company, the Lenders parties thereto and The Bank of Tokyo-Mitsubishi UFJ, Ltd., as Administrative Agent

6. Assigned Interest[s]:



Assignor[s] ⁵	Assignee[s] ⁶	Facility Assigned ⁷	Aggregate Amount of Commitment/Loans for all Lenders ⁸	Amount of Commitment/Loans Assigned ⁸	Percentage Assigned of Commitment/ Loans ⁹	CUSIP Number
			$	$	%
			$	$	%
			$	$	%

[7. Trade Date: ______________] ¹⁰

[Page break]

________________________________________________________________________________________________________

⁵ List each Assignor, as appropriate.

⁶ List each Assignee, as appropriate.

⁷ Fill in the appropriate terminology for the types of facilities under the Credit Agreement that are being assigned under this Assignment (e.g., “Revolving Credit Commitment,” etc.)

⁸ Amount to be adjusted by the counterparties to take into account any payments or prepayments made between the Trade Date and the Effective Date.

⁹ Set forth, to at least 9 decimals, as a percentage of the Commitment/Loans of all Lenders thereunder.

¹⁰ To be completed if the Assignor(s) and the Assignee(s) intend that the minimum assignment amount is to be determined as of the Trade Date.

Effective Date: _____________ ___, 20___ [TO BE INSERTED BY ADMINISTRATIVE AGENT AND WHICH SHALL BE THE EFFECTIVE DATE OF RECORDATION OF TRANSFER IN THE REGISTER THEREFOR.]

The terms set forth in this Assignment and Assumption are hereby agreed to:



ASSIGNOR[S] ¹¹ [NAME OF ASSIGNOR] By______________________________ Title: [NAME OF ASSIGNOR] By______________________________ Title: ASSIGNEE[S] ¹² [NAME OF ASSIGNEE] By______________________________ Title: [NAME OF ASSIGNEE] By______________________________ Title:

_____________________________________________________________________________________________

¹¹ Add additional signature blocks as needed. Include both Fund/Pension Plan and manager making the trade (if applicable).

¹² Add additional signature blocks as needed. Include both Fund/Pension Plan and manager making the trade (if applicable).

[Consented to and] ¹³ Accepted:

THE BANK OF TOKYO-MITSUBISHI UFJ, LTD.as

Administrative Agent

By _________________________________

Title:

[Consented to:] ¹⁴

[NAME OF RELEVANT PARTY]

By ________________________________

Title:

______________________________________________________________________________

¹³ To be added only if the consent of the Administrative Agent is required by the terms of the Credit Agreement.

¹⁴ To be added for, only if the consent of the Borrower is required by the terms of the Credit Agreement, the Borrower.

ANNEX 1

$1,000,000,000 364-Day Credit Agreement, dated as of May 11, 2017, among Berkshire Hathaway Energy Company, the Lenders parties thereto and The Bank of Tokyo-Mitsubishi UFJ, Ltd., as Administrative Agent

STANDARD TERMS AND CONDITIONS FOR
ASSIGNMENT AND ASSUMPTION

1. Representations and Warranties .

1.1 Assignor[s] . [The][Each] Assignor (a) represents and warrants that (i) it is the legal and beneficial owner of [the][the relevant] Assigned Interest, (ii) [the][such] Assigned Interest is free and clear of any lien, encumbrance or other adverse claim, (iii) it has full power and authority, and has taken all action necessary, to execute and deliver this Assignment and Assumption and to consummate the transactions contemplated hereby and (iv) it is [not] a Defaulting Lender; and (b) assumes no responsibility with respect to (i) any statements, warranties or representations made in or in connection with the Credit Agreement or any other Loan Document, (ii) the execution, legality, validity, enforceability, genuineness, sufficiency or value of the Loan Documents or any collateral thereunder, (iii) the financial condition of the Borrower, any of its Subsidiaries or Affiliates or any other Person obligated in respect of any Loan Document, or (iv) the performance or observance by the Borrower, any of its Subsidiaries or Affiliates or any other Person of any of their respective obligations under any Loan Document.

1.2. Assignee[s] . [The][Each] Assignee (a) represents and warrants that (i) it has full power and authority, and has taken all action necessary, to execute and deliver this Assignment and Assumption and to consummate the transactions contemplated hereby and to become a Lender under the Credit Agreement, (ii) it meets all the requirements to be an assignee under Section 8.07(b)(iii), (v) and (vi) of the Credit Agreement (subject to such consents, if any, as may be required under Section 8.07(b)(iii) of the Credit Agreement), (iii) from and after the Effective Date, it shall be bound by the provisions of the Credit Agreement as a Lender thereunder and, to the extent of [the][the relevant] Assigned Interest, shall have the obligations of a Lender thereunder, (iv) it is sophisticated with respect to decisions to acquire assets of the type represented by the Assigned Interest and either it, or the Person exercising discretion in making its decision to acquire the Assigned Interest, is experienced in acquiring assets of such type, (v) it has received a copy of the Credit Agreement, and has received or has been accorded the opportunity to receive copies of the most recent financial statements delivered pursuant to clauses (i) and (ii) of Section 5.01(h) thereof, as applicable, and such other documents and information as it deems appropriate to make its own credit analysis and decision to enter into this Assignment and Assumption and to purchase [the][such] Assigned Interest, (vi) it has, independently and without reliance upon the Administrative Agent or any other Lender and based on such documents and information as it has deemed appropriate, made its own credit analysis and decision to enter

into this Assignment and Assumption and to purchase [the][such] Assigned Interest, and (vii) attached to the Assignment and Assumption is any documentation required to be delivered by it pursuant to the terms of the Credit Agreement, duly completed and executed by [the][such] Assignee; and (b) agrees that (i) it will, independently and without reliance on the Administrative Agent, [the][any] Assignor or any other Lender, and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit decisions in taking or not taking action under the Loan Documents, and (ii) it will perform in accordance with their terms all of the obligations which by the terms of the Loan Documents are required to be performed by it as a Lender.

2. Payments . From and after the Effective Date, the Administrative Agent shall make all payments in respect of [the][each] Assigned Interest (including payments of principal, interest, fees and other amounts) to [the][the relevant] Assignee whether such amounts have accrued prior to, on or after the Effective Date. The Assignor[s] and the Assignee[s] shall make all appropriate adjustments in payments by the Administrative Agent for periods prior to the Effective Date or with respect to the making of this assignment directly between themselves. Notwithstanding the foregoing, the Administrative Agent shall make all payments of interest, fees or other amounts paid or payable in kind from and after the Effective Date to [the][the relevant] Assignee.

3. General Provisions . This Assignment and Assumption shall be binding upon, and inure to the benefit of, the parties hereto and their respective successors and assigns. This Assignment and Assumption may be executed in any number of counterparts, which together shall constitute one instrument. Delivery of an executed counterpart of a signature page of this Assignment and Assumption by telecopy shall be effective as delivery of a manually executed counterpart of this Assignment and Assumption. This Assignment and Assumption shall be governed by, and construed in accordance with, the law of the State of New York.

EXHIBIT F-1

(to the Credit Agreement)

[FORM OF]

U.S. TAX COMPLIANCE CERTIFICATE

(For Foreign Lenders That Are Not Partnerships For U.S. Federal Income Tax Purposes)

Reference is hereby made to the 364-Day Credit Agreement, dated as of May 11, 2017 (as amended, restated, supplemented or otherwise modified from time to time, the “ Credit Agreement ”), among Berkshire Hathaway Energy Company (the “ Borrower ”), the Lenders party thereto from time to time and The Bank of Tokyo-Mitsubishi UFJ, Ltd., as Administrative Agent.

Pursuant to the provisions of Section 2.18 of the Credit Agreement, the undersigned hereby certifies that (i) it is the sole record and beneficial owner of the Loan(s) (as well as any promissory note(s) evidencing such Loan(s)) in respect of which it is providing this certificate, (ii) it is not a bank within the meaning of Section 881(c)(3)(A) of the Internal Revenue Code, (iii) it is not a ten percent shareholder of the Borrower within the meaning of Section 871(h)(3)(B) of the Internal Revenue Code and (iv) it is not a controlled foreign corporation related to the Borrower as described in Section 881(c)(3)(C) of the Internal Revenue Code.

The undersigned has furnished the Administrative Agent and the Borrower with a certificate of its non-U.S. Person status on IRS Form W-8BEN-E or W-8BEN. By executing this certificate, the undersigned agrees that (1) if the information provided on this certificate changes, the undersigned shall promptly so inform the Borrower and the Administrative Agent, and (2) the undersigned shall have at all times furnished the Borrower and the Administrative Agent with a properly completed and currently effective certificate in either the calendar year in which each payment is to be made to the undersigned, or in either of the two calendar years preceding such payments.

Unless otherwise defined herein, terms defined in the Credit Agreement and used herein shall have the meanings given to them in the Credit Agreement.



[NAME OF LENDER]
By:______________________________________
Name:
Title:

Date: ________ __, 20[ ]

EXHIBIT F-2

(to the Credit Agreement)

[FORM OF]

U.S. TAX COMPLIANCE CERTIFICATE

(For Foreign Participants That Are Not Partnerships For U.S. Federal Income Tax Purposes)

Pursuant to the provisions of Section 2.18 of the Credit Agreement, the undersigned hereby certifies that (i) it is the sole record and beneficial owner of the participation in respect of which it is providing this certificate, (ii) it is not a bank within the meaning of Section 881(c)(3)(A) of the Internal Revenue Code, (iii) it is not a ten percent shareholder of the Borrower within the meaning of Section 871(h)(3)(B) of the Internal Revenue Code, and (iv) it is not a controlled foreign corporation related to the Borrower as described in Section 881(c)(3)(C) of the Internal Revenue Code.

The undersigned has furnished its participating Lender with a certificate of its non-U.S. Person status on IRS Form W-8BEN-E or IRS Form W-8BEN. By executing this certificate, the undersigned agrees that (1) if the information provided on this certificate changes, the undersigned shall promptly so inform such Lender in writing, and (2) the undersigned shall have at all times furnished such Lender with a properly completed and currently effective certificate in either the calendar year in which each payment is to be made to the undersigned, or in either of the two calendar years preceding such payments.

Unless otherwise defined herein, terms defined in the Credit Agreement and used herein shall have the meanings given to them in the Credit Agreement.



[NAME OF PARTICIPANT]
By:_______________________________________
Name:
Title:

Date: ________ __, 20[ ]

EXHIBIT F-3

(to the Credit Agreement)

[FORM OF]

U.S. TAX COMPLIANCE CERTIFICATE

(For Foreign Participants That Are Partnerships For U.S. Federal Income Tax Purposes)

Pursuant to the provisions of Section 2.18 of the Credit Agreement, the undersigned hereby certifies that (i) it is the sole record owner of the participation in respect of which it is providing this certificate, (ii) its direct or indirect partners/members are the sole beneficial owners of such participation, (iii) with respect such participation, neither the undersigned nor any of its direct or indirect partners/members is a bank extending credit pursuant to a loan agreement entered into in the ordinary course of its trade or business within the meaning of Section 881(c)(3)(A) of the Internal Revenue Code, (iv) none of its direct or indirect partners/members is a ten percent shareholder of the Borrower within the meaning of Section 871(h)(3)(B) of the Internal Revenue Code and (v) none of its direct or indirect partners/members is a controlled foreign corporation related to the Borrower as described in Section 881(c)(3)(C) of the Internal Revenue Code.

The undersigned has furnished its participating Lender with IRS Form W-8IMY accompanied by one of the following forms from each of its partners/members that is claiming the portfolio interest exemption: (i) an IRS Form W-8BEN-E or IRS Form W-8BEN or (ii) an IRS Form W-8IMY accompanied by an IRS Form W-8BEN-E or IRS Form W-8BEN from each of such partner’s/member’s beneficial owners that is claiming the portfolio interest exemption. By executing this certificate, the undersigned agrees that (1) if the information provided on this certificate changes, the undersigned shall promptly so inform such Lender and (2) the undersigned shall have at all times furnished such Lender with a properly completed and currently effective certificate in either the calendar year in which each payment is to be made to the undersigned, or in either of the two calendar years preceding such payments.

Unless otherwise defined herein, terms defined in the Credit Agreement and used herein shall have the meanings given to them in the Credit Agreement.



[NAME OF PARTICIPANT]
By:_______________________________________
Name:
Title:

Date: ________ __, 20[ ]

EXHIBIT F-4

(to the Credit Agreement)

[FORM OF]

U.S. TAX COMPLIANCE CERTIFICATE

(For Foreign Lenders That Are Partnerships For U.S. Federal Income Tax Purposes)

Pursuant to the provisions of Section 2.18 of the Credit Agreement, the undersigned hereby certifies that (i) it is the sole record owner of the Loan(s) (as well as any promissory note(s) evidencing such Loan(s)) in respect of which it is providing this certificate, (ii) its direct or indirect partners/members are the sole beneficial owners of such Loan(s) (as well as any promissory note(s) evidencing such Loan(s)), (iii) with respect to the extension of credit pursuant to this Credit Agreement or any other Loan Document, neither the undersigned nor any of its direct or indirect partners/members is a bank extending credit pursuant to a loan agreement entered into in the ordinary course of its trade or business within the meaning of Section 881(c)(3)(A) of the Internal Revenue Code, (iv) none of its direct or indirect partners/members is a ten percent shareholder of the Borrower within the meaning of Section 871(h)(3)(B) of the Internal Revenue Code and (v) none of its direct or indirect partners/members is a controlled foreign corporation related to the Borrower as described in Section 881(c)(3)(C) of the Internal Revenue Code.

The undersigned has furnished the Administrative Agent and the Borrower with IRS Form W-8IMY accompanied by one of the following forms from each of its partners/members that is claiming the portfolio interest exemption: (i) an IRS Form W-8BEN-E or IRS Form W-8BEN or (ii) an IRS Form W-8IMY accompanied by an IRS Form W-8BEN-E or IRS Form W-8BEN from each of such partner’s/member’s beneficial owners that is claiming the portfolio interest exemption. By executing this certificate, the undersigned agrees that (1) if the information provided on this certificate changes, the undersigned shall promptly so inform the Borrower and the Administrative Agent, and (2) the undersigned shall have at all times furnished the Borrower and the Administrative Agent with a properly completed and currently effective certificate in either the calendar year in which each payment is to be made to the undersigned, or in either of the two calendar years preceding such payments.

Unless otherwise defined herein, terms defined in the Credit Agreement and used herein shall have the meanings given to them in the Credit Agreement.



[NAME OF LENDER]
By:_______________________________________
Name:
Title:

Date: ________ __, 20[ ]

SCHEDULE I

LIST OF COMMITMENT AMOUNTS AND APPLICABLE LENDING OFFICES

BERKSHIRE HATHAWAY ENERGY COMPANY

U.S. $1,000,000,000 364-Day Credit Agreement



Name of Bank	Commitment Amount	Domestic Lending Office	Eurodollar Lending Office
The Bank of Tokyo-Mitsubishi UFJ, Ltd.	$145,000,000	1251 Avenue of the Americas New York, New York 10020-1104 Contact: Jeffrey Flagg Phone: (213) 236-6911 Email: jflagg@us.mufg.jp Group Email : AgencyDesk@us.sc.mufg.jp Contact: Jeffrey Fesenmaier Phone: (213) 236‐5065 Email: jfesenmaier@ us.mufg.jp	Same as Domestic Lending Office



Name of Bank	Commitment Amount	Domestic Lending Office	Eurodollar Lending Office
Mizuho Bank, Ltd.	$145,000,000	1251 Avenue of the Americas New York, New York 10020 Contact : Nelson Chang Phone: (212) 282-3465 Fax: (212) 282-4488 Email: nelson.chang@mizuhocbus.com Group Email: LAU_USCorp3@mizuhocbus.com	Same as Domestic Lending Office

JPMorgan Chase Bank, N.A.	$145,000,000	500 Stanton Christiana Road, Ops 2 Floor 3 Newark, Delaware 19713-2107 Contact : Juan Javellana Phone: (212) 270-4272 Email: juan.j.javellana@jpmorgan.com Group Email : na_cpg@jpmorgan.com	Same as Domestic Lending Office

Wells Fargo Bank, National Association	$145,000,000	90 S. 7 ^th Street MAC: N9305-06G Minneapolis, MN 55402 Contact : Greg Gredvig Phone: (612) 667-4832 Fax : (612) 316-0506 Email: gregory.r.gredvig@wellsfargo.com Group Email: RKELCLNSVPayments@wellsfargo.com	Same as Domestic Lending Office

Citibank, N.A.	$140,000,000	399 Park Avenue, 16 ^th Floor 5 New York, New York 10043 Contact : Loan Administration Phone: (302) 894-6052 Fax: (212) 994-0847 Email: GLOriginationOps@citi.com	Same as Domestic Lending Office

Barclays Bank PLC	$140,000,000	745 Seventh Avenue, 24 ^th FL New York, New York 10019 Contact : Leah Kaniampuram Phone: (212) 526-4763 Email: leah.kaniampuram@barclays.com Group Email: xraUSLoanOps4@Barclays.com	Same as Domestic Lending Office



Name of Bank	Commitment Amount	Domestic Lending Office	Eurodollar Lending Office
U.S. Bank National Association	$140,000,000	1700 Farnam Street Omaha, Nebraska 68102 Contact : Karen Nelsen Phone: (402) 536-5104 Fax : (402) 536-5213 Email: karen.nelsen@usbank.com Group Email: CLSSyndicationServicesTeam@usbank.com	Same as Domestic Lending Office

TOTAL	$1,000,000,000

SCHEDULE II

LIST OF MATERIAL SUBSIDIARIES

BERKSHIRE HATHAWAY ENERGY COMPANY

U.S. $1,000,000,000 364-Day Credit Agreement

1. MidAmerican Energy Company

2. PacifiCorp

3. NV Energy, Inc.

4. Nevada Power Company

5. Sierra Pacific Power Company

SCHEDULE III

LIST OF CERTAIN PREFERRED SECURITIES AND JUNIOR SUBORDINATED DEBENTURES

BERKSHIRE HATHAWAY ENERGY COMPANY

U.S. $1,000,000,000 364-Day Credit Agreement

1. Indenture between Berkshire Hathaway Energy Company and The Bank of New York Mellon Trust Company, N.A., dated as of November 12, 2014 (Junior Subordinated Debentures Due 2044)

EXECUTION VERSION

______________________________________________________________________________

U.S. $600,000,000

CREDIT AGREEMENT

Dated as of June 30, 2017

Among

PACIFICORP

as the Borrower

THE INITIAL LENDERS NAMED HEREIN

as Initial Lenders

JPMORGAN CHASE BANK, N.A.

as Administrative Agent

and

THE LC ISSUING BANKS

PARTY HERETO FROM TIME TO TIME

as LC Issuing Banks



JPMORGAN CHASE BANK, N.A. WELLS FARGO SECURITIES, LLC MIZUHO BANK, LTD.	MUFG UNION BANK, N.A. CITIGROUP GLOBAL MARKETS INC. U.S. BANK NATIONAL ASSOCIATION BNP PARIBAS SECURITIES CORP.

Joint Lead Arrangers and Joint Bookrunners



WELLS FARGO BANK, NATIONAL ASSOCIATION MIZUHO BANK, LTD. MUFG UNION BANK, N.A. CITIBANK, N.A. U.S. BANK NATIONAL ASSOCIATION BNP PARIBAS Syndication Agents	BARCLAYS BANK PLC THE BANK OF NOVA SCOTIA ROYAL BANK OF CANADA BANK OF MONTREAL, CHICAGO BRANCH KEYBANK NATIONAL ASSOCIATION SUMITOMO MITSUI BANKING CORPORATION SUNTRUST BANK Documentation Agents



TABLE OF CONTENTS

		Page

ARTICLE I DEFINITIONS AND ACCOUNTING TERMS		1

	SECTION 1.01. Certain Defined Terms.	1
	SECTION 1.02. Computation of Time Periods.	23
	SECTION 1.03. Accounting Terms.	23
	SECTION 1.04. Classification of Loans and Borrowings.	23
	SECTION 1.05. Other Interpretive Provisions.	23

ARTICLE II AMOUNTS AND TERMS OF THE EXTENSIONS OF CREDIT

	SECTION 2.01. The Revolving Loans.	24
	SECTION 2.02. Making the Revolving Loans.	24
	SECTION 2.03. [Reserved]	25
	SECTION 2.04. Letters of Credit.	25
	SECTION 2.05. Fees.	31
	SECTION 2.06. Extension of the Termination Date.	32
	SECTION 2.07. Increase of the Commitments.	33
	SECTION 2.08. Termination or Reduction of the Commitments.	34
	SECTION 2.09. Repayment of Loans.	34
	SECTION 2.10. Evidence of Indebtedness.	35
	SECTION 2.11. Interest on Loans.	35
	SECTION 2.12. Interest Rate Determination.	36
	SECTION 2.13. Conversion of Revolving Loans.	36
	SECTION 2.14. Optional Prepayments of Loans.	38
	SECTION 2.15. Increased Costs.	38
	SECTION 2.16. Illegality.	39
	SECTION 2.17. Payments and Computations.	40
	SECTION 2.18. Taxes.	41
	SECTION 2.19. Sharing of Payments, Etc.	45
	SECTION 2.20. Mitigation Obligations; Replacement of Lenders.	46
	SECTION 2.21. Defaulting Lenders.	47
	SECTION 2.22. Cash Collateral.	49

	ARTICLE III CONDITIONS PRECEDENT	50

	SECTION 3.01. Conditions Precedent to Effectiveness.	50
	SECTION 3.02. Conditions Precedent to each Extension of Credit.	52
	SECTION 3.03. Conditions Precedent to Issuance of Each Bond Letter of Credit.	52

ARTICLE IV REPRESENTATIONS AND WARRANTIES		54

	SECTION 4.01. Representations and Warranties of the Borrower.	54




ARTICLE V COVENANTS OF THE BORROWER		58

	SECTION 5.01. Affirmative Covenants.	58
	SECTION 5.02. Negative Covenants	61
	SECTION 5.03. Financial Covenant.	63

ARTICLE VI EVENTS OF DEFAULT		63

	SECTION 6.01. Events of Default.	63
	SECTION 6.02. Actions in Respect of the Letters of Credit upon Default.	65

ARTICLE VII THE ADMINISTRATIVE AGENT		66

	SECTION 7.01. Appointment and Authority.	66
	SECTION 7.02. Rights as a Lender.	66
	SECTION 7.03. Exculpatory Provisions.	67
	SECTION 7.04. Reliance by Administrative Agent.	68
	SECTION 7.05. Resignation of Administrative Agent.	68
	SECTION 7.06. Non-Reliance on Administrative Agent and Other Lenders.	69
	SECTION 7.07. Indemnification.	70
	SECTION 7.08. No Other Duties, etc.	70

ARTICLE VIII MISCELLANEOUS		70

	SECTION 8.01. Amendments, Etc.	70
	SECTION 8.02. Notices, Etc.	71
	SECTION 8.03. No Waiver; Remedies.	73
	SECTION 8.04. Costs and Expenses; Indemnification.	73
	SECTION 8.05. Right of Set-off.	75
	SECTION 8.06. Binding Effect.	76
	SECTION 8.07. Assignments and Participations.	76
	SECTION 8.08. Confidentiality.	80
	SECTION 8.09. Governing Law.	81
	SECTION 8.10. Severability.	81
	SECTION 8.11. Execution in Counterparts.	81
	SECTION 8.12. Jurisdiction, Etc.	81
	SECTION 8.13. Waiver of Jury Trial.	82
	SECTION 8.14. USA Patriot Act.	82
	SECTION 8.15. No Fiduciary Duty.	83
	SECTION 8.16. Acknowledgement and Consent to Bail-In of EEA Financial
	Institutions	83



EXHIBITS AND SCHEDULES

EXHIBIT A	Form of Notice of Borrowing
EXHIBIT B	Form of Request for Issuance
EXHIBIT C	Form of Assignment and Assumption
EXHIBIT F-1	Form of U.S. Tax Compliance Certificate (For Foreign Lenders That Are Not Partnerships For U.S. Federal Income Tax Purposes)
EXHIBIT F-2	Form of U.S. Tax Compliance Certificate (For Foreign Participants That Are Not Partnerships For U.S. Federal Income Tax Purposes)
EXHIBIT F-3	Form of U.S. Tax Compliance Certificate (For Foreign Participants That Are Partnerships For U.S. Federal Income Tax Purposes)
EXHIBIT F-4	Form of U.S. Tax Compliance Certificate (For Foreign Lenders That Are Partnerships For U.S. Federal Income Tax Purposes)

SCHEDULE I	List of Commitment Amounts and Applicable Lending Offices
SCHEDULE II	List of Fronting Commitments
SCHEDULE III	List of Material Subsidiaries
SCHEDULE IV	Existing Letters of Credit

CREDIT AGREEMENT

CREDIT AGREEMENT, dated as of June 30, 2017 (as amended, restated, supplemented or otherwise modified from time to time, this “ Agreement ”), among PACIFICORP, an Oregon corporation (the “ Borrower ”), the banks, financial institutions and other institutional lenders listed on the signatures pages hereof (the “ Initial Lenders ”), JPMORGAN CHASE BANK, N.A. (“ JPMCB ”), as administrative agent (in such capacity, the “ Administrative Agent ”) for the Lenders (as hereinafter defined), and the LC Issuing Banks (as hereinafter defined) party hereto from time to time.

ARTICLE I
DEFINITIONS AND ACCOUNTING TERMS

SECTION 1.01. Certain Defined Terms.

As used in this Agreement, the following terms shall have the following meanings (such meanings to be equally applicable to both the singular and plural forms of the terms defined):

“ Administrative Agent ” has the meaning specified in the first paragraph of this Agreement.

“ Administrative Questionnaire ” means an administrative questionnaire in a form supplied by the Administrative Agent.

“ Agent Fee Letter ” means the letter agreement dated April 24, 2017 among the Borrower and the Administrative Agent, as amended, restated, supplemented or otherwise modified from time to time.

“ Agent Parties ” has the meaning specified in Section 8.02(d)(ii).

time to time, and the applicable regulations thereunder, and (ii) to the extent applicable, the United Kingdom’s Bribery Act 2010, as amended from time to time.



Applicable Rating Level	Applicable Margin for Eurodollar Rate Revolving Loans		Applicable Margin for Base Rate Loans
1	0.625	%	0.000%
2	0.750	%	0.000%
3	0.875	%	0.000%
4	1.000	%	0.000%
5	1.125	%	0.125%

“ Applicable Rating Level ” at any time shall be determined in accordance with the then-applicable S&P Rating or the then-applicable Moody’s Rating as follows:



S&P Rating/Moody’s Rating	Applicable Rating Level
S&P Rating AA- or higher or Moody’s Rating Aa3 or higher	1
S&P Rating A+ or Moody’s Rating A1	2
S&P Rating A or Moody’s Rating A2	3
S&P Rating A- or Moody’s Rating A3	4
S&P Rating BBB+ or Moody’s Rating Baa1 or below or unrated	5

“ Assignment and Assumption ” means an assignment and assumption entered into by a Lender and an Eligible Assignee (with the consent of any party whose consent is required by Section 8.07), and accepted by the Administrative Agent, in substantially the form of Exhibit C or any other form approved by the Administrative Agent.

“ Bail-In Action ” means the exercise of any Write-Down and Conversion Powers by the applicable EEA Resolution Authority in respect of any liability of an EEA Financial Institution.

Person or a direct or indirect parent company of such Person by a Governmental Authority if and for so long as such ownership interest does not result in or provide such Person with immunity from the jurisdiction of courts within the United States or from the enforcement of judgments or writs of attachment on its assets or permit such Person (or such Governmental Authority) to reject, repudiate, disavow or disaffirm any contracts or agreements made with such Lender.

“ Base Rate” means a fluctuating interest rate per annum in effect from time to time, which rate per annum shall at all times be equal to the highest of:


(i)	the rate of interest announced by JPMCB from time to time as JPMCB’s prime rate;


(ii)	1/2 of 1% per annum above the NYFRB Rate in effect on such date; and

(iii)

; provided , that in no event shall the Base Rate be less than 0%.

“ Base Rate Loan” means a Loan that bears interest as provided in Section 2.11(a).

“ Berkshire Hathaway ” means Berkshire Hathaway Inc.

“ Bond Event of Default ” has the meaning specified in Section 6.01.

“ Bond Letter of Credit ” means any standby or direct pay letter of credit issued by an LC Issuing Bank pursuant to Section 2.04 to support certain obligations to pay the principal of, interest on and/or purchase or redemption price of Bonds.

“ Bonds ” means pollution control revenue bonds or industrial development revenue bonds (or similar obligations, however designated) issued pursuant to an Indenture between the Trustee and the Issuer named therein.

“ Borrower ” has the meaning specified in the first paragraph of this Agreement.

“ Borrowing Date ” means the date of any Borrowing.

“ Cash Collateralize ” means to pledge and deposit with or deliver to the Administrative Agent, for the benefit of one or more of the LC Issuing Banks and the Lenders, as collateral for LC Outstandings and obligations of Lenders to fund participations in respect of LC Outstandings, cash or deposit account balances or, if the Administrative Agent and each applicable LC Issuing Bank shall agree in their sole discretion, other credit support, in each case pursuant to documentation in form and substance reasonably satisfactory to the Administrative Agent and each applicable LC Issuing Bank. “ Cash Collateral ” shall have a meaning correlative to the foregoing and shall include the proceeds of such cash collateral and other credit support.

“ Change of Control ” has the meaning specified in Section 6.01(h).

“ Closing Date ” means June 30, 2017

“ Commitment Fee Rate ” means, at any time, the rate per annum set forth below next to the Applicable Rating Level in effect at such time:



Applicable Rating Level	Commitment Fee Rate
1	0.050%
2	0.060%
3	0.075%
4	0.100%
5	0.150%

“ Commitments ” means the aggregate of each Lender’s Commitment hereunder.

“ Communications ” has the meaning specified in Section 8.02(d)(ii).

“ Consolidated Capital” means the sum (without duplication) of (i) Consolidated Debt of the Borrower (without giving effect to the proviso in the definition of Consolidated Debt) and (ii) consolidated equity of all classes (whether common, preferred, mandatorily convertible preferred or preference) of the Borrower.

“ Consolidated Debt ” of the Borrower means the total principal amount of all Debt of the Borrower and its Consolidated Subsidiaries; provided that Guaranties of Debt shall not be included in such total principal amount.

“ Convert ,” “ Conversion ” and “ Converted ” each refers to a conversion of Revolving Loans of one Type into Revolving Loans of the other Type, or the selection of a new, or the renewal of the same, Interest Period for Eurodollar Rate Revolving Loans, pursuant to Section 2.12 or 2.13.

“ Credit Party ” means the Administrative Agent, any LC Issuing Bank or any Lender.

“ Custodian ” means, for any series of Bonds, any Person acting as bailee and agent for the Administrative Agent (on behalf of the applicable LC Issuing Bank and the Lenders) under any Pledge Agreement relating to such Bonds.

“ Debt ” of any Person means, at any date, without duplication, (i) all indebtedness of such Person for borrowed money, (ii) all obligations of such Person for the deferred purchase price of property or services (other than trade payables incurred in the ordinary course of such Person’s business), (iii) all obligations of such Person evidenced by notes, bonds, debentures or other similar instruments, (iv) all obligations of such Person as lessee under leases that have been, in accordance with GAAP, recorded as capital leases, (v) all obligations of such Person in respect of reimbursement agreements with respect to acceptances, letters of credit (other than trade letters of credit) or similar extensions of credit, and (vi) all Guaranties. Solely for the purpose of calculating compliance with the covenant in Section 5.03, Debt shall not include Debt of the Borrower or its Consolidated Subsidiaries arising from the qualification of an arrangement as a lease due to that arrangement conveying the right to use or to control the use of property, plant or equipment under the application of the Financial Accounting Standards Board’s Accounting Standards Codification Topic 840 – Leases paragraph 840-10-15-6 (or the Accounting Standards Codification Topic 842 – Leases paragraphs 842-10-15-3 through 5), nor shall Debt include Debt of any variable interest entity consolidated by PacifiCorp under the requirements of Topic 810 – Consolidation.

“ Declining Lender ” has the meaning specified in Section 2.06(b).

“ Default ” means any Event of Default or any event that would constitute an Event of Default but for the requirement that notice be given or time elapse or both.

“ Defaulting Lender ” means, subject to Section 2.21(b), any Lender that (i) has failed, within two Business Days after the date required to be funded or paid, to (A) fund all or any portion of its Loans, (B) fund any portion of its participations in Letters of Credit or (C) pay over to any Credit Party any other amount required to be paid by it under this Agreement, unless, in the case of clause (A) above, such failure is the result of such Lender’s good faith determination that one or more conditions precedent to funding (each of which conditions precedent, together with any applicable default, shall be specifically identified in writing) has not been satisfied, as notified by such Lender to the Administrative Agent and the Borrower in such writing, (ii) has notified the Borrower or any Credit Party in writing that it does not intend to comply with any of its funding obligations under this Agreement or has made a public statement to the effect that it does not intend to comply with its funding obligations under this Agreement (unless such writing or public statement relates to such Lender’s obligation to fund a Loan hereunder and such position is based on such Lender’s good faith determination that a condition precedent (which condition precedent, together with any applicable default, shall be specifically identified in such writing or public statement) to funding a Loan under this Agreement cannot be satisfied), (iii) has failed, within three Business Days after written request by the Administrative Agent, any LC Issuing Bank or the Borrower, acting in good faith, to confirm in writing to such requesting party that it will comply with its obligations to fund prospective Loans and participations in then outstanding Letters of Credit under this Agreement, provided that such Lender shall cease to be a Defaulting Lender pursuant to clause (iii) upon such requesting party’s receipt of such written confirmation in form and substance reasonably satisfactory to it and the Administrative Agent, or (iv) has become the subject of a (A) Bankruptcy Event or (B) Bail-In Action. Any determination by the Administrative Agent that a Lender is a Defaulting Lender under any one or more of clauses (i) through (iv) above shall be conclusive and binding absent manifest error, and such Lender shall be deemed to be a Defaulting Lender (subject to Section 2.21(b)) upon delivery of written notice of such determination to the Borrower, each LC Issuing Bank and each Lender.

“ Designated Lender ” has the meaning specified in Section 2.07(a).

“ Dollars ” and the symbol “$” mean lawful currency of the United States of America.

“ EEA Member Country ” means any of the member states of the European Union, Iceland, Liechtenstein, and Norway.

“ ERISA ” means the Employee Retirement Income Security Act of 1974, as amended from time to time, and the regulations promulgated and rulings issued thereunder.

“ ERISA Event ” means (i) any “reportable event,” as defined in Section 4043 of ERISA with respect to a Pension Plan (other than an event as to which the PBGC has waived the requirement of Section 4043(a) of ERISA that it be notified of such event); (ii) the failure to make a required contribution to any Pension Plan that would result in the imposition of a lien or other encumbrance or the provision of security under Section 430 of the Internal Revenue Code or Section 303 or 4068 of ERISA, or there being or arising any “unpaid minimum required contribution” or “accumulated funding deficiency” (as defined or otherwise set forth in Section 4971 of the Internal Revenue Code or Part 3 of Subtitle B of Title I of ERISA), whether or not waived, or the filing of any request for or receipt of a minimum funding waiver under Section 412 of the Internal Revenue Code with respect to any Pension Plan or Multiemployer Plan, or a determination that any Pension Plan is, or is reasonably expected to be, in at-risk status under Title IV of ERISA; (iii) the filing of a notice of intent to terminate any Pension Plan, if such termination would require material additional contributions in order to be considered a standard termination within the meaning of Section 4041(b) of ERISA, the filing under Section 4041(c) of ERISA of a notice of intent to terminate any Pension Plan, or the termination of any Pension Plan under Section 4041(c) of ERISA; (iv) the institution of proceedings, or the occurrence of an event or condition that would reasonably be expected to constitute grounds for the institution of proceedings by the PBGC, under Section 4042 of ERISA, for the termination of, or the appointment of a

trustee to administer, any Pension Plan; (v) the complete or partial withdrawal of the Borrower or any of its ERISA Affiliates from a Multiemployer Plan, the reorganization or insolvency under Title IV of ERISA of any Multiemployer Plan, or the receipt by the Borrower or any of its ERISA Affiliates of any notice that a Multiemployer Plan is in endangered or critical status under Section 305 of ERISA; (vi) the failure by the Borrower or any of its ERISA Affiliates to comply with ERISA or the related provisions of the Internal Revenue Code with respect to any Pension Plan; (vii) the Borrower or any of its ERISA Affiliates incurring any liability under Title IV of ERISA with respect to any Pension Plan (other than premiums due and not delinquent under Section 4007 of ERISA); or (viii) the failure by the Borrower or any of its Subsidiaries to comply with Applicable Law with respect to any Foreign Plan.

“ EU Bail-In Legislation Schedule ” means the EU Bail-In Legislation Schedule published by the Loan Market Association (or any successor Person), as in effect from time to time.

“ Eurocurrency Liabilities ” has the meaning assigned to that term in Regulation D of the Board of Governors of the Federal Reserve System, as in effect from time to time.

“ Eurodollar Rate Reserve Percentage ” of any Lender for any Interest Period for each Eurodollar Rate Revolving Loan means the reserve percentage applicable to such Lender during such Interest Period (or if more than one such percentage shall be so applicable, the daily average of such percentages for those days in such Interest Period during which any such percentage shall be so applicable) under regulations issued from time to time by the Board of Governors of the Federal Reserve System (or any successor) for determining the maximum reserve requirement (including, without limitation, any emergency, supplemental or other marginal reserve requirement) then applicable to such Lender with respect to liabilities or assets consisting of or including Eurocurrency Liabilities(or with respect to any other category of liabilities that includes deposits by

reference to which the interest rate on Eurodollar Rate Revolving Loans is determined) having a term equal to such Interest Period.

“ Eurodollar Rate Revolving Loan ” means a Revolving Loan that bears interest as provided in Section 2.11(b).

“ Events of Default ” has the meaning specified in Section 6.01.

“ Existing Credit Agreement ” means the Credit Agreement, dated as of March 27, 2013, as amended, among the Borrower, JPMCB, as administrative agent, and certain other financial institutions named therein.

“ Existing Letters of Credit ” shall mean each of the letters of credit described by applicant, date of issuance, letter of credit number, amount, beneficiary and the date of expiry on Schedule IV hereto.

“ Extension Effective Date ” has the meaning specified in Section 2.06(c).

“ Extension of Credit ” means the making of a Borrowing, the issuance of a Letter of Credit or the amendment of any Letter of Credit having the effect of extending the stated termination date thereof or increasing the maximum amount available to be drawn thereunder. For purposes of this Agreement, a Conversion shall not constitute an Extension of Credit.

“ FATCA ” means Sections 1471 through 1474 of the Internal Revenue Code, as of the date of this Agreement (or any amended or successor version that is substantively comparable and not materially more onerous to comply with) any current or future regulations or official interpretations thereof, any agreements entered into pursuant to Section 1471(b)(1) of the Internal Revenue Code, any intergovernmental agreement entered into in connection with the implementation of such Sections of the Internal

Revenue Code and any fiscal or regulatory legislation, rules or practices adopted pursuant to any such intergovernmental agreement.

“ Fee Letters ” means (i) the letter agreements, each dated as of April 24, 2017, among the Borrower and certain of the Joint Lead Arrangers and (ii) the Agent Fee Letter, in each case, as amended, restated, supplemented or otherwise modified from time to time.

“ FERC ” means the U.S. Federal Energy Regulatory Commission.

“ Foreign Lender ” means a Lender that is not a U.S. Person.

“ Fronting Commitment ” means, with respect to any LC Issuing Bank, the aggregate stated amount of all Letters of Credit that such LC Issuing Bank agrees to issue (subject to the LC Commitment Amount), as modified from time to time pursuant to an agreement signed by such LC Issuing Bank and the Borrower. With respect to each Lender that is an LC Issuing Bank on the date hereof, such LC Issuing Bank’s Fronting Commitment is listed on Schedule II, and with respect to any Lender that becomes an LC Issuing Bank after the date hereof, such Lender’s Fronting Commitment will be the amount agreed between the Borrower and such Lender at the time that such Lender becomes an LC Issuing Bank, in each case, as such Fronting Commitment may be modified in accordance with the terms of this Agreement.

“ Fronting Exposure ” means, at any time there is a Defaulting Lender, with respect to any LC Issuing Bank, such Defaulting Lender’s Commitment Percentage of the LC Outstandings with respect to Letters of Credit issued by such LC Issuing Bank other than LC Outstandings as to which such Defaulting Lender’s participation obligation has been reallocated to other Lenders or Cash Collateralized in accordance with the terms hereof.

“ GAAP ” has the meaning specified in Section 1.03.

“ Governmental Approval ” means any authorization, consent, approval, license or exemption of, registration or filing with, or report or notice to, any Governmental Authority.

“ Guaranty ” of any Person means (i) any obligation, contingent or otherwise, of such Person to pay any Debt of any other Person and (ii) all reasonably quantifiable obligations of such Person under indemnities or under support or capital contribution agreements, and other reasonably quantifiable obligations (contingent or otherwise) to purchase or otherwise to assure a creditor against loss in respect of, or to assure an obligee against loss in respect of, any Debt of any other Person guaranteed directly or indirectly in any manner by such Person, or in effect guaranteed directly or indirectly by such Person through an agreement (A) to pay or purchase such Debt or to advance or supply funds for the payment or purchase of such Debt, (B) to purchase, sell or lease (as lessee or lessor) property, or to purchase or sell services, primarily for the purpose of enabling the debtor to make payment of such Debt or to assure the holder of such Debt against loss, (C) to supply funds to or in any other manner invest in the debtor (including any agreement to pay for property or services irrespective of whether such property is received or such services are rendered) or (D) otherwise to assure a creditor against loss; provided that the term “Guaranty” shall not include endorsements for collection or deposit in the ordinary course of business or the grant of a Lien in connection with Project Finance Debt.

“ Indemnified Party ” has the meaning specified in Section 8.04(b).

“ Indenture ” means, for any series of Bonds, the indenture pursuant to which such Bonds are issued and any supplement thereto relating to such Bonds.

“ Initial Lenders ” has the meaning specified in the first paragraph of this Agreement.


(i)	the Borrower may not select any Interest Period that ends after the latest Termination Date in effect at such time;


(ii)	Interest Periods commencing on the same date for Eurodollar Rate Revolving Loans comprising part of the same Borrowing shall be of the same duration;

(iii)

whenever the last day of any Interest Period would otherwise occur on a day other than a Business Day, the last day of such Interest Period shall be extended to occur on the next succeeding Business Day, provided, however, that, if such extension would cause the last day of such Interest Period to occur in the next following calendar month, the last day of such Interest Period shall occur on the next preceding Business Day; and


(iv)	whenever the first day of any Interest Period occurs on a day of an initial calendar month for which there is no numerically corresponding day in the calendar month that succeeds such initial calendar month by the number of months equal to the number of months in such Interest Period, such Interest Period shall end on the last Business Day of such succeeding calendar month.

“ Internal Revenue Code ” means the Internal Revenue Code of 1986, as amended from time to time, and the regulations promulgated and rulings issued thereunder.

“ IRS ” means the U.S. Internal Revenue Service.

“ Issuer ” means, for any series of Bonds, the issuer of such Bonds under the applicable Indenture.

“ Issuer Agreement ” means, for any series of Bonds, the agreement between the applicable Issuer and the Borrower pursuant to which (i) the proceeds of such Bonds are loaned by such Issuer to the Borrower, together with any promissory note or other instrument evidencing the Debt of the Borrower under such agreement, or (ii) the Borrower agrees to pay the purchase price of, or rent with respect to, the facilities financed or refinanced with the proceeds of such Bonds.

“ Joint Lead Arrangers ” means JPMorgan Chase Bank, N.A., Wells Fargo Securities, LLC, Mizuho Bank, Ltd., MUFG Union Bank, N.A., Citigroup Global Markets Inc., U.S. Bank National Association and BNP Paribas Securities Corp.

“ JPMCB ” has the meaning specified in the recital of parties to this Agreement.

“ LC Collateral Account ” has the meaning specified in Section 6.02.

“ LC Commitment Amount ” means $300,000,000 as the same may be reduced permanently from time to time pursuant to Section 2.08.

“ LC Fee ” has the meaning specified in Section 2.05(c).

“ LC Fronting Fee ” has the meaning specified in Section 2.05(d).

“ LC Issuing Bank ” means each Lender identified as an “LC Issuing Bank” on Schedule II and any other Lender or Affiliate of a Lender that shall agree to issue a Letter of Credit pursuant to Section 2.04.

“ LC Outstandings ” means, on any date of determination, the sum of (i) the undrawn stated amounts of all Letters of Credit that are outstanding on such date plus (ii) the aggregate principal amount of all unpaid reimbursement obligations of the Borrower on such date with respect to payments made by any LC Issuing Bank under any Letter of Credit (excluding reimbursement obligations that have been repaid with the proceeds of any Borrowing). The LC Outstandings with respect to any Lender at any time shall be its Commitment Percentage of the total LC Outstandings at such time.

“ LC Payment Notice ” has the meaning specified in Section 2.04(e).

“ Letter of Credit ” means (a) a standby letter of credit issued by an LC Issuing Bank pursuant to Section 2.04 or a Bond Letter of Credit, in each case, as amended, modified or extended in accordance with the terms of this Agreement and (b) any Existing Letter of Credit, in each case, as such letter of credit may be amended, modified, extended, renewed or replaced from time to time in accordance with the terms of this Agreement.

“ Loan Documents ” means, collectively, (i) this Agreement, (ii) the Fee Letters and (iii) any promissory note issued pursuant to Section 2.10(d).

“ Loans ” means the loans made by the Lenders to the Borrower pursuant this Agreement.

“ Margin Regulations ” means Regulations T, U and X of the Board of Governors of the Federal Reserve System, as in effect from time to time.

“ Margin Stock ” has the meaning specified in the Margin Regulations.

“ Material Adverse Effect ” means a material adverse effect on (i) on the business, operations, properties, financial condition, assets or liabilities (including, without limitation, contingent liabilities) of the Borrower and its Subsidiaries, taken as a whole, (ii) the ability of the Borrower to perform its obligations under the Loan Documents or (iii) the ability of the Administrative Agent, any LC Issuing Bank or any Lender to enforce its rights under the Loan Documents.

“ Material Subsidiaries ” means any Subsidiary of the Borrower with respect to which (x) the Borrower’s percentage ownership interest in such Subsidiary multiplied by (y) the book value of the Consolidated Assets of such Subsidiary represents at least 15% of the Consolidated Assets of the Borrower as reflected in the latest financial statements of the Borrower delivered pursuant to clause (i) or (ii) of Section 5.01(h).

“ Minimum Collateral Amount ” means, at any time, (i) with respect to Cash Collateral consisting of cash or deposit account balances, an amount equal to 103 % of the Fronting Exposure of all LC Issuing Banks with respect to Letters of Credit issued and outstanding at such time and (ii) otherwise, an amount determined by the Administrative Agent and the LC Issuing Banks in their sole discretion.

“ Moody’s ” means Moody’s Investors Service, Inc.

“ New York City Time ” means the time in New York, New York.

“ Non-Defaulting Lender ” means, at the time of determination, a Lender that is not a Defaulting Lender.

“ non-performing Lender ” has the meaning specified in Section 2.04(f).

“ Notice of Borrowing ” has the meaning specified in Section 2.02(a).

“ NYFRB ” means the Federal Reserve Bank of New York.

“ NYFRB Rate ” means, for any day, the greater of (a) the Federal Funds Effective Rate in effect on such day and (b) the Overnight Bank Funding Rate in effect on such day (or for any day that is not a Business Day, for the immediately preceding Business Day); provided that if none of such rates are published for any day that is a Business Day, the term “NYFRB Rate” means the rate for a Federal funds transaction quoted at 11:00 a.m. (New York City Time) on such day received by the Administrative Agent from a Federal funds broker of recognized standing selected by it; provided, further , that if any of the aforesaid rates shall be less than zero, such rate shall be deemed to be zero for purposes of this Agreement.

“ OFAC ” means The Office of Foreign Assets Control of the U.S. Department of the Treasury.

“ Official Statement ” means, for any series of Bonds, the official statement, reoffering circular or similar disclosure document (however designated) relating to such Bonds and the applicable LC Issuing Bank, as amended and supplemented from time to time, and all documents incorporated therein (or in any such supplement or amendment) by reference.

“ Outstanding Credits ” means, on any date of determination, the sum of (i) the aggregate principal amount of all Loans outstanding on such date plus (ii) the LC Outstandings on such date. The Outstanding Credits with respect to any Lender at any time shall be its Commitment Percentage of the total Outstanding Credits at such time.

succeeding Business Day by the NYFRB as an overnight bank funding rate (from and after such date as the NYFRB shall commence to publish such composite rate).

“ Participant ” has the meaning assigned to such term in Section 8.07(d).

“ Participant Register ” has the meaning specified in Section 8.07(d).

“ Patriot Act ” has the meaning specified in Section 8.14.

“ PBGC ” means the U.S. Pension Benefit Guaranty Corporation (or any successor).

“ Pension Plan ” means any “employee pension benefit plan” (as defined in Section 3(2) of ERISA) (other than a Multiemployer Plan), subject to the provisions of Title IV of ERISA or Section 412 of the Internal Revenue Code or Section 302 of ERISA, maintained or contributed to by the Borrower or any of its ERISA Affiliates or to which the Borrower or any of its ERISA Affiliates has or may have an obligation to contribute (or is deemed under Section 4069 of ERISA to have maintained or contributed to or to have had an obligation to contribute to, or otherwise to have liability with respect to) such plan.

“ Permitted Liens ” means such of the following as to which no enforcement, collection, execution, levy or foreclosure proceeding shall have been commenced: (i) Liens for taxes, assessments and governmental charges or levies to the extent not required to be paid under Section 5.01(a) hereof; (ii) Liens imposed by law, such as materialmen’s, mechanics’, carriers’, workmen’s and repairmen’s Liens, and other similar Liens arising in the ordinary course of business; (iii) Liens incurred or deposits made to secure obligations under workers’ compensation laws or similar legislation or to secure public or statutory obligations; (iv) easements, rights of way and other encumbrances on title to real property that do not render title to the property encumbered thereby unmarketable, including zoning and landmarking restrictions; (v) any judgment Lien, unless an Event of Default under Section 6.01(e) shall have occurred and be continuing with respect thereto; (vi) any Lien on any asset of any Person existing at the time such Person is acquired by or merged or consolidated with or into the Borrower or any Subsidiary of the Borrower and not created in contemplation of such event; (vii) pledges and deposits made in the ordinary course of business to secure the performance of bids, trade contracts (other than for Debt), operating leases and surety and appeal bonds, performance bonds and other obligations of a like nature incurred in the ordinary course of business; (viii) Liens upon or in any real property or equipment acquired, constructed, improved or held by the Borrower or any Subsidiary in the ordinary course of business to secure the purchase price of such property or equipment or to secure Debt incurred solely for the purpose of financing the acquisition, construction or improvement of such property or equipment, or Liens existing on such property or equipment at the time of its acquisition (other than any such Liens created in contemplation of such acquisition that were not incurred to finance the acquisition of such property), (ix) Liens securing Project Finance Debt, (x) any Lien on the Borrower’s or any Material Subsidiary’s interest in Bonds or cash or cash equivalents securing (A) the obligation of

the Borrower or any Material Subsidiary to reimburse the issuer of a letter of credit supporting payments to be made in respect of such Bonds (including any Bond Letter of Credit) for a drawing on such letter of credit for the purpose of purchasing Bonds or (B) the obligation of the Borrower or any Material Subsidiary to reimburse or repay amounts advanced under any facility entered into to provide liquidity or credit support for any issue of Bonds; and (xi) extensions, renewals or replacements of any Lien described in clause (vi), (vii), (viii), (ix) or (x) for the same or a lesser amount, provided, however, that no such Lien shall extend to or cover any properties (other than after-acquired property already within the scope of the relevant Lien grant) not theretofore subject to the Lien being extended, renewed or replaced.

“ Person ” means any natural Person, corporation, limited liability company, trust, joint venture, association, company, partnership, Governmental Authority or other entity.

“ Platform ” has the meaning specified in Section 8.02(d)(i).

“ Pledge Agreement ” means, for any series of Bonds, the pledge agreement or custodian agreement (or similar agreement, however designated), among the Administrative Agent, the Borrower and the applicable Custodian with respect to such Bonds, setting forth certain terms relating to the pledge and/or ownership of any such Bonds pending the remarketing thereof pursuant to the applicable Remarketing Agreement.

“ Recipient ” means (i) the Administrative Agent, (ii) any Lender and (iii) any LC Issuing Bank, as applicable.

“ Register ” has the meaning specified in Section 8.07(c).

“ Reimbursement Amount ” has the meaning specified in Section 2.04(d).

“ Related Documents ” means, for any series of Bonds, such Bonds and the Indenture, the Issuer Agreement, any Remarketing Agreement and any Pledge Agreement relating to such Bonds.

“ Remarketing Agent ” means, for any series of Bonds, any Person acting in the capacity of remarketing agent for such Bonds pursuant to a Remarketing Agreement relating to such Bonds.

“ Remarketing Agreement ” means, for any series of Bonds, any agreement or other arrangement pursuant to which the applicable Remarketing Agent has agreed to act in such capacity with respect to such Bonds tendered for purchase pursuant to the applicable Indenture.

“ Removal Effective Date ” has the meaning specified in Section 7.05(b).

“ Request for Issuance ” means a request made pursuant to Section 2.04 in the form of Exhibit B.

“ Required Lenders ” means at any time Lenders owed in excess of 50% of the then aggregate unpaid principal amount of the Revolving Loans and participation obligations with respect to the LC Outstandings, or, if there are no Outstanding Credits, Lenders having in excess of 50% in interest of the Commitments (without giving effect to any termination in whole of the Commitments pursuant to Section 6.01). The Commitments, outstanding Loans and participation obligations with respect to the LC Outstandings for any Defaulting Lender shall be disregarded in determining Required Lenders at any time.

“ Resignation Effective Date ” has the meaning specified in Section 7.05(a).

“ Revolving Loan ” means a Loan by a Lender to the Borrower pursuant to Section 2.02 as part of a Borrowing and refers to a Base Rate Revolving Loan or a Eurodollar Rate Revolving Loan.

“ Sanctioned Person ” means, at any time, (a) any Person listed in any Sanctions-related list of designated Persons maintained by OFAC, the U.S. Department of State or the U.S. Department of the Treasury, or maintained by the United Nations Security Council, the European Union, Her Majesty’s Treasury of the United Kingdom, as may be amended, supplemented or substituted from time to time, (b) any Person organized or ordinarily resident or located in a Sanctioned Country or (c) any Person controlled by, or acting on behalf of, any such Person described in clause (a) or (b). For purposes of this definition, “control” of a Person shall mean the direct or indirect (x) ownership of, or power to vote, 25% or more of the issued and outstanding equity interests having ordinary voting power for the election of directors of such Person or other Persons performing similar functions for such Person, or (y) power to direct or cause the direction of the management and policies of such Person whether by ownership of equity interests, contract or otherwise.

“ S&P” means S&P Global Ratings, a business unit of S&P Global, Inc.

“ SEC” means the U.S. Securities and Exchange Commission.

“ Service ” has the meaning set forth in the definition of “Eurodollar Rate”.

“ Stated Expiry Date ” means the stated expiration date of any Letter of Credit issued or deemed to be issued pursuant to this Agreement; provided , however , that no Stated Expiry Date may be requested or included in any such Letter of Credit where (i) such date would be later than the fifth Business Day preceding the Termination Date then applicable to the Lender that is the LC Issuing Bank for such Letter of Credit, (ii) such date would be later than one year after the date of issuance of such Letter of Credit (subject, for the avoidance of doubt, to the ability to provide for an automatic renewal mechanic in accordance with Section 2.04(a)), or (iii) after taking into account (A) the respective Termination Dates then in effect with respect to all Lenders on the date of issuance or any extension of such Letter of Credit, and (B) the respective Stated Expiry Dates then in effect with respect to all other Letters of Credit then outstanding, the maximum amount of the LC Outstandings under all Letters of Credit (including such

Letter of Credit) then outstanding would exceed the total LC Commitment Amount scheduled to be in effect at any time during the period such Letter of Credit is scheduled to remain in effect, as determined by the Administrative Agent.

“ Termination Date ” means the earlier to occur of (i) June 30, 2020, or such later date that may be established for any Lender from time to time pursuant to Section 2.06 hereof, and (ii) the date of termination in whole of the Commitments available to the Borrower pursuant to Section 2.08 or 6.01.

“ Trustee ” means, for any series of Bonds, the Person acting in the capacity of trustee for the holders of such Bonds under the Indenture pursuant to which such Bonds were issued.

“ Type ” refers to the distinction between Loans bearing interest at the Base Rate and Loans bearing interest at the Eurodollar Rate.

“ U.S. Person ” means any Person that is a “United States Person” as defined in Section 7701(a)(30) of the Internal Revenue Code.

“ U.S. Tax Compliance Certificate ” has the meaning assigned to such term in Section 2.18(g)(ii).

“ Withholding Agent ” means the Borrower and the Administrative Agent.

SECTION 1.02. Computation of Time Periods.

SECTION 1.03. Accounting Terms.

SECTION 1.04. Classification of Loans and Borrowings.

SECTION 1.05. Other Interpretive Provisions.

As used herein, except as otherwise specified herein, (i) references to any Person include its successors and assigns and, in the case of any Governmental Authority, any Person succeeding to its functions and capacities; (ii) references to any Applicable Law include amendments, supplements and successors thereto; (iii) references to specific sections, articles, annexes, schedules and exhibits are to this Agreement; (iv) words importing any gender include the other gender; (v) the singular includes the plural and the plural includes the singular; (vi) the words “including”, “include” and “includes” shall be deemed to be followed by the words “without limitation”; (vii) captions and headings are for ease of reference only and shall not affect the construction hereof; and (viii) references to any time of day shall be to New York City Time unless otherwise specified.

ARTICLE II

AMOUNTS AND TERMS OF THE EXTENSIONS OF CREDIT

SECTION 2.01. The Revolving Loans.

(b) In no event shall the Borrower be entitled to request or receive any Borrowing that (i) would exceed the Available Commitments or (ii) would cause the Outstanding Credits to exceed the Commitments.

SECTION 2.02. Making the Revolving Loans.

(a) Each Borrowing shall be in an amount not less than $1,000,000 (or, if less, the Available Commitments at such time) or an integral multiple of $100,000 in excess thereof and shall consist of Revolving Loans of the same Type made on the same day by the Lenders ratably according to their respective Commitment Percentages. Each Borrowing shall be made on notice, given not later than 1:00 P.M. (New York City Time) on the third Business Day prior to the date of the proposed Borrowing in the case of a Borrowing consisting of Eurodollar Rate Revolving Loans, or not later than 1:00 P.M. (New York City Time) on the date of the proposed Borrowing in the case of a Borrowing consisting of Base Rate Revolving Loans, by the Borrower to the Administrative Agent, which shall give to each Lender prompt written notice thereof. Each such notice of a Revolving Borrowing (a “ Notice of Borrowing ”) shall be by telephone, confirmed immediately in writing or facsimile in substantially the form of Exhibit A hereto, specifying therein the requested (i) Borrowing Date for such Borrowing, (ii) Type of Revolving Loans comprising such Borrowing, (iii) aggregate amount of such Borrowing, and (iv) in the case of a Borrowing consisting of Eurodollar Rate Revolving Loans, the initial Interest Period for each such Revolving Loan. Each Lender shall, before 2:00 P.M. (New York City Time) (or, for Borrowings consisting of Base Rate Revolving Loans for which notice was provided to the Lenders after 12:00 noon (New York City Time) but no later than 1:00 P.M. (New York City Time), before 3:00 P.M. (New York City Time)) on the applicable Borrowing Date, make available for the account of its Applicable Lending Office to the Administrative Agent at the Agent’s Account, in same day funds, such Lender’s ratable portion of the Borrowing to be made on such Borrowing Date. After the Administrative Agent’s receipt of such funds and upon fulfillment of the applicable conditions set forth in Article III, the Administrative Agent will make such funds available to the Borrower no later than 3:30 P.M. (New York City Time) in such manner as the Borrower shall have specified in the applicable Notice of Borrowing.

SECTION 2.03. [Reserved]

SECTION 2.04. Letters of Credit.

exceeding such LC Issuing Bank’s Fronting Commitment, up to a maximum aggregate stated amount for all Letters of Credit at any one time outstanding equal to the LC Commitment Amount, on not less than two Business Days’ prior notice thereof by delivery of (x) a Request for Issuance to the Administrative Agent and (y) such LC Issuing Bank’s standard form of Letter of Credit application for the requested Letter of Credit (including, for direct pay Letters of Credit, any reimbursement agreement or other standard form required by such LC Issuing Bank) to the letter of credit department of such LC Issuing Bank for the account of the Borrower. Each Letter of Credit shall be issued in a form acceptable to the applicable LC Issuing Bank. Each Request for Issuance shall specify (i) the identity of the applicable LC Issuing Bank, (ii) the date (which shall be a Business Day) of issuance of such Letter of Credit (or the date of effectiveness of such extension, modification or amendment) and the Stated Expiry Date thereof, (iii) the proposed stated amount of such Letter of Credit (which amount (A) shall not be less than $100,000 and (B) may be subject to any automatic increase and reinstatement provisions), (iv) the name and address of the beneficiary of such Letter of Credit and (v) a statement of drawing conditions applicable to such Letter of Credit, and if such Request for Issuance relates to an amendment or modification of a Letter of Credit, it shall be accompanied by the consent of the beneficiary of the Letter of Credit thereto (except in the case of an extension of the Stated Expiry Date of any Bond Letter of Credit where no consent of the beneficiary is required for such extension). If so requested by the Borrower, a Letter of Credit may provide that it is automatically renewable for additional one-year periods if subject to an ability of the applicable LC Issuing Bank to not renew by giving notice of the same to the beneficiary of such Letter of Credit. Each Request for Issuance shall be irrevocable unless modified or rescinded by the Borrower prior to the issuance by the applicable LC Issuing Bank of the requested Letter of Credit or prior to the effectiveness of the requested extension, modification or amendment to a Letter of Credit, as applicable. Upon fulfillment of the applicable conditions precedent and the other requirements set forth herein, the relevant LC Issuing Bank shall issue (or extend, amend or modify) such Letter of Credit and provide notice and a copy thereof to the Administrative Agent, which shall promptly furnish copies thereof to the Lenders that shall so request; provided that the LC Issuing Bank shall not issue or amend any Letter of Credit if such LC Issuing Bank has received notice from the Administrative Agent that the applicable conditions precedent have not been satisfied. The Existing Letters of Credit shall, as of the Closing Date, be deemed to have been issued as Letters of Credit hereunder and subject to and governed by the terms of this Agreement. (i) On the Closing Date with respect to all Existing Letters of Credit and (ii) upon the date of issuance with respect to all other Letters of Credit, each Lender shall be deemed, without further action by any party hereto, to have irrevocably and unconditionally purchased from such LC Issuing Bank without recourse a participation in such Letter of Credit equal to such Lender’s Commitment Percentage of the aggregate amount available to be drawn under such Letter of Credit. Each Lender’s participation obligations in respect of Existing Letters of Credit shall be governed by this Agreement. Upon each modification of a Letter of Credit by any LC Issuing Bank which modifies the aggregate amount available to be drawn under such Letter of Credit, such LC Issuing Bank and the Lenders shall be deemed, without further action by any party hereto, to have purchased or sold, as appropriate, participations in such Letter of Credit such that each Lender’s participation in such Letter of Credit shall equal such Lender’s Commitment Percentage of such modified aggregate amount available to be drawn under such Letter of Credit. Each Letter of Credit shall utilize the Commitment of each Lender by an amount equal to the amount of such participation. Without limiting the foregoing, any LC

Issuing Bank that issues a Bond Letter of Credit agrees that (i) all Bonds pledged to such LC Issuing Bank pursuant to any applicable Pledge Agreement or otherwise registered in the name of such LC Issuing Bank pursuant to the other Related Document will be held for the benefit of such LC Issuing Bank and the Lenders and (ii) to apply and/or remit all proceeds from the sale or remarketing of such Bonds in accordance with Section 2.17(f).

(b) The Borrower may from time to time appoint one or more additional Lenders (with the consent of any such Lender, which consent may be withheld in the sole discretion of each Lender) to act, either directly or through an Affiliate of such Lender, as an LC Issuing Bank hereunder. Any such appointment and the terms thereof shall be evidenced in a separate written agreement executed by the Borrower and the relevant LC Issuing Bank, a copy of which agreement shall be delivered by the Borrower to the Administrative Agent. The Administrative Agent shall give prompt notice of any such appointment to the other Lenders. Upon such appointment, if and for so long as such Lender shall have any obligation to issue any Letter of Credit hereunder or any Letter of Credit issued by such Lender shall remain outstanding, such Lender shall be deemed to be, and shall have all the rights and obligations of, an “LC Issuing Bank” under this Agreement.

(c) No Letter of Credit shall be requested, issued or modified hereunder if, after the issuance or modification thereof, (i) the Outstanding Credits would exceed the Commitments then scheduled to be in effect until the latest Termination Date, (ii) that portion of the LC Outstandings arising from Letters of Credit issued by an LC Issuing Bank would exceed the amount of such LC Issuing Bank’s Fronting Commitment or (iii) the LC Outstandings would exceed the LC Commitment Amount. No LC Issuing Bank shall be under any obligation to issue any Letter of Credit if any order, judgment or decree of any Governmental Authority shall by its terms purport to enjoin or restrain such LC Issuing Bank from issuing such Letter of Credit, or any law applicable to such LC Issuing Bank or any request or directive (whether or not having the force of law) from any Governmental Authority with jurisdiction over such LC Issuing Bank shall prohibit, or request that the LC Issuing Bank refrain from, the issuance of letters of credit generally or such Letter of Credit in particular or shall impose upon the LC Issuing Bank with respect to such Letter of Credit any restriction, reserve or capital requirement (for which the LC Issuing Bank is not otherwise compensated or required to be compensated hereunder), which restriction, reserve or capital requirement was not in effect on the date hereof, or shall impose upon the LC Issuing Bank any loss, cost or expense (not reimbursed or required to be reimbursed) that was not applicable on the date hereof and that the LC Issuing Bank in good faith deems material to it.

(d) The Borrower hereby agrees to pay to the Administrative Agent for the account of each LC Issuing Bank and each Lender that has funded its participation in the reimbursement obligations of the Borrower pursuant to subsection (e) below, on demand made by such LC Issuing Bank to the Borrower, on and after each date on which such LC Issuing Bank shall pay any amount under any Letter of Credit issued by such LC Issuing Bank, a sum equal to the amount so paid (the “ Reimbursement Amount ”). Any Reimbursement Amount shall bear interest, payable on demand, from the date so paid by such LC Issuing Bank until repayment to such LC Issuing Bank in full at a fluctuating interest rate per annum equal to the interest rate applicable to Base Rate Loans plus, if any amount paid by such LC Issuing Bank under a Letter of Credit is not reimbursed by the Borrower within three Business Days, 2%. The Borrower may

satisfy its obligation hereunder to repay the Reimbursement Amount by requesting a Borrowing under Section 2.02 (and which Borrowing shall be subject to the conditions in Section 2.02) in the amount of such Reimbursement Amount, and the proceeds of such Borrowing may be applied to satisfy the Borrower’s obligations to such LC Issuing Bank or the Lenders, as the case may be. The Borrower’s obligation to pay any Reimbursement Amount in respect of the Existing Letters of Credit shall be governed by the terms of this Agreement.

(e) If any LC Issuing Bank shall not have been reimbursed in full for any Reimbursement Amount in respect of a Letter of Credit issued by such LC Issuing Bank on the date of such payment, such LC Issuing Bank shall give the Administrative Agent and each Lender prompt notice thereof (an “ LC Payment Notice ”) no later than 12:00 noon (New York City Time) on the Business Day immediately succeeding the date of such payment by such LC Issuing Bank. Each Lender shall fund the participation that such Lender purchased pursuant to Section 2.04(a) by paying to the Administrative Agent for the account of such LC Issuing Bank an amount equal to such Lender’s Commitment Percentage of such Reimbursement Amount paid by such LC Issuing Bank, plus interest on such amount at a rate per annum equal to the Federal Funds Effective Rate, for the first three days from the date of the payment by such LC Issuing Bank, and, thereafter, until the date of payment to such LC Issuing Bank by such Lender, at a rate of interest equal to the rate applicable to Base Rate Loans. Each such payment by a Lender shall be made not later than 3:00 P.M. (New York City Time) on the later to occur of (i) the Business Day immediately following the date of such payment by such LC Issuing Bank and (ii) the Business Day on which such Lender shall have received an LC Payment Notice from such LC Issuing Bank. Each Lender’s obligation to make each such payment to the Administrative Agent for the account of such LC Issuing Bank shall be several and shall not be affected by the occurrence or continuance of a Default or the failure of any other Lender to make any payment under this Section 2.04(e). Each Lender further agrees that each such payment shall be made without any offset, abatement, withholding or reduction whatsoever.

(f) The failure of any Lender to make any payment to the Administrative Agent for the account of any LC Issuing Bank in accordance with subsection (e) above shall not relieve any other Lender of its obligation to make payment, but no Lender shall be responsible for the failure of any other Lender. If any Lender (a “ non-performing Lender ”) shall fail to make any payment to the Administrative Agent for the account of any LC Issuing Bank in accordance with subsection (e) above, then for so long as such failure shall continue, such LC Issuing Bank shall be deemed, for purposes of Sections 6.01 and 8.01 hereof, to be a Lender owed a Borrowing in an amount equal to the outstanding principal amount due and payable by such non-performing Lender to the Administrative Agent for the account of such LC Issuing Bank pursuant to subsection (e) above. Any non-performing Lender and the Borrower (without waiving any claim against such non-performing Lender for such non-performing Lender’s failure to fund its participation in the reimbursement obligations of the Borrower under subsection (e) above) severally agree to pay to the Administrative Agent for the account of such LC Issuing Bank forthwith on demand such amount, together with interest thereon for each day from the date such non-performing Lender would have funded its participation had it complied with the requirements of subsection (e) above until the date such amount is paid to the Administrative Agent at (i) in the case of the Borrower, the interest rate applicable at the time to Base Rate Loans plus, if any amount paid by such LC Issuing Bank under a Letter of Credit is not reimbursed by the Borrower within three Business Days, 2%, in accordance with Section

2.04(d), and (ii) in the case of such non-performing Lender, the Federal Funds Effective Rate, for the first three days and, thereafter, at a rate of interest equal to the rate applicable to Base Rate Loans.

(g) The payment obligations of each Lender under Section 2.04(e) and of the Borrower under this Agreement in respect of any payment under any Letter of Credit shall be absolute, unconditional and irrevocable, and shall be paid strictly in accordance with the terms of this Agreement under all circumstances, including, without limitation, the following circumstances:

(i) any lack of validity or enforceability of this Agreement or any other agreement or instrument relating thereto or to such Letter of Credit;

(ii) any amendment or waiver of, or any consent to departure from, the terms of this Agreement or such Letter of Credit;

(iii) the existence of any claim, set-off, defense or other right that the Borrower may have at any time against any beneficiary, or any transferee, of such Letter of Credit (or any Persons for whom any such beneficiary or any such transferee may be acting), any LC Issuing Bank, or any other Person, whether in connection with this Agreement, the transactions contemplated hereby, thereby or by such Letter of Credit, or any unrelated transaction;

(iv) any statement or any other document presented under such Letter of Credit proving to be forged, fraudulent, invalid or insufficient in any respect or any statement therein being untrue or inaccurate in any respect;

(v) payment in good faith by any LC Issuing Bank under the Letter of Credit issued by such LC Issuing Bank against presentation of a draft or certificate that does not comply with the terms of such Letter of Credit;

(vi) the use that may be made of any Letter of Credit by, or any act or omission of, the beneficiary of any Letter of Credit (or any Person for which the beneficiary may be acting); or

(vii) any other circumstance or happening whatsoever, whether or not similar to any of the foregoing.

(h) Without limiting any other provision of this Section 2.04, for purposes of this Section 2.04 any LC Issuing Bank may rely upon any oral, telephonic, telegraphic, facsimile, electronic, written or other communication believed in good faith to have been authorized by the Borrower, whether or not given or signed by an authorized Person of the Borrower.

beneficiary or transferee thereof in connection therewith; (ii) the validity, sufficiency or genuineness of documents, or of any endorsement thereon, even if such documents should prove to be in any or all respects invalid, insufficient, fraudulent or forged; (iii) payment by any LC Issuing Bank against presentation of documents that do not comply with the terms of such Letter of Credit, including failure of any documents to bear any reference or adequate reference to such Letter of Credit; (iv) any dispute between or among the Borrower, any of its Affiliates, the beneficiary of any Letter of Credit or any financing institution or other party to whom any Letter of Credit may be transferred or any claims or defenses whatsoever of the Borrower or of its Affiliates against the beneficiary of any Letter of Credit or any such transferee; (v) any error, omission, interruption or delay in transmission, dispatch or delivery of any message or advice, however transmitted, in connection with any Letter of Credit; or (vi) any other circumstances whatsoever in making or failing to make payment under such Letter of Credit, except that the Borrower and each Lender shall have the right to bring suit against each LC Issuing Bank, and each LC Issuing Bank shall be liable to the Borrower and any Lender, to the extent of any direct, as opposed to consequential, damages suffered by the Borrower or such Lender that the Borrower or such Lender proves, in a court of competent jurisdiction by final and nonappealable judgment, were caused by such LC Issuing Bank’s willful misconduct or gross negligence. In furtherance and not in limitation of the foregoing, each LC Issuing Bank may accept sight drafts and accompanying certificates presented under the Letter of Credit issued by such LC Issuing Bank that appear on their face to be in substantial compliance with the terms and conditions of the Letter of Credit, without responsibility for further investigation, regardless of any notice or information to the contrary, and payment against such documents shall not constitute willful misconduct or gross negligence by such LC Issuing Bank. Notwithstanding the foregoing, no Lender shall be obligated to indemnify the Borrower for damages caused by any LC Issuing Bank’s willful misconduct or gross negligence.

(j) In the event of any inconsistency between the terms and conditions of this Agreement and the terms and conditions of any application or other agreement submitted by the Borrower to, or entered into by the Borrower with, an LC Issuing Bank relating to any Letter of Credit issued by such LC Issuing Bank (including, for the avoidance of doubt, any Existing Letter of Credit), the terms and conditions of this Agreement shall control. Unless otherwise specified herein, the amount of a Letter of Credit at any time shall be deemed to be the stated amount of such Letter of Credit in effect at such time; provided, however, that with respect to any Letter of Credit that, by its terms or the terms of any application or other agreement related thereto, provides for one or more automatic increases in the stated amount thereof, the amount of such Letter of Credit shall be deemed to be the maximum stated amount of such Letter of Credit after giving effect to all such increases, whether or not such maximum stated amount is in effect at such time.

rights and obligations of an LC Issuing Bank under this Agreement and the other Loan Documents with respect to Letters of Credit issued by it prior to such resignation, but shall not be required to issue additional Letters of Credit or to extend, renew or increase any existing Letter of Credit. Upon any such resignation, the Borrower and the resigning LC Issuing Bank may agree to replace or terminate any outstanding Letters of Credit issued by such LC Issuing Bank and to designate one or more Lenders as LC Issuing Banks to replace such LC Issuing Bank.

SECTION 2.05. Fees.

(a) The Borrower agrees to pay to the Administrative Agent for the account of each Lender a commitment fee on the aggregate unused amount of such Lender’s Commitment (i) from the date hereof in the case of each Initial Lender and (ii) from the effective date specified in the Assignment and Assumption pursuant to which it became a Lender in the case of each other Lender, in each case, until the latest Termination Date applicable to such Lender, payable quarterly in arrears on the last day of each March, June, September and December, commencing September 30, 2017, and ending on such Termination Date. The commitment fee for any period will be equal to the Commitment Fee Rate in effect from time to time during such period, times an amount equal to the Commitments minus the aggregate principal amount of Loans and Letters of Credit outstanding during such period.

(b) The Borrower agrees to pay the fees payable by the Borrower in such amounts and on such terms as set forth in the Fee Letters.

(c) The Borrower agrees to pay to the Administrative Agent for the account of each Lender a fee (the “ LC Fee ”) on the average daily aggregate principal amount of each such Lender’s Commitment Percentage of the LC Outstandings (i) from the date hereof, in the case of each Initial Lender, and (ii) from the effective date specified in the Assignment and Assumption pursuant to which it became a Lender, in the case of each other Lender, in each case until the later to occur of (x) the Termination Date applicable to such Lender and (y) the date on which no Letters of Credit are outstanding, payable quarterly in arrears on the last day of each March, June, September and December (commencing on September 30, 2017), and on such later date, at a rate equal at all times to the Applicable Margin in effect from time to time for Eurodollar Rate Revolving Loans.

(d) The Borrower agrees to pay to the Administrative Agent for the account of each LC Issuing Bank, (i) a fee (the “ LC Fronting Fee ”) equal to 0.20% of the stated amount of each Letter of Credit issued by such LC Fronting Bank hereunder, payable quarterly in arrears on the last day of each March, June, September and December (commencing on September 30, 2017) and ending on the Termination Date or such later date on which no such letter of credit issued by such LC Issuing Bank shall be outstanding, with the calculation based on the actual number of days elapsed in a year of 360 days and (ii) customary issuance, maintenance, drawing and administration fees in respect of such letters of credit.

(e) The Borrower shall pay to the Administrative Agent, for its own account, the annual administrative fee at the times and in the amount set forth in the Agent Fee Letter.

SECTION 2.06. Extension of the Termination Date.

(a) Not earlier than 90 days prior to, nor later than 30 days prior to, each of the first two anniversaries of the date hereof, the Borrower may request by written notice made to the Administrative Agent (which shall promptly notify the Lenders thereof) a one-year extension of the Termination Date applicable to each Lender. Each Lender shall notify the Administrative Agent by the date specified by the Administrative Agent (which date shall be a Business Day and shall not be less than 15 days prior to, nor more than 30 days prior to, the Extension Effective Date) that either (A) such Lender declines to consent to extending the Termination Date or (B) such Lender consents to extending the Termination Date. Any Lender not responding within the above time period shall be deemed to have declined to extend the Termination Date. The consent of a Lender to any such extension shall be in the sole discretion of such Lender. The Administrative Agent shall, after receiving the notifications from all of the Lenders or the expiration of such period, whichever is earlier, notify the Borrower and the Lenders of the results thereof. The Borrower may request no more than two extensions pursuant to this Section.

(b) If any Lender declines, or is deemed to have declined, to consent to such request for extension (each a “ Declining Lender ”), the Borrower shall have the right to replace such Declining Lender with an Eligible Assignee in accordance with Section 2.20(b). Any Lender replacing a Declining Lender shall be deemed to have consented to such request for extension (regardless of when such replacement is effective) and shall not be deemed to be a Declining Lender.

(c) If the Required Lenders have consented to the extension of the Termination Date, the Termination Date of each Lender that consented to the extension shall be extended to the date that is one year after such Lender’s then-effective Termination Date, effective as of the date to be determined by the Administrative Agent and the Borrower (the “ Extension Effective Date ”). On or prior to the Extension Effective Date, the Borrower shall deliver to the Administrative Agent, in form and substance reasonably satisfactory to the Administrative Agent (i) the resolutions of the Borrower authorizing such extension and all Governmental Approvals (if any) required in connection with such extension, certified as being in effect as of the Extension Effective Date and the related incumbency certificate of the Borrower, (ii) a favorable opinion of counsel for the Borrower as to such matters as any Lender through the Administrative Agent may reasonably request and (iii) a certificate of the Borrower stating that on and as of such Extension Effective Date, and after giving effect to the extension to be effective on such date, all conditions precedent to an Extension of Credit under Section 3.02 are satisfied. On each Extension Effective Date, each Declining Lender being replaced by the Borrower pursuant to Section 2.06(b) shall have received payment in full of the principal amount of all Loans outstanding owing to such Declining Lender and all interest thereon and all fees and other amounts (including, without limitation, any amounts payable pursuant to Section 8.04(c)) payable to such Declining Lender accrued through such Extension Effective Date. Promptly following such Extension Effective Date, the Administrative Agent shall distribute an amended Schedule I to this Agreement (which shall thereafter be incorporated into this Agreement) to reflect any changes in the Lenders, the Commitments and each Lender’s Commitment Percentage as of such Extension Effective Date.

(d) Each LC Issuing Bank may, in its sole discretion, elect not to serve in such capacity following any extension of the Termination Date; provided that (i) the Borrower and the Administrative Agent may appoint a replacement for such resigning LC Issuing Bank, as the case may be, and (ii) whether such replacement is appointed shall not otherwise affect the extension of the Termination Date.

SECTION 2.07. Increase of the Commitments.

(a) The Borrower may, from time to time, request by written notice to the Administrative Agent to increase the Commitments by a maximum aggregate amount for all such increases of up to $200,000,000, by designating one or more Lenders or other financial institutions (that will become Lenders), in each case, meeting the requirements set forth in the definition of Eligible Assignee, that agree to accept all or a portion of such additional Commitments (each a “ Designated Lender ”).

(c) Promptly following the effective date of any Commitment increase pursuant to this Section 2.07, (i) the Administrative Agent shall distribute an amended Schedule I to this Agreement (which shall thereafter be incorporated into this Agreement) to reflect any changes in Lenders, the Commitments and each Lender’s Commitment Percentage as of such effective date and (ii) the Borrower shall prepay the outstanding Borrowings (if any) in full, and shall simultaneously make new Borrowings hereunder in an amount equal to such prepayment, so that, after giving effect thereto, the Borrowings are held ratably by the Lenders in accordance with their respective Commitments (after giving effect to such Commitment increase). Prepayments made under this clause (c) shall not be subject to the notice requirements of Section 2.14.

(d) Notwithstanding any provision contained herein to the contrary, from and after the date of any Commitment increase and the making of any Loans on such date pursuant to

clause (c)(ii) above, all calculations and payments of fees and of interest on the Loans shall take into account the actual Commitment of each Lender and the principal amount outstanding of each Loan made by such Lender during the relevant period of time.

SECTION 2.08. Termination or Reduction of the Commitments.

(a) The Borrower shall have the right, upon at least three Business Days’ notice to the Administrative Agent, to terminate in whole or reduce ratably in part the Available Commitments, provided that (i) each partial reduction shall be in the aggregate amount of $10,000,000 or an integral multiple of $5,000,000 in excess thereof and (ii) no such termination or reduction shall be made that would reduce the aggregate Commitments to an amount less than the Outstanding Credits on the date of such termination or reduction. Subject to the foregoing, any reduction of the Commitments to an amount below $300,000,000 shall also result in a reduction of the LC Commitment Amount to the extent of such deficit (and if such reduction would cause the LC Commitment Amount to be less than the aggregate Fronting Commitments, with automatic reductions in the amount of each Fronting Commitment ratably in proportion to the amount of such reduction of the LC Commitment Amount unless, in the case of any LC Issuing Bank, such LC Issuing Bank consents otherwise). Each such notice of termination or reduction shall be irrevocable; provided , however , that a notice of termination delivered pursuant to this Section 2.08 may state that such notice is conditioned upon the effectiveness of other credit facilities, in which case such notice may be revoked by the Borrower (by notice to the Administrative Agent on or prior to the effective date specified in the notice of termination) if such condition is not satisfied.

(b) The Borrower may terminate the unused amount of the Commitment of any Lender that is a Defaulting Lender upon not less than three Business Days’ prior notice to the Administrative Agent (which shall promptly notify the Lenders thereof), and in such event the provisions of Section 2.21(a)(ii) will apply to all amounts thereafter paid by the Borrower for the account of such Defaulting Lender under this Agreement (whether on account of principal, interest, fees, indemnity or other amounts); provided that (i) no Event of Default shall have occurred and be continuing, and (ii) such termination shall not be deemed to be a waiver or release of any claim the Borrower, the Administrative Agent, any LC Issuing Bank or any Lender may have against such Defaulting Lender.

(c) The Commitment of each Lender shall automatically terminate on the Termination Date applicable to such Lender as provided in Section 2.06.

(d) Once terminated, a Commitment or any portion thereof may not be reinstated.

SECTION 2.09. Repayment of Loans.

(a) The Borrower shall repay to the Administrative Agent for the account of each Lender on the Termination Date applicable to such Lender the aggregate principal amount of the Revolving Loans made to the Borrower by such Lender then outstanding. Without limiting the foregoing, the Borrower shall also repay (to the Administrative Agent for the account of the Lenders) Revolving Loans, in each ease, to the extent and at the time required pursuant to the terms of any applicable Governmental Approval relating to the Borrower’s ability to incur Debt.

(b) If at any time the aggregate principal amount of Outstanding Credits exceeds the Commitments, the Borrower shall pay or prepay so much of the Borrowings and/or Cash Collateralize the LC Outstandings as shall be necessary in order that the Outstanding Credits minus the principal amount of Cash Collateral securing the LC Outstandings will not exceed the Commitments.

SECTION 2.10. Evidence of Indebtedness.

SECTION 2.11. Interest on Loans.

The Borrower shall pay interest on the unpaid principal amount of each Loan from the date of such Loan until such principal amount shall be paid in full, at the following rates per annum:

SECTION 2.12. Interest Rate Determination.

(a) The Administrative Agent shall give prompt notice to the Borrower and the Lenders of the applicable interest rate determined by the Administrative Agent for purposes of Section 2.11(a) or (b), and, if applicable, the rate for the purpose of determining the applicable interest rate under Section 2.11(c).

SECTION 2.13. Conversion of Revolving Loans.

and 2.16, Convert all or any part of Revolving Loans of one Type comprising the same Borrowing into Revolving Loans of the other Type or of the same Type but having a new Interest Period; provided , however , that any Conversion of Eurodollar Rate Revolving Loans into Base Rate Revolving Loans shall be made only on the last day of an Interest Period for such Eurodollar Rate Revolving Loans, any Conversion of Base Rate Revolving Loans into Eurodollar Rate Revolving Loans shall be in an amount not less than the minimum amount specified in Section 2.02(b) and no Conversion of any Revolving Loans shall result in more separate Borrowings than permitted under Section 2.02(b). Each such notice of a Conversion shall, within the restrictions specified above, specify (i) the date of such Conversion, (ii) the Revolving Loans to be Converted, and (iii) if such Conversion is into Eurodollar Rate Revolving Loans, the duration of the initial Interest Period for each such Revolving Loan. Each notice of Conversion shall be irrevocable and binding on the Borrower.

(b) Mandatory.

SECTION 2.14. Optional Prepayments of Loans.

SECTION 2.15. Increased Costs.

(a) Increased Costs Generally. If any Change in Law shall:

(iii) impose on any Lender or any LC Issuing Bank or the London interbank market any other condition, cost or expense (other than Taxes) affecting this Agreement or Loans made by such Lender or any Letter of Credit or participation therein;

and the result of any of the foregoing shall be to increase the cost to such Lender or such other Recipient of making, converting to, continuing or maintaining any Loan or of maintaining its obligation to make any such Loan, or to increase the cost to such Lender, such LC Issuing Bank or such other Recipient of participating in, issuing or maintaining any Letter of Credit (or of maintaining its obligation to participate in or to issue any Letter of Credit), or to reduce the amount of any sum received or receivable by such Lender, LC Issuing Bank or other Recipient hereunder (whether of principal, interest or any other amount) then, upon the good faith request of such Lender, LC Issuing Bank or other Recipient, the Borrower will pay to such Lender, LC Issuing Bank or other Recipient, as the case may be, such additional amount or amounts as will compensate such Lender, LC Issuing Bank or other Recipient, as the case may be, for such additional costs incurred or reduction suffered.

(b) Capital Requirements. If any Lender or LC Issuing Bank determines that any Change in Law affecting such Lender or LC Issuing Bank or any lending office of such Lender

or such Lender’s or LC Issuing Bank’s holding company, if any, regarding capital or liquidity requirements, has or would have the effect of reducing the rate of return on such Lender’s or LC Issuing Bank’s capital or on the capital of such Lender’s or LC Issuing Bank’s holding company, if any, as a consequence of this Agreement, the Commitments of such Lender or the Loans made by, or participations in Letters of Credit held by, such Lender, or the Letters of Credit issued by any LC Issuing Bank, to a level below that which such Lender or LC Issuing Bank or such Lender’s or LC Issuing Bank’s holding company could have achieved but for such Change in Law (taking into consideration such Lender’s or LC Issuing Bank’s policies and the policies of such Lender’s or LC Issuing Bank’s holding company with respect to capital adequacy and liquidity), then from time to time the Borrower will pay to such Lender or LC Issuing Bank, as the case may be, such additional amount or amounts as will compensate such Lender or LC Issuing Bank or such Lender’s or LC Issuing Bank’s holding company for any such reduction suffered.

(c) Certificates for Reimbursement. A certificate of a Lender or LC Issuing Bank setting forth the amount or amounts necessary to compensate such Lender or LC Issuing Bank or its holding company, as the case may be, as specified in subsection (a) or (b) of this Section and delivered to the Borrower, shall be conclusive absent manifest error. The Borrower shall pay such Lender or LC Issuing Bank, as the case may be, promptly upon demand the amount shown as due on any such certificate.

(d) Delay in Requests. Failure or delay on the part of any Lender or LC Issuing Bank to demand compensation pursuant to this Section shall not constitute a waiver of such Lender’s or LC Issuing Bank’s right to demand such compensation; provided that the Borrower shall not be required to compensate a Lender or LC Issuing Bank pursuant to this Section for any increased costs incurred or reductions suffered more than 180 days prior to the date that such Lender or LC Issuing Bank, as the case may be, notifies the Borrower of the Change in Law giving rise to such increased costs or reductions, and of such Lender’s or LC Issuing Bank’s intention to claim compensation therefor (except that, if the Change in Law giving rise to such increased costs or reductions is retroactive, then the 180-day period referred to above shall be extended to include the period of retroactive effect thereof).

SECTION 2.16. Illegality.

to a Base Rate Revolving Loan either (i) on the last day of the then current Interest Period applicable to such Eurodollar Rate Revolving Loan if such Lender may lawfully continue to maintain and fund such Revolving Loan to such day or (ii) immediately if such Lender shall determine that it may not lawfully continue to maintain and fund such Revolving Loan to such day.

SECTION 2.17. Payments and Computations.

(a) The Borrower shall make each payment to be made by it hereunder not later than 1:00 P.M. (New York City Time) on the day when due in Dollars to the Administrative Agent at the Agent’s Account in same day funds without condition or deduction for any counterclaim, defense, recoupment or setoff. The Administrative Agent will promptly thereafter cause to be distributed like funds relating to the payment of principal or interest or commitment fees ratably (other than amounts payable pursuant to Section 2.02(c), 2.06, 2.11(c), 2.13(c), 2.15, 2.18, 2.21 or 8.04(c)) to the Lenders for the account of their respective Applicable Lending Offices, and like funds relating to the payment of any other amount payable to any Lender to such Lender for the account of its Applicable Lending Office, in each case to be applied in accordance with the terms of this Agreement. Upon its acceptance of an Assignment and Assumption and recording of the information contained therein in the Register pursuant to Section 8.07(c), from and after the effective date specified in such Assignment and Assumption, the Administrative Agent shall make all payments hereunder in respect of the interest assigned thereby to the Lender assignee thereunder, and the parties to such Assignment and Assumption shall make all appropriate adjustments in such payments for periods prior to such effective date directly between themselves.

(c) All computations of interest based on the rate referred to in clause (i) of the definition of the “Base Rate” contained in Section 1.01 shall be made by the Administrative Agent on the basis of a year of 365 or 366 days, as the case may be, and all computations of interest based on the Eurodollar Rate, the Federal Funds Effective Rate, NYFRB Rate or the rate referred to in clause (iii) of the definition of the “Base Rate” and of commitment fees and LC Fees shall be made by the Administrative Agent on the basis of a year of 360 days, in each case for the actual number of days (including the first day but excluding the last day) occurring in the period for which such interest, commitment fees or LC Fees are payable. Each determination by the Administrative Agent of an interest rate hereunder shall be conclusive and binding for all purposes, absent manifest error.

following calendar month or on a date after the Termination Date, such payment shall be made on the next preceding Business Day.

(f) Notwithstanding anything to the contrary set forth in subsection (a) above or Section 2.04(d), the Borrower may pay, or cause to be paid pursuant to the applicable Related Documents, the Reimbursement Amount with respect to any drawing under a Bond Letter of Credit directly to the LC Issuing Bank that issued such Bond Letter of Credit. Upon receipt of any such payment, such LC Issuing Bank will promptly (i) (A) apply such payment to that portion of such Reimbursement Amount participations in which have not been funded by the Lenders under Section 2.04(e) and (B) remit the balance of such payment to the Administrative Agent for further payment to the Lenders that have funded participations in such Reimbursement Amount pursuant to Section 2.04(e), or (ii) if such Reimbursement Amount has been financed with Borrowings, remit such payment to the Administrative Agent, which will apply such payment to the prepayment of Borrowings in a principal amount equal to the principal amount of such Reimbursement Amount so financed. The Administrative Agent shall select the Borrowings to be prepaid pursuant to clause (ii) above in a manner that will mitigate, to the extent practical, the Borrower’s obligations under Section 8.04(c) with respect to such prepayment.

SECTION 2.18. Taxes.

(a) Defined Terms. For purposes of this Section 2.18 and for the avoidance of doubt, the term “Lender” includes any LC Issuing Bank and the term “Applicable Law” includes FATCA.

under this Section) the applicable Recipient receives an amount equal to the sum it would have received had no such deduction or withholding been made.

any Lender, if reasonably requested by the Borrower or the Administrative Agent, shall deliver such other documentation prescribed by Applicable Law or reasonably requested by the Borrower or the Administrative Agent as will enable the Borrower or the Administrative Agent to determine whether or not such Lender is subject to backup withholding or information reporting requirements. Notwithstanding anything to the contrary in the preceding two sentences, the completion, execution and submission of such documentation (other than such documentation set forth in Section 2.18(g)(ii)(A), (ii)(B) and (ii)(D) below) shall not be required if in the Lender’s reasonable judgment such completion, execution or submission would subject such Lender to any material unreimbursed cost or expense or would materially prejudice the legal or commercial position of such Lender.

(i) Without limiting the generality of the foregoing,

(ii) an executed IRS Form W-8ECI;

Governmental Authority with respect to such refund). Such indemnifying party, upon the request of such indemnified party, shall repay to such indemnified party the amount paid over pursuant to this subsection (h) (plus any penalties, interest or other charges imposed by the relevant Governmental Authority) in the event that such indemnified party is required to repay such refund to such Governmental Authority. Notwithstanding anything to the contrary in this subsection (h), in no event will the indemnified party be required to pay any amount to an indemnifying party pursuant to this subsection (h) the payment of which would place the indemnified party in a less favorable net after-Tax position than the indemnified party would have been in if the Tax subject to indemnification and giving rise to such refund had not been deducted, withheld or otherwise imposed and the indemnification payments or additional amounts with respect to such Tax had never been paid. This subsection shall not be construed to require any indemnified party to make available its Tax returns (or any other information relating to its Taxes that it deems confidential) to the indemnifying party or any other Person.

SECTION 2.19. Sharing of Payments, Etc.

(B) the provisions of this Section shall not be construed to apply to (x) any payment made by the Borrower pursuant to and in accordance with the express terms of this Agreement (including the application of funds arising from the existence of a Defaulting Lender and any payment made pursuant to Section 2.02(c), 2.06, 2.11(c), 2.13(c), 2.15, 2.18, 2.21 or 8.04(c) or, in respect of Eurodollar Rate Revolving Loans converted into Base Rate Revolving Loans, pursuant to Section 2.16), or (y) any payment obtained by a Lender as consideration for the assignment of or sale of a participation in any of its Loans or participations in LC Outstandings to any assignee or participant, other than to the Borrower or any Subsidiary thereof (as to which the provisions of this Section shall apply).

SECTION 2.20. Mitigation Obligations; Replacement of Lenders.

(a) Designation of a Different Lending Office. If any Lender requests compensation under Section 2.15, or if the Borrower is required to pay any Indemnified Taxes or additional amounts to any Lender or any Governmental Authority for the account of any Lender pursuant to Section 2.18, then such Lender shall (at the request of the Borrower) use reasonable efforts to designate a different Applicable Lending Office for funding or booking its Loans hereunder or to assign its rights and obligations hereunder to another of its offices, branches or Affiliates, if, in the judgment of such Lender, such designation or assignment (i) would eliminate or reduce amounts payable pursuant to Section 2.15 or 2.18, as the case may be, in the future, and (ii) would not subject such Lender to any unreimbursed cost or expense and would not otherwise be disadvantageous to such Lender. The Borrower hereby agrees to pay all reasonable costs and expenses incurred by any Lender in connection with any such designation or assignment.

(b) Replacement of Lenders. If any Lender requests compensation under Section 2.15, or if the Borrower is required to pay any Indemnified Taxes or additional amounts to any Lender or any Governmental Authority for the account of any Lender pursuant to Section 2.18 and, in each case, such Lender has declined or is unable to designate a different Applicable Lending Office in accordance with subsection (a) above, or if any Lender is a Declining Lender, a Defaulting Lender or a Non-Consenting Lender, then the Borrower may, at its sole expense and effort, upon notice to such Lender and the Administrative Agent, require such Lender to assign and delegate, without recourse (in accordance with and subject to the restrictions contained in, and consents required by, Section 8.07), all of its interests, rights (other than its existing rights to payments pursuant to Section 2.15 or Section 2.18) and obligations under this Agreement and the related Loan Documents to an Eligible Assignee that shall assume such obligations (which assignee may be another Lender, if such Lender accepts such assignment); provided that:

(i) the Borrower shall have paid to the Administrative Agent the assignment fee (if any) specified in Section 8.07(b)(iv);

(ii) such Lender shall have received payment of an amount equal to the outstanding principal of its Loans and any participations in Letters of Credit funded pursuant to Section 2.04(e), together with all applicable accrued interest thereon, accrued fees and all other amounts payable to it hereunder and under the other Loan Documents (including any amounts under Section 8.04(c)) from the assignee (to the extent of such outstanding principal amounts and accrued interest and fees) or the Borrower (in the case of all other amounts);

(iii) in the case of any such assignment resulting from a claim for compensation under Section 2.15 or payments required to be made pursuant to

Section 2.18, such assignment will result in a reduction in such compensation or payments thereafter;

(iv) such assignment shall not conflict with Applicable Law;

(v) in the case of any assignment resulting from a Lender becoming a Declining Lender or a Non-Consenting Lender, the applicable assignee shall have consented to the applicable extension, amendment, waiver or consent; and

(vi) No Default shall have occurred and be continuing.

SECTION 2.21. Defaulting Lenders.

(ii) Defaulting Lender Waterfall. Any payment of principal, interest, fees or other amounts received by the Administrative Agent for the account of such Defaulting Lender (whether voluntary or mandatory, at maturity, pursuant to Article 6.01 or otherwise) or received by the Administrative Agent from a Defaulting Lender pursuant to Section 8.05 shall be applied at such time or times as may be determined by the Administrative Agent as follows: first , to the payment of any amounts owing by such Defaulting Lender to the Administrative Agent hereunder; second , to the payment on a pro rata basis of any amounts owing by such Defaulting Lender to any LC Issuing Bank hereunder; third , to Cash Collateralize the LC Issuing Banks’ Fronting Exposure with respect to such Defaulting Lender in accordance with Section 2.22; fourth , as the Borrower may request (so long as no Default exists), to the funding of any Loan in respect of which such Defaulting Lender has failed to fund its portion thereof as required by this Agreement, as determined by the Administrative Agent; fifth , if so determined by the Administrative Agent and the Borrower, to be held in a deposit account and released pro rata in order (x) to satisfy such Defaulting Lender’s potential future funding obligations with respect to Loans under this Agreement and (y) to Cash Collateralize the LC Issuing Banks’ future Fronting Exposure with respect to such Defaulting Lender with respect to future Letters of Credit issued under this Agreement, in accordance with Section 2.22; sixth , to the payment of any amounts owing to the Lenders or the LC Issuing Banks as a result of any judgment of a court of competent jurisdiction obtained by any Lender or the LC Issuing Banks against such Defaulting Lender as a result of such Defaulting Lender’s breach of its obligations under this Agreement; seventh , so long as no Default exists, to the payment of any amounts owing to the Borrower as a result of any

judgment of a court of competent jurisdiction obtained by the Borrower against such Defaulting Lender as a result of such Defaulting Lender’s breach of its obligations under this Agreement; and eighth , to such Defaulting Lender or as otherwise directed by a court of competent jurisdiction; provided that if (x) such payment is a payment of the principal amount of any Loans or LC Outstandings in respect of which such Defaulting Lender has not fully funded its appropriate share, and (y) such Loans were made or the related Letters of Credit were issued at a time when the conditions set forth in Section 3.02 were satisfied or waived, such payment shall be applied solely to pay the Loans of, and LC Outstandings owed to, all Non-Defaulting Lenders on a pro rata basis prior to being applied to the payment of any Loans of, or LC Outstandings owed to, such Defaulting Lender until such time as all Loans and funded and unfunded participations in LC Outstandings are held by the Lenders pro rata in accordance with the Commitments without giving effect to Section 2.21(a)(iv). Any payments, prepayments or other amounts paid or payable to a Defaulting Lender that are applied (or held) to pay amounts owed by a Defaulting Lender or to post Cash Collateral pursuant to this Section 2.21(a)(ii) shall be deemed paid to and redirected by such Defaulting Lender, and each Lender irrevocably consents hereto.

(iii) Certain Fees. (A) No Defaulting Lender shall be entitled to receive any commitment fee for any period during which that Lender is a Defaulting Lender (and the Borrower shall not be required to pay any such fee that otherwise would have been required to have been paid to that Defaulting Lender).

(B) Each Defaulting Lender shall be entitled to receive LC Fees for any period during which that Lender is a Defaulting Lender only to the extent allocable to its Commitment Percentage of the LC Outstandings for which it has provided Cash Collateral pursuant to Section 2.22.

(C) With respect to any LC Fee not required to be paid to any Defaulting Lender pursuant to clause (B) above, the Borrower shall (x) pay to each Non-Defaulting Lender that portion of any such LC Fee otherwise payable to such Defaulting Lender with respect to such Defaulting Lender’s participation in LC Outstandings that has been reallocated to such Non-Defaulting Lender pursuant to clause (iv) below, (y) pay to each LC Issuing Bank, as applicable, the amount of any such LC Fee otherwise payable to such Defaulting Lender to the extent allocable to such LC Issuing Bank’s Fronting Exposure to such Defaulting Lender, and (z) not be required to pay the remaining amount of any such LC Fee.

(iv) Reallocation of Participations to Reduce Fronting Exposure. All or any part of such Defaulting Lender’s participation in LC Outstandings shall be reallocated among the Non-Defaulting Lenders in accordance with their respective Commitment Percentages (calculated without regard to such Defaulting Lender’s Commitment) but only to the extent that (x) such reallocation does not cause the aggregate Outstanding Credits of any Non-Defaulting Lender to exceed such Non-Defaulting Lender’s Commitment and (y) such reallocation does not cause the aggregate Outstanding Credits of all Non-Defaulting Lenders to exceed the Commitments of all Non-Defaulting Lenders. Subject to Section 8.16, no reallocation hereunder shall constitute a waiver or

release of any claim of any party hereunder against a Defaulting Lender arising from that Lender having become a Defaulting Lender, including any claim of a Non-Defaulting Lender as a result of such Non-Defaulting Lender’s increased exposure following such reallocation.

(v) Reduction of Available Commitments . The Borrower may terminate the Available Commitment of any Lender that is a Defaulting Lender in accordance with Section 2.08(b).

(b) Defaulting Lender Cure. If the Borrower, the Administrative Agent and each LC Issuing Bank agree in writing that a Lender is no longer a Defaulting Lender, the Administrative Agent will so notify the parties hereto, whereupon as of the effective date specified in such notice and subject to any conditions set forth therein (which may include arrangements with respect to any Cash Collateral), that Lender will, to the extent applicable, purchase at par that portion of outstanding Loans of the other Lenders or take such other actions as the Administrative Agent may determine to be necessary to cause the Loans and funded and unfunded participations in LC Outstandings to be held pro rata by the Lenders in accordance with the Commitments (without giving effect to Section 2.21(a)(iv)), whereupon such Lender will cease to be a Defaulting Lender; provided that no adjustments will be made retroactively with respect to fees accrued or payments made by or on behalf of the Borrower while that Lender was a Defaulting Lender; and provided , further , that except to the extent otherwise expressly agreed in writing by the affected parties, no change hereunder from Defaulting Lender to Lender will constitute a waiver or release of any claim of any party hereunder arising from that Lender’s having been a Defaulting Lender.

(c) New Letters of Credit. So long as any Lender is a Defaulting Lender, no LC Issuing Bank shall be required to issue, extend, renew or increase any Letter of Credit unless it is satisfied that it will have no Fronting Exposure after giving effect thereto.

(d) Bankruptcy Event or Bail-In Action of a Parent Company. If (i) a Bankruptcy Event or Bail-In Action with respect to a direct or indirect parent company of any Lender shall occur following the date hereof and for so long as such event shall continue or (ii) any LC Issuing Bank has a good faith belief that any Lender has defaulted in fulfilling its obligations under one or more other agreements in which such Lender commits to extend credit, no LC Issuing Bank shall be required to issue, extend, renew or increase any Letter of Credit, unless such LC Issuing Bank shall have entered into arrangements with the Borrower or such Lender, satisfactory to such LC Issuing Bank to defease any risk to it in respect of such Lender hereunder.

SECTION 2.22. Cash Collateral.

At any time that there shall exist a Defaulting Lender, within one Business Day following the written request of the Administrative Agent or any LC Issuing Bank (with a copy to the Administrative Agent) the Borrower shall Cash Collateralize the LC Issuing Banks’ Fronting Exposure with respect to such Defaulting Lender (determined after giving effect to Section 2.21(a)(iv) and any Cash Collateral provided by such Defaulting Lender) in an amount not less than the Minimum Collateral Amount.

(i) Grant of Security Interest. The Borrower, and to the extent provided by any Defaulting Lender, such Defaulting Lender, hereby grants to the Administrative Agent, for the benefit of the LC Issuing Banks, and agrees to maintain, a first priority security interest in all such Cash Collateral as security for the Defaulting Lenders’ obligation to fund participations in respect of LC Outstandings, to be applied pursuant to paragraph (ii) below. If at any time the Administrative Agent determines that Cash Collateral is subject to any right or claim of any Person other than the Administrative Agent and the LC Issuing Banks as herein provided, or that the total amount of such Cash Collateral is less than the Minimum Collateral Amount, the Borrower will, promptly upon demand by the Administrative Agent, pay or provide to the Administrative Agent additional Cash Collateral in an amount sufficient to eliminate such deficiency (after giving effect to any Cash Collateral provided by the Defaulting Lender).

(ii) Application. Notwithstanding anything to the contrary contained in this Agreement, Cash Collateral provided under this Section 2.22 or Section 2.21 in respect of Letters of Credit shall be applied to the satisfaction of the Defaulting Lender’s obligation to fund participations in respect of LC Outstandings (including, as to Cash Collateral provided by a Defaulting Lender, any interest accrued on such obligation) for which the Cash Collateral was so provided, prior to any other application of such property as may otherwise be provided for herein.

(iii) Termination of Requirement. Cash Collateral (or the appropriate portion thereof) provided to reduce any LC Issuing Bank’s Fronting Exposure shall no longer be required to be held as Cash Collateral pursuant to this Section 2.22 following (A) the elimination of the applicable Fronting Exposure (including by the termination of Defaulting Lender status of the applicable Lender), or (B) the determination by the Administrative Agent and each LC Issuing Bank that there exists excess Cash Collateral; provided that, subject to Section 2.21, the Person providing Cash Collateral and each LC Issuing Bank may agree that Cash Collateral shall be held to support future anticipated Fronting Exposure or other obligations.

ARTICLE III

CONDITIONS PRECEDENT

SECTION 3.01. Conditions Precedent to Effectiveness.

The obligation of each Lender and each LC Issuing Bank to make the initial Extension of Credit to be made by it hereunder shall become effective on and as of the first date on which the following conditions precedent have been satisfied:

(i) A fully executed version of this Agreement and the other Loan Documents;

(ii) Promissory notes payable to each Lender that has requested the same prior to such date pursuant to Section 2.10(d), duly executed by the Borrower.

(iii) (A) A copy of the articles of incorporation or other organizational documents of the Borrower and each amendment thereto, certified by the Secretary of State of Oregon as being a true and correct copy thereof, and (B) a certificate from the Secretary of State of Oregon (dated not more than 10 days prior to the date hereof) attesting to the continued existence and good standing of the Borrower in that State.

(vi) A favorable opinion of in-house counsel for the Borrower, in form and substance reasonably acceptable to the Administrative Agent.

(vii) A favorable opinion of special New York counsel for the Borrower, in form and substance reasonably acceptable to the Administrative Agent.

(i) The representations and warranties of the Borrower contained in this Agreement are true and correct on and as of the date of such effectiveness as though made on and as of such date, and

(ii) No event has occurred and is continuing that constitutes a Default.

(c) The Borrower shall have paid all accrued fees and expenses of the Administrative Agent, the Joint Lead Arrangers and the Lenders payable on the date hereof (including the accrued fees and expenses of counsel to the Administrative Agent to the extent then due and payable).

documentation or information is requested by the Administrative Agent on behalf of the Lenders reasonably in advance of the date hereof.

(e) All amounts outstanding under the Existing Credit Agreement, whether for principal, interest, fees or otherwise, shall have been paid in full, all commitments to lend thereunder shall have been terminated, and the Existing Credit Agreement shall have been terminated.

(f) The Administrative Agent shall have received such other approvals or documents as the Administrative Agent, any Lender or any LC Issuing Bank shall have reasonably requested through the Administrative Agent reasonably in advance of the date hereof.

SECTION 3.02. Conditions Precedent to each Extension of Credit.

The obligation of each Lender and each LC Issuing Bank to make each Extension of Credit to be made by it hereunder (other than in connection with any Borrowing that would not increase the aggregate principal amount of Loans outstanding immediately prior to the making of such Borrowing) shall be subject to the following statements being true on the date of such Borrowing (and each of the giving of the applicable Notice of Borrowing or Request for Issuance and the acceptance by the Borrower of the proceeds of any such Extension of Credit shall constitute a representation and warranty by the Borrower that on the date of such Extension of Credit such statements are true):

(ii) No event has occurred and is continuing, or would result from such Extension of Credit or from the application of the proceeds therefrom, that constitutes a Default.

SECTION 3.03. Conditions Precedent to Issuance of Each Bond Letter of Credit.

The obligation of each LC Issuing Bank to issue any Bond Letter of Credit in connection with any series of Bonds shall be subject to the satisfaction of the conditions precedent set forth in Sections 3.01 and 3.02 and the further conditions precedent that:

(a) The Administrative Agent shall have received on or before the date of such issuance the following, in form and substance reasonably satisfactory to the Administrative Agent and the applicable LC Issuing Bank and, to the extent requested by the Administrative Agent, in sufficient copies for each Lender:

(i) Counterparts of any Pledge Agreement relating to such Bonds, duly executed by the Borrower, the Administrative Agent and the applicable Custodian, or

other evidence that the Bonds purchased with the proceeds of such Bond Letter of Credit will be effectively pledged to or held for the benefit of such LC Issuing Bank and the Lenders, and that a separate CUSIP number has been assigned to such Bonds.

(ii) Certified copies or originals of the other applicable Related Documents (which, in the case of the applicable Bonds, may be a specimen of such Bonds).

(iii) Certified copies of the resolutions of the board of directors of the Borrower approving the Related Documents to which the Borrower is a party in connection with such Bond Letter of Credit, and of all documents evidencing other necessary corporate action and Governmental Approvals, if any, with respect to the transactions contemplated by such Related Documents.

(iv) A certificate of the Secretary or Assistant Secretary of the Borrower certifying the names and true signatures of the Borrower authorized to sign the Related Documents to which the Borrower is a party in connection with such Bond Letter of Credit and the other documents to be delivered by the Borrower hereunder in connection with the issuance of such Bond Letter of Credit.

(v) A copy of the Official Statement, if any, relating to the Bonds to be supported by such Bond Letter of Credit.

(vi) A certificate of an authorized officer of the applicable Custodian certifying the names, true signatures and incumbency of the officers of such Custodian authorized to sign the applicable Pledge Agreement.

(vii) A certificate of an authorized officer of the applicable Trustee certifying the names, true signatures and incumbency of the officers of such Trustee authorized to make drawings under such Bond Letter of Credit.

(viii) A favorable opinion of counsel to the Borrower with respect to the Related Documents to which the Borrower is a party.

(ix) A reliance letter from bond counsel relating to the Bonds to be supported by such Bond Letter of Credit permitting the Lenders to rely on the approving opinion of bond counsel with respect to such Bonds.

(x) The Administrative Agent shall have received such other approvals or documents as the Administrative Agent, any Lender or any LC Issuing Bank shall have reasonably requested through the Administrative Agent reasonably in advance of the date hereof.

(b) On the date of such issuance, the following statements shall be true and correct, and the Administrative Agent shall have received on or before such date for the account of the applicable LC Issuing Bank and each Lender a certificate signed by a duly authorized officer of the Borrower, dated such date, stating that the following representations and warranties are true and correct in all material respects (without duplication of any materiality qualifiers) on and as of such date, as though made on and as of such date:

(i) The execution, delivery and performance by the Borrower of each Related Document to which the Borrower is a party in connection with such Bond Letter of Credit, and the consummation of the transactions contemplated thereby, are within the Borrower’s corporate powers and have been duly authorized by all necessary corporate and shareholder action. Each Related Document to which the Borrower is stated to be a party in connection with such Bond Letter of Credit has been duly executed and delivered by the Borrower.

(ii) No authorization or approval or other action by, and no notice to or filing with, any Governmental Authority or any other third party is required for the due execution, delivery and performance by the Borrower of any Related Document to which the Borrower is a party in connection with such Bond Letter of Credit, other than such authorizations, approvals, actions, notices and filings that have been obtained or made (as applicable) prior to such date.

(iii) The execution, delivery and performance by the Borrower of each Related Document to which the Borrower is a party in connection with such Bond Letter of Credit will not (A) violate (x) the articles of incorporation or bylaws (or comparable documents) of Borrower or any of its Material Subsidiaries or (y) any Applicable Law, (B) be in conflict with, or result in a breach of or constitute a default under, any contract, agreement, indenture or instrument to which the Borrower or any of its Material Subsidiaries is a party or by which any of its or their respective properties is bound, or (C) result in the creation or imposition of any Lien on the property of Borrower or any of its Material Subsidiaries other than Permitted Liens and Liens required under this Agreement, except to the extent such conflict, breach or default referred to in the preceding clause (B), individually or in the aggregate, would not reasonably be expected to have a Material Adverse Effect.

(iv) Each Related Document to which the Borrower is a party in connection with such Bond Letter of Credit is the legal, valid and binding obligation of the Borrower enforceable against the Borrower in accordance with its terms.

(v) The representations and warranties of the Borrower in the Related Documents to which the Borrower is a party in connection with such Bond Letter of Credit are true and correct in all material respects (without duplication of any materiality qualifiers).

ARTICLE IV

REPRESENTATIONS AND WARRANTIES

SECTION 4.01. Representations and Warranties of the Borrower.

The Borrower represents and warrants as follows:

(a) The Borrower is a corporation duly organized, validly existing and in good standing under the laws of the State of Oregon and is duly qualified to do business and is in good standing as a foreign corporation under the laws of each state in which the ownership of its

properties or the conduct of its business makes such qualification necessary, except where the failure to be so qualified would not reasonably be expected to have a Material Adverse Effect, and each Material Subsidiary is duly organized, validly existing and in good standing under the laws of the jurisdiction in which it is incorporated or otherwise organized.

(c) No authorization or approval or other action by, and no notice to or filing with, any Governmental Authority or any other third party is required for the due execution, delivery and performance by the Borrower of any Loan Document, other than such Governmental Approvals that have been duly obtained and are in full force and effect, which as of the date hereof include: Decision 88-04-062 of the Public Utilities Commission of the State of California dated April 27, 1988; Order No. 33476 of the Idaho Public Utilities Commission issued March 4, 2016, in Case No. PAC-E-16-03; Order No. 94-1240 and Order No. 98-158 of the Public Utility of Commission of Oregon issued August 17, 1994 and April 16, 1998, respectively; Order Establishing Compliance issued April 8, 1998, in Docket UE-980404, by the Washington Utilities and Transportation Commission; Order Approving Securities Exemption and Accepting the Substance and Format of the Quarterly Financing Activity Report To Be Filed Thereunder issued November 1, 2010, in Docket No. 20000-372-EA-10 (Record No. 12519), by the Public Service Commission of Wyoming; Report and Order issued May 10, 2007, in Docket No. 07-035-16, by the Public Service Commission of Utah; and Letter Order issued December 4, 2015, in Docket No. ES16-3-000, by the FERC.

(h) The consolidated balance sheet of the Borrower and its Consolidated Subsidiaries as at December 31, 2016, and the related consolidated statements of income, cash flows and stockholders’ equity for the fiscal year ended on such date, certified by Deloitte & Touche LLP, copies of which have heretofore been furnished to the Administrative Agent and each Lender, present fairly in all material respects the financial condition of the Borrower and its Consolidated Subsidiaries as at such date, and the consolidated results of their operations and cash flows for the fiscal year then ended. The consolidated balance sheet of the Borrower and its Consolidated Subsidiaries as at March 31, 2017, and the related consolidated statements of income, cash flows and stockholders’ equity for the fiscal quarter ended on such date, copies of which have heretofore been furnished to the Administrative Agent and each Lender, present fairly in all material respects the consolidated financial condition of the Borrower and its Consolidated Subsidiaries as at such date, and the consolidated results of their operations and cash flows for the fiscal quarter then ended (subject to normal year-end audit adjustments). All such financial statements, including the related schedules and notes thereto, have been prepared in accordance with GAAP applied consistently throughout the periods involved (except as may be disclosed therein).

(i) Since December 31, 2016, no event has occurred that could reasonably be expected to have a Material Adverse Effect.

applicable to its Foreign Plans, except to the extent that failure to comply would not reasonably be expected to have a Material Adverse Effect.

(m) Neither the Borrower nor any Subsidiary is an “investment company” or a company “controlled” by an “investment company,” as such terms are defined in the Investment Company Act of 1940, as amended.

(o) No written statement or information furnished by or on behalf of the Borrower to the Administrative Agent, any Lender or any LC Issuing Bank in connection with the syndication or negotiation of this Agreement or delivered pursuant hereto, in each case as of the date such statement or information is made or delivered, as applicable, contained or contains, any material misstatement of fact or intentionally omitted or omits to state any material fact necessary to make the statements therein, in the light of the circumstances under which they were, are, or will be made, not misleading.

(p) Each Material Subsidiary as of the date hereof is set forth on Schedule III.

(q) The Borrower has implemented and maintains in effect policies and procedures designed to promote compliance by the Borrower, its Subsidiaries and their respective directors, officers and employees with Anti-Corruption Laws and applicable Sanctions, and the Borrower, its Subsidiaries and, to the knowledge of the Borrower, their respective officers, directors and employees and their respective agents that will act in any capacity in connection with or benefit from the credit facility established hereby, are in compliance with Anti-Corruption Laws and applicable Sanctions in all material respects. None of the Borrower or any Subsidiary is a Sanctioned Person. No Borrowing or Letter of Credit, use of proceeds or other transaction contemplated by this Agreement will violate any Anti-Corruption Law or applicable Sanctions.

ARTICLE V

COVENANTS OF THE BORROWER

SECTION 5.01. Affirmative Covenants.

So long as any Loan or any other amount payable hereunder shall remain unpaid, any Letter of Credit shall remain outstanding or any Lender shall have any Commitment hereunder, the Borrower will:

(a) Payment of Taxes, Etc. Pay and discharge, and cause each Material Subsidiary to pay and discharge, before the same shall become delinquent, (i) all taxes, assessments and governmental charges or levies imposed upon it or its property, and (ii) all lawful claims that, if unpaid, would by Applicable Law become a Lien upon its property, in each case, except to the extent that the failure to pay and discharge such amounts, either singly or in the aggregate, would not reasonably be expected to have a Material Adverse Effect; provided , however , that neither the Borrower nor any Material Subsidiary shall be required to pay or discharge any such tax, assessment, charge or claim that is being contested in good faith and by proper proceedings and as to which adequate reserves are being maintained in accordance with GAAP.

(c) Compliance with Laws, Etc. Comply, and cause each Material Subsidiary to comply with Applicable Law (with such compliance to include, without limitation, compliance with Environmental Laws, the Patriot Act, Anti-Corruption Laws and Sanctions), except to the extent the failure to do so would not reasonably be expected to have a Material Adverse Effect.

(d) Inspection Rights . At any reasonable time and from time to time, permit the Administrative Agent, any LC Issuing Bank or any Lender or any designated agents or representatives thereof, at all reasonable times and to the extent permitted by Applicable Law, to examine and make copies of and abstracts from the records and books of account of, and visit the properties of, the Borrower and any Material Subsidiary and to discuss the affairs, finances and accounts of the Borrower and any Material Subsidiary with any of their officers or directors and with their independent certified public accountants (at which discussion, if the Borrower or such Material Subsidiary so requests, a representative of the Borrower or such Material Subsidiary shall be permitted to be present, and if such accountants should require that a representative of the Borrower be present, the Borrower agrees to provide a representative to attend such discussion); provided that (i) such designated agents or representatives shall agree to any reasonable confidentiality obligations proposed by the Borrower and shall follow the guidelines and procedures generally imposed upon like visitors to the Borrower’s facilities, and (ii) unless an Event of Default shall have occurred and be continuing, such visits and inspections shall occur not more than once in any fiscal quarter.

(g) Maintenance of Insurance . Maintain, and cause each Material Subsidiary to maintain, insurance with responsible and reputable insurance companies or associations in such amounts and covering such risks as is usually carried by companies engaged in similar businesses and owning similar properties in the same general areas in which Borrower or any of its Material Subsidiaries operates to the extent available on commercially reasonable terms (the “ Industry Standard ”); provided , however , that the Borrower and each Material Subsidiary may self-insure to the same extent as other companies engaged in similar businesses and owning similar properties and to the extent consistent with prudent business practice; and provided, further, that if the Industry Standard is such that the insurance coverage then being maintained by Borrower and its Material Subsidiaries is below the Industry Standard, Borrower shall only be required to use its reasonable best efforts to obtain the necessary insurance coverage such that its and its Material Subsidiaries’ insurance coverage equals or is greater than the Industry Standard.

(h) Reporting Requirements . Furnish to the Lenders:

chief financial officer, chief accounting officer, treasurer or assistant treasurer of the Borrower as to compliance with the terms of this Agreement and setting forth in reasonable detail the calculations necessary to demonstrate compliance with Section 5.03, provided that in the event of any change in GAAP used in the preparation of such financial statements, the Borrower shall also provide, if necessary for the determination of compliance with Section 5.03, a statement of reconciliation conforming such financial statements to GAAP in effect on the date hereof;

(vi) together with the financial statements delivered in paragraphs (i) and (ii) of this Section 5.01(h), if Schedule III shall no longer set forth a complete and correct list of all Material Subsidiaries as of the last date of the period for which such financial statements were prepared, an updated Schedule III setting forth all Material Subsidiaries as of the last date of such period for which such financial statements have been prepared;

(vii) promptly upon the occurrence of a Reportable Compliance Event, notice of such occurrence; and

(viii) such other information respecting the Borrower or any of its Subsidiaries as any Lender through the Administrative Agent may from time to time reasonably request.

delivery of a notice to the Administrative Agent (which notice may be delivered by electronic mail and/or included in the applicable compliance certificate delivered pursuant to Section 5.01(h)(i) or 5.01(h)(ii)) that such form is so available, in each case within the time period required by such Section.

(i) Use of Proceeds . Use the proceeds of the Borrowings and the Letters of Credit for working capital and other general corporate purposes.

(j) Control of Purchased Bonds . So long as any Bond Letter of Credit shall remain outstanding, cause each Bond purchased with the proceeds of such Bond Letter of Credit to be subject to the Lien of an applicable Pledge Agreement or otherwise registered in the name of the applicable LC Issuing Bank, the Administrative Agent or any nominee of such LC Issuing Bank or of the Administrative Agent pending the remarketing of such Bonds pursuant to the applicable Remarketing Agreement and the other applicable Related Documents.

SECTION 5.02. Negative Covenants.

So long as any Loan or any other amount payable hereunder shall remain unpaid, any Letter of Credit shall remain outstanding or any Lender shall have any Commitment hereunder, the Borrower agrees that it will not:

ratings issued (and confirmed after giving effect to such merger) by S&P or Moody’s of at least BBB- and Baa3, respectively (or if no such ratings have been issued, commercial paper ratings issued (and confirmed after giving effect to such merger) by S&P and Moody’s of at least A-3 and P-3, respectively), and (ii) no Default shall have occurred and be continuing at the time of such proposed transaction or would result therefrom, and provided , in each case of clause (i) where the successor entity is other than the Borrower, that the Administrative Agent shall have received, and be reasonably satisfied with, all documentation and information required by regulatory authorities under applicable “know your customer” and anti-money laundering rules and regulations, including without limitation the Patriot Act, to the extent such documentation or information is requested by the Administrative Agent on behalf of the Lenders prior to the date of such proposed transaction.

(c) Sales, Etc. of Assets . Sell, lease, transfer or otherwise dispose of all or substantially all of its assets to any Person, or grant any option or other right to purchase, lease or otherwise acquire such assets, except that the Borrower may sell, lease, transfer or otherwise dispose of all or substantially all of its assets to any Person so long as the requirements set forth in Section 5.02(b) are satisfied as if such disposition were a merger or consolidation in which the Borrower is not the surviving entity.

(d) Use of Proceeds . Use the proceeds of any Extension of Credit to buy or carry Margin Stock in violation of the Margin Regulations.

(e) Optional Redemption of Bonds. So long as any Bond Letter of Credit shall remain outstanding, cause or permit delivery of a notice of an optional redemption or purchase of the applicable Bonds or of a change in the interest modes (other than to or from a mode in which interest is payable at a rate determined daily or weekly) on such Bonds resulting in a mandatory redemption or purchase of such Bonds under the applicable Indenture, unless (i) the Borrower has deposited with the Administrative Agent, the applicable LC Issuing Bank or the applicable Trustee an amount equal to the principal of, premium, if any, and interest on such Bonds on the date of such redemption or purchase, or (ii) any notice of such redemption or purchase or change in the applicable interest mode is conditional upon receipt by the applicable Trustee or paying agent on or prior to the date fixed for the applicable redemption or purchase of funds (other than funds drawn under such Bond Letter of Credit) sufficient to pay the principal of, premium, if any, and interest on such Bonds on the date of such redemption or purchase.

(f) Amendments to Indenture. So long as any Bond Letter of Credit shall remain outstanding, amend, modify, terminate or grant, or permit the amendment, modification, termination or grant of, any waiver under (or consent to, or permit or suffer to occur any action or omission which results in, or is equivalent to, an amendment, modification, or grant of a waiver under) any provision of the applicable Indenture that would (i) directly affect the rights or obligations of the applicable LC Issuing Bank under the applicable Related Documents without the prior written consent of such LC Issuing Bank or (ii) have an adverse effect on the rights or obligations of the Lenders hereunder without the prior written consent of the Required Lenders.

amendment or supplement without the prior consent of such LC Issuing Bank, or revise, amend or supplement such Official Statement without providing a copy of such revision, amendment or supplement, as the case may be, to such LC Issuing Bank.

(h) Use of Proceeds of Bond Letter of Credit. So long as any Bond Letter of Credit shall remain outstanding, permit any proceeds of such Bond Letter of Credit to be used for any purpose other than the payment of the principal of, interest on, redemption price of and purchase price of the applicable Bonds.

(i) Compliance with Anti-Corruption Laws and Sanctions . The Borrower will not, directly or, to the knowledge of the Borrower, indirectly, use the proceeds of any Borrowing or any Letter of Credit, or lend, contribute or otherwise make available such proceeds to any Subsidiary, joint venture partner or other Person (i) in furtherance of an offer, payment, promise to pay, or authorization of the payment or giving of money, or anything else of value, to any Person in violation of any Anti-Corruption Laws, (ii) for the purpose of funding, financing or facilitating any activities, business or transaction of or with any Sanctioned Person, or in any Sanctioned Country, or (iii) in any manner that would result in the violation of any Sanctions by the Borrower or any of its Subsidiaries or, to the knowledge of the Borrower, any other party (including each Credit Party) to this Agreement or the other Loan Documents.

SECTION 5.03. Financial Covenant.

So long as any Loan shall remain unpaid, any Letter of Credit shall remain outstanding or any Lender shall have any Commitment hereunder, the Borrower will maintain a ratio of Consolidated Debt to Consolidated Capital of not greater than 0.65 to 1.00 as of the last day of each fiscal quarter.

ARTCILE VI

EVENTS OF DEFAULT

SECTION 6.01. Events of Default.

If any of the following events (“ Events of Default ”) shall occur and be continuing:

(a) The Borrower shall fail to pay any principal of any Loan when the same becomes due and payable, or shall fail to pay any interest on any Loan or make any other payment of fees or other amounts payable under this Agreement within five days after the same becomes due and payable, or shall fail to provide Cash Collateral in accordance with Section 2.21(a)(v), 2.22 or 6.02 within five days after the same is required to be provided; or

Document if such failure shall remain unremedied for 30 days after written notice thereof shall have been given to the Borrower by the Administrative Agent or any Lender; or

(d) The Borrower or any Material Subsidiary shall fail to pay any principal of or premium or interest on any Debt (other than Debt under this Agreement) that is outstanding in a principal amount in excess of $100,000,000 in the aggregate when the same becomes due and payable (whether by scheduled maturity, required prepayment, acceleration, demand or otherwise), and such failure shall continue after the applicable grace period, if any, specified in the agreement or instrument relating to such Debt; or any other event shall occur or condition shall exist under any agreement or instrument relating to any such Debt and shall continue after the applicable grace period, if any, specified in such agreement or instrument, if the effect of such event or condition is to accelerate, or to permit the acceleration of, the maturity of such Debt; or any such Debt shall be declared to be due and payable, or required to be prepaid or redeemed (other than by a regularly scheduled required prepayment or redemption), prior to the stated maturity thereof; or

(g) An ERISA Event shall have occurred that, when taken together with all other ERISA Events that have occurred, has resulted in, or is reasonably likely to result in, a Material Adverse Effect; or

(h) (i) Berkshire Hathaway shall fail to own, directly or indirectly, at least 50% of the issued and outstanding shares of common stock of the Borrower, calculated on a fully diluted basis or (ii) Berkshire Hathaway Energy Company shall fail to own, directly or indirectly, at least 80% of the issued and outstanding shares of common stock of the Borrower, calculated on a fully diluted basis (each, a “ Change of Control ”); provided that, in each case of the foregoing

clauses (i) and (ii), such failure shall not constitute an Event of Default unless and until a Rating Decline has occurred;

then, and in any such event, the Administrative Agent (i) shall at the request, or may with the consent, of the Required Lenders, by notice to the Borrower, declare the obligation of each Lender and each LC Issuing Bank to make Extensions of Credit to be terminated, whereupon the same shall forthwith terminate; (ii) shall at the request, or may with the consent, of the Required Lenders, by notice to the Borrower, declare the outstanding Borrowings, all interest thereon and all other amounts payable under this Agreement to be forthwith due and payable, whereupon the outstanding Borrowings, all such interest and all such amounts shall become and be forthwith due and payable by the Borrower, without presentment, demand, protest or further notice of any kind, all of which are hereby expressly waived by the Borrower; provided , however , that in the event of an actual or deemed entry of an order for relief with respect to the Borrower under the Bankruptcy Code of the United States of America, (A) the obligation of each Lender and each LC Issuing Bank to make Extensions of Credit shall automatically be terminated and (B) the outstanding Borrowings, all such interest and all such amounts shall automatically become and be due and payable, without presentment, demand, protest or any notice of any kind, all of which are hereby expressly waived by the Borrower; (iii) shall at the request, or may with the consent, of the Required Lenders by notice to the Borrower, give notice of the occurrence of an Event of Default to the Trustee for each series of Bonds supported by a Bond Letter of Credit issued for the account of the Borrower and instruct such Trustee either to accelerate such Bonds, thereby causing such Bond Letter of Credit to expire thereafter, per the terms of such Bond Letter of Credit, or to effect a mandatory tender of such Bonds; and (iv) shall at the request, or may with the consent, of the Required Lenders by notice to the Borrower, pursue any rights and remedies on behalf of the Lenders and the applicable LC Issuing Bank that the Administrative Agent may have under the Related Documents executed and delivered in connection with any Bond Letter of Credit.

In addition, if an “Event of Default” (or any other similar term) under and as defined in any Indenture executed and delivered in connection with any Bond Letter of Credit (a “ Bond Event of Default ”) shall have occurred and be continuing, such circumstance shall constitute an Event of Default hereunder solely for the purpose of permitting the exercise of the remedies described in clauses (iii) and (iv) of the immediately preceding paragraph with respect to the Bonds for which such Bond Event of Default exists and the related Bond Letter of Credit and not for any other purpose under this Agreement. For the avoidance of doubt, a Bond Event of Default shall not give the Administrative Agent the right to exercise any other remedy described in the immediately preceding paragraph, unless such Bond Event of Default, or the facts and circumstances underlying such Bond Event of Default, gives rise to another Event of Default otherwise described in Section 6.01.

SECTION 6.02. Actions in Respect of the Letters of Credit upon Default.

Borrower, automatically without demand) the Borrower will, deposit in an account designated in such demand (the “ LC Collateral Account ”) with the Administrative Agent, in the name of the Administrative Agent and for the benefit of the Lenders and LC Issuing Banks, in same day funds, an amount equal to 103% of the aggregate undrawn stated amounts of all Letters of Credit that are outstanding on such date. If at any time the Administrative Agent determines that any funds held in the LC Collateral Account are subject to any right or claim of any Person other than the Administrative Agent, the Lenders and the LC Issuing Banks or that the total amount of such funds is less than 103% of the aggregate undrawn stated amounts of all Letters of Credit that are outstanding on such date, the Borrower will, forthwith upon demand by the Administrative Agent, pay to the Administrative Agent, as additional funds to be deposited and held in the LC Collateral Account, an amount equal to the excess of (i) 103% of such aggregate undrawn stated amounts of all Letters of Credit that are outstanding on such date over (ii) the total amount of funds, if any, then held in the LC Collateral Account that the Administrative Agent determines to be free and clear of any such right and claim. Upon the drawing of any Letter of Credit for which funds are on deposit in the LC Collateral Account, such funds shall be applied to reimburse the relevant LC Issuing Bank or Lender holding a participation in the reimbursement obligation of the Borrower to such LC Issuing Bank to the extent permitted by Applicable Law.

ARTICLE VII

THE ADMINISTRATIVE AGENT

SECTION 7.01. Appointment and Authority.

Each Lender and each LC Issuing Bank hereby irrevocably appoints JPMCB to act on its behalf as the Administrative Agent hereunder, under the other Loan Documents and the Related Documents and authorizes the Administrative Agent to take such actions on its behalf and to exercise such powers as are delegated to the Administrative Agent by the terms hereof or thereof, together with such actions and powers as are reasonably incidental thereto. The provisions of this Article are solely for the benefit of the Administrative Agent, the Lenders and the LC Issuing Banks, and the Borrower shall not have rights as a third-party beneficiary of any of such provisions. It is understood and agreed that the use of the term “agent” herein, in any other Loan Document or any Related Document (or any other similar term) with reference to the Administrative Agent is not intended to connote any fiduciary or other implied (or express) obligations arising under agency doctrine of any Applicable Law. Instead such term is used as a matter of market custom, and is intended to create or reflect only an administrative relationship between contracting parties.

SECTION 7.02. Rights as a Lender.

any Subsidiary or other Affiliate thereof as if such Person were not the Administrative Agent hereunder and without any duty to account therefor to the Lenders.

SECTION 7.03. Exculpatory Provisions.

(a) The Administrative Agent shall not have any duties or obligations except those expressly set forth herein, in the other Loan Documents and in the Related Documents, and its duties hereunder shall be administrative in nature. Without limiting the generality of the foregoing, the Administrative Agent:

(i) shall not be subject to any fiduciary or other implied duties, regardless of whether a Default has occurred and is continuing;

(ii) shall not have any duty to take any discretionary action or exercise any discretionary powers, except discretionary rights and powers expressly contemplated hereby, by the other Loan Documents or by the Related Documents that the Administrative Agent is required to exercise as directed in writing by the Required Lenders (or such other number or percentage of the Lenders as shall be expressly provided for herein, in the other Loan Documents or in the Related Documents); provided that the Administrative Agent shall not be required to take any action that, in its opinion or the opinion of its counsel, may expose the Administrative Agent to liability or that is contrary to any Loan Document, any Related Document or Applicable Law, including for the avoidance of doubt any action that may be in violation of the automatic stay under any Debtor Relief Law or that may effect a forfeiture, modification or termination of property of a Defaulting Lender in violation of any Debtor Relief Law; and

(iii) shall not, except as expressly set forth herein, in the other Loan Documents or in the Related Documents, have any duty to disclose, and shall not be liable for the failure to disclose, any information relating to the Borrower or any of its Affiliates that is communicated to or obtained by the Person serving as the Administrative Agent or any of its Affiliates in any capacity.

(b) The Administrative Agent shall not be liable for any action taken or not taken by it (i) with the consent or at the request of the Required Lenders (or such other number or percentage of the Lenders as shall be necessary, or as the Administrative Agent shall believe in good faith shall be necessary, under the circumstances as provided in Sections 6.01, 6.02 and 8.01), or (ii) in the absence of its own gross negligence or willful misconduct as determined by a court of competent jurisdiction by final and nonappealable judgment. The Administrative Agent shall be deemed not to have knowledge of any Default unless and until notice describing such Default is given to the Administrative Agent in writing by the Borrower, a Lender or an LC Issuing Bank.

other terms or conditions set forth herein or therein or the occurrence of any Default, (iv) the validity, enforceability, effectiveness or genuineness of this Agreement, any other Loan Document, any Related Document or any other agreement, instrument or document, or (v) the satisfaction of any condition set forth in Article III or elsewhere herein, other than to confirm receipt of items expressly required to be delivered to the Administrative Agent.

SECTION 7.04. Reliance by Administrative Agent.

The Administrative Agent shall be entitled to rely upon, and shall not incur any liability for relying upon, any notice, request, certificate, consent, statement, instrument, document or other writing (including any electronic message, Internet or intranet website posting or other distribution) believed by it to be genuine and to have been signed, sent or otherwise authenticated by the proper Person. The Administrative Agent also may rely upon any statement made to it orally or by telephone and believed by it to have been made by the proper Person, and shall not incur any liability for relying thereon. In determining compliance with any condition hereunder to the making of a Loan, or the issuance, extension, renewal or increase of a Letter of Credit, that by its terms must be fulfilled to the satisfaction of any Lender or an LC Issuing Bank, the Administrative Agent may presume that such condition is satisfactory to such Lender or such LC Issuing Bank unless the Administrative Agent shall have received notice to the contrary from such Lender or such LC Issuing Bank prior to the making of such Loan or the issuance of such Letter of Credit. The Administrative Agent may consult with legal counsel (who may be counsel for the Borrower), independent accountants and other experts selected by it, and shall not be liable for any action taken or not taken by it in accordance with the advice of any such counsel, accountants or experts.

SECTION 7.05. Resignation of Administrative Agent.

(a) The Administrative Agent may at any time give notice of its resignation to the Lenders, the LC Issuing Banks and the Borrower. Upon receipt of any such notice of resignation, the Required Lenders shall have the right, in consultation with the Borrower, to appoint a successor, which shall be (i) a commercial bank with an office in the United States having a combined capital and surplus of at least $500,000,000, or an Affiliate of any such bank with an office in the United States and (ii) subject to the approval of the Borrower so long as no Default shall have occurred and be continuing (such approval not to be unreasonably withheld or delayed). If no such successor shall have been so appointed by the Required Lenders and shall have accepted such appointment within 30 days after the retiring Administrative Agent gives notice of its resignation (or such earlier day as shall be agreed by the Required Lenders) (the “ Resignation Effective Date ”), then the retiring Administrative Agent may (but shall not be obligated to), on behalf of the Lenders and the LC Issuing Banks, appoint a successor Administrative Agent meeting the qualifications set forth above. Whether or not a successor has been appointed, such resignation shall become effective in accordance with such notice on the Resignation Effective Date.

(i) a commercial bank with an office in the United States having a combined capital and surplus of at least $500,000,000, or an Affiliate of any such bank with an office in the United States and (ii) subject to the approval of the Borrower so long as no Default shall have occurred and be continuing (such approval not to be unreasonably withheld or delayed). If no such successor shall have been so appointed by the Required Lenders and shall have accepted such appointment within 30 days (or such earlier day as shall be agreed by the Required Lenders) (the “ Removal Effective Date ”), then such removal shall nonetheless become effective in accordance with such notice on the Removal Effective Date.

(c) With effect from the Resignation Effective Date or the Removal Effective Date (as applicable) (1) the retiring or removed Administrative Agent shall be discharged from its duties and obligations hereunder and under the other Loan Documents and (2) except for any indemnity payments owed to the retiring or removed Administrative Agent, all payments, communications and determinations provided to be made by, to or through the Administrative Agent shall instead be made by or to each Lender and each LC Issuing Bank directly, until such time, if any, as the Required Lenders appoint a successor Administrative Agent as provided for above. Upon the acceptance of a successor’s appointment as Administrative Agent hereunder, such successor shall succeed to and become vested with all of the rights, powers, privileges and duties of the retiring or removed Administrative Agent (other than any rights to indemnity payments owed to the retiring or removed Administrative Agent), and the retiring or removed Administrative Agent shall be discharged from all of its duties and obligations hereunder, under the other Loan Documents or under the Related Documents. The fees payable by the Borrower to a successor Administrative Agent shall be the same as those payable to its predecessor unless otherwise agreed between the Borrower and such successor. After the retiring or removed Administrative Agent’s resignation or removal hereunder, under the other Loan Documents and under the Related Documents, the provisions of this Article and Section 8.04 shall continue in effect for the benefit of such retiring or removed Administrative Agent, its sub‑agents and their respective Related Parties in respect of any actions taken or omitted to be taken by any of them while the retiring or removed Administrative Agent was acting as Administrative Agent.

(d) Notwithstanding anything in this Section 7.05 to the contrary, the retiring or removed Administrative Agent shall continue to hold any collateral (including cash collateral and collateral held under any Pledge Agreement) as bailee for the benefit of the LC Issuing Banks and the Lenders until a successor Administrative Agent has been appointed in accordance with this Section 7.05.

SECTION 7.06. Non-Reliance on Administrative Agent and Other Lenders.

Each Lender and LC Issuing Bank acknowledges that it has, independently and without reliance upon the Administrative Agent or any other Lender or any of their Related Parties and based on such documents and information as it has deemed appropriate, made its own credit analysis and decision to enter into this Agreement. Each Lender and LC Issuing Bank also acknowledges that it will, independently and without reliance upon the Administrative Agent or any other Lender or any of their Related Parties and based on such documents and information as it shall from time to time deem appropriate, continue to make its own decisions in taking or not taking action under or based upon this Agreement, any other Loan Document, any Related Document or any related agreement or any document furnished hereunder or thereunder.

SECTION 7.07. Indemnification.

Each Lender severally agrees to indemnify the Administrative Agent (to the extent not promptly reimbursed by the Borrower and without limiting its obligation to do so) from and against such Lender’s Commitment Percentage of any and all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements of any kind or nature whatsoever that may be imposed on, incurred by, or asserted against the Administrative Agent in any way relating to or arising out of this Agreement, any other Loan Document or any Related Document or any action taken or omitted by the Administrative Agent under this Agreement, any other Loan Document or any Related Document; provided , however , that no Lender shall be liable for any portion of such liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements resulting from the Administrative Agent’s gross negligence or willful misconduct, as proven in a court of competent jurisdiction by final and nonappealable judgment. Without limitation of the foregoing, each Lender agrees to reimburse the Administrative Agent promptly upon demand for its Commitment Percentage of any costs and expenses (including, without limitation, fees and reasonable expenses of counsel) payable by the Borrower under Section 8.04, to the extent that the Administrative Agent is not promptly reimbursed for such costs and expenses by the Borrower (and without limiting its obligation to do so) after request therefor. The failure of any Lender to reimburse the Administrative Agent promptly upon demand for its Commitment Percentage of any amount required to be paid by the Lender to the Administrative Agent as provided herein shall not relieve any other Lender of its obligation hereunder to reimburse the Administrative Agent for its Commitment Percentage of such amount, but no Lender shall be responsible for the failure of any other Lender to reimburse the Administrative Agent for such other Lender’s Commitment Percentage of such amount. Without prejudice to the survival of any other agreement of any Lender hereunder, the agreement and obligations of each Lender contained in this Section 7.07 shall survive the payment in full of principal, interest and all other amounts payable hereunder.

SECTION 7.08. No Other Duties, etc.

Anything herein to the contrary notwithstanding, none of the Joint Lead Arrangers, the “Joint Bookrunners”, the “Syndication Agents” or the Documentation Agents listed on the cover page hereof shall have any powers, duties or responsibilities under this Agreement, any other Loan Document or any Related Document, except in its capacity, as applicable, as the Administrative Agent, a Lender or an LC Issuing Bank hereunder or thereunder.

ARTICLE VIII

MISCELLANEOUS

SECTION 8.01. Amendments, Etc.

shall, unless in writing and signed by each Lender directly affected thereby (other than, in the case of clause (i) or (v) below, any Defaulting Lender), do any of the following: (i) amend Section 3.01, 3.02 or 3.03 or waive any of the conditions specified therein, (ii) increase the Commitment of any Lender or extend the Commitments (except pursuant to Section 2.06 or 2.07), (iii) reduce the principal of, or interest on, or rate of interest applicable to, the outstanding Loans or any fees or other amounts payable hereunder, (iv) postpone any date fixed for any payment of principal of, or interest on, the outstanding Loans, reimbursement obligations or any fees or other amounts payable hereunder, (v) change the definition of Required Lenders or change the percentage of the Commitments or of the aggregate unpaid principal amount of the outstanding Borrowings, or the number or the percentage of Lenders, that shall be required for the Lenders or any of them to take any action hereunder, or (vi) amend or waive this Section 8.01 or any provision of this Agreement that requires pro rata treatment of the Lenders; and provided further that (x) no amendment, waiver or consent shall, unless in writing and signed by the Administrative Agent or any LC Issuing Bank in addition to the Lenders required above to take such action, affect the rights or duties of the Administrative Agent or such LC Issuing Bank, as the case may be, under this Agreement and (y) no amendment, waiver or consent shall, unless in writing and signed by the Administrative Agent, each LC Issuing Bank and the Required Lenders, amend or waive Section 2.21. Notwithstanding the foregoing, any provision of this Agreement may be amended by an agreement in writing entered into by the Borrower, the Required Lenders and the Administrative Agent if by the terms of such agreement the Commitment of each Non-Consenting Lender and the obligations of each LC Issuing Bank not consenting to the amendment provided for therein shall terminate (but such Non-Consenting Lender or LC Issuing Bank shall continue to be entitled to the benefits of Sections 2.15, 2.18 and 8.04) upon the effectiveness of such amendment, and such Non-Consenting Lender or LC Issuing Bank shall have received or shall at the time of such termination receive payment of an amount equal to the outstanding principal of its Loans and any participations in Letters of Credit funded pursuant to Section 2.04(e), together with all applicable accrued interest thereon, accrued fees and all other amounts then payable to it hereunder and under the other Loan Documents.

SECTION 8.02. Notices, Etc.

(i) if to the Borrower, to it at 825 N.E. Multnomah Street, Suite 2000, Portland, Oregon 97232-4116, Attention: Nikki L. Kobliha, Vice President, Chief Financial Officer and Treasurer (Facsimile: (503) 813-5625; Telephone No. (503) 813-5645);

(ii) This section has been REDACTED

(iii) if to any LC Issuing Bank identified on Schedule II hereto, at the address specified opposite its name on Schedule II hereto, and if to any other LC Issuing Bank, at such address as shall be designated by such LC Issuing Bank in a written notice to the Administrative Agent and the Borrower;

(iv) if to any Initial Lender, at its Domestic Lending Office specified opposite its name on Schedule I hereto, and if to any other Lender at its Domestic Lending Office specified in the Assignment and Assumption pursuant to which it became a Lender.

(b) Electronic Communications. Notices and other communications to the Lenders and the LC Issuing Banks hereunder may be delivered or furnished by electronic communication (including e‑mail and Internet or intranet websites) pursuant to procedures approved by the Administrative Agent, provided that the foregoing shall not apply to notices to any Lender or any LC Issuing Bank pursuant to Section 2.02 or 2.04 if such Lender or such Issuing Bank, as applicable, has notified the Administrative Agent that it is incapable of receiving notices under such Section by electronic communication. The Administrative Agent or the Borrower may, in its discretion, agree to accept notices and other communications to it hereunder by electronic communications pursuant to procedures approved by it; provided that approval of such procedures may be limited to particular notices or communications.

(c) Change of Address, etc. Any party hereto may change its address or facsimile number for notices and other communications hereunder by notice to the other parties hereto.

(d) Platform.

(i) The Borrower agrees that the Administrative Agent may, but shall not be obligated to, make the Communications (as defined below) available to the LC Issuing Banks and the other Lenders by posting the Communications on Debt Domain, Intralinks, Syndtrak or a substantially similar electronic transmission system (the “ Platform ”).

SECTION 8.03. No Waiver; Remedies.

SECTION 8.04. Costs and Expenses; Indemnification.

further agrees to pay promptly upon demand all reasonable costs and expenses of the Administrative Agent, the Lenders and the LC Issuing Banks, if any, (A) in connection with the enforcement (whether through negotiations, legal proceedings or otherwise) of this Agreement and the other Loan Documents, including its rights under this Section, or (B) in connection with the Loans made or Letters of Credit issued hereunder, including all such reasonable out-of-pocket expenses incurred during any workout, restructuring or negotiations in respect of such Loans or Letters of Credit, including, without limitation, reasonable fees and expenses of one outside counsel for the Administrative Agent, the Lenders and the LC Issuing Banks taken as a whole in connection with the enforcement of rights under this Section 8.04(a) (and, with respect to matters referred to in clause (A) of this sentence only, separate counsel for the Administrative Agent, any Lender and any LC Issuing Banks to the extent needed to avoid an actual or potential conflict of interest).

(b) The Borrower shall indemnify the Administrative Agent (and any sub-agent thereof), the Joint Lead Arrangers, each Lender and each LC Issuing Bank, and each Related Party of any of the foregoing Persons (each, an “ Indemnified Party ”) from and against any and all claims, damages, losses and liabilities, joint or several, to which any such Indemnified Party may become subject, in each case arising out of or in connection with or relating to (including, without limitation, in connection with any investigation, litigation or proceeding or preparation of a defense in connection therewith) this Agreement, any of the transactions contemplated herein or the actual or proposed use of the proceeds of the Extensions of Credit, and shall reimburse any Indemnified Party for any and all reasonable expenses (including, without limitation, reasonable fees and expenses of counsel) as they are incurred in connection with the investigation of or preparation for or defense of any pending or threatened claim or any action or proceeding arising therefrom, whether or not such Indemnified Party is a party (but if not a party thereto, then only with respect to such proceedings where such Indemnified Party (i) is subject to legal process or other compulsion of law, (ii) believes in good faith that it will be so subject, or (iii) believes in good faith that it is necessary or appropriate for it to resist any legal process or other compulsion of law which is purported to be asserted against it) and whether or not such claim, action or proceeding is initiated or brought by or on behalf of the Borrower or any of its Affiliates and whether or not any of the transactions contemplated hereby are consummated or this Agreement is terminated, except to the extent such claim, damage, loss, liability or expense is found in a judgment by a court of competent jurisdiction by final and nonappealable judgment to have resulted from such Indemnified Party’s gross negligence, bad faith or willful misconduct. In the case of an investigation, litigation or other proceeding to which the indemnity in this Section 8.04(b) applies, such indemnity shall be effective whether or not such investigation, litigation or proceeding is brought by the Borrower, its directors, shareholders or creditors or an Indemnified Party or any other Person or any Indemnified Party is otherwise a party thereto and whether or not the transactions contemplated hereby are consummated. The Borrower agrees not to assert any claim against the Administrative Agent, any Lender, any of their respective Affiliates, or any of their respective directors, officers, employees, attorneys and agents, on any theory of liability, for special, indirect, consequential or punitive damages arising out of or otherwise relating to this Agreement, any of the transactions contemplated herein or the actual or proposed use of the proceeds of the Extensions of Credit. This Section 8.04(b) shall not apply with respect to Taxes that are Indemnified Taxes, Excluded Taxes or Taxes that are covered by Section 2.15(a)(ii).

(c) If any payment of principal of, or Conversion of, any Eurodollar Rate Revolving Loan is made by the Borrower to or for the account of a Lender other than on the last day of the Interest Period for such Revolving Loan, as a result of a payment or Conversion pursuant to Section 2.06(c), 2.07(c), 2.09, 2.12(b), 2.13, 2.14, 2.15 or 2.16, acceleration of the maturity of the outstanding Borrowings pursuant to Section 6.01, assignment to another Lender upon demand of the Borrower pursuant to Section 2.20(b) or for any other reason (in the case of any such payment or Conversion), the Borrower shall, promptly upon demand by such Lender (with a copy of such demand to the Administrative Agent), pay to the Administrative Agent for the account of such Lender any amounts required to compensate such Lender for any additional losses, costs or expenses that it may reasonably incur as a result of such payment or Conversion, including, without limitation, any loss (other than loss of Applicable Margin), cost or expense incurred by reason of the liquidation or reemployment of deposits or other funds acquired by any Lender to fund or maintain such Loan.

SECTION 8.05. Right of Set-off.

Borrower now or hereafter existing under this Agreement or any other Loan Document to such Lender, such LC Issuing Bank or their respective Affiliates, irrespective of whether or not such Lender, such LC Issuing Bank or such Affiliate shall have made any demand under this Agreement or any other Loan Document and although such obligations of the Borrower may be contingent or unmatured or are owed to a branch, office or Affiliate of such Lender, such LC Issuing Bank different from the branch, office or Affiliate holding such deposit or obligated on such indebtedness; provided that in the event that any Defaulting Lender shall exercise any such right of setoff, (x) all amounts so set off shall be paid over immediately to the Administrative Agent for further application in accordance with the provisions of Section 2.21 and, pending such payment, shall be segregated by such Defaulting Lender from its other funds and deemed held in trust for the benefit of the Administrative Agent, the LC Issuing Banks, and the Lenders, and (y) the Defaulting Lender shall provide promptly to the Administrative Agent a statement describing in reasonable detail the obligations of the Borrower owing to such Defaulting Lender as to which it exercised such right of setoff. The rights of each Lender, each LC Issuing Bank and their respective Affiliates under this Section are in addition to other rights and remedies (including other rights of setoff) that such Lender, such LC Issuing Bank or their respective Affiliates may have. Each Lender and each LC Issuing Bank agrees to notify the Borrower and the Administrative Agent promptly after any such setoff and application; provided that the failure to give such notice shall not affect the validity of such setoff and application.

SECTION 8.06. Binding Effect.

This Agreement shall become effective when it shall have been executed by the Borrower and the Administrative Agent and when the Administrative Agent shall have been notified by each Initial Lender that such Initial Lender has executed it and thereafter shall be binding upon and inure to the benefit of the Borrower, the Administrative Agent each Lender and each LC Issuing Bank (upon its appointment pursuant to Section 2.04) and their respective successors and assigns, except that the Borrower shall not have the right to assign its rights hereunder or any interest herein without the prior written consent of all of the Lenders.

SECTION 8.07. Assignments and Participations.

(a) Successors and Assigns Generally. The provisions of this Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns permitted hereby, except that the Borrower may not assign or otherwise transfer any of its rights or obligations hereunder without the prior written consent of the Administrative Agent, each Lender and each LC Issuing Bank, and no Lender may assign or otherwise transfer any of its rights or obligations hereunder except (i) to an assignee in accordance with the provisions of subsection (b) of this Section, (ii) by way of participation in accordance with the provisions of subsection (d) of this Section, or (iii) by way of pledge or assignment of a security interest subject to the restrictions of subsection (e) of this Section (and any other attempted assignment or transfer by any party hereto shall be null and void). Nothing in this Agreement, expressed or implied, shall be construed to confer upon any Person (other than the parties hereto, their respective successors and assigns permitted hereby, Participants to the extent provided in subsection (d) of this Section and, to the extent expressly contemplated hereby, the Related Parties of each of the Administrative Agent, the LC Issuing Banks and the Lenders) any legal or equitable right, remedy or claim under or by reason of this Agreement.

(i) Minimum Amounts.

(iii) Required Consents. No consent shall be required for any assignment except to the extent required by subsection (b)(i)(B) of this Section and, in addition:

(C) the consent of each LC Issuing Bank (such consent not to be unreasonably withheld or delayed) shall be required for any assignment.

(vi) No Assignment to Natural Persons. No such assignment shall be made to a natural Person.

(vii) Certain Additional Payments. In connection with any assignment of rights and obligations of any Defaulting Lender hereunder, no such assignment shall be effective unless and until, in addition to the other conditions thereto set forth herein, the parties to the assignment shall make such additional payments to the Administrative Agent in an aggregate amount sufficient, upon distribution thereof as appropriate (which may be outright payment, purchases by the assignee of participations or subparticipations, or other compensating actions, including funding, with the consent of the Borrower and the Administrative Agent, the applicable pro rata share of Loans previously requested but not funded by the Defaulting Lender, to each of which the applicable assignee and assignor hereby irrevocably consent), to (x) pay and satisfy in full all payment liabilities then owed by such Defaulting Lender to the Administrative Agent, each LC Issuing Bank and each other Lender hereunder (and interest accrued thereon), and (y) acquire (and fund as appropriate) its full pro rata share of all Loans and participations in Letters of Credit in accordance with its Commitment Percentage. Notwithstanding the foregoing, in the event that any assignment of rights and obligations of any Defaulting Lender hereunder shall become effective under Applicable Law without compliance with the provisions of this subsection, then the assignee of such interest shall be deemed to be a Defaulting Lender for all purposes of this Agreement until such compliance occurs.

this Agreement (and, in the case of an Assignment and Assumption covering all of the assigning Lender’s rights and obligations under this Agreement, such Lender shall cease to be a party hereto) but shall continue to be entitled to the benefits of Sections 2.15, 2.18 and 8.04 with respect to facts and circumstances occurring prior to the effective date of such assignment; provided , that except to the extent otherwise expressly agreed by the affected parties, no assignment by a Defaulting Lender will constitute a waiver or release of any claim of any party hereunder arising from that Lender’s having been a Defaulting Lender. Any assignment or transfer by a Lender of rights or obligations under this Agreement that does not comply with this subsection shall be treated for purposes of this Agreement as a sale by such Lender of a participation in such rights and obligations in accordance with subsection (d) of this Section.

(c) Register. The Administrative Agent, acting solely for this purpose as a non-fiduciary agent of the Borrower, shall maintain at its address referred to in Section 8.02 a copy of each Assignment and Assumption delivered to it and a register for the recordation of the names and addresses of the Lenders, and the Commitments and Termination Date of, and principal amounts (and stated interest) of the Loans owing to, each Lender pursuant to the terms hereof from time to time (the “ Register ”). The entries in the Register shall be conclusive absent manifest error, and the Borrower, the Administrative Agent and the Lenders shall treat each Person whose name is recorded in the Register pursuant to the terms hereof as a Lender hereunder for all purposes of this Agreement. The Register shall be available for inspection by the Borrower, any LC Issuing Bank and any Lender, at any reasonable time and from time to time upon reasonable prior notice.

(d) Participations. Any Lender may at any time, without the consent of, or notice to, the Borrower or the Administrative Agent, sell participations to any Person (other than a natural Person or the Borrower or any of the Borrower’s Affiliates (except for any Affiliate of Berkshire Hathaway not controlled directly or indirectly by the Borrower that is a commercial lender acquiring participations under this Agreement in the ordinary course of its business) or Subsidiaries) (each, a “ Participant ”) in all or a portion of such Lender’s rights and/or obligations under this Agreement (including all or a portion of its Commitment and/or the Loans owing to it); provided that (i) such Lender’s obligations under this Agreement shall remain unchanged, (ii) such Lender shall remain solely responsible to the other parties hereto for the performance of such obligations, and (iii) the Borrower, the Administrative Agent, the LC Issuing Banks and Lenders shall continue to deal solely and directly with such Lender in connection with such Lender’s rights and obligations under this Agreement. For the avoidance of doubt, each Lender shall be responsible for the indemnity under Section 7.07 with respect to any payments made by such Lender to its Participant(s).

be delivered to the participating Lender or the applicable Withholding Agent to the extent required by Applicable Law)) to the same extent as if it were a Lender and had acquired its interest by assignment pursuant to subsection (b) of this Section; provided that such Participant (A) agrees to be subject to the provisions of Section 2.20 as if it were an assignee under subsection (b) of this Section; and (B) shall not be entitled to receive any greater payment under Section 2.15 or 2.18, with respect to any participation, than its participating Lender would have been entitled to receive. Each Lender that sells a participation agrees, at the Borrower’s request and expense, to use reasonable efforts to cooperate with the Borrower to effectuate the provisions of Section 2.20(b) with respect to any Participant. To the extent permitted by law, each Participant also shall be entitled to the benefits of Section 8.05 as though it were a Lender; provided that such Participant agrees to be subject to Section 2.19 as though it were a Lender. Each Lender that sells a participation shall, acting solely for this purpose as a non-fiduciary agent of the Borrower, maintain a register on which it enters the name and address of each Participant and the principal amounts (and stated interest) of each Participant’s interest in the Loans or other obligations under the Loan Documents (the “ Participant Register ”); provided that no Lender shall have any obligation to disclose all or any portion of the Participant Register (including the identity of any Participant or any information relating to a Participant’s interest in any Commitments, Loans, Letters of Credit or its other obligations under any Loan Document) to any Person except to the extent that such disclosure is necessary to establish that such Commitment, Loan, Letter of Credit or other obligation is in registered form under Section 5f.103-1(c) of the United States Treasury Regulations or to comply with other requirements under applicable tax law. The entries in the Participant Register shall be conclusive absent manifest error, and such Lender shall treat each Person whose name is recorded in the Participant Register as the owner of such participation for all purposes of this Agreement notwithstanding any notice to the contrary. For the avoidance of doubt, the Administrative Agent (in its capacity as Administrative Agent) shall have no responsibility for maintaining a Participant Register.

SECTION 8.08. Confidentiality.

securitization transaction related to the obligations under this Agreement on a confidential basis, (vi) to any credit insurance provider relating to the Borrower and its obligations on a confidential basis and (vii) pursuant to a request or requirement from a regulatory authority (governmental or non-governmental self-regulatory authority) having jurisdiction over a Lender; provided that unless prohibited by Applicable Law, each Lender and the Administrative Agent agree, prior to disclosure thereof, to notify the Borrower of any request for disclosure of any such Confidential Information (x) by any Governmental Authority or representative thereof (other than any such request in connection with an examination of such Lender or the Administrative Agent by such Governmental Authority) or (y) pursuant to legal process.

SECTION 8.09. Governing Law.

SECTION 8.10. Severability.

SECTION 8.11. Execution in Counterparts.

SECTION 8.12. Jurisdiction, Etc.

(a) Each party hereto hereby irrevocably and unconditionally agrees that it will not commence any action, litigation or proceeding of any kind or description, whether in law or equity, whether in contract or in tort or otherwise, against the Administrative Agent, any Lender, any LC Issuing Bank, or any Related Party of the foregoing in any way relating to this Agreement or any other Loan Document or the transactions relating hereto or thereto, in any forum other than the courts of the State of New York sitting in the Borough of Manhattan in New York City, and of the United States District Court of the Southern District of New York sitting in the Borough of Manhattan in New York City, and any appellate court from any thereof, and each of the parties hereto irrevocably and unconditionally submits to the jurisdiction of such courts and agrees that all claims in respect of any such action, litigation or proceeding may be heard and determined in such New York State court or, to the fullest extent permitted by applicable law, in such federal court. Each party hereto agrees that a final judgment in any such action, litigation

or proceeding shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by law.

SECTION 8.13. Waiver of Jury Trial.

EACH PARTY HERETO HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY) OR THE ACTIONS OF THE ADMINISTRATIVE AGENT, ANY LC ISSUING BANK, THE BORROWER OR ANY LENDER IN THE NEGOTIATION, ADMINISTRATION, PERFORMANCE OR ENFORCEMENT THEREOF. TO THE EXTENT THEY MAY LEGALLY DO SO, BORROWER, THE ADMINISTRATIVE AGENT, THE LC ISSUING BANKS AND THE LENDERS HEREBY AGREE THAT ANY SUCH CLAIM, DEMAND, ACTION, CAUSE OF ACTION, OR PROCEEDING SHALL BE DECIDED BY A COURT TRIAL WITHOUT A JURY AND THAT ANY PARTY HERETO MAY FILE AN ORIGINAL COUNTERPART OR A COPY OF THIS SECTION WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT OF THE OTHER PARTY OR PARTIES HERETO TO WAIVER OF ITS OR THEIR RIGHT TO TRIAL BY JURY. EACH PARTY HERETO (i) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PERSON HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PERSON WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (ii) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION.

SECTION 8.14. USA Patriot Act.

information includes the name and address of the Borrower and other information that will allow such Lender or the Administrative Agent, as applicable, to identify the Borrower in accordance with the Patriot Act. The Borrower shall, and shall cause each of its Subsidiaries to, provide to the extent commercially reasonable, such information and take such actions as are reasonably requested by the Administrative Agent or any Lender in order to assist the Administrative Agent and the Lenders in maintaining compliance with the Patriot Act.

SECTION 8.15. No Fiduciary Duty.

The Credit Parties and their respective Affiliates (collectively, solely for purposes of this Section, the “Lender Parties”), may have economic interests that conflict with those of the Borrower, its securities holders and/or their Affiliates. The Borrower agrees that nothing in the Loan Documents or the Related Documents will be deemed to create an advisory, fiduciary or agency relationship or fiduciary or other implied duty between any Lender Party, on the one hand, and the Borrower, its securities holders or its Affiliates, on the other hand. The Borrower acknowledges and agrees that (i) the transactions contemplated by the Loan Documents and the Related Documents (including the exercise of rights and remedies hereunder and thereunder) are arm’s-length commercial transactions between the Lender Parties, on the one hand, and the Borrower, on the other, and (ii) in connection therewith and with the process leading thereto, (x) no Lender Party has assumed an advisory or fiduciary responsibility in favor of the Borrower, its securities holders or its Affiliates with respect to the transactions contemplated hereby (or the exercise of rights or remedies with respect thereto) or the process leading thereto (irrespective of whether any Lender Party has advised, is currently advising or will advise the Borrower, its securities holders or its Affiliates on other matters), and (y) each Lender Party is acting solely as principal hereunder and under the other Loan Documents and the Related Documents and not as the agent or fiduciary of the Borrower, its management, securities holders or creditors. The Borrower acknowledges and agrees that it has consulted its own legal and financial advisors to the extent it deemed appropriate and that it is responsible for making its own independent judgment with respect to such transactions and the process leading thereto. The Borrower agrees that it will not claim that any Lender Party has rendered advisory services of any nature or respect, or owes a fiduciary or similar duty to the Borrower, in connection with the transactions contemplated by the Loan Documents or the Related Documents or the process leading thereto.

SECTION 8.16. Acknowledgement and Consent to Bail-In of EEA Financial Institutions.

(b) the effects of any Bail-In Action on any such liability, including, if applicable:

(i) a reduction in full or in part or cancellation of any such liability;

(iii) the variation of the terms of such liability in connection with the exercise of the write-down and conversion powers of any EEA Resolution Authority.

[Remainder of page intentionally left blank.]



PACIFICORP
as Borrower


By /s/ Nikki L. Kobliha
Nikki L. Kobliha
Vice President, Chief Financial Officer and
Treasurer

Signature Page to PacifiCorp II Credit Agreement



JPMORGAN CHASE BANK, N.A.,
as Administrative Agent and Lender


By /s/ Amit Gaur
Name: Amit Gaur
Title: Vice President

Signature Page to PacifiCorp II Credit Agreement



LENDERS:

WELLS FARGO BANK, NATIONAL
ASSOCIATION, as Lender and LC Issuing Bank


By /s/ Gregory R. Gredvig
Name: Gregory R. Gredvig
Title: Director

Signature Page to PacifiCorp II Credit Agreement



MIZUHO BANK, LTD., as Lender


By /s/ Nelson Chang
Name: Nelson Chang
Title: Authorized Signatory

Signature Page to PacifiCorp II Credit Agreement



MUFG UNION BANK, N.A., as Lender


By /s/ Jeffrey Flagg
Name: Jeffrey Flagg
Title: Vice President

Signature Page to PacifiCorp II Credit Agreement



CITIBANK, N.A., as Lender


By /s/ Richard Rivera
Name: Richard Rivera
Title: Vice President

Signature Page to PacifiCorp II Credit Agreement



U.S. BANK, NATIONAL ASSOCIATION, as Lender


By /s/ Holland H. Williams
Name: Holland H. Williams
Title: Vice President

Signature Page to PacifiCorp II Credit Agreement



BNP PARIBAS,
as Lender and LC Issuing Bank


By /s/ Nicole Rodriquez
Name: Nicole Rodriguez
Title: Director

By /s/ Julien Pecoud-Bouvet
Name: Julian Pecoud-Bouvet
Title: Vice President

Signature Page to PacifiCorp II Credit Agreement



BARCLAYS BANK PLC, as Lender


By /s/ Christopher Aitkin
Name: Christopher Aitkin
Title: Assistant Vice President

Signature Page to PacifiCorp II Credit Agreement



ROYAL BANK OF CANADA, as Lender


By /s/ Rahul Shah
Name: Rahul Shah
Title: Authorized Signatory

Signature Page to PacifiCorp II Credit Agreement



The Bank of Nova Scotia, as Lender


By /s/ David Dewar
Name: David Dewar
Title: Director

Signature Page to PacifiCorp II Credit Agreement



Bank of Montreal, Chicago Branch, as Lender


By /s/ Brian Banke
Name: Brian Banke
Title: Managing Director

Signature Page to PacifiCorp II Credit Agreement



SUMITOMO MITSUI BANKING CORP., as
Lender


By /s/ Katsuyuki Kubo
Name: Katsuyuki Kubo
Title: Managing Director

Signature Page to PacifiCorp II Credit Agreement



CANADIAN IMPERIAL BANK OF
COMMERCE, NEW YORK BRANCH, as
Lender


By /s/ Anju Abraham
Name: Anju Abraham
Title: Authorized Signatory

By /s/ Darrel Ho
Name: Darrel Ho
Title: Authorized Signatory

Signature Page to PacifiCorp II Credit Agreement



COBANK, ACB, as Lender


By /s/ Josh Batchelder
Name: Josh Batchelder
Title: Vice President

Signature Page to PacifiCorp II Credit Agreement



KEYBANK NATIONAL ASSOCIATION, as
Lender


By /s/ Benjamin C. Cooper
Name: Benjamin C. Cooper
Title: Vice President

Signature Page to PacifiCorp II Credit Agreement



PNC Bank, National Association, as Lender


By /s/ Jon R. Hinard
Name: Jon R. Hinard
Title: Managing Director

Signature Page to PacifiCorp II Credit Agreement



SunTrust Bank, as Lender


By /s/ Yann Pirio
Name: Yann Pirio
Title: Managing Director

Signature Page to PacifiCorp II Credit Agreement



TD Bank, N.A., as Lender


By /s/ Vijay Prasad
Name: Vijay Prasad
Title: Senior Vice President

Signature Page to PacifiCorp II Credit Agreement



THE BANK OF NEW YORK MELLON, as
Lender


By /s/ Hussam S. Alsahlani
Name: Hussam S. Alsahlani
Title: Vice President

Signature Page to PacifiCorp II Credit Agreement



NATIONAL COOPERATIVE SERVICES
CORPORATION, as Lender


By /s/ Uzma Rahman
Name: Uzma Rahman
Title: Assistant Secretary - Treasurer

Signature Page to PacifiCorp II Credit Agreement



The Northern Trust Company,
as Lender


By /s/ Robert Jank
Name: Robert Jank
Title: Managing Director Corporate Banking

Signature Page to PacifiCorp II Credit Agreement

EXHIBIT A

(to the Credit Agreement)

FORM OF NOTICE OF BORROWING

This section has been REDACTED

EXHIBIT B

(to the Credit Agreement)

FORM OF REQUEST FOR ISSUANCE

JPMorgan Chase Bank, N.A., as Administrative Agent

for the Lenders party

to the Credit Agreement

referred to below

Attention: Letter of Credit Department

[ ], as LC Issuing Bank

[Date]

Ladies and Gentlemen:

The undersigned, PacifiCorp, refers to the Credit Agreement, dated as of June 30, 2017 (as amended or modified from time to time, the “ Credit Agreement ,” the terms defined therein being used herein as therein defined), among the undersigned, certain Lenders and LC Issuing Banks party thereto, and JPMorgan Chase Bank, N.A., as Administrative Agent, and hereby gives you notice pursuant to Section 2.04(a) of the Credit Agreement that the undersigned hereby requests the issuance of a Letter of Credit (the “ Requested Letter of Credit ”) in accordance with the following terms:

(i) the LC Issuing Bank is _____________;

(ii) the requested date of [issuance] [extension] [modification] [amendment] of the Requested Letter of Credit (which is a Business Day) is _____________;

(iii) the expiration date of the Requested Letter of Credit requested hereby is ___________; ¹

(iv) the proposed stated amount of the Requested Letter of Credit is _______________; ²

(v) the beneficiary of the Requested Letter of Credit is _____________, with an address at ______________; and

(vi) the conditions under which a drawing may be made under the Requested Letter of Credit are as follows: ___________________; and

(vii) any other additional conditions are as follows: ___________________.

_______________________

1 Date may not be later than the fifth Business Day preceding the Termination Date.

2 Must be minimum of $100,000.

B-2

The undersigned hereby certifies that the following statements are true on the date hereof, and will be true on the date of the [issuance] [extension] [modification] [amendment] of the Requested Letter of Credit:

(A) the representations and warranties contained in Section 4.01 of the Credit Agreement (other than the representations and warranties in the first sentence of Section 4.01(g), in Section 4.01(i) and in the first sentence of Section 4.01(n)) are true and correct in all material respects on and as of the date hereof, before and after giving effect to the [issuance] [extension] [modification] [amendment] of the Requested Letter of Credit and to the application of the proceeds therefrom, as though made on and as of the date hereof; and

(B) no event has occurred and is continuing, or would result from the [issuance] [extension] [modification] [amendment] of the Requested Letter of Credit or from the application of the proceeds therefrom, that constitutes a Default.

[The undersigned hereby further certifies that, on the date of the issuance of the Requested Letter of Credit, the conditions precedent set forth in Section 3.03 of the Credit Agreement will be satisfied.] ³



PACIFICORP


By
Name:
Title:



Consented to as of the date ⁴
first above written:

[NAME OF LETTER OF CREDIT BENEFICIARY]


By
Name:
Title:

________________________

3 Necessary only for issuance of a Bond Letter of Credit

4 Necessary only for modification or amendment

EXHIBIT C

(to the Credit Agreement)

ASSIGNMENT AND ASSUMPTION

_____________________________

1 For bracketed language here and elsewhere in this form relating to the Assignor(s), if the assignment is from a

single Assignor, choose the first bracketed language. If the assignment is from multiple Assignors, choose

the second bracketed language.

2 For bracketed language here and elsewhere in this form relating to the Assignee(s), if the assignment is to a single

Assignee, choose the first bracketed language. If the assignment is to multiple Assignees, choose the

second bracketed language.

3 Select as appropriate.

4 Include bracketed language if there are either multiple Assignors or multiple Assignees.

C- 2

[the][any] Assignor and, except as expressly provided in this Assignment and Assumption, without representation or warranty by [the][any] Assignor.



1.	Assignor[s]:	________________________________

		________________________________
	[Assignor [is] [is not] a Defaulting Lender]

2.	Assignee[s]:	________________________________

		________________________________
	[for each Assignee, indicate [Affiliate][Approved Fund] of [identify Lender]

3.	Borrower(s):	PacifiCorp

4.	Administrative Agent:	JPMorgan Chase Bank, N.A., as the administrative agent under the
		Credit Agreement

5.	Credit Agreement:	The $600,000,000 Credit Agreement dated as of June 30, 2017
		among PacifiCorp, the Lenders parties thereto, JPMorgan
		Bank, N.A., as Administrative Agent, and the LC Issuing Banks
		parties thereto
6.	Assigned Interest[s]:



Assignor[s] ⁵	Assignee[s] ⁶	Facility Assigned ⁷	Aggregate Amount of Commitment/Loans for all Lenders ⁸	Amount of Commitment/Loans Assigned ⁸	Percentage Assigned of Commitment/ Loans ⁹	CUSIP Number
			$	$	%
			$	$	%
			$	$	%

[7. Trade Date: ______________] ¹⁰

[Page break]

_____________

5 List each Assignor, as appropriate.

6 List each Assignee, as appropriate.

7 Fill in the appropriate terminology for the types of facilities under the Credit Agreement that are being assigned

under this Assignment (e.g., "Revolving Credit Commitment," etc.)

8 Amount to be adjusted by the counterparties to take into account any payments or prepayments made between the

Trade Date and the Effective Date.

9 Set forth, to at least 9 decimels, as a percentage of the Commitment/Loans of all Lenders thereunder.

10 To be completed if the Assignor(s) and the Assignee(s) intend that the minimum assignment amount is to be

determined as of the Trade Date.

C- 3

Effective Date: _____________ ___, 20___ [TO BE INSERTED BY ADMINISTRATIVE AGENT AND WHICH SHALL BE THE EFFECTIVE DATE OF RECORDATION OF TRANSFER IN THE REGISTER THEREFOR.]

The terms set forth in this Assignment and Assumption are hereby agreed to:



ASSIGNOR[S] ¹¹
[NAME OF ASSIGNOR]


By______________________________
Title:

[NAME OF ASSIGNOR]


By______________________________
Title:

ASSIGNEE[S] ¹²
[NAME OF ASSIGNEE]


By______________________________
Title:

[NAME OF ASSIGNEE]


By______________________________
Title:

^{______________________________________________}

¹¹ Add additional signature blocks as needed. Include both Fund/Pension Plan and manager making the trade (if applicable).

¹² Add additional signature blocks as needed. Include both Fund/Pension Plan and manager making the trade (if applicable).

C- 4



[Consented to and] ¹³ Accepted:
JPMORGAN CHASE BANK, N.A., as
Administrative Agent


By
Title:

[Consented to:] ¹⁴
[NAME OF RELEVANT PARTY]


By
Title:

________________________

¹³ To be added only if the consent of the Administrative Agent is required by the terms of the Credit Agreement.

¹⁴ To be added only if the consent of the Borrower and/or other parties (e.g. LC Issuing Bank) is required by the terms of the Credit Agreement.

ANNEX 1

$600,000,000 Credit Agreement, dated as of June 30, 2017, among PacifiCorp, the Lenders parties thereto, JPMorgan Chase Bank, N.A., as Administrative Agent, and the LC Issuing Banks parties thereto

STANDARD TERMS AND CONDITIONS FOR
ASSIGNMENT AND ASSUMPTION

1. Representations and Warranties .

and to purchase [the][such] Assigned Interest, (vi) it has, independently and without reliance upon the Administrative Agent or any other Lender and based on such documents and information as it has deemed appropriate, made its own credit analysis and decision to enter into this Assignment and Assumption and to purchase [the][such] Assigned Interest, and (vii) attached to the Assignment and Assumption is any documentation required to be delivered by it pursuant to the terms of the Credit Agreement, duly completed and executed by [the][such] Assignee; and (b) agrees that (i) it will, independently and without reliance on the Administrative Agent, [the][any] Assignor or any other Lender, and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit decisions in taking or not taking action under the Loan Documents, and (ii) it will perform in accordance with their terms all of the obligations which by the terms of the Loan Documents are required to be performed by it as a Lender.

EXHIBIT F-1

(to the Credit Agreement)

[FORM OF]

U.S. TAX COMPLIANCE CERTIFICATE

(For Foreign Lenders That Are Not Partnerships For U.S. Federal Income Tax Purposes)

Reference is hereby made to the Credit Agreement, dated as of June 30, 2017 (as amended, supplemented or otherwise modified from time to time, the “ Credit Agreement ”), among PacifiCorp (the “ Borrower ”), the Lenders party thereto from time to time, JPMorgan Chase Bank, N.A., as Administrative Agent and the LC Issuing Banks party thereto from time to time.

The undersigned has furnished the Administrative Agent and the Borrower with a certificate of its non-U.S. Person status on IRS Form W-8BEN-E or IRS Form W-8BEN. By executing this certificate, the undersigned agrees that (1) if the information provided on this certificate changes, the undersigned shall promptly so inform the Borrower and the Administrative Agent, and (2) the undersigned shall have at all times furnished the Borrower and the Administrative Agent with a properly completed and currently effective certificate in either the calendar year in which each payment is to be made to the undersigned, or in either of the two calendar years preceding such payments.

Unless otherwise defined herein, terms defined in the Credit Agreement and used herein shall have the meanings given to them in the Credit Agreement.



[NAME OF LENDER]
By: ____________________________________
	Name:
	Title:

Date: ________ __, 20[ ]

EXHIBIT F-2

(to the Credit Agreement)

[FORM OF]

U.S. TAX COMPLIANCE CERTIFICATE

(For Foreign Participants That Are Not Partnerships For U.S. Federal Income Tax Purposes)

Unless otherwise defined herein, terms defined in the Credit Agreement and used herein shall have the meanings given to them in the Credit Agreement.



[NAME OF PARTICIPANT]

By: ____________________________________
	Name:
	Title:

Date: ________ __, 20[ ]

EXHIBIT F-3

(to the Credit Agreement)

[FORM OF]

U.S. TAX COMPLIANCE CERTIFICATE

(For Foreign Participants That Are Partnerships For U.S. Federal Income Tax Purposes)

Unless otherwise defined herein, terms defined in the Credit Agreement and used herein shall have the meanings given to them in the Credit Agreement.



[NAME OF PARTICIPANT]

By: ___________________________________
	Name:
	Title:

Date: ________ __, 20[ ]

EXHIBIT F-4

(to the Credit Agreement)

[FORM OF]

U.S. TAX COMPLIANCE CERTIFICATE

(For Foreign Lenders That Are Partnerships For U.S. Federal Income Tax Purposes)

Unless otherwise defined herein, terms defined in the Credit Agreement and used herein shall have the meanings given to them in the Credit Agreement.



[NAME OF LENDER]
By: _____________________________________
	Name:
	Title:

Date: ________ __, 20[ ]

SCHEDULE I

LIST OF COMMITMENT AMOUNTS AND APPLICABLE LENDING OFFICES

PACIFICORP

U.S. $600,000,000 Credit Agreement



Name of Bank	Commitment Amount	Domestic Lending Office	Eurodollar Lending Office
JPMorgan Chase Bank, N.A.	$36,273,225.79	500 Stanton Christiana Road, Ops 2 Floor 3 Newark, Delaware 19713-2107 Contact : Juan Javellana Phone: (212) 270-4272 Email: juan.j.javellana@jpmorgan.com Group Email : na_cpg@jpmorgan.com	Same as Domestic Lending Office

Wells Fargo Bank, National Association	$36,273,225.79	90 S. 7 ^th Street MAC: N9305-06G Minneapolis, MN 55402 Contact : Greg Gredvig Phone: (612) 667-4832 Fax : (612) 316-0506 Email: gregory.r.gredvig@wellsfargo.com Group Email: RKELCLNSVPayments@wellsfargo.com	Same as Domestic Lending Office

Mizuho Bank, Ltd.	$36,273,225.79	1251 Avenue of the Americas New York, New York 10020 Contact : Nelson Chang Phone: (212) 282-3465 Fax: (212) 282-4488 Email: nelson.chang@mizuhocbus.com Group Email: LAU_USCorp3@mizuhocbus.com	Same as Domestic Lending Office

I-2



Name of Bank	Commitment Amount	Domestic Lending Office	Eurodollar Lending Office
MUFG Union Bank, N.A.	$36,273,225.79	445 South Figueroa Street, 15th Floor Los Angeles, California 90071 Contact: Jeffrey Flagg Phone: (213) 236-6911 Email: jflagg@us.mufg.jp Group Email: #CLOSYND@unionbank.com	Same as Domestic Lending Office

Citibank, N.A.	$36,273,225.79	399 Park Avenue, 16 ^th Floor 5 New York, New York 10043 Contact : Loan Administration Phone: (302) 894-6052 Fax: (212) 994-0847 Email: GLOriginationOps@citi.com	Same as Domestic Lending Office

U.S. Bank, National Association	$36,273,225.79	800 Nicollet Mall Minneapolis, Minnesota 55402 Contact : Holland H. Williams Phone: (208) 383-7565 Fax: (208) 383-7489 Email: hollandhuffman.williams@usbank.com	Same as Domestic Lending Office

BNP Paribas	$36,273,225.79	787 Seventh Avenue New York, New York 10019 Contact : Denis O’Meara Phone: (212) 471-8108 Fax: (212) 841-2745 Email: denis.omeara@americas.bnpparibas.com	Same as Domestic Lending Office

Barclays Bank PLC	$23,732,698.24	745 Seventh Avenue, 24 ^th FL New York, New York 10019 Contact : Leah Kaniampuram Phone: (212) 526-4763 Email: leah.kaniampuram@barclays.com Group Email: xraUSLoanOps4@Barclays.com	Same as Domestic Lending Office

I-3



Name of Bank	Commitment Amount	Domestic Lending Office	Eurodollar Lending Office
Royal Bank of Canada	$23,732,698.25	Three World Financial Center New York, New York 10281 Contact : Rahul Shah Phone: (212) 858-6053 Fax: (212) 428-6201 Email: rahul.shah@rbccm.com	Same as Domestic Lending Office

The Bank of Nova Scotia	$23,732,698.25	720 King Street W-2nd floor, Toronto, Ontario, Canada M5V 2T3 Contact : Mona Nagpaul Phone: (212) 225-5705 Fax: (212) 225-5709 Email: mona.nagpaul@scotiabank.com Group Email: GWSUSCorp_LoanOps@scotiabank.com	Same as Domestic Lending Office

Bank of Montreal, Chicago Branch	$21,461,958.53	115 S. LaSalle St., 17 ^th Floor West Chicago, IL 60603 Contact: Carol McDonald Phone: (403) 515-3663 Fax: (403) 515-3650 Email: carol.mcdonald@bmo.com	Same as Domestic Lending Office

Sumitomo Mitsui Banking Corp.	$26,059,294.04	277 Park Avenue New York, New York 10172 Contact : Emily Estevez Phone: (212) 224-4177 Fax : (212) 224-4384 Email: eestevez@smbclf.com	Same as Domestic Lending Office

Canadian Imperial Bank of Commerce, New York Branch	$21,236,787.84	595 Bay Street, 5 ^th Floor Toronto, ON M5G 2C2 Contact : Angela Tom Phone: (416) 542-4446 Fax: (905) 948-1934	Same as Domestic Lending Office

I-4



Name of Bank	Commitment Amount	Domestic Lending Office	Eurodollar Lending Office
CoBank, ACB	$24,049,916.46	6340 S. Fiddlers Green Circle Greenwood Village, CO 80111 Contact : Courtney Baird Phone: (303) 793-2121 Fax : (303) 740-4002 Email: cbaird@cobank.com Group Email: agencybank@cobank.com	Same as Domestic Lending Office

KeyBank National Association	$26,863,045.07	4900 Tiedeman Road Brooklyn, OH 44144 Contact : KAS Servicing Phone: (216) 813-5647 Fax : (216) 370-5997 (Note: All notices must be faxed) Email: kas_servicing@keybank.com Group Email: kas_servicing@keybank.com	Same as Domestic Lending Office

PNC Bank, National Association	$25,657,418.52	249 Fifth Avenue One PNC Plaza Pittsburgh, Pennsylvania 15222 Contact : Janet Gordon Phone: (440) 546-6564 Fax: (877) 717-5502 Email: janet.gordon@pnc.com Group Email: ParticipationCloserRequests@pnc.com	Same as Domestic Lending Office

SunTrust Bank	$32,087,426.77	211 Perimeter Center Parkway Atlanta, GA 30346 Contact: Meta Tshimanga Phone: (770) 352-5231 Fax: (844) 288-3379 Email: Meta.Tshimanga@suntrust.com	Same as Domestic Lending Office

I-5



Name of Bank	Commitment Amount	Domestic Lending Office	Eurodollar Lending Office
TD Bank N.A.	$32,087,426.77	2005 Market Street Philadelphia, Pennsylvania 19103 Contact: Vijay Prasad Phone: (646) 652-1427 Email: Vijay.prasad2@td.com Group Email: investor.processing@yesbank.com	Same as Domestic Lending Office

The Bank of New York Mellon	$20,433,036.81	6023 Airport Road Oriskany, NY 13424 Contact : Brian K. Brown Phone: (315) 801-2433 Fax: (315) 765-4822 Email: brian.brown@bnymellon.com	Same as Domestic Lending Office

National Cooperative Services Corporation	$25,000,000.00	20701 Cooperative Way Dulles, Virginia 20166 Contact : Jamie Rodrigues Phone: (703) 467-2740 Fax: (703) 467-5653 Email: Jamie.Rodriguez@nrucfc.coop	Same as Domestic Lending Office

The Northern Trust Company	$19,953,013.92	50 S. LaSalle Street Chicago, Illinois 60603 Contact: Murtuza Ziauddin Phone: (312) 557-3075 Fax: (312) 557-1425 Email: mz14@ntrs.com	Same as Domestic Lending Office

TOTAL	$600,000,000

SCHEDULE II

LIST OF FRONTING COMMITMENTS

PACIFICORP

U.S. $600,000,000 Credit Agreement



LC Issuing Bank	LC Issuing Bank Address	Fronting Commitment

Wells Fargo Bank, National Association	90 S. 7 ^th Street MAC: N9305-06G Minneapolis, MN 55402 Contact : Greg Gredvig Phone: (612) 667-4832 Fax : (612) 316-0506 Email: gregory.r.gredvig@wellsfargo.com Group Email: RKELCLNSVPayments@wellsfargo.com	$125,000,000

BNP Paribas	787 Seventh Avenue New York, New York 10019 Contact : Denis O’Meara Phone: (212) 471-8108 Fax: (212) 841-2745 Email: denis.omeara@americas.bnpparibas.com	$50,000,000

SCHEDULE III

LIST OF MATERIAL SUBSIDIARIES

PACIFICORP

U.S. $600,000,000 Credit Agreement

None.

SCHEDULE IV

EXISTING LETTERS OF CREDIT

None.

EXECUTION VERSION

U.S. $900,000,000

CREDIT AGREEMENT

Dated as of June 30, 2017

Among

MIDAMERICAN ENERGY COMPANY

as the Borrower

THE INITIAL LENDERS NAMED HEREIN

as Initial Lenders

MIZUHO BANK, LTD.

as Administrative Agent

and

THE LC ISSUING BANKS

PARTY HERETO FROM TIME TO TIME

as LC Issuing Banks



MIZUHO BANK, LTD. JPMORGAN CHASE BANK, N.A. WELLS FARGO SECURITIES, LLC	MUFG UNION BANK, N.A. BARCLAYS BANK PLC U.S. BANK NATIONAL ASSOCIATION RBC CAPITAL MARKETS

Joint Lead Arrangers and Joint Bookrunners



JPMORGAN CHASE BANK, N.A. WELLS FARGO BANK, NATIONAL ASSOCIATION MUFG UNION BANK, N.A. BARCLAYS BANK PLC U.S. BANK NATIONAL ASSOCIATION ROYAL BANK OF CANADA Syndication Agents	CITIBANK, N.A. BNP PARIBAS THE BANK OF NOVA SCOTIA SUMITOMO MITSUI BANKING CORPORATION BANK OF MONTREAL, CHICAGO BRANCH KEYBANK NATIONAL ASSOCIATION SUNTRUST BANK Documentation Agents

TABLE OF CONTENTS



			Page

ARTICLE I DEFINITIONS AND ACCOUNTING TERMS			1

	SECTION 1.01.	Certain Defined Terms	1
	SECTION 1.02.	Computation of Time Periods	23
	SECTION 1.03.	Accounting Terms	23
	SECTION 1.04.	Classification of Loans and Borrowings	24
	SECTION 1.05.	Other Interpretive Provisions	24

ARTICLE II AMOUNTS AND TERMS OF THE EXTENSIONS OF CREDIT			24

	SECTION 2.01.	The Revolving Loans	24
	SECTION 2.02.	Making the Revolving Loans	24
	SECTION 2.03.	[Reserved]	26
	SECTION 2.04.	Letters of Credit	26
	SECTION 2.05.	Fees	31
	SECTION 2.06.	Extension of the Termination Date	32
	SECTION 2.07.	Increase of the Commitments	33
	SECTION 2.08.	Termination or Reduction of the Commitments	34
	SECTION 2.09.	Repayment of Loans	35
	SECTION 2.10.	Evidence of Indebtedness	35
	SECTION 2.11.	Interest on Loans	36
	SECTION 2.12.	Interest Rate Determination	37
	SECTION 2.13.	Conversion of Revolving Loans	37
	SECTION 2.14.	Optional Prepayments of Loans	38
	SECTION 2.15.	Increased Costs	38
	SECTION 2.16.	Illegality	40
	SECTION 2.17.	Payments and Computations	40
	SECTION 2.18.	Taxes	42
	SECTION 2.19.	Sharing of Payments, Etc	46
	SECTION 2.20.	Mitigation Obligations; Replacement of Lenders	46
	SECTION 2.21.	Defaulting Lenders	47
	SECTION 2.22.	Cash Collateral	50

ARTICLE III CONDITIONS PRECEDENT			51

	SECTION 3.01.	Conditions Precedent to Effectiveness	51
	SECTION 3.02.	Conditions Precedent to each Extension of Credit	52
	SECTION 3.03.	Conditions Precedent to Issuance of Each Bond Letter of Credit	53



ARTICLE IV REPRESENTATIONS AND WARRANTIES			55

	SECTION 4.01.	Representations and Warranties of the Borrower	55

ARTICLE V COVENANTS OF THE BORROWER			58

	SECTION 5.01.	Affirmative Covenants	58
	SECTION 5.02.	Negative Covenants	61
	SECTION 5.03.	Financial Covenant	63

ARTICLE VI EVENTS OF DEFAULT			64

	SECTION 6.01.	Events of Default	64
	SECTION 6.02.	Actions in Respect of the Letters of Credit upon Default	66

ARTICLE VII THE ADMINISTRATIVE AGENT			66

	SECTION 7.01.	Appointment and Authority	66
	SECTION 7.02.	Rights as a Lender	67
	SECTION 7.03.	Exculpatory Provisions	67
	SECTION 7.04.	Reliance by Administrative Agent	68
	SECTION 7.05.	Resignation of Administrative Agent	69
	SECTION 7.06.	Non-Reliance on Administrative Agent and Other Lenders	70
	SECTION 7.07.	Indemnification	70
	SECTION 7.08.	No Other Duties, etc	71

ARTICLE VIII MISCELLANEOUS			71

	SECTION 8.01.	Amendments, Etc	71
	SECTION 8.02.	Notices, Etc	72
	SECTION 8.03.	No Waiver; Remedies	73
	SECTION 8.04.	Costs and Expenses; Indemnification	74
	SECTION 8.05.	Right of Set-off	76
	SECTION 8.06.	Binding Effect	76
	SECTION 8.07.	Assignments and Participations	77
	SECTION 8.08.	Confidentiality	81
	SECTION 8.09.	Governing Law	81
	SECTION 8.10.	Severability	81
	SECTION 8.11.	Execution in Counterparts	81
	SECTION 8.12.	Jurisdiction, Etc	82
	SECTION 8.13.	Waiver of Jury Trial	82
	SECTION 8.14.	USA Patriot Act	83
	SECTION 8.15.	No Fiduciary Duty	83
	SECTION 8.16.	Acknowledgment and Consent to Bail-In of EEA Financial
		Institutions	84



EXHIBITS AND SCHEDULES

EXHIBIT A	---------------	Form of Notice of Borrowing
EXHIBIT B	---------------	Form of Request for Issuance
EXHIBIT C	---------------	Form of Assignment and Assumption
EXHIBIT F-1	---------------	Form of U.S. Tax Compliance Certificate (For Foreign Lenders That Are Not Partnerships For U.S. Federal Income Tax Purposes)
EXHIBIT F-2	---------------	Form of U.S. Tax Compliance Certificate (For Foreign Participants That Are Not Partnerships For U.S. Federal Income Tax Purposes)
EXHIBIT F-3	---------------	Form of U.S. Tax Compliance Certificate (For Foreign Participants That Are Partnerships For U.S. Federal Income Tax Purposes)
EXHIBIT F-4	---------------	Form of U.S. Tax Compliance Certificate (For Foreign Lenders That Are Partnerships For U.S. Federal Income Tax Purposes)

SCHEDULE I	---------------	List of Commitment Amounts and Applicable Lending Offices
SCHEDULE II	---------------	List of Fronting Commitments
SCHEDULE III	---------------	List of Material Subsidiaries
SCHEDULE IV	---------------	Existing Letters of Credit

CREDIT AGREEMENT

CREDIT AGREEMENT, dated as of June 30, 2017 (as amended, restated, supplemented or otherwise modified from time to time, this “ Agreement ”), among MIDAMERICAN ENERGY COMPANY, an Iowa corporation (the “ Borrower ”), the banks, financial institutions and other institutional lenders listed on the signatures pages hereof (the “ Initial Lenders ”), MIZUHO BANK, LTD. (“ Mizuho ”), as administrative agent (in such capacity, the “ Administrative Agent ”) for the Lenders (as hereinafter defined), and the LC Issuing Banks (as hereinafter defined) party hereto from time to time.

Article I
DEFINITIONS AND ACCOUNTING TERMS

SECTION 1.01. Certain Defined Terms.

As used in this Agreement, the following terms shall have the following meanings (such meanings to be equally applicable to both the singular and plural forms of the terms defined):

“ Administrative Agent ” has the meaning specified in the first paragraph of this Agreement.

“ Administrative Questionnaire ” means an administrative questionnaire in a form supplied by the Administrative Agent.

“ Agent Fee Letter ” means the letter agreement dated April 24, 2017 among the Borrower and the Administrative Agent, as amended, restated, supplemented or otherwise modified from time to time.

“ Agent Parties ” has the meaning specified in Section 8.02(d)(ii).

time to time, and the applicable regulations thereunder, and (ii) to the extent applicable, the United Kingdom’s Bribery Act 2010, as amended from time to time.



Applicable Rating Level	Applicable Margin for Eurodollar Rate Revolving Loans	Applicable Margin for Base Rate Loans
1	0.550%	0.000%
2	0.625%	0.000%
3	0.750%	0.000%
4	0.875%	0.000%
5	1.000%	0.000%

“ Applicable Rating Level ” at any time shall be determined in accordance with the then-applicable S&P Rating or the then-applicable Moody’s Rating as follows:



S&P Rating/Moody’s Rating	Applicable Rating Level
S&P Rating AA or higher or Moody’s Rating Aa2 or higher	1
S&P Rating AA- or Moody’s Rating Aa3	2
S&P Rating A+ or Moody’s Rating A1	3
S&P Rating A or Moody’s Rating A2	4
S&P Rating A- or below or Moody’s Rating A3 or below or unrated	5

“ Assignment and Assumption ” means an assignment and assumption entered into by a Lender and an Eligible Assignee (with the consent of any party whose consent is required by Section 8.07), and accepted by the Administrative Agent, in substantially the form of Exhibit C or any other form approved by the Administrative Agent.

“ Bail-In Action ” means the exercise of any Write-Down and Conversion Powers by the applicable EEA Resolution Authority in respect of any liability of an EEA Financial Institution.

“ Base Rate” means a fluctuating interest rate per annum in effect from time to time, which rate per annum shall at all times be equal to the highest of:


(i)	the rate of interest announced by Mizuho from time to time as Mizuho’s prime rate;


(ii)	1/2 of 1% per annum above the NYFRB Rate in effect on such date; and

(iii)

; provided , that in no event shall the Base Rate be less than 0%.

“ Base Rate Loan” means a Loan that bears interest as provided in Section 2.11(a).

“ Berkshire Hathaway ” means Berkshire Hathaway Inc.

“ Bond Event of Default ” has the meaning specified in Section 6.01.

“ Bond LC Reimbursement Agreement ” means, with respect to any Bond Letter of Credit, any reimbursement agreement executed and delivered in connection with such Bond Letter of Credit by the Borrower and the LC Issuing Bank issuing such Bond Letter of Credit, as the same may be amended, supplemented, restated and otherwise modified from time to time.

“ Borrower ” has the meaning specified in the first paragraph of this Agreement.

“ Borrowing Date ” means the date of any Borrowing.

“ Change of Control ” has the meaning specified in Section 6.01(h).

“ Closing Date ” means June 30, 2017.

“ Commitment Fee Rate ” means, at any time, the rate per annum set forth below next to the Applicable Rating Level in effect at such time:



Applicable Rating Level	Commitment Fee Rate
1	0.045%
2	0.050%
3	0.060%
4	0.075%
5	0.100%

“ Commitments ” means the aggregate of each Lender’s Commitment hereunder.

“ Communications ” has the meaning specified in Section 8.02(d)(ii).

“ Credit Party ” means the Administrative Agent, any LC Issuing Bank or any Lender.

“ Debt ” of any Person means, at any date, without duplication, (i) all indebtedness of such Person for borrowed money, (ii) all obligations of such Person for the deferred purchase price of property or services (other than trade payables incurred in the ordinary course of such Person’s business), (iii) all obligations of such Person evidenced by notes, bonds, debentures or other similar instruments, (iv) all obligations of such Person as lessee under leases that have been, in accordance with GAAP, recorded as capital leases, (v) all obligations of such Person in respect of reimbursement agreements with respect to acceptances, letters of credit (other than trade letters of credit) or similar extensions of credit, and (vi) all Guaranties. Solely for the purpose of calculating compliance with the covenant in Section 5.03, Debt shall not include Debt of the Borrower or its Consolidated Subsidiaries arising from the qualification of an arrangement as a lease due to that arrangement conveying the right to use or to control the use of property, plant or equipment under the application of the Financial Accounting Standards Board’s Accounting Standards Codification Topic 840 – Leases paragraph 840-10-15-6 (or the Accounting Standards Codification Topic 842 – Leases paragraphs 842-10-15-3 through 5), nor shall Debt include Debt of any variable interest entity consolidated by the Borrower under the requirements of Topic 810 – Consolidation.

“ Declining Lender ” has the meaning specified in Section 2.06(b).

“ Default ” means any Event of Default or any event that would constitute an Event of Default but for the requirement that notice be given or time elapse or both.

“ Defaulting Lender ” means, subject to Section 2.21(b), any Lender that (i) has failed, within two Business Days after the date required to be funded or paid, to (A) fund all or any portion of its Loans, (B) fund any portion of its participations in Letters of Credit or (C) pay over to any Credit Party any other amount required to be paid by it under this Agreement, unless, in the case of clause (A) above, such failure is the result of such Lender’s good faith determination that one or more conditions precedent to funding (each of which conditions precedent, together with any applicable default, shall be specifically identified in writing) has not been satisfied, as notified by such Lender to the Administrative Agent and the Borrower in such writing, (ii) has notified the Borrower or any Credit Party in writing that it does not intend to comply with any of its funding obligations under this Agreement or has made a public statement to the effect that it does not intend to comply with its funding obligations under this Agreement (unless such writing or public statement relates to such Lender’s obligation to fund a Loan hereunder and such position is based on such Lender’s good faith determination that a condition precedent (which condition precedent, together with any applicable default, shall be specifically identified in such writing or public statement) to funding a Loan under this Agreement cannot be satisfied), (iii) has failed, within three Business Days after written request by the Administrative Agent, any LC Issuing Bank or the Borrower, acting in good faith, to confirm in writing to such requesting party that it will comply with its obligations to fund prospective Loans and participations in then outstanding Letters of Credit under this Agreement, provided that such Lender shall cease to be a Defaulting Lender pursuant to clause (iii) upon such requesting party’s receipt of such written confirmation in form and substance reasonably satisfactory to it and the Administrative Agent, or (iv) has become the subject of a (A) Bankruptcy Event or (B) Bail-In Action. Any determination by the Administrative Agent that a Lender is a Defaulting Lender under any one or more of clauses (i) through (iv) above shall be conclusive and binding absent manifest error, and such Lender shall be deemed to be a Defaulting Lender (subject to Section 2.21(b)) upon delivery of written notice of such determination to the Borrower, each LC Issuing Bank and each Lender.

“ Designated Lender ” has the meaning specified in Section 2.07(a).

“ Dollars ” and the symbol “$” mean lawful currency of the United States of America.

“ EEA Member Country ” means any of the member states of the European Union, Iceland, Liechtenstein, and Norway.

“ ERISA ” means the Employee Retirement Income Security Act of 1974, as amended from time to time, and the regulations promulgated and rulings issued thereunder.

insolvency under Title IV of ERISA of any Multiemployer Plan, or the receipt by the Borrower or any of its ERISA Affiliates of any notice that a Multiemployer Plan is in endangered or critical status under Section 305 of ERISA; (vi) the failure by the Borrower or any of its ERISA Affiliates to comply with ERISA or the related provisions of the Internal Revenue Code with respect to any Pension Plan; (vii) the Borrower or any of its ERISA Affiliates incurring any liability under Title IV of ERISA with respect to any Pension Plan (other than premiums due and not delinquent under Section 4007 of ERISA); or (viii) the failure by the Borrower or any of its Subsidiaries to comply with Applicable Law with respect to any Foreign Plan.

“ EU Bail-In Legislation Schedule ” means the EU Bail-In Legislation Schedule published by the Loan Market Association (or any successor Person), as in effect from time to time.

“ Eurocurrency Liabilities ” has the meaning assigned to that term in Regulation D of the Board of Governors of the Federal Reserve System, as in effect from time to time.

which the interest rate on Eurodollar Rate Revolving Loans is determined) having a term equal to such Interest Period.

“ Eurodollar Rate Revolving Loan ” means a Revolving Loan that bears interest as provided in Section 2.11(b).

“ Events of Default ” has the meaning specified in Section 6.01.

“ Extension Effective Date ” has the meaning specified in Section 2.06(c).

“ FERC ” means the U.S. Federal Energy Regulatory Commission.

“ Foreign Lender ” means a Lender that is not a U.S. Person.

“ GAAP ” has the meaning specified in Section 1.03.

“ Governmental Approval ” means any authorization, consent, approval, license or exemption of, registration or filing with, or report or notice to, any Governmental Authority.

“ Indemnified Party ” has the meaning specified in Section 8.04(b).

“ Indenture ” means, for any series of Bonds, the indenture pursuant to which such Bonds are issued and any supplement thereto relating to such Bonds.

“ Initial Lenders ” has the meaning specified in the first paragraph of this Agreement.

“ Interest Period ” means, for each Eurodollar Rate Revolving Loan comprising part of the same Borrowing, the period commencing on the date of such Eurodollar Rate

Revolving Loan or the date of the Conversion of any Base Rate Revolving Loan into such Eurodollar Rate Revolving Loan and ending on the last day of the period selected by the Borrower pursuant to the provisions below and, thereafter, with respect to Eurodollar Rate Revolving Loans, each subsequent period commencing on the last day of the immediately preceding Interest Period and ending on the last day of the period selected by the Borrower pursuant to the provisions below. The duration of each such Interest Period shall be one, two, three or six months or such other period acceptable to all the Lenders, as the Borrower may, upon notice received by the Administrative Agent not later than 12:00 noon (New York City Time) on the third Business Day prior to the first day of such Interest Period, select; provided, however, that:


(i)	the Borrower may not select any Interest Period that ends after the latest Termination Date in effect at such time;


(ii)	Interest Periods commencing on the same date for Eurodollar Rate Revolving Loans comprising part of the same Borrowing shall be of the same duration;

(iii)


(iv)	whenever the first day of any Interest Period occurs on a day of an initial calendar month for which there is no numerically corresponding day in the calendar month that succeeds such initial calendar month by the number of months equal to the number of months in such Interest Period, such Interest Period shall end on the last Business Day of such succeeding calendar month.

“ Internal Revenue Code ” means the Internal Revenue Code of 1986, as amended from time to time, and the regulations promulgated and rulings issued thereunder.

“ IRS ” means the U.S. Internal Revenue Service.

“ Issuer ” means, for any series of Bonds, the issuer of such Bonds under the applicable Indenture.

“ Joint Lead Arrangers ” means Mizuho Bank, Ltd., JPMorgan Chase Bank, N.A., Wells Fargo Securities, LLC, MUFG Union Bank, N.A., Barclays Bank PLC, U.S. Bank National Association and RBC Capital Markets ¹ .

“ JPMCB ” means JPMorgan Chase Bank, N.A.

“ LC Collateral Account ” has the meaning specified in Section 6.02.

“ LC Commitment Amount ” means $450,000,000 as the same may be reduced permanently from time to time pursuant to Section 2.08.

“ LC Fee ” has the meaning specified in Section 2.05(c).

“ LC Fronting Fee ” has the meaning specified in Section 2.05(d).

“ LC Payment Notice ” has the meaning specified in Section 2.04(e).

^{________________________________________________________________________________________________________________________________________________}

¹ RBC Capital Markets is a brand name for the capital markets business of Royal Bank of Canada and its affiliates.

“ Loan Documents ” means, collectively, (i) this Agreement, (ii) the Fee Letters and (iii) any promissory note issued pursuant to Section 2.10(d).

“ Loans ” means the loans made by the Lenders to the Borrower pursuant this Agreement.

“ Margin Regulations ” means Regulations T, U and X of the Board of Governors of the Federal Reserve System, as in effect from time to time.

“ Margin Stock ” has the meaning specified in the Margin Regulations.

“ Material Adverse Effect ” means a material adverse effect on (i) on the business, operations, properties, financial condition, assets or liabilities (including, without limitation, contingent liabilities) of the Borrower and its Subsidiaries, taken as a whole, (ii) the ability of the Borrower to perform its obligations under the Loan Documents or (iii) the ability of the Administrative Agent, any LC Issuing Bank or any Lender to enforce its rights under the Loan Documents.

“ Mizuho ” has the meaning specified in the recital of parties to this Agreement.

“ Moody’s ” means Moody’s Investors Service, Inc.

“ New York City Time ” means the time in New York, New York.

“ Non-Defaulting Lender ” means, at the time of determination, a Lender that is not a Defaulting Lender.

“ non-performing Lender ” has the meaning specified in Section 2.04(f).

“ Notice of Borrowing ” has the meaning specified in Section 2.02(a).

“ NYFRB ” means the Federal Reserve Bank of New York.

“ OFAC ” means The Office of Foreign Assets Control of the U.S. Department of the Treasury.

“ Participant ” has the meaning assigned to such term in Section 8.07(d).

“ Participant Register ” has the meaning specified in Section 8.07(d).

“ Patriot Act ” has the meaning specified in Section 8.14.

“ PBGC ” means the U.S. Pension Benefit Guaranty Corporation (or any successor).

the ordinary course of business to secure the purchase price of such property or equipment or to secure Debt incurred solely for the purpose of financing the acquisition, construction or improvement of such property or equipment, or Liens existing on such property or equipment at the time of its acquisition (other than any such Liens created in contemplation of such acquisition that were not incurred to finance the acquisition of such property), (ix) Liens securing Project Finance Debt, (x) any Lien on the Borrower’s or any Material Subsidiary’s interest in Bonds or cash or cash equivalents securing (A) the obligation of the Borrower or any Material Subsidiary to reimburse the issuer of a letter of credit supporting payments to be made in respect of such Bonds (including any Bond Letter of Credit) for a drawing on such letter of credit for the purpose of purchasing Bonds or (B) the obligation of the Borrower or any Material Subsidiary to reimburse or repay amounts advanced under any facility entered into to provide liquidity or credit support for any issue of Bonds; and (xi) extensions, renewals or replacements of any Lien described in clause (vi), (vii), (viii), (ix) or (x) for the same or a lesser amount, provided, however, that no such Lien shall extend to or cover any properties (other than after-acquired property already within the scope of the relevant Lien grant) not theretofore subject to the Lien being extended, renewed or replaced.

“ Person ” means any natural Person, corporation, limited liability company, trust, joint venture, association, company, partnership, Governmental Authority or other entity.

“ Platform ” has the meaning specified in Section 8.02(d)(i).

of the Borrower’s (or its direct or indirect parent company’s) intention to effect a Change of Control, which 90-day period will be extended so long as the S&P Rating or Moody’s Rating is under publicly announced consideration for possible downgrading by S&P or Moody’s, as applicable: the S&P Rating is reduced to any rating level below BBB+ or the Moody’s Rating is reduced to any rating level below Baa1 (or both the S&P Rating and the Moody’s Rating become unavailable).

“ Recipient ” means (i) the Administrative Agent, (ii) any Lender and (iii) any LC Issuing Bank, as applicable.

“ Register ” has the meaning specified in Section 8.07(c).

“ Reimbursement Amount ” has the meaning specified in Section 2.04(d).

“ Related Documents ” means, for any series of Bonds, such Bonds and the Indenture, the Issuer Agreement, any Remarketing Agreement and any Pledge Agreement relating to such Bonds.

“ Remarketing Agent ” means, for any series of Bonds, any Person acting in the capacity of remarketing agent for such Bonds pursuant to a Remarketing Agreement relating to such Bonds.

“ Removal Effective Date ” has the meaning specified in Section 7.05(b).

“ Request for Issuance ” means a request made pursuant to Section 2.04 in the form of Exhibit B.

Loans and participation obligations with respect to the LC Outstandings for any Defaulting Lender shall be disregarded in determining Required Lenders at any time.

“ Resignation Effective Date ” has the meaning specified in Section 7.05(a).

“ Revolving Loan ” means a Loan by a Lender to the Borrower pursuant to Section 2.02 as part of a Borrowing and refers to a Base Rate Revolving Loan or a Eurodollar Rate Revolving Loan.

“ Sanctioned Person ” means, at any time, (a) any Person listed in any Sanctions-related list of designated Persons maintained by OFAC, the U.S. Department of State or the U.S. Department of the Treasury, or maintained by the United Nations Security Council, the European Union, Her Majesty’s Treasury of the United Kingdom, as may be amended, supplemented or substituted from time to time, (b) any Person organized or ordinarily resident or located in a Sanctioned Country or (c) any Person controlled by, or acting on behalf of, any such Person described in clause (a) or (b). For purposes of this definition, “control” of a Person shall mean the direct or indirect (x) ownership of, or power to vote, 25% or more of the issued and outstanding equity interests having ordinary voting power for the election of directors of such Person or other Persons performing similar functions for such Person, or (y) power to direct or cause the direction of the management and policies of such Person whether by ownership of equity interests, contract or otherwise.

“ S&P” means S&P Global Ratings, a business unit of S&P Global, Inc.

“ SEC” means the U.S. Securities and Exchange Commission.

“ Service ” has the meaning set forth in the definition of “Eurodollar Rate”.

be later than the fifth Business Day preceding the Termination Date then applicable to the Lender that is the LC Issuing Bank for such Letter of Credit, (ii) in the case of any Letter of Credit that is not a Bond Letter of Credit, such date would be later than one year after the date of issuance of such Letter of Credit (subject, for the avoidance of doubt, to the ability to provide for an automatic renewal mechanic in accordance with Section 2.04(a)), or (iii) after taking into account (A) the respective Termination Dates then in effect with respect to all Lenders on the date of issuance or any extension of such Letter of Credit, and (B) the respective Stated Expiry Dates then in effect with respect to all other Letters of Credit then outstanding, the maximum amount of the LC Outstandings under all Letters of Credit (including such Letter of Credit) then outstanding would exceed the total LC Commitment Amounts scheduled to be in effect at any time during the period such Letter of Credit is scheduled to remain in effect, as determined by the Administrative Agent.

“ Trustee ” means, for any series of Bonds, the Person acting in the capacity of trustee for the holders of such Bonds under the Indenture pursuant to which such Bonds were issued.

“ Type ” refers to the distinction between Loans bearing interest at the Base Rate and Loans bearing interest at the Eurodollar Rate.

“ U.S. Person ” means any Person that is a “United States Person” as defined in Section 7701(a)(30) of the Internal Revenue Code.

“ U.S. Tax Compliance Certificate ” has the meaning assigned to such term in Section 2.18(g)(ii).

“ Withholding Agent ” means the Borrower and the Administrative Agent.

SECTION 1.02. Computation of Time Periods.

SECTION 1.03. Accounting Terms.

SECTION 1.04. Classification of Loans and Borrowings.

SECTION 1.05. Other Interpretive Provisions.

the singular includes the plural and the plural includes the singular; (vi) the words “including”, “include” and “includes” shall be deemed to be followed by the words “without limitation”; (vii) captions and headings are for ease of reference only and shall not affect the construction hereof; and (viii) references to any time of day shall be to New York City Time unless otherwise specified.

Article II
AMOUNTS AND TERMS OF THE EXTENSIONS OF CREDIT

SECTION 2.01. The Revolving Loans.

(b) In no event shall the Borrower be entitled to request or receive a Borrowing that (i) would exceed the Available Commitments or (ii) would cause the Outstanding Credits to exceed the Commitments.

SECTION 2.02. Making the Revolving Loans.

Administrative Agent will make such funds available to the Borrower no later than 3:30 p.m. (New York City Time) in such manner as the Borrower shall have specified in the applicable Notice of Borrowing.

SECTION 2.03. [Reserved]

SECTION 2.04. Letters of Credit.

(a) Subject to the terms and conditions hereof, each LC Issuing Bank agrees to issue Letters of Credit from time to time for the account of the Borrower (or to extend the stated maturity thereof or to amend or modify the terms thereof), in an aggregate stated amount not exceeding such LC Issuing Bank’s Fronting Commitment, up to a maximum aggregate stated amount for all Letters of Credit at any one time outstanding equal to the LC Commitment Amount. With respect to Letters of Credit that are not Bond Letters of Credit, such issuance shall occur on not less than two Business Days’ prior notice thereof by delivery of (x) a Request for Issuance for such Letter of Credit to the Administrative Agent and the LC Issuing Bank for such Letter of Credit, and (y) such LC Issuing Bank’s standard form of Letter of Credit application for the requested Letter of Credit (including, for direct pay Letters of Credit, any reimbursement agreement or other standard form required by such LC Issuing Bank) to the letter of credit department of such LC Issuing Bank for the account of the Borrower. With respect to each Bond Letter of Credit, such issuance shall occur after receipt of (x) a Request for Issuance for such Bond Letter of Credit to the Administrative Agent and the LC Issuing Bank for such Bond Letter of Credit, (y) the Bond LC Reimbursement Agreement for such Bond Letter of Credit, as may be required by the LC Issuing Bank for such Bond Letter of Credit, and (z) the documents required pursuant to Section 3.03 and such Bond LC Reimbursement Agreement; provided that in the case of any Request for Issuance for an extension of an outstanding Bond Letter of Credit, such Request for Issuance shall be delivered to the Administrative Agent and the applicable LC Issuing Bank at least 90 days prior to the then-current Stated Expiry Date of such Bond Letter of Credit. Each Letter of Credit shall be issued in a form acceptable to the applicable LC Issuing Bank. Each Request for Issuance shall specify (i) the identity of the applicable LC Issuing Bank, (ii) the date (which shall be a Business Day) of issuance of such Letter of Credit (or the date of effectiveness of such extension, modification or amendment) and the Stated Expiry Date thereof, (iii) the proposed stated amount of such Letter of Credit (which amount (A) shall not be less than $100,000 and (B) may be subject to any automatic increase and reinstatement provisions), (iv) the name and address of the beneficiary of such Letter of Credit and (v) a statement of drawing conditions applicable to such Letter of Credit. If such Request for Issuance relates to an amendment or modification of a Letter of Credit, it shall be accompanied by the consent of the beneficiary of the Letter of Credit thereto (except in the case of an extension of the Stated Expiry Date of any Bond Letter of Credit where no consent of the beneficiary is required for such extension). If so requested by the Borrower, a Letter of Credit that is not a Bond Letter of Credit may provide that it is automatically renewable for additional one-year periods if subject to an ability of the applicable LC Issuing Bank to not renew by giving notice of the same to the beneficiary of such Letter of Credit. Each Request for Issuance shall be irrevocable unless modified or rescinded by the Borrower prior to the issuance by the applicable LC Issuing Bank of the requested Letter of Credit or prior to the effectiveness of the requested extension, modification or amendment to a Letter of Credit, as applicable. Upon fulfillment of the applicable conditions precedent and the other requirements set forth herein, the relevant LC Issuing Bank shall issue (or extend, amend or modify) such Letter of Credit and provide notice and a copy thereof to the Administrative Agent, which shall promptly furnish copies thereof to the Lenders that shall so request; provided that the LC Issuing Bank shall not issue or amend any Letter of Credit if such LC Issuing Bank has received notice from the Administrative Agent that the applicable conditions precedent have not been satisfied. The Existing Letters of Credit shall, as of the Closing Date, be deemed to have been issued as Letters of Credit hereunder and subject to and governed by the terms of this Agreement. (i) On the Closing Date with respect to all Existing Letters of Credit and (ii) upon the date of issuance

with respect to all other Letters of Credit, each Lender shall be deemed, without further action by any party hereto, to have irrevocably and unconditionally purchased from such LC Issuing Bank without recourse a participation in such Letter of Credit equal to such Lender’s Commitment Percentage of the aggregate amount available to be drawn under such Letter of Credit. Upon each modification of a Letter of Credit by any LC Issuing Bank which modifies the aggregate amount available to be drawn under such Letter of Credit, such LC Issuing Bank and the Lenders shall be deemed, without further action by any party hereto, to have purchased or sold, as appropriate, participations in such Letter of Credit such that each Lender’s participation in such Letter of Credit shall equal such Lender’s Commitment Percentage of such modified aggregate amount available to be drawn under such Letter of Credit. Each Letter of Credit shall utilize the Commitment of each Lender by an amount equal to the amount of such participation. Without limiting the foregoing, any LC Issuing Bank that issues a Bond Letter of Credit agrees that (i) all Bonds pledged to such LC Issuing Bank pursuant to any applicable Pledge Agreement or otherwise registered in the name of such LC Issuing Bank pursuant to the other Related Documents will be held for the benefit of such LC Issuing Bank and the Lenders and (ii) to apply and/or remit all proceeds from the sale or remarketing of such Bonds in accordance with Section 2.17(f).

performing Lender for such non-performing Lender’s failure to fund its participation in the reimbursement obligations of the Borrower under subsection (e) above) severally agree to pay to the Administrative Agent for the account of such LC Issuing Bank forthwith on demand such amount, together with interest thereon for each day from the date such non-performing Lender would have funded its participation had it complied with the requirements of subsection (e) above until the date such amount is paid to the Administrative Agent at (i) in the case of the Borrower, the interest rate applicable at the time to Base Rate Loans plus, if any amount paid by such LC Issuing Bank under a Letter of Credit is not reimbursed by the Borrower within three Business Days, 2%, in accordance with Section 2.04(d), and (ii) in the case of such non-performing Lender, the Federal Funds Effective Rate, for the first three days and, thereafter, at a rate of interest equal to the rate applicable to Base Rate Loans.

(i) any lack of validity or enforceability of this Agreement or any other agreement or instrument relating thereto or to such Letter of Credit;

(ii) any amendment or waiver of, or any consent to departure from, the terms of this Agreement or such Letter of Credit;

(vi) the use that may be made of any Letter of Credit by, or any act or omission of, the beneficiary of any Letter of Credit (or any Person for which the beneficiary may be acting); or

(vii) any other circumstance or happening whatsoever, whether or not similar to any of the foregoing.

(i) The Borrower assumes all risks of the acts and omissions of any beneficiary or transferee of any Letter of Credit. Neither any LC Issuing Bank, the Lenders nor any of their respective officers, directors, employees, agents or Affiliates shall be liable or responsible for, and the Borrower’s reimbursement obligation in respect of any Letter of Credit shall not be affected by, (i) the use that may be made of such Letter of Credit or any acts or omissions of any beneficiary or transferee thereof in connection therewith; (ii) the validity, sufficiency or genuineness of documents, or of any endorsement thereon, even if such documents should prove to be in any or all respects invalid, insufficient, fraudulent or forged; (iii) payment by any LC Issuing Bank against presentation of documents that do not comply with the terms of such Letter of Credit, including failure of any documents to bear any reference or adequate reference to such Letter of Credit; (iv) any dispute between or among the Borrower, any of its Affiliates, the beneficiary of any Letter of Credit or any financing institution or other party to whom any Letter of Credit may be transferred or any claims or defenses whatsoever of the Borrower or of its Affiliates against the beneficiary of any Letter of Credit or any such transferee; (v) any error, omission, interruption or delay in transmission, dispatch or delivery of any message or advice, however transmitted, in connection with any Letter of Credit; or (vi) any other circumstances whatsoever in making or failing to make payment under such Letter of Credit, except that the Borrower and each Lender shall have the right to bring suit against each LC Issuing Bank, and each LC Issuing Bank shall be liable to the Borrower and any Lender, to the extent of any direct, as opposed to consequential, damages suffered by the Borrower or such Lender that the Borrower or such Lender proves, in a court of competent jurisdiction by final and nonappealable judgment, were caused by such LC Issuing Bank’s willful misconduct or gross negligence. In furtherance and not in limitation of the foregoing, each LC Issuing Bank may accept sight drafts and accompanying certificates presented under the Letter of Credit issued by such LC Issuing Bank that appear on their face to be in substantial compliance with the terms and conditions of the Letter of Credit, without responsibility for further investigation, regardless of any notice or information to the contrary, and payment against such documents shall not constitute willful misconduct or gross negligence by such LC Issuing Bank. Notwithstanding the foregoing, no Lender shall be obligated to indemnify the Borrower for damages caused by any LC Issuing Bank’s willful misconduct or gross negligence.

(j) In the event of any inconsistency between the terms and conditions of this Agreement and the terms and conditions of any application or other agreement submitted by the Borrower to, or entered into by the Borrower with, an LC Issuing Bank relating to any Letter of Credit issued by such LC Issuing Bank, the terms and conditions of this Agreement shall control. Unless otherwise specified herein, the amount of a Letter of Credit at any time shall be deemed to be the stated amount of such Letter of Credit in effect at such time; provided, however, that with respect to any Letter of Credit that, by its terms or the terms of any application or other agreement related thereto, provides for one or more automatic increases in the stated amount thereof, the amount of such Letter of Credit shall be deemed to be the maximum stated amount of such Letter of Credit after giving effect to all such increases, whether or not such maximum stated amount is in effect at such time.

(k) Any LC Issuing Bank may resign at any time by giving written notice thereof to the Administrative Agent, Lenders, the other LC Issuing Banks (if any) and the Borrower, provided that (i) there are no Letters of Credit outstanding with respect to such LC Issuing Bank at such time or (ii) unless the Borrower shall have agreed otherwise, another Lender or Affiliate thereof reasonably acceptable to the Borrower has agreed to serve as an LC Issuing Bank and commits in writing to issue one or more Letters of Credit in an aggregate amount at least equal to those of the resigning LC Issuing Bank. After the resignation of an LC Issuing Bank hereunder, such resigning LC Issuing Bank shall remain a party hereto and shall continue to have all the rights and obligations of an LC Issuing Bank under this Agreement and the other Loan Documents with respect to Letters of Credit issued by it prior to such resignation, but shall not be required to issue additional Letters of Credit or to extend, renew or increase any existing Letter of Credit. Upon any such resignation, the Borrower and the resigning LC Issuing Bank may agree to replace or terminate any outstanding Letters of Credit issued by such LC Issuing Bank and to designate one or more Lenders as LC Issuing Banks to replace such LC Issuing Bank.

SECTION 2.05. Fees.

(a) The Borrower agrees to pay to the Administrative Agent for the account of each Lender a commitment fee on the aggregate unused amount of such Lender’s Commitment (i) from the date hereof in the case of each Initial Lender and (ii) from the effective date specified in the Assignment and Assumption pursuant to which it became a Lender in the case of each other Lender, in each case, until the latest Termination Date applicable to such Lender, payable quarterly in arrears on the last day of each March, June, September and December, commencing September 30, 2017, and ending on such Termination Date. The commitment fee for any period will be equal to the Commitment Fee Rate in effect from time to time during such period, times an amount equal to the Commitments minus the aggregate principal amount of Loans and Letters of Credit outstanding during such period.

(b) The Borrower agrees to pay the fees payable by the Borrower in such amounts and on such terms as set forth in the Fee Letters.

Issuing Bank shall be outstanding, with the calculation based on the actual number of days elapsed in a year of 360 days and (ii) customary issuance, maintenance, drawing and administration fees in respect of such letters of credit.

(e) The Borrower shall pay to the Administrative Agent, for its own account, the annual administrative fee at the times and in the amount set forth in the Agent Fee Letter.

SECTION 2.06. Extension of the Termination Date.

payable pursuant to Section 8.04(c)) payable to such Declining Lender accrued through such Extension Effective Date. Promptly following such Extension Effective Date, the Administrative Agent shall distribute an amended Schedule I to this Agreement (which shall thereafter be incorporated into this Agreement) to reflect any changes in the Lenders, the Commitments and each Lender’s Commitment Percentage as of such Extension Effective Date.

SECTION 2.07. Increase of the Commitments.

thereto, the Borrowings are held ratably by the Lenders in accordance with their respective Commitments (after giving effect to such Commitment increase). Prepayments made under this clause (c) shall not be subject to the notice requirements of Section 2.14.

SECTION 2.08. Termination or Reduction of the Commitments.

(a) The Borrower shall have the right, upon at least three Business Days’ notice to the Administrative Agent, to terminate in whole or reduce ratably in part the Available Commitments, provided that (i) each partial reduction shall be in the aggregate amount of $10,000,000 or an integral multiple of $5,000,000 in excess thereof and (ii) no such termination or reduction shall be made that would reduce the aggregate Commitments to an amount less than the Outstanding Credits on the date of such termination or reduction. Subject to the foregoing, any reduction of the Commitments to an amount below $450,000,000 shall also result in a reduction of the LC Commitment Amount to the extent of such deficit (and if such reduction would cause the LC Commitment Amount to be less than the aggregate Fronting Commitments, with automatic reductions in the amount of each Fronting Commitment ratably in proportion to the amount of such reduction of the LC Commitment Amount unless, in the case of any LC Issuing Bank, such LC Issuing Bank consents otherwise). Each such notice of termination or reduction shall be irrevocable; provided , however , that a notice of termination delivered pursuant to this Section 2.08 may state that such notice is conditioned upon the effectiveness of other credit facilities, in which case such notice may be revoked by the Borrower (by notice to the Administrative Agent on or prior to the effective date specified in the notice of termination) if such condition is not satisfied.

(b) The Borrower may terminate the unused amount of the Commitment of any Lender that is a Defaulting Lender upon not less than three Business Days’ prior notice to the Administrative Agent (which shall promptly notify the Lenders thereof), and in such event the provisions of Section 2.21(a)(ii) will apply to all amounts thereafter paid by the Borrower for the account of such Defaulting Lender under this Agreement (whether on account of principal, interest, fees, indemnity or other amounts); provided that (i) no Event of Default shall have occurred and be continuing, and (ii) such termination shall not be deemed to be a waiver or release of any claim the Borrower, the Administrative Agent, any LC Issuing Bank or any Lender may have against such Defaulting Lender.

(c) The Commitment of each Lender shall automatically terminate on the Termination Date applicable to such Lender as provided in Section 2.06.

(d) Once terminated, a Commitment or any portion thereof may not be reinstated.

SECTION 2.09. Repayment of Loans.

SECTION 2.10. Evidence of Indebtedness.

SECTION 2.11. Interest on Loans.

The Borrower shall pay interest on the unpaid principal amount of each Loan from the date of such Loan until such principal amount shall be paid in full, at the following rates per annum:

SECTION 2.12. Interest Rate Determination.

SECTION 2.13. Conversion of Revolving Loans.

(b) Mandatory.

SECTION 2.14. Optional Prepayments of Loans.

SECTION 2.15. Increased Costs.

(a) Increased Costs Generally. If any Change in Law shall:

and the result of any of the foregoing shall be to increase the cost to such Lender or such other Recipient of making, converting to, continuing or maintaining any Loan or of maintaining its obligation to make any such Loan, or to increase the cost to such Lender, such LC Issuing Bank or such other Recipient of participating in, issuing or maintaining any Letter of Credit (or of maintaining its obligation to participate in or to issue any Letter of Credit), or to reduce the amount of any sum received or receivable by such Lender, LC Issuing Bank or other Recipient hereunder (whether of principal, interest or any other amount) then, upon the good faith request of such Lender, LC Issuing Bank or other Recipient, the Borrower will pay to such Lender, LC Issuing Bank or other Recipient,

as the case may be, such additional amount or amounts as will compensate such Lender, LC Issuing Bank or other Recipient, as the case may be, for such additional costs incurred or reduction suffered.

(b) Capital Requirements. If any Lender or LC Issuing Bank determines that any Change in Law affecting such Lender or LC Issuing Bank or any lending office of such Lender or such Lender’s or LC Issuing Bank’s holding company, if any, regarding capital or liquidity requirements, has or would have the effect of reducing the rate of return on such Lender’s or LC Issuing Bank’s capital or on the capital of such Lender’s or LC Issuing Bank’s holding company, if any, as a consequence of this Agreement, the Commitments of such Lender or the Loans made by, or participations in Letters of Credit held by, such Lender, or the Letters of Credit issued by any LC Issuing Bank, to a level below that which such Lender or LC Issuing Bank or such Lender’s or LC Issuing Bank’s holding company could have achieved but for such Change in Law (taking into consideration such Lender’s or LC Issuing Bank’s policies and the policies of such Lender’s or LC Issuing Bank’s holding company with respect to capital adequacy and liquidity), then from time to time the Borrower will pay to such Lender or LC Issuing Bank, as the case may be, such additional amount or amounts as will compensate such Lender or LC Issuing Bank or such Lender’s or LC Issuing Bank’s holding company for any such reduction suffered.

SECTION 2.16. Illegality.

giving any notice to the Administrative Agent pursuant to this Section 2.16, such Lender shall use reasonable efforts (consistent with its internal policy and legal and regulatory restrictions applicable to such Lender) to designate a different Eurodollar Lending Office if such designation would avoid the need for giving such notice and would not, in the judgment of such Lender, be otherwise disadvantageous to such Lender. If such notice is given, each Eurodollar Rate Revolving Loan of such Lender then outstanding shall be converted to a Base Rate Revolving Loan either (i) on the last day of the then current Interest Period applicable to such Eurodollar Rate Revolving Loan if such Lender may lawfully continue to maintain and fund such Revolving Loan to such day or (ii) immediately if such Lender shall determine that it may not lawfully continue to maintain and fund such Revolving Loan to such day.

SECTION 2.17. Payments and Computations.

(a) The Borrower shall make each payment to be made by it hereunder not later than 1:00 P.M. (New York City Time) on the day when due in Dollars to the Administrative Agent at the Agent’s Account in same day funds without condition or deduction for any counterclaim, defense, recoupment or setoff. The Administrative Agent will promptly thereafter cause to be distributed like funds relating to the payment of principal or interest or commitment fees ratably (other than amounts payable pursuant to Section 2.02(c), 2.06, 2.11(c), 2.13(c), 2.15, 2.18, 2.21 or 8.04(c)) to the Lenders for the account of their respective Applicable Lending Offices, and like funds relating to the payment of any other amount payable to any Lender to such Lender for the account of its Applicable Lending Office, in each case to be applied in accordance with the terms of this Agreement. Upon its acceptance of an Assignment and Assumption and recording of the information contained therein in the Register pursuant to Section 8.07(c), from and after the effective date specified in such Assignment and Assumption, the Administrative Agent shall make all payments hereunder in respect of the interest assigned thereby to the Lender assignee thereunder, and the parties to such Assignment and Assumption shall make all appropriate adjustments in such payments for periods prior to such effective date directly between themselves.

fees, as the case may be; provided, however, that, if such extension would cause payment of interest on or principal of Eurodollar Rate Revolving Loans to be made in the next following calendar month or on a date after the Termination Date, such payment shall be made on the next preceding Business Day.

SECTION 2.18. Taxes.

(a) Defined Terms. For purposes of this Section 2.18 and for the avoidance of doubt, the term “Lender” includes any LC Issuing Bank and the term “Applicable Law” includes FATCA.

receives an amount equal to the sum it would have received had no such deduction or withholding been made.

without withholding or at a reduced rate of withholding. In addition, any Lender, if reasonably requested by the Borrower or the Administrative Agent, shall deliver such other documentation prescribed by Applicable Law or reasonably requested by the Borrower or the Administrative Agent as will enable the Borrower or the Administrative Agent to determine whether or not such Lender is subject to backup withholding or information reporting requirements. Notwithstanding anything to the contrary in the preceding two sentences, the completion, execution and submission of such documentation (other than such documentation set forth in Section 2.18(g)(ii)(A), (ii)(B) and (ii)(D) below) shall not be required if in the Lender’s reasonable judgment such completion, execution or submission would subject such Lender to any material unreimbursed cost or expense or would materially prejudice the legal or commercial position of such Lender.

(i) Without limiting the generality of the foregoing,

(ii) an executed IRS Form W-8ECI;

Tax Compliance Certificate ”) and (y) an executed IRS Form W-8BEN-E or IRS Form W-8BEN; or

such refund), net of all reasonable out-of-pocket expenses (including Taxes) of such indemnified party and without interest (other than any interest paid by the relevant Governmental Authority with respect to such refund). Such indemnifying party, upon the request of such indemnified party, shall repay to such indemnified party the amount paid over pursuant to this subsection (h) (plus any penalties, interest or other charges imposed by the relevant Governmental Authority) in the event that such indemnified party is required to repay such refund to such Governmental Authority. Notwithstanding anything to the contrary in this subsection (h), in no event will the indemnified party be required to pay any amount to an indemnifying party pursuant to this subsection (h) the payment of which would place the indemnified party in a less favorable net after-Tax position than the indemnified party would have been in if the Tax subject to indemnification and giving rise to such refund had not been deducted, withheld or otherwise imposed and the indemnification payments or additional amounts with respect to such Tax had never been paid. This subsection shall not be construed to require any indemnified party to make available its Tax returns (or any other information relating to its Taxes that it deems confidential) to the indemnifying party or any other Person.

SECTION 2.19. Sharing of Payments, Etc.

(B) the provisions of this Section shall not be construed to apply to (x) any payment made by the Borrower pursuant to and in accordance with the express terms of this Agreement (including the application of funds arising from the existence of a Defaulting Lender and any payment made pursuant to Section 2.02(c), 2.06, 2.11(c), 2.13(c), 2.15, 2.18, 2.21 or 8.04(c) or, in respect of Eurodollar Rate Revolving Loans converted into Base Rate Revolving Loans, pursuant to Section 2.16), or (y) any payment obtained by a Lender as consideration for the assignment of or sale of a participation in any of its Loans or

participations in LC Outstandings to any assignee or participant, other than to the Borrower or any Subsidiary thereof (as to which the provisions of this Section shall apply).

SECTION 2.20. Mitigation Obligations; Replacement of Lenders.

(i) the Borrower shall have paid to the Administrative Agent the assignment fee (if any) specified in Section 8.07(b)(iv);

(iv) such assignment shall not conflict with Applicable Law;

(vi) No Default shall have occurred and be continuing.

SECTION 2.21. Defaulting Lenders.

as a result of such Defaulting Lender’s breach of its obligations under this Agreement; seventh , so long as no Default exists, to the payment of any amounts owing to the Borrower as a result of any judgment of a court of competent jurisdiction obtained by the Borrower against such Defaulting Lender as a result of such Defaulting Lender’s breach of its obligations under this Agreement; and eighth , to such Defaulting Lender or as otherwise directed by a court of competent jurisdiction; provided that if (x) such payment is a payment of the principal amount of any Loans or LC Outstandings in respect of which such Defaulting Lender has not fully funded its appropriate share, and (y) such Loans were made or the related Letters of Credit were issued at a time when the conditions set forth in Section 3.02 were satisfied or waived, such payment shall be applied solely to pay the Loans of, and LC Outstandings owed to, all Non-Defaulting Lenders on a pro rata basis prior to being applied to the payment of any Loans of, or LC Outstandings owed to, such Defaulting Lender until such time as all Loans and funded and unfunded participations in LC Outstandings are held by the Lenders pro rata in accordance with the Commitments without giving effect to Section 2.21(a)(iv). Any payments, prepayments or other amounts paid or payable to a Defaulting Lender that are applied (or held) to pay amounts owed by a Defaulting Lender or to post Cash Collateral pursuant to this Section 2.21(a)(ii) shall be deemed paid to and redirected by such Defaulting Lender, and each Lender irrevocably consents hereto.

reallocation does not cause the aggregate Outstanding Credits of all Non-Defaulting Lenders to exceed the Commitments of all Non-Defaulting Lenders. Subject to Section 8.16, no reallocation hereunder shall constitute a waiver or release of any claim of any party hereunder against a Defaulting Lender arising from that Lender having become a Defaulting Lender, including any claim of a Non-Defaulting Lender as a result of such Non-Defaulting Lender’s increased exposure following such reallocation.

(v) Reduction of Available Commitments . The Borrower may terminate the Available Commitment of any Lender that is a Defaulting Lender in accordance with Section 2.08(b).

SECTION 2.22. Cash Collateral.

(iv) and any Cash Collateral provided by such Defaulting Lender) in an amount not less than the Minimum Collateral Amount.

ARTICLE III
CONDITIONS PRECEDENT

SECTION 3.01. Conditions Precedent to Effectiveness.

Administrative Agent, in sufficient copies (except with respect to the promissory notes described in paragraph (ii) below) for each Lender and each LC Issuing Bank:

(i) A fully executed version of this Agreement and the other Loan Documents;

(ii) Promissory notes payable to each Lender that has requested the same prior to such date pursuant to Section 2.10(d), duly executed by the Borrower.

(vi) A favorable opinion of in-house counsel for the Borrower, in form and substance reasonably acceptable to the Administrative Agent.

(vii) A favorable opinion of special New York counsel for the Borrower, in form and substance reasonably acceptable to the Administrative Agent.

(i) The representations and warranties of the Borrower contained in this Agreement are true and correct on and as of the date of such effectiveness as though made on and as of such date, and

(ii) No event has occurred and is continuing that constitutes a Default.

(d) The Administrative Agent shall have received all documentation and information required by regulatory authorities under applicable “know your customer” and anti-money

laundering rules and regulations, including without limitation the Patriot Act, to the extent such documentation or information is requested by the Administrative Agent on behalf of the Lenders reasonably in advance of the date hereof.

SECTION 3.02. Conditions Precedent to each Extension of Credit.

(ii) No event has occurred and is continuing, or would result from such Extension of Credit or from the application of the proceeds therefrom, that constitutes a Default.

SECTION 3.03. Conditions Precedent to Issuance of Each Bond Letter of Credit.

(i) Counterparts of any Pledge Agreement relating to such Bonds, duly executed by the Borrower, the Administrative Agent and the applicable Custodian, or other evidence

that the Bonds purchased with the proceeds of such Bond Letter of Credit will be effectively pledged to or held for the benefit of such LC Issuing Bank and the Lenders, and that a separate CUSIP number has been assigned to such Bonds.

(ii) Certified copies or originals of the other applicable Related Documents (which, in the case of the applicable Bonds, may be a specimen of such Bonds).

(v) A copy of the Official Statement, if any, relating to the Bonds to be supported by such Bond Letter of Credit.

(viii) A favorable opinion of counsel to the Borrower with respect to the Related Documents to which the Borrower is a party.

material respects (without duplication of any materiality qualifiers) on and as of such date, as though made on and as of such date:

ARTICLE IV
REPRESENTATIONS AND WARRANTIES

SECTION 4.01. Representations and Warranties of the Borrower.

The Borrower represents and warrants as follows:

(a) The Borrower is a corporation duly organized, validly existing and in good standing under the laws of the State of Iowa and is duly qualified to do business and is in good standing as

a foreign corporation under the laws of each state in which the ownership of its properties or the conduct of its business makes such qualification necessary, except where the failure to be so qualified would not reasonably be expected to have a Material Adverse Effect, and each Material Subsidiary is duly organized, validly existing and in good standing under the laws of the jurisdiction in which it is incorporated or otherwise organized.

(i) Since December 31, 2016, no event has occurred that could reasonably be expected to have a Material Adverse Effect.

and the Material Subsidiaries that are subject to the restrictions of Section 5.02(a) or (c) constitute Margin Stock.

(p) Each Material Subsidiary as of the date hereof is set forth on Schedule III.

(q) The Borrower has implemented and maintains in effect policies and procedures designed to promote compliance by the Borrower, its Subsidiaries and their respective directors, officers and employees with Anti-Corruption Laws and applicable Sanctions, and the Borrower, its Subsidiaries and, to the knowledge of the Borrower, their respective officers, directors and employees and their respective agents that will act in any capacity in connection with or benefit from the credit facility established hereby, are in compliance with Anti-Corruption Laws and applicable Sanctions in all material respects. None of the Borrower or any Subsidiary is a Sanctioned Person. No Borrowing or Letter of Credit, use of proceeds or other transaction contemplated by this Agreement will violate any Anti-Corruption Law or applicable Sanctions.

ARTICLE V
COVENANTS OF THE BORROWER

SECTION 5.01. Affirmative Covenants.

So long as any Loan or any other amount payable hereunder shall remain unpaid, any Letter of Credit shall remain outstanding or any Lender shall have any Commitment hereunder, the Borrower will:

(h) Reporting Requirements . Furnish to the Lenders:

(vii) promptly upon the occurrence of a Reportable Compliance Event, notice of such occurrence; and

(viii) such other information respecting the Borrower or any of its Subsidiaries as any Lender through the Administrative Agent may from time to time reasonably request.

(i) Use of Proceeds . Use the proceeds of the Borrowings and the Letters of Credit for working capital and other general corporate purposes.

SECTION 5.02. Negative Covenants.

information required by regulatory authorities under applicable “know your customer” and anti-money laundering rules and regulations, including without limitation the Patriot Act, to the extent such documentation or information is requested by the Administrative Agent on behalf of the Lenders prior to the date of such proposed transaction.

(d) Use of Proceeds . Use the proceeds of any Extension of Credit to buy or carry Margin Stock in violation of the Margin Regulations.

(g) Official Statement. So long as any Bond Letter of Credit shall remain outstanding, refer to the applicable LC Issuing Bank in the Official Statement with respect to the applicable Bonds or make any changes in reference to such LC Issuing Bank in any revision, amendment or supplement without the prior consent of such LC Issuing Bank, or revise, amend or supplement such Official Statement without providing a copy of such revision, amendment or supplement, as the case may be, to such LC Issuing Bank.

(h) Use of Proceeds of Bond Letter of Credit. So long as any Bond Letter of Credit shall remain outstanding, permit any proceeds of such Bond Letter of Credit to be used for any

purpose other than the payment of the principal of, interest on, redemption price of and purchase price of the applicable Bonds.

SECTION 5.03. Financial Covenant.

ARTICLE VI
EVENTS OF DEFAULT

SECTION 6.01. Events of Default.

If any of the following events (“ Events of Default ”) shall occur and be continuing:

(c) (i) The Borrower shall fail to perform or observe any term, covenant or agreement contained in Section 5.01(b), 5.01(j), 5.02 or 5.03, or (ii) the Borrower shall fail to perform or observe any other term, covenant or agreement contained in this Agreement or any other Loan Document if such failure shall remain unremedied for 30 days after written notice thereof shall have been given to the Borrower by the Administrative Agent or any Lender; or

(d) The Borrower or any Material Subsidiary shall fail to pay any principal of or premium or interest on any Debt (other than Debt under this Agreement) that is outstanding in a principal

amount in excess of $75,000,000 in the aggregate when the same becomes due and payable (whether by scheduled maturity, required prepayment, acceleration, demand or otherwise), and such failure shall continue after the applicable grace period, if any, specified in the agreement or instrument relating to such Debt; or any other event shall occur or condition shall exist under any agreement or instrument relating to any such Debt and shall continue after the applicable grace period, if any, specified in such agreement or instrument, if the effect of such event or condition is to accelerate, or to permit the acceleration of, the maturity of such Debt; or any such Debt shall be declared to be due and payable, or required to be prepaid or redeemed (other than by a regularly scheduled required prepayment or redemption), prior to the stated maturity thereof; or

(e) Any judgment or order for the payment of money in excess of $75,000,000 to the extent not paid or insured shall be rendered against the Borrower or any Material Subsidiary and either (i) enforcement proceedings shall have been commenced by any creditor upon such judgment or order or (ii) there shall be any period of 30 consecutive days during which a stay of enforcement of such judgment or order, by reason of a pending appeal or otherwise, shall not be in effect; or

(g) An ERISA Event shall have occurred that, when taken together with all other ERISA Events that have occurred, has resulted in, or is reasonably likely to result in, a Material Adverse Effect; or

terminate; (ii) shall at the request, or may with the consent, of the Required Lenders, by notice to the Borrower, declare the outstanding Borrowings, all interest thereon and all other amounts payable under this Agreement to be forthwith due and payable, whereupon the outstanding Borrowings, all such interest and all such amounts shall become and be forthwith due and payable by the Borrower, without presentment, demand, protest or further notice of any kind, all of which are hereby expressly waived by the Borrower; provided , however , that in the event of an actual or deemed entry of an order for relief with respect to the Borrower under the Bankruptcy Code of the United States of America, (A) the obligation of each Lender and each LC Issuing Bank to make Extensions of Credit shall automatically be terminated and (B) the outstanding Borrowings, all such interest and all such amounts shall automatically become and be due and payable, without presentment, demand, protest or any notice of any kind, all of which are hereby expressly waived by the Borrower; (iii) shall at the request, or may with the consent, of the Required Lenders by notice to the Borrower, give notice of the occurrence of an Event of Default to the Trustee for each series of Bonds supported by a Bond Letter of Credit issued for the account of the Borrower and instruct such Trustee either to accelerate such Bonds, thereby causing such Bond Letter of Credit to expire thereafter, per the terms of such Bond Letter of Credit, or to effect a mandatory tender of such Bonds; and (iv) shall at the request, or may with the consent, of the Required Lenders by notice to the Borrower, pursue any rights and remedies on behalf of the Lenders and the applicable LC Issuing Bank that the Administrative Agent may have under the Related Documents executed and delivered in connection with any Bond Letter of Credit.

SECTION 6.02. Actions in Respect of the Letters of Credit upon Default.

Account are subject to any right or claim of any Person other than the Administrative Agent, the Lenders and the LC Issuing Banks or that the total amount of such funds is less than 103% of the aggregate undrawn stated amounts of all Letters of Credit that are outstanding on such date, the Borrower will, forthwith upon demand by the Administrative Agent, pay to the Administrative Agent, as additional funds to be deposited and held in the LC Collateral Account, an amount equal to the excess of (i) 103% of such aggregate undrawn stated amounts of all Letters of Credit that are outstanding on such date over (ii) the total amount of funds, if any, then held in the LC Collateral Account that the Administrative Agent determines to be free and clear of any such right and claim. Upon the drawing of any Letter of Credit for which funds are on deposit in the LC Collateral Account, such funds shall be applied to reimburse the relevant LC Issuing Bank or Lender holding a participation in the reimbursement obligation of the Borrower to such LC Issuing Bank to the extent permitted by Applicable Law.

ARTICLE VII
THE ADMINISTRATIVE AGENT

SECTION 7.01. Appointment and Authority.

Each Lender and each LC Issuing Bank hereby irrevocably appoints Mizuho to act on its behalf as the Administrative Agent hereunder, under the other Loan Documents and the Related Documents and authorizes the Administrative Agent to take such actions on its behalf and to exercise such powers as are delegated to the Administrative Agent by the terms hereof or thereof, together with such actions and powers as are reasonably incidental thereto. The provisions of this Article are solely for the benefit of the Administrative Agent, the Lenders and the LC Issuing Banks, and the Borrower shall not have rights as a third-party beneficiary of any of such provisions. It is understood and agreed that the use of the term “agent” herein, in any other Loan Document or any Related Document (or any other similar term) with reference to the Administrative Agent is not intended to connote any fiduciary or other implied (or express) obligations arising under agency doctrine of any Applicable Law. Instead such term is used as a matter of market custom, and is intended to create or reflect only an administrative relationship between contracting parties.

SECTION 7.02. Rights as a Lender.

SECTION 7.03. Exculpatory Provisions.

(i) shall not be subject to any fiduciary or other implied duties, regardless of whether a Default has occurred and is continuing;

(b) The Administrative Agent shall not be liable for any action taken or not taken by it (i) with the consent or at the request of the Required Lenders (or such other number or percentage of the Lenders as shall be necessary, or as the Administrative Agent shall believe in good faith shall be necessary, under the circumstances as provided in Sections 6.01, 6.02 and 8.01), or (ii) in the absence of its own gross negligence or willful misconduct as determined by a court of competent jurisdiction by final and nonappealable judgment. The Administrative Agent shall be deemed not to have knowledge of any Default unless and until notice describing such Default is given to the Administrative Agent in writing by the Borrower, a Lender or an LC Issuing Bank.

(c) The Administrative Agent shall not be responsible for or have any duty to ascertain or inquire into (i) any statement, warranty or representation made in or in connection with this Agreement, any other Loan Document or any Related Document, (ii) the contents of any certificate, report or other document delivered hereunder or thereunder or in connection herewith or therewith, (iii) the performance or observance of any of the covenants, agreements or other terms or conditions set forth herein or therein or the occurrence of any Default, (iv) the validity, enforceability, effectiveness or genuineness of this Agreement, any other Loan Document, any Related Document or any other agreement, instrument or document, or (v) the satisfaction of any condition set forth in Article III or elsewhere herein, other than to confirm receipt of items expressly required to be delivered to the Administrative Agent.

SECTION 7.04. Reliance by Administrative Agent.

The Administrative Agent shall be entitled to rely upon, and shall not incur any liability for relying upon, any notice, request, certificate, consent, statement, instrument, document or other writing (including any electronic message, Internet or intranet website posting or other distribution) believed by it to be genuine and to have been signed, sent or otherwise authenticated by the proper Person. The Administrative Agent also may rely upon any statement made to it orally or by telephone and believed by it to have been made by the proper Person, and shall not incur any liability for relying thereon. In determining compliance with any condition hereunder to the making of a Loan, or the issuance, extension, renewal or increase of a Letter of Credit, that by its terms must be fulfilled to the satisfaction of any Lender or an LC Issuing Bank, the Administrative Agent may presume that such condition is satisfactory to such Lender or such LC Issuing Bank unless the Administrative Agent shall have received notice to the contrary from such Lender or such LC Issuing Bank prior to the making of such Loan or the issuance of such Letter of Credit. The Administrative Agent may consult with legal counsel (who may be counsel for the Borrower), independent accountants and other experts selected by it, and shall not be liable for any action taken or not taken by it in accordance with the advice of any such counsel, accountants or experts.

SECTION 7.05. Resignation of Administrative Agent.

such removal shall nonetheless become effective in accordance with such notice on the Removal Effective Date.

(c) With effect from the Resignation Effective Date or the Removal Effective Date (as applicable) (1) the retiring or removed Administrative Agent shall be discharged from its duties and obligations hereunder and under the other Loan Documents and (2) except for any indemnity payments owed to the retiring or removed Administrative Agent, all payments, communications and determinations provided to be made by, to or through the Administrative Agent shall instead be made by or to each Lender and each LC Issuing Bank directly, until such time, if any, as the Required Lenders appoint a successor Administrative Agent as provided for above. Upon the acceptance of a successor’s appointment as Administrative Agent hereunder, such successor shall succeed to and become vested with all of the rights, powers, privileges and duties of the retiring or removed Administrative Agent (other than any rights to indemnity payments owed to the retiring or removed Administrative Agent), and the retiring or removed Administrative Agent shall be discharged from all of its duties and obligations hereunder, under the other Loan Documents or under the Related Documents. The fees payable by the Borrower to a successor Administrative Agent shall be the same as those payable to its predecessor unless otherwise agreed between the Borrower and such successor. After the retiring or removed Administrative Agent’s resignation or removal hereunder, under the other Loan Documents and under the Related Documents, the provisions of this Article and Section 8.04 shall continue in effect for the benefit of such retiring or removed Administrative Agent, its sub‑agents and their respective Related Parties in respect of any actions taken or omitted to be taken by any of them while the retiring or removed Administrative Agent was acting as Administrative Agent.

SECTION 7.06. Non-Reliance on Administrative Agent and Other Lenders.

SECTION 7.07. Indemnification.

penalties, actions, judgments, suits, costs, expenses or disbursements of any kind or nature whatsoever that may be imposed on, incurred by, or asserted against the Administrative Agent in any way relating to or arising out of this Agreement, any other Loan Document or any Related Document or any action taken or omitted by the Administrative Agent under this Agreement, any other Loan Document or any Related Document; provided , however , that no Lender shall be liable for any portion of such liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements resulting from the Administrative Agent’s gross negligence or willful misconduct, as proven in a court of competent jurisdiction by final and nonappealable judgment. Without limitation of the foregoing, each Lender agrees to reimburse the Administrative Agent promptly upon demand for its Commitment Percentage of any costs and expenses (including, without limitation, fees and reasonable expenses of counsel) payable by the Borrower under Section 8.04, to the extent that the Administrative Agent is not promptly reimbursed for such costs and expenses by the Borrower (and without limiting its obligation to do so) after request therefor. The failure of any Lender to reimburse the Administrative Agent promptly upon demand for its Commitment Percentage of any amount required to be paid by the Lender to the Administrative Agent as provided herein shall not relieve any other Lender of its obligation hereunder to reimburse the Administrative Agent for its Commitment Percentage of such amount, but no Lender shall be responsible for the failure of any other Lender to reimburse the Administrative Agent for such other Lender’s Commitment Percentage of such amount. Without prejudice to the survival of any other agreement of any Lender hereunder, the agreement and obligations of each Lender contained in this Section 7.07 shall survive the payment in full of principal, interest and all other amounts payable hereunder.

SECTION 7.08. No Other Duties, etc.

ARTICLE VIII
MISCELLANEOUS

SECTION 8.01. Amendments, Etc.

or rate of interest applicable to, the outstanding Loans or any fees or other amounts payable hereunder, (iv) postpone any date fixed for any payment of principal of, or interest on, the outstanding Loans, reimbursement obligations or any fees or other amounts payable hereunder, (v) change the definition of Required Lenders or change the percentage of the Commitments or of the aggregate unpaid principal amount of the outstanding Borrowings, or the number or the percentage of Lenders, that shall be required for the Lenders or any of them to take any action hereunder, or (vi) amend or waive this Section 8.01 or any provision of this Agreement that requires pro rata treatment of the Lenders; and provided further that (x) no amendment, waiver or consent shall, unless in writing and signed by the Administrative Agent or any LC Issuing Bank in addition to the Lenders required above to take such action, affect the rights or duties of the Administrative Agent or such LC Issuing Bank, as the case may be, under this Agreement and (y) no amendment, waiver or consent shall, unless in writing and signed by the Administrative Agent, each LC Issuing Bank and the Required Lenders, amend or waive Section 2.21. Notwithstanding the foregoing, any provision of this Agreement may be amended by an agreement in writing entered into by the Borrower, the Required Lenders and the Administrative Agent if by the terms of such agreement the Commitment of each Non-Consenting Lender and the obligations of each LC Issuing Bank not consenting to the amendment provided for therein shall terminate (but such Non-Consenting Lender or LC Issuing Bank shall continue to be entitled to the benefits of Sections 2.15, 2.18 and 8.04) upon the effectiveness of such amendment, and such Non-Consenting Lender or LC Issuing Bank shall have received or shall at the time of such termination receive payment of an amount equal to the outstanding principal of its Loans and any participations in Letters of Credit funded pursuant to Section 2.04(e), together with all applicable accrued interest thereon, accrued fees and all other amounts then payable to it hereunder and under the other Loan Documents.

SECTION 8.02. Notices, Etc.

(i) if to the Borrower, to it at 666 Grand Avenue, Suite 500, Des Moines, Iowa 50309-2580, Attention: James C. Galt, Treasurer (Facsimile No.: (515) 242-4019; Telephone No. (515) 281-2521);

(ii) if to the Administrative Agent, to Mizuho Bank, Ltd. at 1800 Plaza Ten Harborside Financial Center, Jersey City, NJ 07311, Attention: Michael Takham (Telephone: (201) 626-9307; Facsimile: (201) 626-9935; Email: lau_agent@mizuhocbus.com);

(c) Change of Address, etc. Any party hereto may change its address or facsimile number for notices and other communications hereunder by notice to the other parties hereto.

(d) Platform.

or statutory, including, without limitation, any warranty of merchantability, fitness for a particular purpose, non-infringement of third-party rights or freedom from viruses or other code defects, is made by any Agent Party in connection with the Communications or the Platform. In no event shall the Administrative Agent or any of its Related Parties (collectively, the “ Agent Parties ”) have any liability to the Borrower, any Lender or any other Person or entity for damages of any kind, including, without limitation, direct or indirect, special, incidental or consequential damages, losses or expenses (whether in tort, contract or otherwise) arising out of the Borrower’s or the Administrative Agent’s transmission of communications through the Platform except to the extent that such damages are found in a judgment by a court of competent jurisdiction by final and nonappealable judgment to have resulted from such Agent Party’s gross negligence or willful misconduct. “ Communications ” means, collectively, any notice, demand, communication, information, document or other material provided by or on behalf of the Borrower pursuant to any Loan Document or the transactions contemplated therein which is distributed to the Administrative Agent, any Lender or any LC Issuing Bank by means of electronic communications pursuant to this Section, including through the Platform.

SECTION 8.03. No Waiver; Remedies.

SECTION 8.04. Costs and Expenses; Indemnification.

(a) The Borrower agrees to pay promptly upon demand (i) all reasonable out-of-pocket costs and expenses of the Administrative Agent, the Joint Lead Arrangers and their respective Affiliates in connection with the preparation, negotiation, execution, delivery, administration, modification and amendment of this Agreement and the other documents to be delivered hereunder, including, without limitation, (A) all due diligence, syndication (including printing, distribution and bank meetings), transportation, computer, duplication, appraisal, consultant, and audit expenses and (B) the reasonable fees and expenses of counsel for the Administrative Agent with respect thereto and with respect to advising the Administrative Agent as to its rights and responsibilities under this Agreement, and (ii) all reasonable out of pocket expenses incurred by any LC Issuing Bank in connection with the issuance, amendment, renewal or extension of any Letter of Credit or any demand for payment thereunder. The Borrower further agrees to pay promptly upon demand all reasonable costs and expenses of the Administrative Agent, the Lenders and the LC Issuing Banks, if any, (A) in connection with the enforcement (whether through negotiations, legal proceedings or otherwise) of this Agreement and the other Loan Documents, including its rights under this Section, or (B) in connection with the Loans made or Letters of Credit issued hereunder, including all such reasonable out-of-pocket expenses incurred during any workout, restructuring or negotiations in respect of such Loans or Letters of Credit, including, without limitation, reasonable fees and expenses of one outside counsel for the Administrative Agent, the Lenders and the LC

Issuing Banks taken as a whole in connection with the enforcement of rights under this Section 8.04(a) (and, with respect to matters referred to in clause (A) of this sentence only, separate counsel for the Administrative Agent, any Lender and any LC Issuing Banks to the extent needed to avoid an actual or potential conflict of interest).

(b) The Borrower shall indemnify the Administrative Agent (and any sub-agent thereof), each Lender, the Joint Lead Arrangers and each LC Issuing Bank, and each Related Party of any of the foregoing Persons (each, an “ Indemnified Party ”) from and against any and all claims, damages, losses and liabilities, joint or several, to which any such Indemnified Party may become subject, in each case arising out of or in connection with or relating to (including, without limitation, in connection with any investigation, litigation or proceeding or preparation of a defense in connection therewith) this Agreement, any of the transactions contemplated herein or the actual or proposed use of the proceeds of the Extensions of Credit, and shall reimburse any Indemnified Party for any and all reasonable expenses (including, without limitation, reasonable fees and expenses of counsel) as they are incurred in connection with the investigation of or preparation for or defense of any pending or threatened claim or any action or proceeding arising therefrom, whether or not such Indemnified Party is a party (but if not a party thereto, then only with respect to such proceedings where such Indemnified Party (i) is subject to legal process or other compulsion of law, (ii) believes in good faith that it will be so subject, or (iii) believes in good faith that it is necessary or appropriate for it to resist any legal process or other compulsion of law which is purported to be asserted against it) and whether or not such claim, action or proceeding is initiated or brought by or on behalf of the Borrower or any of its Affiliates and whether or not any of the transactions contemplated hereby are consummated or this Agreement is terminated, except to the extent such claim, damage, loss, liability or expense is found in a judgment by a court of competent jurisdiction by final and nonappealable judgment to have resulted from such Indemnified Party’s gross negligence, bad faith or willful misconduct. In the case of an investigation, litigation or other proceeding to which the indemnity in this Section 8.04(b) applies, such indemnity shall be effective whether or not such investigation, litigation or proceeding is brought by the Borrower, its directors, shareholders or creditors or an Indemnified Party or any other Person or any Indemnified Party is otherwise a party thereto and whether or not the transactions contemplated hereby are consummated. The Borrower agrees not to assert any claim against the Administrative Agent, any Lender, any of their respective Affiliates, or any of their respective directors, officers, employees, attorneys and agents, on any theory of liability, for special, indirect, consequential or punitive damages arising out of or otherwise relating to this Agreement, any of the transactions contemplated herein or the actual or proposed use of the proceeds of the Extensions of Credit. This Section 8.04(b) shall not apply with respect to Taxes that are Indemnified Taxes, Excluded Taxes or Taxes that are covered by Section 2.15(a)(ii).

Administrative Agent), pay to the Administrative Agent for the account of such Lender any amounts required to compensate such Lender for any additional losses, costs or expenses that it may reasonably incur as a result of such payment or Conversion, including, without limitation, any loss (other than loss of Applicable Margin), cost or expense incurred by reason of the liquidation or reemployment of deposits or other funds acquired by any Lender to fund or maintain such Loan.

SECTION 8.05. Right of Set-off.

Upon (i) the occurrence and during the continuance of any Event of Default and (ii) the making of the request or the granting of the consent specified by Section 6.01 to authorize the Administrative Agent to declare the outstanding Borrowings due and payable pursuant to the provisions of Section 6.01, each Lender, each LC Issuing Bank and each of their respective Affiliates is hereby authorized at any time and from time to time, to the fullest extent permitted by Applicable Law, to set off and apply any and all deposits (general or special, time or demand, provisional or final, in whatever currency) at any time held, and other obligations (in whatever currency) at any time owing, by such Lender, such LC Issuing Bank or any such Affiliate, to or for the credit or the account of the Borrower against any and all of the obligations of the Borrower now or hereafter existing under this Agreement or any other Loan Document to such Lender, such LC Issuing Bank or their respective Affiliates, irrespective of whether or not such Lender, such LC Issuing Bank or such Affiliate shall have made any demand under this Agreement or any other Loan Document and although such obligations of the Borrower may be contingent or unmatured or are owed to a branch, office or Affiliate of such Lender, such LC Issuing Bank different from the branch, office or Affiliate holding such deposit or obligated on such indebtedness; provided that in the event that any Defaulting Lender shall exercise any such right of setoff, (x) all amounts so set off shall be paid over immediately to the Administrative Agent for further application in accordance with the provisions of Section 2.21 and, pending such payment, shall be segregated by such Defaulting Lender from its other funds

and deemed held in trust for the benefit of the Administrative Agent, the LC Issuing Banks, and the Lenders, and (y) the Defaulting Lender shall provide promptly to the Administrative Agent a statement describing in reasonable detail the obligations of the Borrower owing to such Defaulting Lender as to which it exercised such right of setoff. The rights of each Lender, each LC Issuing Bank and their respective Affiliates under this Section are in addition to other rights and remedies (including other rights of setoff) that such Lender, such LC Issuing Bank or their respective Affiliates may have. Each Lender and each LC Issuing Bank agrees to notify the Borrower and the Administrative Agent promptly after any such setoff and application; provided that the failure to give such notice shall not affect the validity of such setoff and application.

SECTION 8.06. Binding Effect.

SECTION 8.07. Assignments and Participations.

(a) Successors and Assigns Generally. The provisions of this Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns permitted hereby, except that the Borrower may not assign or otherwise transfer any of its rights or obligations hereunder without the prior written consent of the Administrative Agent, each Lender and each LC Issuing Bank, and no Lender may assign or otherwise transfer any of its rights or obligations hereunder except (i) to an assignee in accordance with the provisions of subsection (b) of this Section, (ii) by way of participation in accordance with the provisions of subsection (d) of this Section, or (iii) by way of pledge or assignment of a security interest subject to the restrictions of subsection (e) of this Section (and any other attempted assignment or transfer by any party hereto shall be null and void). Nothing in this Agreement, expressed or implied, shall be construed to confer upon any Person (other than the parties hereto, their respective successors and assigns permitted hereby, Participants to the extent provided in subsection (d) of this Section and, to the extent expressly contemplated hereby, the Related Parties of each of the Administrative Agent, the LC Issuing Banks and the Lenders) any legal or equitable right, remedy or claim under or by reason of this Agreement.

(i) Minimum Amounts.

(iii) Required Consents. No consent shall be required for any assignment except to the extent required by subsection (b)(i)(B) of this Section and, in addition:

(C) the consent of each LC Issuing Bank (such consent not to be unreasonably withheld or delayed) shall be required for any assignment.

its sole discretion, elect to waive such processing and recordation fee in the case of any assignment. The assignee, if it is not a Lender, shall deliver to the Administrative Agent an Administrative Questionnaire.

(vi) No Assignment to Natural Persons. No such assignment shall be made to a natural Person.

any claim of any party hereunder arising from that Lender’s having been a Defaulting Lender. Any assignment or transfer by a Lender of rights or obligations under this Agreement that does not comply with this subsection shall be treated for purposes of this Agreement as a sale by such Lender of a participation in such rights and obligations in accordance with subsection (d) of this Section.

(c) Register. The Administrative Agent, acting solely for this purpose as a non-fiduciary agent of the Borrower, shall maintain at its address referred to in Section 8.02 a copy of each Assignment and Assumption delivered to it and a register for the recordation of the names and addresses of the Lenders, and the Commitments and Termination Date of, and principal amounts (and stated interest) of the Loans owing to, each Lender pursuant to the terms hereof from time to time (the “ Register ”). The entries in the Register shall be conclusive absent manifest error, and the Borrower, the Administrative Agent and the Lenders shall treat each Person whose name is recorded in the Register pursuant to the terms hereof as a Lender hereunder for all purposes of this Agreement. The Register shall be available for inspection by the Borrower, any LC Issuing Bank and any Lender, at any reasonable time and from time to time upon reasonable prior notice.

sells a participation agrees, at the Borrower’s request and expense, to use reasonable efforts to cooperate with the Borrower to effectuate the provisions of Section 2.20(b) with respect to any Participant. To the extent permitted by law, each Participant also shall be entitled to the benefits of Section 8.05 as though it were a Lender; provided that such Participant agrees to be subject to Section 2.19 as though it were a Lender. Each Lender that sells a participation shall, acting solely for this purpose as a non-fiduciary agent of the Borrower, maintain a register on which it enters the name and address of each Participant and the principal amounts (and stated interest) of each Participant’s interest in the Loans or other obligations under the Loan Documents (the “ Participant Register ”); provided that no Lender shall have any obligation to disclose all or any portion of the Participant Register (including the identity of any Participant or any information relating to a Participant’s interest in any Commitments, Loans, Letters of Credit or its other obligations under any Loan Document) to any Person except to the extent that such disclosure is necessary to establish that such Commitment, Loan, Letter of Credit or other obligation is in registered form under Section 5f.103-1(c) of the United States Treasury Regulations or to comply with other requirements under applicable tax law. The entries in the Participant Register shall be conclusive absent manifest error, and such Lender shall treat each Person whose name is recorded in the Participant Register as the owner of such participation for all purposes of this Agreement notwithstanding any notice to the contrary. For the avoidance of doubt, the Administrative Agent (in its capacity as Administrative Agent) shall have no responsibility for maintaining a Participant Register.

SECTION 8.08. Confidentiality.

disclosure of any such Confidential Information (x) by any Governmental Authority or representative thereof (other than any such request in connection with an examination of such Lender or the Administrative Agent by such Governmental Authority) or (y) pursuant to legal process.

SECTION 8.09. Governing Law.

SECTION 8.10. Severability.

SECTION 8.11. Execution in Counterparts.

SECTION 8.12. Jurisdiction, Etc.

(a) Each party hereto hereby irrevocably and unconditionally agrees that it will not commence any action, litigation or proceeding of any kind or description, whether in law or equity, whether in contract or in tort or otherwise, against the Administrative Agent, any Lender, any LC Issuing Bank, or any Related Party of the foregoing in any way relating to this Agreement or any other Loan Document or the transactions relating hereto or thereto, in any forum other than the courts of the State of New York sitting in the Borough of Manhattan in New York City, and of the United States District Court of the Southern District of New York sitting in the Borough of Manhattan in New York City, and any appellate court from any thereof, and each of the parties hereto irrevocably and unconditionally submits to the jurisdiction of such courts and agrees that all claims in respect of any such action, litigation or proceeding may be heard and determined in such New York State court or, to the fullest extent permitted by applicable law, in such federal court. Each party hereto agrees that a final judgment in any such action, litigation or proceeding shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by law.

any court referred to in paragraph (a) of this Section. Each of the parties hereto hereby irrevocably waives, to the fullest extent permitted by applicable law, the defense of an inconvenient forum to the maintenance of such action or proceeding in any such court.

SECTION 8.13. Waiver of Jury Trial.

SECTION 8.14. USA Patriot Act.

SECTION 8.15. No Fiduciary Duty.

SECTION 8.16. Acknowledgement and Consent to Bail-In of EEA Financial Institutions.

(b) the effects of any Bail-In Action on any such liability, including, if applicable:

(i) a reduction in full or in part or cancellation of any such liability;

instruments of ownership will be accepted by it in lieu of any rights with respect to any such liability under this Agreement or any other Loan Document; or

(iii) the variation of the terms of such liability in connection with the exercise of the write-down and conversion powers of any EEA Resolution Authority.

[Remainder of page intentionally left blank.]

MIDAMERICAN ENERGY COMPANY,

as Borrower

By: /s/ James C. Galt

James C. Galt

Treasurer

Signature Page to MidAmerican Energy Company Credit Agreement

MIZUHO BANK, LTD.,

as Administrative Agent, Lender and LC Issuing Bank

By /s/ Nelson Chang

Name: Nelson Chang

Title: Authorized Signatory

Signature Page to MidAmerican Energy Company Credit Agreement

LENDERS:

JPMORGAN CHASE BANK, N.A.,

as Lender

By /s/ Amit Gaur

Name: Amit Gaur

Title: Vice President

Signature Page to MidAmerican Energy Company Credit Agreement

WELLS FARGO BANK, NATIONAL ASSOCIATION,

as Lender

By /s/ Gregory R. Gredvig

Name: Gregory R. Gredvig

Title: Director

Signature Page to MidAmerican Energy Company Credit Agreement

MUFG UNION BANK, N.A.,

as Lender

By /s/ Jeffrey Flagg

Name: Gregory R. Gredvig

Title: Vice President

Signature Page to MidAmerican Energy Company Credit Agreement

CITIBANK, N.A.,

as Lender

By /s/ Richard D. Rivera

Name: Richard D. Rivera

Title: Vice President

Signature Page to MidAmerican Energy Company Credit Agreement

U.S. BANK NATIONAL ASSOCIATION,

as Lender and LC Issuing Bank

By /s/ Karen Nelsen

Name: Karen Nelsen

Title: Vice President

Signature Page to MidAmerican Energy Company Credit Agreement

BNP PARIBAS,

as Lender

By /s/ Nicole Rodriguez

Name: Nicole Rodriguez

Title: Director

By /s/ Julien Pecoud-Bouvet

Name: Julien Pecoud-Bouvet

Title: Vice President

Signature Page to MidAmerican Energy Company Credit Agreement

BARCLAYS BANK PLC,

as Lender

By /s/ Christopher Aitkin

Name: Christopher Aitkin

Title: Assistant Vice President

Signature Page to MidAmerican Energy Company Credit Agreement

ROYAL BANK OF CANADA,

as Lender and LC Issuing Bank

By /s/ Rahul Shah

Name: Rahul Shah

Title: Authorized Signatory

Signature Page to MidAmerican Energy Company Credit Agreement

BANK OF NOVA SCOTIA,

as Lender and LC Issuing Bank

By /s/ David Dewar

Name: David Dewar

Title: Director

Signature Page to MidAmerican Energy Company Credit Agreement

BANK OF MONTREAL, CHICAGO BRANCH,

as Lender

By /s/ Brian Banke

Name: Brian Banke

Title: Managing Director

Signature Page to MidAmerican Energy Company Credit Agreement

SUMITOMO MITSUI BANKING CORP.,

as Lender

By /s/ Katsuyuki Kubo

Name: Katsuyuki Kubo

Title: Managing Director

Signature Page to MidAmerican Energy Company Credit Agreement

CANADIAN IMPERIAL BANK OF COMMERCE, NEW YORK BRANCH, as Lender

By /s/ Anju Abraham

Name: Anjou Abraham

Title: Authorized Signatory

By /s/ Darrel Ho

Name: Darrel Ho

Title: Authorized Signatory

Signature Page to MidAmerican Energy Company Credit Agreement

COBANK, ACB,

as Lender

By /s/ John H. Kemper

Name: John H. Kemper

Title: Vice President

Signature Page to MidAmerican Energy Company Credit Agreement

KEYBANK NATIONAL ASSOCIATION,

as Lender

By /s/ Benjamin C. Cooper

Name: Benjamin C. Cooper

Title: Vice President

Signature Page to MidAmerican Energy Company Credit Agreement

PNC BANK, NATIONAL ASSOCIATION,

as Lender

By /s/ Jon R. Hinard

Name: Jon R. Hinard

Title: Managing Director

Signature Page to MidAmerican Energy Company Credit Agreement

SUNTRUST BANK,

as Lender

By /s/ Yann Pirio

Name: Yann Pirio

Title: Managing Director

Signature Page to MidAmerican Energy Company Credit Agreement

TD BANK, N.A.,

as Lender

By /s/ Vijay Prasad

Name: Vijay Prasad

Title: Senior Vice President

Signature Page to MidAmerican Energy Company Credit Agreement

THE BANK OF NEW YORK MELLON,

as Lender

By /s/ Hussam S. Alsahlani

Name: Hussam S. Alsahlani

Title: Vice President

Signature Page to MidAmerican Energy Company Credit Agreement

NATIONAL COOPERATIVE SERVICES CORPORATION, as Lender

By /s/ Uzma Rahman

Name: Uzma Rahman

Title: Assistant Secretary-Treasurer

Signature Page to MidAmerican Energy Company Credit Agreement

THE NORTHERN TRUST COMPANY,

as Lender

By /s/ Robert Jank

Name: Robert Jank

Title: Managing Director Corporate Banking

Signature Page to MidAmerican Energy Company Credit Agreement

BANKERS TRUST COMPANY,

as Lender

By /s/ Robert Gagne

Name: Robert Gagne

Title: Vice President

Signature Page to MidAmerican Energy Company Credit Agreement

EXHIBIT A

(to the Credit Agreement)

FORM OF NOTICE OF BORROWING

Mizuho Bank, Ltd., as Administrative Agent

for the Lenders party

to the Credit Agreement

referred to below

Attention: Agency Group

[Date]

Ladies and Gentlemen:

The undersigned, MidAmerican Energy Company, refers to the Credit Agreement, dated as of June 30, 2017 (as amended or modified from time to time, the “ Credit Agreement ,” the terms defined therein being used herein as therein defined), among the undersigned, certain Lenders and LC Issuing Banks party thereto, and JPMorgan Chase Bank, N.A., as Administrative Agent, and hereby gives you notice, irrevocably, pursuant to Section 2.02(a) of the Credit Agreement that the undersigned hereby requests a Borrowing under the Credit Agreement, and in that connection sets forth below the information relating to such Borrowing (the “ Proposed Borrowing ”) as required by Section 2.02(a) of the Credit Agreement:

(i) The Business Day of the Proposed Borrowing is __________________, 20__.

(ii) The Type of Loans comprising the Proposed Borrowing is [Base Rate Loans][Eurodollar Rate Revolving Loans].

(iii) The aggregate amount of the Proposed Borrowing is $___________________.

[(iv) The initial Interest Period for each Eurodollar Rate Revolving Loan made as part of the Proposed Borrowing is _____ month[s].]

The undersigned hereby certifies that the following statements are true on the date hereof, and will be true on the date of the Proposed Borrowing:

material respects on and as of the date hereof, before and after giving effect to the Proposed Borrowing and to the application of the proceeds therefrom, as though made on the date hereof; and

(B) no event has occurred and is continuing, or would result from the Proposed Borrowing or from the application of the proceeds therefrom, that constitutes a Default.

Very truly yours,

MIDAMERICAN ENERGY COMPANY

Name:

Title:

EXHIBIT B

(to the Credit Agreement)

FORM OF REQUEST FOR ISSUANCE

Mizuho Bank, Ltd., as Administrative Agent

for the Lenders party

to the Credit Agreement

referred to below

Attention: Letter of Credit Department

[ ], as LC Issuing Bank

[Date]

Ladies and Gentlemen:

The undersigned, MidAmerican Energy Company, refers to the Credit Agreement, dated as of June 30, 2017 (as amended or modified from time to time, the “ Credit Agreement ,” the terms defined therein being used herein as therein defined), among the undersigned, certain Lenders and LC Issuing Banks party thereto, and JPMorgan Chase Bank, N.A., as Administrative Agent, and hereby gives you notice pursuant to Section 2.04(a) of the Credit Agreement that the undersigned hereby requests the issuance of a Letter of Credit (the “ Requested Letter of Credit ”) in accordance with the following terms:

(i) the LC Issuing Bank is _____________;

(ii) the requested date of [issuance] [extension] [modification] [amendment] of the Requested Letter of Credit (which is a Business Day) is _____________;

(iii) the expiration date of the Requested Letter of Credit requested hereby is ___________; ¹

(iv) the proposed stated amount of the Requested Letter of Credit is _______________; ²

(v) the beneficiary of the Requested Letter of Credit is _____________, with an address at ______________; and

(vi) the conditions under which a drawing may be made under the Requested Letter of Credit are as follows: ___________________; and


(vii)	any other additional conditions are as follows: ___________________.

_____________________________________________________________________________________________

¹ Date may not be later than the fifth Business Day preceding the Termination Date.

² Must be minimum of $100,000.

MIDAMERICAN ENERGY COMPANY

Name:

Title:

Consented to as of the date ⁴

first above written:

[NAME OF LETTER OF CREDIT BENEFICIARY]

By____________________________________

Name:

Title:

______________________________________________________________________________

³ Necessary only for issuance of a Bond Letter of Credit.

⁴ Necessary only for modification or amendment

EXHIBIT C

(to the Credit Agreement)

ASSIGNMENT AND ASSUMPTION

______________________________________________________________________________

³ Select as appropriate.

⁴ Include bracketed language if there are either multiple Assignors or multiple Assignees

1. Assignor[s]: ________________________________

______________________________

[Assignor [is] [is not] a Defaulting Lender]


2.	Assignee[s]: ______________________________

______________________________

[for each Assignee, indicate [Affiliate][Approved Fund] of [ identify Lender ]]


3.	Borrower(s): MidAmerican Energy Company


4.	Administrative Agent: Mizuho Bank, Ltd., as the administrative agent under the Credit Agreement


5.	Credit Agreement: The $900,000,000 Credit Agreement dated as of June 30, 2017 among MidAmerican Energy Company, the Lenders parties thereto, Mizuho Bank, Ltd., as Administrative Agent, and the LC Issuing Banks parties thereto


6.	Assigned Interest[s]:



Assignor[s] ⁵	Assignee[s] ⁶	Facility Assigned ⁷	Aggregate Amount of Commitment/Loans for all Lenders ⁸	Amount of Commitment/Loans Assigned ⁸	Percentage Assigned of Commitment/ Loans ⁹	CUSIP Number
			$	$	%
			$	$	%
			$	$	%

[7. Trade Date: ______________] ¹⁰

[Page break]

______________________________________________________________________________

⁵ List each Assignor, as appropriate.

⁶ List each Assignee, as appropriate.

⁷ Fill in the appropriate terminology for the types of facilities under the Credit Agreement that are being assigned under this Assignment (e.g., “Revolving Credit Commitment,” etc.)

⁸ Amount to be adjusted by the counterparties to take into account any payments or prepayments made between the Trade Date and the Effective Date.

⁹ Set forth, to at least 9 decimals, as a percentage of the Commitment/Loans of all Lenders thereunder.

¹⁰ To be completed if the Assignor(s) and the Assignee(s) intend that the minimum assignment amount is to be determined as of the Trade Date.

Effective Date: _____________ ___, 20___ [TO BE INSERTED BY ADMINISTRATIVE AGENT AND WHICH SHALL BE THE EFFECTIVE DATE OF RECORDATION OF TRANSFER IN THE REGISTER THEREFOR.]

The terms set forth in this Assignment and Assumption are hereby agreed to:

ASSIGNOR[S] ¹¹

[NAME OF ASSIGNOR]

By______________________________

Title:

[NAME OF ASSIGNOR]

By______________________________

Title:

ASSIGNEE[S] ¹²

[NAME OF ASSIGNEE]

By______________________________

Title:

[NAME OF ASSIGNEE]

By______________________________

Title:

______________________________________________________________________________

¹¹ Add additional signature blocks as needed. Include both Fund/Pension Plan and manager making the trade (if applicable).

¹² Add additional signature blocks as needed. Include both Fund/Pension Plan and manager making the trade (if applicable).

[Consented to and] ¹³ Accepted:

MIZUHO BANK, LTD., as

Administrative Agent

By _________________________________

Title:

[Consented to:] ¹⁴

[NAME OF RELEVANT PARTY]

By ________________________________

Title:

__________________________________________________________________________

¹³ To be added only if the consent of the Administrative Agent is required by the terms of the Credit Agreement.

¹⁴ To be added only if the consent of the Borrower and/or other parties (e.g. LC Issuing Bank) is required by the terms of the Credit Agreement.

ANNEX 1

$900,000,000 Credit Agreement, dated as of June 30, 2017, among MidAmerican Energy Company, the Lenders parties thereto, Mizuho Bank, Ltd., as Administrative Agent, and the LC Issuing Banks parties thereto

STANDARD TERMS AND CONDITIONS FOR
ASSIGNMENT AND ASSUMPTION

1. Representations and Warranties .

EXHIBIT F-1

(to the Credit Agreement)

[FORM OF]

U.S. TAX COMPLIANCE CERTIFICATE

(For Foreign Lenders That Are Not Partnerships For U.S. Federal Income Tax Purposes)

Reference is hereby made to the Credit Agreement, dated as of June 30, 2017 (as amended, supplemented or otherwise modified from time to time, the “ Credit Agreement ”), among MidAmerican Energy Company (the “ Borrower ”), the Lenders party thereto from time to time, Mizuho Bank, Ltd., as Administrative Agent and the LC Issuing Banks party thereto from time to time.

Unless otherwise defined herein, terms defined in the Credit Agreement and used herein shall have the meanings given to them in the Credit Agreement.



[NAME OF LENDER]
By:
	Name:
	Title:

Date: ________ __, 20[ ]

EXHIBIT F-2

(to the Credit Agreement)

[FORM OF]

U.S. TAX COMPLIANCE CERTIFICATE

(For Foreign Participants That Are Not Partnerships For U.S. Federal Income Tax Purposes)

Pursuant to the provisions of Section 2.18 of the Credit Agreement , the undersigned hereby certifies that (i) it is the sole record and beneficial owner of the participation in respect of which it is providing this certificate, (ii) it is not a bank within the meaning of Section 881(c)(3)(A) of the Internal Revenue Code , (iii) it is not a ten percent shareholder of the Borrower within the meaning of Section 871(h)(3)(B) of the Internal Revenue Code , and (iv) it is not a controlled foreign corporation related to the Borrower as described in Section 881(c)(3)(C) of the Internal Revenue Code .

The undersigned has furnished its participating Lender with a certificate of its non- U.S. Person status on IRS Form W-8BEN-E or IRS Form W-8BEN. By executing this certificate, the undersigned agrees that (1) if the information provided on this certificate changes, the undersigned shall promptly so inform such Lender in writing, and (2) the undersigned shall have at all times furnished such Lender with a properly completed and currently effective certificate in either the calendar year in which each payment is to be made to the undersigned, or in either of the two calendar years preceding such payments .

Unless otherwise defined herein, terms defined in the Credit Agreement and used herein shall have the meanings given to them in the Credit Agreement .



[NAME OF PARTICIPANT]
By:
	Name:
	Title:

Date: ________ __ , 20 [ ]

EXHIBIT F-3

(to the Credit Agreement)

[FORM OF]

U.S. TAX COMPLIANCE CERTIFICATE

(For Foreign Participants That Are Partnerships For U.S. Federal Income Tax Purposes)

Unless otherwise defined herein, terms defined in the Credit Agreement and used herein shall have the meanings given to them in the Credit Agreement.



[NAME OF PARTICIPANT]
By:
	Name:
	Title:

Date: ________ __, 20[ ]

EXHIBIT F-4

(to the Credit Agreement)

[FORM OF]

U.S. TAX COMPLIANCE CERTIFICATE

(For Foreign Lenders That Are Partnerships For U.S. Federal Income Tax Purposes)

Unless otherwise defined herein, terms defined in the Credit Agreement and used herein shall have the meanings given to them in the Credit Agreement.



[NAME OF LENDER]
By:
	Name:
	Title:

Date: ________ __, 20[ ]

SCHEDULE I

LIST OF COMMITMENT AMOUNTS AND APPLICABLE LENDING OFFICES

MIDAMERICAN ENERGY COMPANY

U.S. $900,000,000 Credit Agreement



Name of Bank	Commitment Amount	Domestic Lending Office	Eurodollar Lending Office
Mizuho Bank, Ltd.	$52,702,007.37	1251 Avenue of the Americas New York, New York 10020 Contact : Nelson Chang Phone: (212) 282-3465 Fax: (212) 282-4488 Email: nelson.chang@mizuhocbus.com Group Email: LAU_USCorp3@mizuhocbus.com	Same as Domestic Lending Office

JPMorgan Chase Bank, N.A.	$52,702,007.37	500 Stanton Christiana Road, Ops 2 Floor 3 Newark, Delaware 19713-2107 Contact : Juan Javellana Phone: (212) 270-4272 Email: juan.j.javellana@jpmorgan.com Group Email : na_cpg@jpmorgan.com	Same as Domestic Lending Office

Wells Fargo Bank, National Association	$52,702,007.37	90 S. 7 ^th Street MAC: N9305-06G Minneapolis, MN 55402 Contact : Greg Gredvig Phone: (612) 667-4832 Fax : (612) 316-0506 Email: gregory.r.gredvig@wellsfargo.com Group Email: RKELCLNSVPayments@wellsfargo.com	Same as Domestic Lending Office

MUFG Union Bank, N.A.	$52,702,007.37	445 South Figueroa Street, 15th Floor Los Angeles, California 90071 Contact: Jeffrey Flagg Phone: (213) 236-6911 Email: jflagg@us.mufg.jp Group Email: #CLOSYND@unionbank.com	Same as Domestic Lending Office



Name of Bank	Commitment Amount	Domestic Lending Office	Eurodollar Lending Office
Citibank, N.A.	$34,568,926.87	399 Park Avenue, 16 ^th Floor 5 New York, New York 10043 Contact : Loan Administration Phone: (302) 894-6052 Fax: (212) 994-0847 Email: GLOriginationOps@citi.com	Same as Domestic Lending Office

U.S. Bank National Association	$52,702,007.37	1700 Farnam Street Omaha, Nebraska 68102 Contact : Karen Nelsen Phone: (402) 536-5104 Fax : (402) 536-5213 Email: karen.nelsen@usbank.com Group Email: CLSSyndicationServicesTeam@usbank.com	Same as Domestic Lending Office

BNP Paribas	$34,568,926.87	787 Seventh Avenue New York, New York 10019 Contact : Denis O’Meara Phone: (212) 471-8108 Fax: (212) 841-2745 Email: denis.omeara@americas.bnpparibas.com	Same as Domestic Lending Office

Barclays Bank PLC	$52,702,007.37	745 Seventh Avenue, 24 ^th FL New York, New York 10019 Contact : Leah Kaniampuram Phone: (212) 526-4763 Email: leah.kaniampuram@barclays.com Group Email: xraUSLoanOps4@Barclays.com	Same as Domestic Lending Office

Royal Bank of Canada	$52,702,007.36	Three World Financial Center New York, New York 10281 Contact : Rahul Shah Phone: (212) 858-6053 Fax: (212) 428-6201 Email: rahul.shah@rbccm.com	Same as Domestic Lending Office

Bank of Nova Scotia	$34,568,926.87	720 King Street W-2nd floor, Toronto, Ontario, Canada M5V 2T3 Contact : Mona Nagpaul Phone: (212) 225-5705 Fax: (212) 225-5709 Email: mona.nagpaul@scotiabank.com Group Email: GWSUSCorp_LoanOps@scotiabank.com	Same as Domestic Lending Office



Name of Bank	Commitment Amount	Domestic Lending Office	Eurodollar Lending Office
Bank of Montreal, Chicago Branch	$33,270,391.37	115 S. LaSalle St., 17 ^th Floor West Chicago, IL 60603 Contact: Carol McDonald Phone: (403) 515-3663 Fax: (403) 515-3650 Email: carol.mcdonald@bmo.com	Same as Domestic Lending Office

Sumitomo Mitsui Banking Corp.	$40,397,194.42	277 Park Avenue New York, New York 10172 Contact : Emily Estevez Phone: (212) 224-4177 Fax : (212) 224-4384 Email: eestevez@smbclf.com	Same as Domestic Lending Office

Canadian Imperial Bank of Commerce, New York Branch	$32,921,331.12	595 Bay Street, 5 ^th Floor Toronto, ON M5G 2C2 Contact : Angela Tom Phone: (416) 542-4446 Fax: (905) 948-1934	Same as Domestic Lending Office

CoBank, ACB	$37,282,251.38	6340 S. Fiddlers Green Circle Greenwood Village, CO 80111 Contact : Courtney Baird Phone: (303) 793-2121 Fax : (303) 740-4002 Email: cbaird@cobank.com Group Email: agencybank@cobank.com	Same as Domestic Lending Office

KeyBank National Association	$41,643,171.66	4900 Tiedeman Road Brooklyn, OH 44144 Contact : KAS Servicing Phone: (216) 813-5647 Fax : (216) 370-5997 (Note: All notices must be faxed) Email: kas_servicing@keybank.com Group Email: kas_servicing@keybank.com	Same as Domestic Lending Office

PNC Bank, National Association	$39,774,205.82	249 Fifth Avenue One PNC Plaza Pittsburgh, Pennsylvania 15222 Contact : Janet Gordon Phone: (440) 546-6564 Fax: (877) 717-5502 Email: janet.gordon@pnc.com Group Email: ParticipationCloserRequests@pnc.com	Same as Domestic Lending Office



Name of Bank	Commitment Amount	Domestic Lending Office	Eurodollar Lending Office

SunTrust Bank	$49,742,023.57	211 Perimeter Center Parkway Atlanta, GA 30346 Contact: Meta Tshimanga Phone: (770) 352-5231 Fax: (844) 288-3379 Email: Meta.Tshimanga@suntrust.com	Same as Domestic Lending Office

TD Bank, N.A.	$49,742,023.57	2005 Market Street Philadelphia, Pennsylvania 19103 Contact: Vijay Prasad Phone: (646) 652-1427 Email: Vijay.prasad2@td.com Group Email: investor.processing@yesbank.com	Same as Domestic Lending Office

The Bank of New York Mellon	$31,675,353.90	6023 Airport Road Oriskany, NY 13424 Contact : Brian K. Brown Phone: (315) 801-2433 Fax: (315) 765-4822 Email: brian.brown@bnymellon.com	Same as Domestic Lending Office

National Cooperative Services Corporation	$25,000,000.00	20701 Cooperative Way Dulles, Virginia 20166 Contact : Jamie Rodrigues Phone: (703) 467-2740 Fax: (703) 467-5653 Email: Jamie.Rodriguez@nrucfc.coop	Same as Domestic Lending Office

The Northern Trust Company	$30,931,221.00	50 S. LaSalle Street Chicago, Illinois 60603 Contact: Murtuza Ziauddin Phone: (312) 557-3075 Fax: (312) 557-1425 Email: mz14@ntrs.com	Same as Domestic Lending Office

Bankers Trust Company	$15,000,000.00	453 7th Street Des Moines, IA 50309 Contact : Bob Gagne Phone: (515) 245-5204 Fax: (515) 245-5216 Email: BGagne@bankerstrust.com	Same as Domestic Lending Office

TOTAL	$900,000,000

SCHEDULE II

LIST OF FRONTING COMMITMENTS

MIDAMERICAN ENERGY COMPANY

U.S. $900,000,000 Credit Agreement



LC Issuing Bank	LC Issuing Bank Address	Fronting Commitment

Mizuho Bank, Ltd.	1251 Avenue of the Americas New York, New York 10020 Contact : Nelson Chang Phone: (212) 282-3465 Fax: (212) 282-4488 Email: nelson.chang@mizuhocbus.com Group Email: LAU_USCorp3@mizuhocbus.com	$50,000,000

U.S. Bank National Association	1700 Farnam Street OM-NE-T2CB Omaha, NE 68102 Contact : Karen Nelsen Phone: (402) 536-5104 Fax: (402) 536-5213 Email: karen.nelsen@usbank.com	$100,000,000

Royal Bank of Canada	Three World Financial Center New York, New York 10281 Contact : Rahul Shah Phone: (212) 858-6053 Fax: (212) 428-6201 Email: rahul.shah@rbccm.com	$90,000,000

Bank of Nova Scotia	720 King Street W-2nd floor, Toronto, Ontario, Canada M5V 2T3 Contact : Mona Nagpaul Phone: (212) 225-5705 Fax: (212) 225-5709 Email: mona.nagpaul@scotiabank.com Group Email: GWSUSCorp_LoanOps@scotiabank.com	$40,000,000

SCHEDULE III

LIST OF MATERIAL SUBSIDIARIES

MIDAMERICAN ENERGY COMPANY

U.S. $900,000,000 Credit Agreement

None.

SCHEDULE IV

EXISTING LETTERS OF CREDIT

None.

EXECUTION VERSION

______________________________________________________________________________

U.S. $400,000,000

SECOND AMENDED AND RESTATED CREDIT AGREEMENT

Dated as of June 30, 2017

Among

NEVADA POWER COMPANY

as the Borrower

THE INITIAL LENDERS NAMED HEREIN

as Initial Lenders

WELLS FARGO BANK, NATIONAL ASSOCIATION

as Administrative Agent

and

THE LC ISSUING BANKS

PARTY HERETO FROM TIME TO TIME

as LC Issuing Banks



WELLS FARGO SECURITIES, LLC JPMORGAN CHASE BANK, N.A. MIZUHO BANK, LTD.	MUFG UNION BANK, N.A. CITIGROUP GLOBAL MARKETS INC. BARCLAYS BANK PLC THE BANK OF NOVA SCOTIA

Joint Lead Arrangers and Joint Bookrunners



JPMORGAN CHASE BANK, N.A. MIZUHO BANK, LTD. MUFG UNION BANK, N.A. CITIBANK, N.A. BARCLAYS BANK PLC THE BANK OF NOVA SCOTIA Syndication Agents	U.S. BANK NATIONAL ASSOCIATION BNP PARIBAS ROYAL BANK OF CANADA SUMITOMO MITSUI BANKING CORPORATION BANK OF MONTREAL, CHICAGO BRANCH KEYBANK NATIONAL ASSOCIATION SUNTRUST BANK Documentation Agents

TABLE OF CONTENTS



			Page

ARTICLE I DEFINITIONS AND ACCOUNTING TERMS			1

	SECTION 1.01.	Certain Defined Terms	1
	SECTION 1.02.	Computation of Time Periods	25
	SECTION 1.03.	Accounting Terms	26
	SECTION 1.04.	Classification of Loans and Borrowings	26
	SECTION 1.05.	Other Interpretive Provisions	26

ARTICLE II AMOUNTS AND TERMS OF THE EXTENSIONS OF CREDIT			26

	SECTION 2.01.	The Revolving Loans	26
	SECTION 2.02.	Making the Revolving Loans	27
	SECTION 2.03.	[Reserved]	28
	SECTION 2.04.	Letters of Credit	28
	SECTION 2.05.	Fees	34
	SECTION 2.06.	Extension of the Termination Date	34
	SECTION 2.07.	Increase of the Commitments	36
	SECTION 2.08.	Termination or Reduction of the Commitments	37
	SECTION 2.09.	Repayment of Loans	38
	SECTION 2.10.	Evidence of Indebtedness	38
	SECTION 2.11.	Interest on Loans	39
	SECTION 2.12.	Interest Rate Determination	39
	SECTION 2.13.	Conversion of Revolving Loans	40
	SECTION 2.14.	Optional Prepayments of Loans	41
	SECTION 2.15.	Increased Costs	41
	SECTION 2.16.	Illegality	43
	SECTION 2.17.	Payments and Computations	43
	SECTION 2.18.	Taxes	45
	SECTION 2.19.	Sharing of Payments, Etc	48
	SECTION 2.20.	Mitigation Obligations; Replacement of Lenders	49
	SECTION 2.21.	Defaulting Lenders	50
	SECTION 2.22.	Cash Collateral	53

ARTICLE III CONDITIONS PRECEDENT			54

	SECTION 3.01.	Conditions Precedent to Effectiveness	54
	SECTION 3.02.	Conditions Precedent to each Extension of Credit	55
	SECTION 3.03.	Conditions Precedent to Issuance of Each Bond Letter of Credit	56

ARTICLE IV REPRESENTATIONS AND WARRANTIES			58

	SECTION 4.01.	Representations and Warranties of the Borrower	58



ARTICLE V COVENANTS OF THE BORROWER			62

	SECTION 5.01.	Affirmative Covenants	62
	SECTION 5.02.	Negative Covenants	65
	SECTION 5.03.	Financial Covenant	68

ARTICLE VI EVENTS OF DEFAULT			68

	SECTION 6.01.	Events of Default	68
	SECTION 6.02.	Actions in Respect of the Letters of Credit upon Default	71

ARTICLE VII THE ADMINISTRATIVE AGENT			71

	SECTION 7.01.	Appointment and Authority	71
	SECTION 7.02.	Rights as a Lender	72
	SECTION 7.03.	Exculpatory Provisions	72
	SECTION 7.04.	Reliance by Administrative Agent	73
	SECTION 7.05.	Resignation of Administrative Agent	73
	SECTION 7.06.	Non-Reliance on Administrative Agent and Other Lenders	75
	SECTION 7.07.	Indemnification	75
	SECTION 7.08.	No Other Duties, etc	76
	SECTION 7.09.	Collateral Release Matters	76

ARTICLE VIII MISCELLANEOUS			76

	SECTION 8.01.	Amendments, Etc	76
	SECTION 8.02.	Notices, Etc	78
	SECTION 8.03.	No Waiver; Remedies	79
	SECTION 8.04.	Costs and Expenses; Indemnification	80
	SECTION 8.05.	Right of Set-off	82
	SECTION 8.06.	Binding Effect	82
	SECTION 8.07.	Assignments and Participations	83
	SECTION 8.08.	Confidentiality	87
	SECTION 8.09.	Governing Law	87
	SECTION 8.10.	Severability	87
	SECTION 8.11.	Execution in Counterparts	87
	SECTION 8.12.	Jurisdiction, Etc	88
	SECTION 8.13.	Waiver of Jury Trial	88
	SECTION 8.14.	USA Patriot Act	89
	SECTION 8.15.	No Fiduciary Duty	89
	SECTION 8.16.	Acknowledgment and Consent to Bail-In of EEA Financial
		Institutions	90
	SECTION 8.17.	Reaffirmation of Loan Documents	90

EXHIBITS AND SCHEDULES

EXHIBIT A --------------- Form of Notice of Borrowing

EXHIBIT B --------------- Form of Request for Issuance

EXHIBIT C --------------- Form of Assignment and Assumption

EXHIBIT F-1 --------------- Form of U.S. Tax Compliance Certificate (For Foreign Lenders That Are Not Partnerships For U.S. Federal Income Tax Purposes)

EXHIBIT F-2 --------------- Form of U.S. Tax Compliance Certificate (For Foreign Participants That Are Not Partnerships For U.S. Federal Income Tax Purposes)

EXHIBIT F-3 --------------- Form of U.S. Tax Compliance Certificate (For Foreign Participants That Are Partnerships For U.S. Federal Income Tax Purposes)

EXHIBIT F-4 --------------- Form of U.S. Tax Compliance Certificate (For Foreign Lenders That Are Partnerships For U.S. Federal Income Tax Purposes)

SCHEDULE I --------------- List of Commitment Amounts and Applicable Lending Offices

SCHEDULE II --------------- List of Fronting Commitments

SCHEDULE III--------------- List of Material Subsidiaries

SECOND AMENDED AND RESTATED CREDIT AGREEMENT

SECOND AMENDED AND RESTATED CREDIT AGREEMENT, dated as of June 30, 2017 (as further amended, restated, supplemented or otherwise modified from time to time, this “ Agreement ”), among NEVADA POWER COMPANY, a Nevada corporation (the “ Borrower ”), the banks, financial institutions and other institutional lenders listed on the signatures pages hereof (the “ Initial Lenders ”), WELLS FARGO BANK, NATIONAL ASSOCIATION (“ Wells Fargo Bank ”), as administrative agent (in such capacity, the “ Administrative Agent ”) for the Lenders (as hereinafter defined), and the LC Issuing Banks (as hereinafter defined) party hereto from time to time.

ARTICLE I
DEFINITIONS AND ACCOUNTING TERMS

SECTION 1.01. Certain Defined Terms.

As used in this Agreement, the following terms shall have the following meanings (such meanings to be equally applicable to both the singular and plural forms of the terms defined):

“ Administrative Agent ” has the meaning specified in the first paragraph of this Agreement.

“ Administrative Questionnaire ” means an administrative questionnaire in a form supplied by the Administrative Agent.

“ Agent Fee Letter ” means the letter agreement dated April 24, 2017 among the Borrower and the Administrative Agent, as amended, restated, supplemented or otherwise modified from time to time.

“ Agent Parties ” has the meaning specified in Section 8.02(d)(ii).

limitation, (i) the United States Foreign Corrupt Practices Act of 1977, as amended from time to time, and the applicable regulations thereunder, and (ii) to the extent applicable, the United Kingdom’s Bribery Act 2010, as amended from time to time.



Applicable Rating Level	Applicable Margin for Eurodollar Rate Revolving Loans		Applicable Margin for Base Rate Loans
1	0.550	%	0.000	%
2	0.625	%	0.000	%
3	0.750	%	0.000	%
4	0.875	%	0.000	%
5	1.000	%	0.000	%

“ Applicable Rating Level ” at any time shall be determined in accordance with the then-applicable S&P Rating or the then-applicable Moody’s Rating as follows:



S&P Rating/Moody’s Rating	Applicable Rating Level
S&P Rating AA or higher or Moody’s Rating Aa2 or higher	1
S&P Rating AA- or Moody’s Rating Aa3	2
S&P Rating A+ or Moody’s Rating A1	3
S&P Rating A or Moody’s Rating A2	4
S&P Rating A- or below or Moody’s Rating A3 or below or unrated	5

“ Assignment and Assumption ” means an assignment and assumption entered into by a Lender and an Eligible Assignee (with the consent of any party whose consent is required by Section 8.07), and accepted by the Administrative Agent, in substantially the form of Exhibit C or any other form approved by the Administrative Agent.

“ Bail-In Action ” means the exercise of any Write-Down and Conversion Powers by the applicable EEA Resolution Authority in respect of any liability of an EEA Financial Institution.

“ Base Rate” means a fluctuating interest rate per annum in effect from time to time, which rate per annum shall at all times be equal to the highest of:


(i)	the rate of interest announced by Wells Fargo Bank from time to time as Wells Fargo Bank’s prime rate;


(ii)	1/2 of 1% per annum above the NYFRB Rate in effect on such date; and

(iii)

; provided , that in no event shall the Base Rate be less than 0%.

“ Base Rate Loan” means a Loan that bears interest as provided in Section 2.11(a).

“ Berkshire Hathaway ” means Berkshire Hathaway Inc.

“ Bond Event of Default ” has the meaning specified in Section 6.01.

“ Bond Indenture ” means, for any series of Bonds, the indenture pursuant to which such Bonds are issued and any supplement thereto relating to such Bonds.

“ Bond Trustee ” means, for any series of Bonds, the Person acting in the capacity of trustee for the holders of such Bonds under the Bond Indenture pursuant to which such Bonds were issued.

“ Bonds ” means pollution control revenue bonds or industrial development revenue bonds (or similar obligations, however designated) issued pursuant to a Bond Indenture between the Bond Trustee and the Issuer named therein.

“ Borrower ” has the meaning specified in the first paragraph of this Agreement.

“ Borrowing Date ” means the date of any Borrowing.

“ Change of Control ” has the meaning specified in Section 6.01(h).

“ Closing Date ” means June 30, 2017.

“ Collateral Release ” has the meaning specified in Section 7.09(a).

“ Collateral Release Trigger ” means the satisfaction of each of the following conditions: (i) the receipt by the Borrower of an S&P Unsecured Rating of BBB- or higher

or a Moody’s Unsecured Rating of Baa3 or higher (in each case, with a stable or better outlook), (ii) no Default exists, and (iii) the Administrative Agent’s receipt of a certificate signed by a duly authorized officer of the Borrower certifying to the foregoing.

“ Commitment Fee Rate ” means, at any time, the rate per annum set forth below next to the Applicable Rating Level in effect at such time:



Applicable Rating Level	Commitment Fee Rate
1	0.045%
2	0.050%
3	0.060%
4	0.075%
5	0.100%

“ Commitments ” means the aggregate of each Lender’s Commitment hereunder.

“ Communications ” has the meaning specified in Section 8.02(d)(ii).

Arrangers or such Lender from a source other than the Borrower that has no obligation to maintain the confidentiality of such information.

“ Credit Party ” means the Administrative Agent, any LC Issuing Bank or any Lender.

840 – Leases paragraph 840-10-15-6 (or the Accounting Standards Codification Topic 842 – Leases paragraphs 842-10-15-3 through 5), nor shall Debt include Debt of any variable interest entity consolidated by the Borrower under the requirements of Topic 810 – Consolidation.

“ Declining Lender ” has the meaning specified in Section 2.06(b).

“ Default ” means any Event of Default or any event that would constitute an Event of Default but for the requirement that notice be given or time elapse or both.

“ Defaulting Lender ” means, subject to Section 2.21(b), any Lender that (i) has failed, within two Business Days after the date required to be funded or paid, to (A) fund all or any portion of its Loans, (B) fund any portion of its participations in Letters of Credit or (C) pay over to any Credit Party any other amount required to be paid by it under this Agreement, unless, in the case of clause (A) above, such failure is the result of such Lender’s good faith determination that one or more conditions precedent to funding (each of which conditions precedent, together with any applicable default, shall be specifically identified in writing) has not been satisfied, as notified by such Lender to the Administrative Agent and the Borrower in such writing, (ii) has notified the Borrower or any Credit Party in writing that it does not intend to comply with any of its funding obligations under this Agreement or has made a public statement to the effect that it does not intend to comply with its funding obligations under this Agreement (unless such writing or public statement relates to such Lender’s obligation to fund a Loan hereunder and such position is based on such Lender’s good faith determination that a condition precedent (which condition precedent, together with any applicable default, shall be specifically identified in such writing or public statement) to funding a Loan under this Agreement cannot be satisfied), (iii) has failed, within three Business Days after written request by the Administrative Agent, any LC Issuing Bank or the Borrower, acting in good faith, to confirm in writing to such requesting party that it will comply with its obligations to fund prospective Loans and participations in then outstanding Letters of Credit under this Agreement, provided that such Lender shall cease to be a Defaulting Lender pursuant to clause (iii) upon such requesting party’s receipt of such written confirmation in form and substance reasonably satisfactory to it and the Administrative Agent, or (iv) has become the subject of a (A) Bankruptcy Event or (B) Bail-In Action. Any determination by the Administrative Agent that a Lender is a Defaulting Lender under any one or more of clauses (i) through (iv) above shall be conclusive and binding absent manifest error, and such Lender shall be deemed to be a Defaulting Lender (subject to Section 2.21(b)) upon delivery of written notice of such determination to the Borrower, each LC Issuing Bank and each Lender.

“ Designated Lender ” has the meaning specified in Section 2.07(a).

“ Dollars ” and the symbol “$” mean lawful currency of the United States of America.

“ EEA Member Country ” means any of the member states of the European Union, Iceland, Liechtenstein, and Norway.

“ ERISA ” means the Employee Retirement Income Security Act of 1974, as amended from time to time, and the regulations promulgated and rulings issued thereunder.

minimum required contribution” or “accumulated funding deficiency” (as defined or otherwise set forth in Section 4971 of the Internal Revenue Code or Part 3 of Subtitle B of Title I of ERISA), whether or not waived, or the filing of any request for or receipt of a minimum funding waiver under Section 412 of the Internal Revenue Code with respect to any Pension Plan or Multiemployer Plan, or a determination that any Pension Plan is, or is reasonably expected to be, in at-risk status under Title IV of ERISA; (iii) the filing of a notice of intent to terminate any Pension Plan, if such termination would require material additional contributions in order to be considered a standard termination within the meaning of Section 4041(b) of ERISA, the filing under Section 4041(c) of ERISA of a notice of intent to terminate any Pension Plan, or the termination of any Pension Plan under Section 4041(c) of ERISA; (iv) the institution of proceedings, or the occurrence of an event or condition that would reasonably be expected to constitute grounds for the institution of proceedings by the PBGC, under Section 4042 of ERISA, for the termination of, or the appointment of a trustee to administer, any Pension Plan; (v) the complete or partial withdrawal of the Borrower or any of its ERISA Affiliates from a Multiemployer Plan, the reorganization or insolvency under Title IV of ERISA of any Multiemployer Plan, or the receipt by the Borrower or any of its ERISA Affiliates of any notice that a Multiemployer Plan is in endangered or critical status under Section 305 of ERISA; (vi) the failure by the Borrower or any of its ERISA Affiliates to comply with ERISA or the related provisions of the Internal Revenue Code with respect to any Pension Plan; (vii) the Borrower or any of its ERISA Affiliates incurring any liability under Title IV of ERISA with respect to any Pension Plan (other than premiums due and not delinquent under Section 4007 of ERISA); or (viii) the failure by the Borrower or any of its Subsidiaries to comply with Applicable Law with respect to any Foreign Plan.

“ EU Bail-In Legislation Schedule ” means the EU Bail-In Legislation Schedule published by the Loan Market Association (or any successor Person), as in effect from time to time.

“ Eurocurrency Liabilities ” has the meaning assigned to that term in Regulation D of the Board of Governors of the Federal Reserve System, as in effect from time to time.

rates of interest (in each case, the “ Service ”) as the London interbank offered rate for deposits in Dollars at approximately 11:00 a.m. (London time) two Business Days before the first day of such Interest Period for a period equal to such Interest Period, but in no event less than 0%.

“ Eurodollar Rate Revolving Loan ” means a Revolving Loan that bears interest as provided in Section 2.11(b).

“ Events of Default ” has the meaning specified in Section 6.01.

“ Existing Credit Agreement ” means the Amended and Restated Credit Agreement, dated as of June 27, 2014, as amended, among the Borrower, Wells Fargo Bank, as administrative agent, and certain other financial institutions named therein.

“ Extension Effective Date ” has the meaning specified in Section 2.06(c).

“ Foreign Lender ” means a Lender that is not a U.S. Person.

LC Outstandings as to which such Defaulting Lender’s participation obligation has been reallocated to other Lenders or Cash Collateralized in accordance with the terms hereof.

“ GAAP ” has the meaning specified in Section 1.03.

“ General and Refunding Mortgage Bonds ” means, collectively, (a) the Borrower’s General and Refunding Mortgage Bond, Series Z-2, due on June 30, 2020, issued as of June 30, 2017 to the Administrative Agent under the General and Refunding Mortgage Indenture and any supplemental indenture or Officer’s Certificate related thereto, in a principal amount equal to the Commitments, and (b) any additional General and Refunding Mortgage Bonds issued by the Borrower to the Administrative Agent under the General and Refunding Mortgage Indenture and any supplemental indentures or Officer’s Certificate related thereto in connection with any increase in the Commitments pursuant to Section 2.07, in each case, together with all amendments or replacements thereof (including any Replacement Collateral) and as collateral securing the Obligations.

“ General and Refunding Mortgage Indenture ” means the General and Refunding Mortgage Indenture, dated as of May 1, 2001, between the Borrower and the Indenture Trustee, as the same may be amended, modified or supplemented from time to time; provided that, if the Borrower enters into a Replacement Indenture in accordance with the last sentence of Section 5.02(b), “ General and Refunding Mortgage Indenture ” shall include such Replacement Indenture.

“ Governmental Approval ” means any authorization, consent, approval, license or exemption of, registration or filing with, or report or notice to, any Governmental Authority.

sell services, primarily for the purpose of enabling the debtor to make payment of such Debt or to assure the holder of such Debt against loss, (C) to supply funds to or in any other manner invest in the debtor (including any agreement to pay for property or services irrespective of whether such property is received or such services are rendered) or (D) otherwise to assure a creditor against loss; provided that the term “Guaranty” shall not include endorsements for collection or deposit in the ordinary course of business or the grant of a Lien in connection with Project Finance Debt.

“ Hedge Agreements ” means, with respect to any Person, the collective reference to any of the following: (a) interest rate swap agreements, interest rate cap agreements, interest rate collar agreements and any other agreements designed to protect such Person against fluctuations in interest rates with respect to Debt incurred and not for purposes of speculation, (b) foreign exchange contracts and currency protection agreements entered into with one of more financial institutions designed to protect such Person against fluctuations in currency exchange rates with respect to Debt incurred and not for purposes of speculation, (c) any commodity futures contract, commodity option or other similar agreement or arrangement designed to protect against fluctuations in the price of commodities used by such Person at the time and (d) other agreements or arrangements designed to protect such Person against fluctuations in interest rates or currency exchange rates. The term “ Hedge Agreements ”, for the avoidance of doubt, shall exclude any forward energy purchase or sale contracts or similar arrangements entered into by the Borrower or its Subsidiaries.

“ Hedging Obligations ” means, with respect to any Person, all existing or future payment and other obligations owing by such Person under any Hedge Agreement that is permitted hereunder with any Person that (i) is a current Lender or Affiliate of a current Lender or (ii) was a Lender or an Affiliate of a Lender at the time such Hedge Agreement was executed.

“ Indemnified Party ” has the meaning specified in Section 8.04(b).

“ Indenture Trustee ” means The Bank of New York Mellon Trust Company, N.A. (successor to The Bank of New York Mellon), as trustee under the General and Refunding Mortgage Indenture, or any successor trustee permitted thereunder.

“ Initial Lenders ” has the meaning specified in the first paragraph of this Agreement.


(i)	the Borrower may not select any Interest Period that ends after the latest Termination Date in effect at such time;


(ii)	Interest Periods commencing on the same date for Eurodollar Rate Revolving Loans comprising part of the same Borrowing shall be of the same duration;

(iii)


(iv)	whenever the first day of any Interest Period occurs on a day of an initial calendar month for which there is no numerically corresponding day in the calendar month that succeeds such initial calendar month by the number of months equal to the number of months in such Interest Period, such Interest Period shall end on the last Business Day of such succeeding calendar month.

“ Internal Revenue Code ” means the Internal Revenue Code of 1986, as amended from time to time, and the regulations promulgated and rulings issued thereunder.

“ IRS ” means the U.S. Internal Revenue Service.

“ Issuer ” means, for any series of Bonds, the issuer of such Bonds under the applicable Bond Indenture.

“ Joint Lead Arrangers ” means Wells Fargo Securities, LLC, JPMorgan Chase Bank, N.A., Mizuho Bank, Ltd., MUFG Union Bank, N.A., Citigroup Global Markets Inc., Barclays Bank PLC and The Bank of Nova Scotia.

“ LC Collateral Account ” has the meaning specified in Section 6.02.

“ LC Commitment Amount ” means $200,000,000 as the same may be reduced permanently from time to time pursuant to Section 2.08.

“ LC Fee ” has the meaning specified in Section 2.05(c).

“ LC Fronting Fee ” has the meaning specified in Section 2.05(d).

“ LC Payment Notice ” has the meaning specified in Section 2.04(e).

“ Letter of Credit ” means a letter of credit issued by an LC Issuing Bank pursuant to Section 2.04 (including, without limitation, any Bond Letter of Credit), in each case, as amended, modified or extended in accordance with the terms of this Agreement. A Letter of Credit may be a commercial letter of credit, a standby letter of credit or a direct pay letter of credit.

“ Loan Documents ” means, collectively, (i) this Agreement, (ii) the Fee Letters, (iii) any promissory note issued pursuant to Section 2.10(d) and (iv) unless the Collateral Release has occurred, any Officer’s Certificates and the General and Refunding Mortgage Bonds.

“ Loans ” means the loans made by the Lenders to the Borrower pursuant to this Agreement.

“ Margin Regulations ” means Regulations T, U and X of the Board of Governors of the Federal Reserve System, as in effect from time to time.

“ Margin Stock ” has the meaning specified in the Margin Regulations.

“ Material Adverse Effect ” means a material adverse effect on (i) on the business, operations, properties, financial condition, assets or liabilities (including, without limitation, contingent liabilities) of the Borrower and its Subsidiaries, taken as a whole, (ii) the ability of the Borrower to perform its obligations under the Loan Documents or (iii) the ability of the Administrative Agent, any LC Issuing Bank or any Lender to enforce its rights under the Loan Documents.

“ Moody’s ” means Moody’s Investors Service, Inc.

“ Moody’s Rating ” means, on any date of determination (i) prior to the Collateral Release, the Moody’s Secured Rating and (ii) from and after the Collateral Release, the Moody’s Unsecured Rating.

“ Moody’s Secured Rating ” means the rating most recently announced by Moody’s with respect to any senior secured long term Debt of the Borrower.

“ Moody’s Unsecured Rating ” means the rating most recently announced by Moody’s with respect to any senior unsecured, non-credit enhanced Debt of the Borrower.

“ Mortgaged Property ” has the meaning assigned to that term in the General and Refunding Mortgage Indenture.

“ New York City Time ” means the time in New York, New York.

“ Non-Defaulting Lender ” means, at the time of determination, a Lender that is not a Defaulting Lender.

“ non-performing Lender ” has the meaning specified in Section 2.04(f).

“ Notice of Borrowing ” has the meaning specified in Section 2.02(a).

“ NYFRB ” means the Federal Reserve Bank of New York.

“ Obligations ” means the unpaid principal of and interest on (including, without limitation, interest accruing after the maturity of the Loans and interest accruing after the filing of any petition in bankruptcy, or the commencement of any insolvency, reorganization or like proceeding, relating to the Borrower, whether or not a claim for post-filing or post-petition interest is allowed in such proceeding) the Loans and all other obligations and liabilities (including any Hedging Obligations and any Treasury Management Obligations) of the Borrower to (a) the Administrative Agent, (b) any LC Issuing Bank, (c) any Lender and (d) in the case of Hedging Obligations and Treasury Management Obligations, (i) any current Lender or Affiliate of any current Lender and (ii) any Person who was a Lender or an Affiliate of any Lender at the time such Hedge Agreement or Treasury Management Agreement is executed, in each case, whether direct or indirect, absolute or contingent, due or to become due, or now existing or hereafter incurred, which may arise under, out of, or in connection with any Letter of Credit, any Loan Document, any Hedge Agreement between the Borrower and (x) any current Lender or any Affiliate of a current Lender or (y) any Person who was a Lender or an Affiliate of a Lender at the time such Hedge Agreement was executed, any Treasury Management Agreement between the Borrower and (x) any current Lender or any Affiliate of a current Lender or (y) any Person who was a Lender or an Affiliate of a Lender at the time such Treasury Management Agreement was executed, or any other document made, delivered or given in connection herewith or therewith, whether on account of principal, interest, fees, indemnities, costs, expenses (including, without limitation, all fees, charges and disbursements of counsel to the Administrative Agent, any LC Issuing

Bank or any Lender that are required to be paid by the Borrower pursuant hereto) or otherwise.

“ OFAC ” means The Office of Foreign Assets Control of the U.S. Department of the Treasury.

“ Officer’s Certificate ” means an “Officer’s Certificate” (as defined in the General and Refunding Mortgage Indenture) setting forth the terms of each series of the General and Refunding Mortgage Bonds, executed by a duly authorized officer of the Borrower and authenticated by the Indenture Trustee.

“ Participant ” has the meaning assigned to such term in Section 8.07(d).

“ Participant Register ” has the meaning specified in Section 8.07(d).

“ Patriot Act ” has the meaning specified in Section 8.14.

“ PBGC ” means the U.S. Pension Benefit Guaranty Corporation (or any successor).

“ Permitted Liens ” means such of the following as to which no enforcement, collection, execution, levy or foreclosure proceeding shall have been commenced: (i) Liens for taxes, assessments and governmental charges or levies to the extent not required to be paid under Section 5.01(a) hereof; (ii) Liens imposed by law, such as materialmen’s, mechanics’, carriers’, workmen’s and repairmen’s Liens, and other similar Liens arising in the ordinary course of business; (iii) Liens incurred or deposits made to secure obligations under workers’ compensation laws or similar legislation or to secure public or statutory obligations; (iv) easements, rights of way and other encumbrances on title to real property that do not render title to the property encumbered thereby unmarketable, including zoning and landmarking restrictions; (v) any judgment Lien, unless an Event of Default under Section 6.01(e) shall have occurred and be continuing with respect thereto; (vi) any Lien on any asset of any Person existing at the time such Person is acquired by or merged or consolidated with or into the Borrower or any Subsidiary of the Borrower and not created in contemplation of such event; (vii) pledges and deposits made in the ordinary course of business to secure the performance of bids, trade contracts (other than for Debt), operating leases and surety and appeal bonds, performance bonds and other obligations of a like nature incurred in the ordinary course of business; (viii) Liens upon or in any real property or equipment acquired, constructed, improved or held by the Borrower or any Subsidiary in the ordinary course of business to secure the purchase price of such property or equipment or to secure Debt incurred solely for the purpose of financing the acquisition, construction or improvement of such property or equipment, or Liens existing on such property or equipment at the time of its acquisition (other than any such Liens created in contemplation of such acquisition that were not incurred to finance the acquisition of such property), (ix) Liens securing Project Finance Debt, (x) any Lien on the Borrower’s or any Material Subsidiary’s interest in Bonds or cash or cash equivalents securing (A) the obligation of the Borrower or any Material Subsidiary to reimburse the issuer of a letter of credit supporting payments to be made in respect of such Bonds (including any Bond Letter of Credit) for a drawing on such letter of credit for the purpose of purchasing Bonds or (B) the obligation of the Borrower or any Material Subsidiary to reimburse or repay amounts advanced under any facility entered into to provide liquidity or credit support for any issue of Bonds; and (xi) extensions, renewals or replacements of any Lien described in clause (vi), (vii), (viii), (ix) or (x) for the same or a lesser amount, provided, however, that no such Lien shall extend to or cover any properties (other than after-acquired property already within the scope of

the relevant Lien grant) not theretofore subject to the Lien being extended, renewed or replaced.

“ Person ” means any natural Person, corporation, limited liability company, trust, joint venture, association, company, partnership, Governmental Authority or other entity.

“ Platform ” has the meaning specified in Section 8.02(d)(i).

“ PUCN ” means the Public Utilities Commission of Nevada, or any successor agency.

(A) prior to the Collateral Release, the S&P Secured Rating is reduced to any rating level below A- or the Moody’s Secured Rating is reduced to any rating level below A3 (or both the S&P Secured Rating and the Moody’s Secured Rating become unavailable), or

(B) from and after the Collateral Release, the S&P Unsecured Rating is reduced to any rating level below BBB+ or the Moody’s Unsecured Rating is reduced

to any rating level below Baa1 (or both the S&P Unsecured Rating and the Moody’s Unsecured Rating become unavailable).

“ Recipient ” means (i) the Administrative Agent, (ii) any Lender and (iii) any LC Issuing Bank, as applicable.

“ Register ” has the meaning specified in Section 8.07(c).

“ Reimbursement Amount ” has the meaning specified in Section 2.04(d).

“ Related Documents ” means, for any series of Bonds, such Bonds and the Bond Indenture, the Issuer Agreement, any Remarketing Agreement and any Pledge Agreement relating to such Bonds.

“ Remarketing Agent ” means, for any series of Bonds, any Person acting in the capacity of remarketing agent for such Bonds pursuant to a Remarketing Agreement relating to such Bonds.

“ Removal Effective Date ” has the meaning specified in Section 7.05(b).

“ Replacement Collateral ” has the meaning specified in Section 5.02(b).

“ Replacement Indenture ” has the meaning specified in Section 5.02(b).

“ Request for Issuance ” means a request made pursuant to Section 2.04 in the form of Exhibit B.

Loans and participation obligations with respect to the LC Outstandings for any Defaulting Lender shall be disregarded in determining Required Lenders at any time.

“ Resignation Effective Date ” has the meaning specified in Section 7.05(a).

“ Revolving Loan ” means a Loan by a Lender to the Borrower pursuant to Section 2.02 as part of a Borrowing and refers to a Base Rate Revolving Loan or a Eurodollar Rate Revolving Loan.

“ Sanctioned Person ” means, at any time, (a) any Person listed in any Sanctions-related list of designated Persons maintained by OFAC, the U.S. Department of State or the U.S. Department of the Treasury, or maintained by the United Nations Security Council, the European Union, Her Majesty’s Treasury of the United Kingdom, as may be amended, supplemented or substituted from time to time, (b) any Person organized or ordinarily resident or located in a Sanctioned Country or (c) any Person controlled by, or acting on behalf of, any such Person described in clause (a) or (b). For purposes of this definition, “control” of a Person shall mean the direct or indirect (x) ownership of, or power to vote, 25% or more of the issued and outstanding equity interests having ordinary voting power for the election of directors of such Person or other Persons performing similar functions for such Person, or (y) power to direct or cause the direction of the management and policies of such Person whether by ownership of equity interests, contract or otherwise.

“ S&P” means S&P Global Ratings, a business unit of S&P Global, Inc.

“ S&P Rating ” means, on any date of determination (i) prior to the Collateral Release, the S&P Secured Rating and (ii) from and after the Collateral Release, the S&P Unsecured Rating.

“ S&P Secured Rating ” means the rating most recently announced by S&P with respect to any senior secured long term Debt of the Borrower.

“ S&P Unsecured Rating ” means the rating most recently announced by S&P with respect to any senior unsecured, non-credit enhanced Debt of the Borrower.

“ SEC” means the U.S. Securities and Exchange Commission.

“ Service ” has the meaning set forth in the definition of “Eurodollar Rate”.

“ SPPC Credit Agreement ” means the Second Amended and Restated Credit Agreement, dated as of June 30, 2017, among Sierra Pacific Power Company, Wells Fargo Bank, as administrative agent, and certain other financial institutions party thereto, as the same may be further amended, restated, supplemented or otherwise modified from time to time.

“ Stated Expiry Date ” means the stated expiration date of any Letter of Credit issued or deemed to be issued pursuant to this Agreement; provided, however, that no Stated Expiry Date may be requested or included in any such Letter of Credit where (i) such date would be later than the fifth Business Day preceding the Termination Date then applicable to the Lender that is the LC Issuing Bank for such Letter of Credit, (ii) in the case of any Letter of Credit that is not a Bond Letter of Credit, such date would be later than one year after the date of issuance of such Letter of Credit (subject, for the avoidance of doubt, to the ability to provide for an automatic renewal mechanic in accordance with Section 2.04(a)), or (iii) after taking into account (A) the respective Termination Dates then in effect with respect to all Lenders on the date of issuance or any extension of such Letter of Credit, and (B) the respective Stated Expiry Dates then in effect with respect to all other Letters of Credit then outstanding, the maximum amount of the LC Outstandings under all Letters of Credit (including such Letter of Credit) then outstanding would exceed the total LC Commitment Amounts scheduled to be in effect at any time during the period such Letter of Credit is scheduled to remain in effect, as determined by the Administrative Agent.

concentration, controlled disbursement, lockbox, account reconciliation and reporting and trade finance services and other cash management services.

“ Treasury Management Obligations ” means with respect to any Person, all existing or future payment and other obligations owing by such Person under any Treasury Management Agreement with any Person that (i) is a current Lender or Affiliate of a current Lender or (ii) was a Lender or an Affiliate of a Lender at the time such Treasury Management Agreement was executed.

“ Type ” refers to the distinction between Loans bearing interest at the Base Rate and Loans bearing interest at the Eurodollar Rate.

“ U.S. Person ” means any Person that is a “United States Person” as defined in Section 7701(a)(30) of the Internal Revenue Code.

“ U.S. Tax Compliance Certificate ” has the meaning assigned to such term in Section 2.18(g)(ii).

“ Wells Fargo Bank ” has the meaning specified in the recital of parties to this Agreement.

“ Withholding Agent ” means the Borrower and the Administrative Agent.

SECTION 1.02. Computation of Time Periods.

SECTION 1.03. Accounting Terms.

financial covenants, standards and terms in this Agreement shall continue to be calculated or construed as if such Accounting Change had not occurred. “ Accounting Change ” means a change in accounting principles required by the promulgation of any final rule, regulation, pronouncement or opinion by the Financial Accounting Standards Board of the American Institute of Certified Public Accountants or, if applicable, the SEC (or successors thereto or agencies with similar functions).

SECTION 1.04. Classification of Loans and Borrowings.

SECTION 1.05. Other Interpretive Provisions.

ARTICLE II
AMOUNTS AND TERMS OF THE EXTENSIONS OF CREDIT

SECTION 2.01. The Revolving Loans.

(b) In no event shall the Borrower be entitled to request or receive a Borrowing that (i) would exceed the Available Commitments or (ii) would cause the Outstanding Credits to exceed the Commitments.

SECTION 2.02. Making the Revolving Loans.

of the Borrowing to be made on such Borrowing Date, the Administrative Agent may, but shall not be required to, assume that such Lender has made such portion available to the Administrative Agent on such Borrowing Date in accordance with subsection (a) of this Section 2.02, and the Administrative Agent may (but it shall not be required to), in reliance upon such assumption, make available to the Borrower on such date a corresponding amount. If and to the extent that such Lender shall not have so made such Loan available to the Administrative Agent, such Lender and the Borrower severally agree to repay to the Administrative Agent forthwith on demand such corresponding amount, together with interest thereon, for each day from the date such amount is made available to the Borrower until the date such amount is repaid to the Administrative Agent, at (i) in the case of the Borrower, the interest rate applicable at the time to Loans comprising such Borrowing and (ii) in the case of such Lender, the Federal Funds Effective Rate. If such Lender shall repay to the Administrative Agent such corresponding amount, such amount so repaid shall constitute such Lender’s Loan as part of such Borrowing for purposes of this Agreement.

SECTION 2.03. [Reserved]

SECTION 2.04. Letters of Credit.

(or the date of effectiveness of such extension, modification or amendment) and the Stated Expiry Date thereof, (iii) the proposed stated amount of such Letter of Credit (which amount (A) shall not be less than $100,000 and (B) may be subject to any automatic increase and reinstatement provisions), (iv) the name and address of the beneficiary of such Letter of Credit and (v) a statement of drawing conditions applicable to such Letter of Credit. If such Request for Issuance relates to an amendment or modification of a Letter of Credit, it shall be accompanied by the consent of the beneficiary of the Letter of Credit thereto (except in the case of an extension of the Stated Expiry Date of any Bond Letter of Credit where no consent of the beneficiary is required for such extension). If so requested by the Borrower, a Letter of Credit that is not a Bond Letter of Credit may provide that it is automatically renewable for additional one-year periods if subject to an ability of the applicable LC Issuing Bank to not renew by giving notice of the same to the beneficiary of such Letter of Credit. Each Request for Issuance shall be irrevocable unless modified or rescinded by the Borrower prior to the issuance by the applicable LC Issuing Bank of the requested Letter of Credit or prior to the effectiveness of the requested extension, modification or amendment to a Letter of Credit, as applicable. Upon fulfillment of the applicable conditions precedent and the other requirements set forth herein, the relevant LC Issuing Bank shall issue (or extend, amend or modify) such Letter of Credit and provide notice and a copy thereof to the Administrative Agent, which shall promptly furnish copies thereof to the Lenders that shall so request; provided that the LC Issuing Bank shall not issue or amend any Letter of Credit if such LC Issuing Bank has received notice from the Administrative Agent that the applicable conditions precedent have not been satisfied. Upon each issuance of a Letter of Credit by any LC Issuing Bank, each Lender shall be deemed, without further action by any party hereto, to have irrevocably and unconditionally purchased from such LC Issuing Bank without recourse a participation in such Letter of Credit equal to such Lender’s Commitment Percentage of the aggregate amount available to be drawn under such Letter of Credit. Upon each modification of a Letter of Credit by any LC Issuing Bank which modifies the aggregate amount available to be drawn under such Letter of Credit, such LC Issuing Bank and the Lenders shall be deemed, without further action by any party hereto, to have purchased or sold, as appropriate, participations in such Letter of Credit such that each Lender’s participation in such Letter of Credit shall equal such Lender’s Commitment Percentage of such modified aggregate amount available to be drawn under such Letter of Credit. Each Letter of Credit shall utilize the Commitment of each Lender by an amount equal to the amount of such participation. Without limiting the foregoing, any LC Issuing Bank that issues a Bond Letter of Credit agrees that (i) all Bonds pledged to such LC Issuing Bank pursuant to any applicable Pledge Agreement or otherwise registered in the name of such LC Issuing Bank pursuant to the other Related Documents will be held for the benefit of such LC Issuing Bank and the Lenders and (ii) to apply and/or remit all proceeds from the sale or remarketing of such Bonds in accordance with Section 2.17(f).

issued by such Lender shall remain outstanding, such Lender shall be deemed to be, and shall have all the rights and obligations of, an “LC Issuing Bank” under this Agreement.

three days from the date of the payment by such LC Issuing Bank, and, thereafter, until the date of payment to such LC Issuing Bank by such Lender, at a rate of interest equal to the rate applicable to Base Rate Loans. Each such payment by a Lender shall be made not later than 3:00 P.M. (New York City Time) on the later to occur of (i) the Business Day immediately following the date of such payment by such LC Issuing Bank and (ii) the Business Day on which such Lender shall have received an LC Payment Notice from such LC Issuing Bank. Each Lender’s obligation to make each such payment to the Administrative Agent for the account of such LC Issuing Bank shall be several and shall not be affected by the occurrence or continuance of a Default or the failure of any other Lender to make any payment under this Section 2.04(e). Each Lender further agrees that each such payment shall be made without any offset, abatement, withholding or reduction whatsoever.

(i) any lack of validity or enforceability of this Agreement or any other agreement or instrument relating thereto or to such Letter of Credit;

(ii) any amendment or waiver of, or any consent to departure from, the terms of this Agreement or such Letter of Credit;

(iii) the existence of any claim, set-off, defense or other right that the Borrower may have at any time against any beneficiary, or any transferee, of such Letter of Credit (or

any Persons for whom any such beneficiary or any such transferee may be acting), any LC Issuing Bank, or any other Person, whether in connection with this Agreement, the transactions contemplated hereby, thereby or by such Letter of Credit, or any unrelated transaction;

(vi) the use that may be made of any Letter of Credit by, or any act or omission of, the beneficiary of any Letter of Credit (or any Person for which the beneficiary may be acting); or

(vii) any other circumstance or happening whatsoever, whether or not similar to any of the foregoing.

negligence. In furtherance and not in limitation of the foregoing, each LC Issuing Bank may accept sight drafts and accompanying certificates presented under the Letter of Credit issued by such LC Issuing Bank that appear on their face to be in substantial compliance with the terms and conditions of the Letter of Credit, without responsibility for further investigation, regardless of any notice or information to the contrary, and payment against such documents shall not constitute willful misconduct or gross negligence by such LC Issuing Bank. Notwithstanding the foregoing, no Lender shall be obligated to indemnify the Borrower for damages caused by any LC Issuing Bank’s willful misconduct or gross negligence.

(j) In the event of any inconsistency between the terms and conditions of this Agreement and the terms and conditions of any application or other agreement submitted by the Borrower to, or entered into by the Borrower with, an LC Issuing Bank relating to any Letter of Credit issued by such LC Issuing Bank, the terms and conditions of this Agreement shall control. Unless otherwise specified herein, the amount of a Letter of Credit at any time shall be deemed to be the stated amount of such Letter of Credit in effect at such time; provided, however, that with respect to any Letter of Credit that, by its terms or the terms of any application or other agreement related thereto, provides for one or more automatic increases in the stated amount thereof, the amount of such Letter of Credit shall be deemed to be the maximum stated amount of such Letter of Credit after giving effect to all such increases, whether or not such maximum stated amount is in effect at such time.

SECTION 2.05. Fees.

(a) The Borrower agrees to pay to the Administrative Agent for the account of each Lender a commitment fee on the aggregate unused amount of such Lender’s Commitment (i) from the date hereof in the case of each Initial Lender and (ii) from the effective date specified in the Assignment and Assumption pursuant to which it became a Lender in the case of each other Lender, in each case, until the latest Termination Date applicable to such Lender, payable quarterly in arrears on the last day of each March, June, September and December, commencing September 30, 2017, and ending on such Termination Date. The commitment fee for any period will be equal to the Commitment Fee Rate in effect from time to time during such period, times an amount equal to the

Commitments minus the aggregate principal amount of Loans and Letters of Credit outstanding during such period.

(b) The Borrower agrees to pay the fees payable by the Borrower in such amounts and on such terms as set forth in the Fee Letters.

(e) The Borrower shall pay to the Administrative Agent, for its own account, the annual administrative fee at the times and in the amount set forth in the Agent Fee Letter.

SECTION 2.06. Extension of the Termination Date.

(c) If the Required Lenders have consented to the extension of the Termination Date, the Termination Date of each Lender that consented to the extension shall be extended to the date that is one year after such Lender’s then-effective Termination Date, effective as of the date to be determined by the Administrative Agent and the Borrower (the “ Extension Effective Date ”). On or prior to the Extension Effective Date, (i) unless the Collateral Release has occurred, the Borrower shall have delivered to the Administrative Agent an amendment or replacement of each existing General and Refunding Mortgage Bond, extending the stated maturity date of such bond to the latest Termination Date as of the Extension Effective Date, each of which amendment or replacement bond shall be duly issued and delivered by a duly authorized officer of the Borrower and duly authenticated by the Indenture Trustee; and (ii) the Borrower shall have delivered to the Administrative Agent, in form and substance reasonably satisfactory to the Administrative Agent (A) the resolutions of the Borrower authorizing such extension (and, if applicable, such amendment or replacement of General and Refunding Mortgage Bonds) and all Governmental Approvals (if any) required in connection with such extension (and, if applicable, such amendment or replacement of General and Refunding Mortgage Bonds), certified as being in effect as of the Extension Effective Date and the related incumbency certificate of the Borrower, (B) a favorable opinion of counsel for the Borrower as to such matters as any Lender through the Administrative Agent may reasonably request (including, if applicable, as to such amendment or replacement of General and Refunding Mortgage Bonds) and (C) a certificate of the Borrower stating that on and as of such Extension Effective Date, and after giving effect to the extension to be effective on such date, all conditions precedent to an Extension of Credit under Section 3.02 are satisfied. On each Extension Effective Date, each Declining Lender being replaced by the Borrower pursuant to Section 2.06(b) shall have received payment in full of the principal amount of all Loans outstanding owing to such Declining Lender and all interest thereon and all fees and other amounts (including, without limitation, any amounts payable pursuant to Section 8.04(c)) payable to such Declining Lender accrued through such Extension Effective Date. Promptly following such Extension Effective Date, the Administrative Agent shall distribute an amended Schedule I to this Agreement (which shall thereafter be incorporated into this Agreement) to reflect any changes in the Lenders, the Commitments and each Lender’s Commitment Percentage as of such Extension Effective Date.

SECTION 2.07. Increase of the Commitments.

(a) The Borrower may, from time to time, request by written notice to the Administrative Agent to increase the Commitments by a maximum aggregate amount for all such increases of up to $150,000,000, by designating one or more Lenders or other financial institutions (that will become Lenders), in each case, meeting the requirements set forth in the definition of Eligible Assignee, that agree to accept all or a portion of such additional Commitments (each a “ Designated Lender ”).

(b) The Administrative Agent shall promptly notify the Designated Lenders of the Borrower’s request pursuant to subsection (a) above. Each Designated Lender shall notify the Administrative Agent by the date specified by the Administrative Agent (which date shall be a Business Day) that either (A) such Designated Lender declines to accept its additional Commitments or (B) such Designated Lender consents to accept the offered Commitments. Any Designated Lender not responding on or prior to the date specified by the Administrative Agent shall be deemed to have declined to accept the offered Commitments. The Administrative Agent shall, after receiving the notifications from all of the Designated Lenders or following the date specified in the notice to such Designated Lenders, whichever is earlier, notify the Borrower and the Lenders of the results thereof and the effective date of any additional Commitments. The effectiveness of such additional Commitments shall be subject to the conditions precedent that (i) unless the Collateral Release has occurred, the Borrower shall have issued to the Administrative Agent General and Refunding Mortgage Bonds, in form and substance similar to the General and Refunding Mortgage Bond issued to the Administrative Agent on the Closing Date, in accordance with the terms of the General and Refunding Mortgage Indenture, in an aggregate principal amount equal to the difference between the principal amount of the Commitments (after giving effect to such increase and any prior increases or permanent reductions to the Commitments) and the outstanding principal amount of General and Refunding Mortgage Bonds previously issued to the Administrative Agent as collateral support for the Obligations; and (ii) the Borrower shall have delivered to the Administrative Agent (A) the resolutions of the Borrower authorizing such additional Commitments (and, if applicable, such new issuance of General and Refunding Mortgage Bonds) and all Governmental Approvals (if any) required in connection with such additional Commitments (and, if applicable, such new issuance of General and Refunding Mortgage Bonds), certified as being in effect as of the effective date of such additional Commitments, (B) a favorable opinion of counsel for the Borrower as to such matters as any Lender through the Administrative Agent may reasonably request (including, if applicable, as to such new issuance of General and Refunding Mortgage Bonds) and (C) a certificate signed by a duly authorized officer of the Borrower, dated as of the effective date of such additional Commitments, stating that all conditions precedent to an Extension of Credit have been satisfied on and as of such effective date.

(d) Notwithstanding any provision contained herein to the contrary, from and after the date of any Commitment increase and the making of any Loans on such date pursuant to clause (c)(ii) above, all calculations and payments of fees and of interest on the Loans shall take into account the actual Commitment of each Lender and the principal amount outstanding of each Loan made by such Lender during the relevant period of time. The Loans made or Letters of Credit issued in respect of any Commitment increase pursuant to this Section 2.07 will rank pari passu in right of payment and security with the other Loans made and Letters of Credit issued hereunder and shall constitute and be part of the “Obligations” arising under this Agreement.

SECTION 2.08. Termination or Reduction of the Commitments.

(a) The Borrower shall have the right, upon at least three Business Days’ notice to the Administrative Agent, to terminate in whole or reduce ratably in part the Available Commitments, provided that (i) each partial reduction shall be in the aggregate amount of $10,000,000 or an integral multiple of $5,000,000 in excess thereof and (ii) no such termination or reduction shall be made that would reduce the aggregate Commitments to an amount less than the Outstanding Credits on the date of such termination or reduction. Subject to the foregoing, any reduction of the Commitments to an amount below $200,000,000 shall also result in a reduction of the LC Commitment Amount to the extent of such deficit (and if such reduction would cause the LC Commitment Amount to be less than the aggregate Fronting Commitments, with automatic reductions in the amount of each Fronting Commitment ratably in proportion to the amount of such reduction of the LC Commitment Amount unless, in the case of any LC Issuing Bank, such LC Issuing Bank consents otherwise). Each such notice of termination or reduction shall be irrevocable; provided , however , that a notice of termination delivered pursuant to this Section 2.08 may state that such notice is conditioned upon the effectiveness of other credit facilities, in which case such notice may be revoked by the Borrower (by notice to the Administrative Agent on or prior to the effective date specified in the notice of termination) if such condition is not satisfied.

(b) The Borrower may terminate the unused amount of the Commitment of any Lender that is a Defaulting Lender upon not less than three Business Days’ prior notice to the Administrative Agent (which shall promptly notify the Lenders thereof), and in such event the provisions of Section 2.21(a)(ii) will apply to all amounts thereafter paid by the Borrower for the account of such Defaulting Lender under this Agreement (whether on account of principal, interest, fees, indemnity or other amounts); provided that (i) no Event of Default shall have occurred and be continuing, and (ii) such termination shall not be deemed to be a waiver or release of any claim the Borrower, the Administrative Agent, any LC Issuing Bank or any Lender may have against such Defaulting Lender.

(c) The Commitment of each Lender shall automatically terminate on the Termination Date applicable to such Lender as provided in Section 2.06.

(d) Once terminated, a Commitment or any portion thereof may not be reinstated.

SECTION 2.09. Repayment of Loans.

(a) The Borrower shall repay to the Administrative Agent for the account of each Lender on the Termination Date applicable to such Lender the aggregate principal amount of the Revolving

Loans made to the Borrower by such Lender then outstanding. Without limiting the foregoing, the Borrower shall also repay (to the Administrative Agent for the account of the Lenders) Revolving Loans to the extent and at the time required pursuant to the terms of any applicable Governmental Approval relating to the Borrower’s ability to incur Debt.

SECTION 2.10. Evidence of Indebtedness.

SECTION 2.11. Interest on Loans.

The Borrower shall pay interest on the unpaid principal amount of each Loan from the date of such Loan until such principal amount shall be paid in full, at the following rates per annum:

(a) Base Rate Loans . During such periods as such Loan is a Base Rate Revolving Loan, a rate per annum equal at all times to the sum of (x) the Base Rate plus (y) the Applicable Margin

for Base Rate Loans in effect from time to time, payable in arrears quarterly on the last day of each March, June, September and December during such periods and on the date such Base Rate Loan shall be Converted or paid in full.

SECTION 2.12. Interest Rate Determination.

SECTION 2.13. Conversion of Revolving Loans.

(b) Mandatory.

(c) Failure to Convert. Each notice of Conversion given pursuant to subsection (a) above shall be irrevocable and binding on the Borrower. In the case of any Borrowing that is to comprise Eurodollar Rate Revolving Loans upon Conversion, the Borrower agrees to indemnify each Lender against any loss, cost or expense incurred by such Lender if, as a result of the failure of the Borrower to satisfy any condition to such Conversion (including, without limitation, the occurrence of any Default), such Conversion does not occur. The Borrower’s obligations under this subsection (c) shall survive the repayment of all Obligations and the termination of the Commitments.

(d) Limitation on Certain Conversions. Notwithstanding any other provision of this Agreement to the contrary, the Borrower may not borrow Revolving Loans at the Eurodollar Rate

or Convert Revolving Loans resulting in Eurodollar Rate Revolving Loans at any time an Event of Default has occurred and is continuing.

SECTION 2.14. Optional Prepayments of Loans.

SECTION 2.15. Increased Costs.

(a) Increased Costs Generally. If any Change in Law shall:

and the result of any of the foregoing shall be to increase the cost to such Lender or such other Recipient of making, converting to, continuing or maintaining any Loan or of maintaining its obligation to make any such Loan, or to increase the cost to such Lender, such LC Issuing Bank or such other Recipient of participating in, issuing or maintaining any Letter of Credit (or of maintaining its obligation to participate in or to issue any Letter of Credit), or to reduce the amount of any sum received or receivable by such Lender, LC Issuing Bank or other Recipient hereunder (whether of principal, interest or any other amount) then, upon the good faith request of such Lender, LC Issuing Bank or other Recipient, the Borrower will pay to such Lender, LC Issuing Bank or other Recipient, as the case may be, such additional amount or amounts as will compensate such Lender, LC Issuing Bank or other Recipient, as the case may be, for such additional costs incurred or reduction suffered.

SECTION 2.16. Illegality.

the need for giving such notice and would not, in the judgment of such Lender, be otherwise disadvantageous to such Lender. If such notice is given, each Eurodollar Rate Revolving Loan of such Lender then outstanding shall be converted to a Base Rate Revolving Loan either (i) on the last day of the then current Interest Period applicable to such Eurodollar Rate Revolving Loan if such Lender may lawfully continue to maintain and fund such Revolving Loan to such day or (ii) immediately if such Lender shall determine that it may not lawfully continue to maintain and fund such Revolving Loan to such day.

SECTION 2.17. Payments and Computations.

(a) The Borrower shall make each payment to be made by it hereunder not later than 1:00 P.M. (New York City Time) on the day when due in Dollars to the Administrative Agent at the Agent’s Account in same day funds without condition or deduction for any counterclaim, defense, recoupment or setoff. The Administrative Agent will promptly thereafter cause to be distributed like funds relating to the payment of principal or interest or commitment fees ratably (other than amounts payable pursuant to Section 2.02(c), 2.06, 2.11(c), 2.13(c), 2.15, 2.18, 2.21 or 8.04(c)) to the Lenders for the account of their respective Applicable Lending Offices, and like funds relating to the payment of any other amount payable to any Lender to such Lender for the account of its Applicable Lending Office, in each case to be applied in accordance with the terms of this Agreement. Upon its acceptance of an Assignment and Assumption and recording of the information contained therein in the Register pursuant to Section 8.07(c), from and after the effective date specified in such Assignment and Assumption, the Administrative Agent shall make all payments hereunder in respect of the interest assigned thereby to the Lender assignee thereunder, and the parties to such Assignment and Assumption shall make all appropriate adjustments in such payments for periods prior to such effective date directly between themselves.

or on a date after the Termination Date, such payment shall be made on the next preceding Business Day.

SECTION 2.18. Taxes.

(a) Defined Terms. For purposes of this Section 2.18 and for the avoidance of doubt, the term “Lender” includes any LC Issuing Bank and the term “Applicable Law” includes FATCA.

prescribed by Applicable Law or reasonably requested by the Borrower or the Administrative Agent as will enable the Borrower or the Administrative Agent to determine whether or not such Lender is subject to backup withholding or information reporting requirements. Notwithstanding anything to the contrary in the preceding two sentences, the completion, execution and submission of such documentation (other than such documentation set forth in Section 2.18(g)(ii)(A), (ii)(B) and (ii)(D) below) shall not be required if in the Lender’s reasonable judgment such completion, execution or submission would subject such Lender to any material unreimbursed cost or expense or would materially prejudice the legal or commercial position of such Lender.

(i) Without limiting the generality of the foregoing,

(ii) an executed IRS Form W-8ECI;

repay to such indemnified party the amount paid over pursuant to this subsection (h) (plus any penalties, interest or other charges imposed by the relevant Governmental Authority) in the event that such indemnified party is required to repay such refund to such Governmental Authority. Notwithstanding anything to the contrary in this subsection (h), in no event will the indemnified party be required to pay any amount to an indemnifying party pursuant to this subsection (h) the payment of which would place the indemnified party in a less favorable net after-Tax position than the indemnified party would have been in if the Tax subject to indemnification and giving rise to such refund had not been deducted, withheld or otherwise imposed and the indemnification payments or additional amounts with respect to such Tax had never been paid. This subsection shall not be construed to require any indemnified party to make available its Tax returns (or any other information relating to its Taxes that it deems confidential) to the indemnifying party or any other Person.

SECTION 2.19. Sharing of Payments, Etc.

(B) the provisions of this Section shall not be construed to apply to (x) any payment made by the Borrower pursuant to and in accordance with the express terms of this Agreement (including the application of funds arising from the existence of a Defaulting Lender and any payment made pursuant to Section 2.02(c), 2.06, 2.11(c), 2.13(c), 2.15, 2.18, 2.21 or 8.04(c) or, in respect of Eurodollar Rate Revolving Loans converted into Base Rate Revolving Loans, pursuant to Section 2.16), or (y) any payment obtained by a Lender as consideration for the assignment of or sale of a participation in any of its Loans or participations in LC Outstandings to any assignee or participant, other than to the Borrower or any Subsidiary thereof (as to which the provisions of this Section shall apply).

SECTION 2.20. Mitigation Obligations; Replacement of Lenders.

(i) the Borrower shall have paid to the Administrative Agent the assignment fee (if any) specified in Section 8.07(b)(iv);

(iv) such assignment shall not conflict with Applicable Law;

(vi) No Default shall have occurred and be continuing.

SECTION 2.21. Defaulting Lenders.

obligations under this Agreement; and eighth , to such Defaulting Lender or as otherwise directed by a court of competent jurisdiction; provided that if (x) such payment is a payment of the principal amount of any Loans or LC Outstandings in respect of which such Defaulting Lender has not fully funded its appropriate share, and (y) such Loans were made or the related Letters of Credit were issued at a time when the conditions set forth in Section 3.02 were satisfied or waived, such payment shall be applied solely to pay the Loans of, and LC Outstandings owed to, all Non-Defaulting Lenders on a pro rata basis prior to being applied to the payment of any Loans of, or LC Outstandings owed to, such Defaulting Lender until such time as all Loans and funded and unfunded participations in LC Outstandings are held by the Lenders pro rata in accordance with the Commitments without giving effect to Section 2.21(a)(iv). Any payments, prepayments or other amounts paid or payable to a Defaulting Lender that are applied (or held) to pay amounts owed by a Defaulting Lender or to post Cash Collateral pursuant to this Section 2.21(a)(ii) shall be deemed paid to and redirected by such Defaulting Lender, and each Lender irrevocably consents hereto.

including any claim of a Non-Defaulting Lender as a result of such Non-Defaulting Lender’s increased exposure following such reallocation.

(v) Reduction of Available Commitments . The Borrower may terminate the Available Commitment of any Lender that is a Defaulting Lender in accordance with Section 2.08(b).

SECTION 2.22. Cash Collateral.

(i) Grant of Security Interest. The Borrower, and to the extent provided by any Defaulting Lender, such Defaulting Lender, hereby grants to the Administrative Agent, for

the benefit of the LC Issuing Banks, and agrees to maintain, a first priority security interest in all such Cash Collateral as security for the Defaulting Lenders’ obligation to fund participations in respect of LC Outstandings, to be applied pursuant to paragraph (ii) below. If at any time the Administrative Agent determines that Cash Collateral is subject to any right or claim of any Person other than the Administrative Agent and the LC Issuing Banks as herein provided, or that the total amount of such Cash Collateral is less than the Minimum Collateral Amount, the Borrower will, promptly upon demand by the Administrative Agent, pay or provide to the Administrative Agent additional Cash Collateral in an amount sufficient to eliminate such deficiency (after giving effect to any Cash Collateral provided by the Defaulting Lender).

ARTICLE III

CONDITIONS PRECEDENT

SECTION 3.01. Conditions Precedent to Effectiveness.

(i) A fully executed version of this Agreement and the other Loan Documents;

(ii) Promissory notes payable to each Lender that has requested the same prior to such date pursuant to Section 2.10(d), duly executed by the Borrower.

(iii) (A) A copy of the articles of incorporation or other organizational documents of the Borrower and each amendment thereto, certified by the Secretary of State of Nevada as being a true and correct copy thereof, and (B) a certificate from the Secretary of State of Nevada (dated not more than 10 days prior to the date hereof) attesting to the continued existence and good standing of the Borrower in that State.

(vi) A favorable opinion of in-house counsel for the Borrower, in form and substance reasonably acceptable to the Administrative Agent.

(vii) A favorable opinion of special New York counsel for the Borrower, in form and substance reasonably acceptable to the Administrative Agent.

(viii) The General and Refunding Mortgage Bond referred to in clause (a) of the definition thereof, duly issued and delivered by a duly authorized officer of the Borrower and duly authenticated by the Indenture Trustee.

(ix) (A) Certified copies of the General and Refunding Mortgage Indenture as in effect on the Closing Date; (B) an Officer’s Certificate pursuant to a supplemental indenture or board resolution meeting the requirements of Section 4.01(b) of the General and Refunding Mortgage Indenture and setting forth the terms of the General and Refunding Mortgage Bond referred to in paragraph (viii) above; (C) a “Company Order” (as defined in the General and Refunding Mortgage Indenture) requesting authentication of such General and Refunding Mortgage Bond by the Indenture Trustee; and (D) all legal opinions provided in connection with the issuance of such General and Refunding Mortgage Bond, including any provided pursuant to Section 4.01(d) of the General and Refunding Mortgage Indenture.

(i) The representations and warranties of the Borrower contained in this Agreement are true and correct on and as of the date of such effectiveness as though made on and as of such date, and

(ii) No event has occurred and is continuing that constitutes a Default.

(c) The Borrower shall have paid all accrued fees and expenses under the Existing Credit Agreement payable on the date hereof and all accrued fees and expenses of the Administrative Agent, the Joint Lead Arrangers and the Lenders payable on the date hereof (including the accrued fees and expenses of counsel to the Administrative Agent to the extent then due and payable).

(e) The Administrative Agent shall have received such other approvals or documents as the Administrative Agent, any Lender or any LC Issuing Bank shall have reasonably requested through the Administrative Agent reasonably in advance of the date hereof.

SECTION 3.02. Conditions Precedent to each Extension of Credit.

(ii) No event has occurred and is continuing, or would result from such Extension of Credit or from the application of the proceeds therefrom, that constitutes a Default.

SECTION 3.03. Conditions Precedent to Issuance of Each Bond Letter of Credit.

(i) Counterparts of any Pledge Agreement relating to such Bonds, duly executed by the Borrower, the Administrative Agent and the applicable Custodian, or other evidence that the Bonds purchased with the proceeds of such Bond Letter of Credit will be effectively pledged to or held for the benefit of such LC Issuing Bank and the Lenders, and that a separate CUSIP number has been assigned to such Bonds.

(ii) Certified copies or originals of the other applicable Related Documents (which, in the case of the applicable Bonds, may be a specimen of such Bonds).

(v) A copy of the Official Statement, if any, relating to the Bonds to be supported by such Bond Letter of Credit.

(vii) A certificate of an authorized officer of the applicable Bond Trustee certifying the names, true signatures and incumbency of the officers of such Bond Trustee authorized to make drawings under such Bond Letter of Credit.

(viii) A favorable opinion of counsel to the Borrower with respect to the Related Documents to which the Borrower is a party.

ARTICLE IV

REPRESENTATIONS AND WARRANTIES

SECTION 4.01. Representations and Warranties of the Borrower.

The Borrower represents and warrants as follows:

(a) The Borrower is a corporation duly organized, validly existing and in good standing under the laws of the State of Nevada and is duly qualified to do business and is in good standing as a foreign corporation under the laws of each state in which the ownership of its properties or the conduct of its business makes such qualification necessary, except where the failure to be so qualified would not reasonably be expected to have a Material Adverse Effect, and each Material Subsidiary is duly organized, validly existing and in good standing under the laws of the jurisdiction in which it is incorporated or otherwise organized.

(i) Since December 31, 2016, no event has occurred that could reasonably be expected to have a Material Adverse Effect.

No lien imposed under the Internal Revenue Code or ERISA on the assets of the Borrower or any of its ERISA Affiliates exists or is likely to arise with respect to any Pension Plan. The Borrower and each of its Subsidiaries have complied with foreign law applicable to its Foreign Plans, except to the extent that failure to comply would not reasonably be expected to have a Material Adverse Effect.

(p) Each Material Subsidiary as of the date hereof is set forth on Schedule III.

Person. No Borrowing or Letter of Credit, use of proceeds or other transaction contemplated by this Agreement will violate any Anti-Corruption Law or applicable Sanctions.

(r) At all times prior to the Collateral Release, the General and Refunding Mortgage Indenture is effective to create in favor of the Indenture Trustee, for the ratable benefit of all Holders of Securities (as defined in the General and Refunding Mortgage Indenture), a legal, valid, binding, subsisting and enforceable Lien on and security interest in the Mortgaged Property and the proceeds thereof, subject to applicable Debtor Relief Laws, and such Lien constitutes a fully perfected Lien on, and security interest in, all right title and interest of the grantors thereof in such Mortgaged Property and the proceeds thereof, in each case prior to and superior in right to any other Person subject only to Permitted Liens (as defined in the General and Refunding Mortgage Indenture).

(s) At all times prior to the Collateral Release, the General and Refunding Mortgage Bonds, when executed by the Borrower and authenticated by the Indenture Trustee in accordance with the General and Refunding Mortgage Indenture and delivered to the Administrative Agent in accordance with the terms hereof, will constitute valid and binding obligations of the Borrower, enforceable against the Borrower in accordance with their terms, except as the enforceability thereof may be limited by applicable Debtor Relief Laws. At all times prior to the Collateral Release, the Borrower has all requisite corporate power and authority to issue and deliver the General and Refunding Mortgage Bonds in accordance with and upon the terms and conditions set forth herein.

(t) At all times prior to the Collateral Release, the General and Refunding Mortgage Bonds secure the Obligations of the Borrower hereunder, have been duly and validly issued and are entitled to the security and benefits of the General and Refunding Mortgage Indenture. At all times prior to the Collateral Release, the General and Refunding Mortgage Bonds are secured equally and ratably with, and only with, all other Securities (as defined in the General and Refunding Mortgage Indenture) issued and outstanding under the General and Refunding Mortgage Indenture.

ARTICLE V

COVENANTS OF THE BORROWER

SECTION 5.01. Affirmative Covenants.

So long as any Loan or any other amount payable hereunder shall remain unpaid, any Letter of Credit shall remain outstanding or any Lender shall have any Commitment hereunder, the Borrower will:

Subsidiaries is below the Industry Standard, Borrower shall only be required to use its reasonable best efforts to obtain the necessary insurance coverage such that its and its Material Subsidiaries’ insurance coverage equals or is greater than the Industry Standard.

(h) Reporting Requirements . Furnish to the Lenders:

than an ERISA Event as defined in clause (vi) of the definition of “ERISA Event”) has occurred, a certificate of the chief financial officer of the Borrower describing such ERISA Event and the action, if any, proposed to be taken with respect to such ERISA Event and a copy of any notice filed with the PBGC or the IRS pertaining to such ERISA Event and all notices received by the Borrower or such ERISA Affiliate from the PBGC or any other governmental agency with respect thereto;

(vii) promptly upon any amendment or modification to the General and Refunding Mortgage Indenture at any time prior to the Collateral Release, notice of such amendment or modification;

(viii) promptly upon any change in the S&P Rating or Moody’s Rating, notice of such change;

(ix) promptly upon the occurrence of a Reportable Compliance Event, notice of such occurrence; and

(x) such other information respecting the Borrower or any of its Subsidiaries as any Lender through the Administrative Agent may from time to time reasonably request.

(i) Use of Proceeds . Use the proceeds of the Borrowings and the Letters of Credit for working capital and other general corporate purposes.

of the Administrative Agent pending the remarketing of such Bonds pursuant to the applicable Remarketing Agreement and the other applicable Related Documents.

SECTION 5.02. Negative Covenants.

(a) Liens, Etc. Create or suffer to exist, or cause or permit any Material Subsidiary to create or suffer to exist, any Lien on or with respect to any of its properties, including, without limitation, equity interests held by such Person in any Subsidiary of such Person, whether now owned or hereafter acquired, other than (i) Permitted Liens; (ii) Liens created under Section 2.22 or 6.02; (iii) Liens created by or pursuant to the General and Refunding Mortgage Indenture or by or pursuant to any other first mortgage indenture or similar agreement or instrument pursuant to which the Borrower or any of its Material Subsidiaries may issue bonds, notes or similar instruments secured by a lien on all or a substantial portion of its fixed assets; provided that under the terms of such other indenture or similar agreement or instrument (including any amendment, modification or supplement to the General and Refunding Mortgage Indenture and any Replacement Indenture) no “cross-default” or similar “event of default” (howsoever designated) in respect of any bonds, notes, or other instruments issued thereunder will be triggered by reference to a Default; (iv) Liens that constitute “Permitted Liens” as defined in the General and Refunding Mortgage Indenture as in effect on the Closing Date except for Liens permitted by clause (c) of such definition of “Permitted Liens” in the General and Refunding Mortgage Indenture as in effect on the Closing Date; (v) Liens in favor of the United States Department of Energy in connection with the Borrower’s smart grid assets purchased with a grant from the United States Department of Energy under the American Recovery and Reinvestment Act; and (vi) Liens, in addition to the foregoing, securing obligations not greater than the greater of (A) 7.5% of consolidated shareholders’ equity of all classes (whether common, preferred, mandatorily convertible preferred or preference) of the Borrower and (B) $100,000,000.

respectively, (ii) if such proposed transaction will occur prior to the Collateral Release (A) such proposed transaction is permitted under the General and Refunding Mortgage Indenture and (B) after giving effect to such proposed transaction, the General and Refunding Mortgage Bonds continue to secure the Obligations to the same extent as required hereunder, and (iii) no Default shall have occurred and be continuing at the time of such proposed transaction or would result therefrom; provided , in each case of clause (i) where the successor entity is other than the Borrower, that the Administrative Agent shall have received, and be reasonably satisfied with, all documentation and information required by regulatory authorities under applicable “know your customer” and anti-money laundering rules and regulations, including without limitation the Patriot Act, to the extent such documentation or information is requested by the Administrative Agent on behalf of the Lenders prior to the date of such proposed transaction. Without limiting the foregoing, the Borrower may merge with or into Sierra Pacific Power Company, subject to the conditions in the preceding clauses (i), (ii) and (iii), and provided that, unless the Collateral Release has occurred, the Borrower shall take such actions necessary to (x) ensure that the Obligations continue to be secured under the General and Refunding Mortgage Indenture (as in effect immediately prior to such merger) as required hereunder or (y) secure the Obligations under a replacement indenture or similar agreement or instrument (the “ Replacement Indenture ”) on a substantially similar basis as under the General and Refunding Mortgage Indenture (as in effect immediately prior to such merger) (and, if applicable, under the “General and Refunding Mortgage Indenture” (as defined in the SPPC Credit Agreement)), which actions will include the issuance under the Replacement Indenture of bonds, notes or other instruments (collectively, the “ Replacement Collateral ”) to secure the Obligations on a substantially similar basis as under the General and Refunding Mortgage Bond issued to the Administrative Agent on the Closing Date (and, if applicable, under the “General and Refunding Mortgage Bond” (as defined in the SPPC Credit Agreement)) and the delivery of related resolutions, Governmental Approvals and legal opinions for such transactions.

(d) Use of Proceeds . Use the proceeds of any Extension of Credit to buy or carry Margin Stock in violation of the Margin Regulations.

(e) Optional Redemption of Bonds. So long as any Bond Letter of Credit shall remain outstanding, cause or permit delivery of a notice of an optional redemption or purchase of the applicable Bonds or of a change in the interest modes (other than to or from a mode in which interest is payable at a rate determined daily or weekly) on such Bonds resulting in a mandatory redemption or purchase of such Bonds under the applicable Bond Indenture, unless (i) the Borrower has deposited with the Administrative Agent, the applicable LC Issuing Bank or the applicable Bond Trustee an amount equal to the principal of, premium, if any, and interest on such Bonds on the date of such redemption or purchase, or (ii) any notice of such redemption or purchase or change in the applicable interest mode is conditional upon receipt by the applicable Bond Trustee or paying agent

on or prior to the date fixed for the applicable redemption or purchase of funds (other than funds drawn under such Bond Letter of Credit) sufficient to pay the principal of, premium, if any, and interest on such Bonds on the date of such redemption or purchase.

(f) Amendments to Bond Indenture. So long as any Bond Letter of Credit shall remain outstanding, amend, modify, terminate or grant, or permit the amendment, modification, termination or grant of, any waiver under (or consent to, or permit or suffer to occur any action or omission which results in, or is equivalent to, an amendment, modification, or grant of a waiver under) any provision of the applicable Bond Indenture that would (i) directly affect the rights or obligations of the applicable LC Issuing Bank under the applicable Related Documents without the prior written consent of such LC Issuing Bank or (ii) have an adverse effect on the rights or obligations of the Lenders hereunder without the prior written consent of the Required Lenders.

(i) Modifications of Instruments, Etc . At any time prior to the Collateral Release, amend or modify in any manner adverse to the Lenders (as reasonably determined by the Administrative Agent) the General and Refunding Mortgage Indenture.

(j) Limitation on Release from Liens . At any time prior to the Collateral Release, cause the Liens of the General and Refunding Mortgage Indenture and related security documents, upon any assets, to be released, except in connection with a disposition of such assets permitted by Section 5.02(c); provided that, within 180 days after any such release, the Borrower will either (i) dispose of such assets or (ii) subject such assets again to the Lien of the General and Refunding Mortgage Indenture.

(k) Compliance with Anti-Corruption Laws and Sanctions . The Borrower will not, directly or, to the knowledge of the Borrower, indirectly, use the proceeds of any Borrowing or any Letter of Credit, or lend, contribute or otherwise make available such proceeds to any Subsidiary, joint venture partner or other Person (i) in furtherance of an offer, payment, promise to pay, or authorization of the payment or giving of money, or anything else of value, to any Person in violation of any Anti-Corruption Laws, (ii) for the purpose of funding, financing or facilitating any activities, business or transaction of or with any Sanctioned Person, or in any Sanctioned Country, or (iii) in any manner that would result in the violation of any Sanctions by the Borrower or any of its Subsidiaries or, to the knowledge of the Borrower, any other party (including each Credit Party) to this Agreement or the other Loan Documents.

SECTION 5.03. Financial Covenant.

ARTICLE VI

EVENTS OF DEFAULT

SECTION 6.01. Events of Default.

If any of the following events (“ Events of Default ”) shall occur and be continuing:

(d) The Borrower or any Material Subsidiary shall fail to pay any principal of or premium or interest on any Debt (other than Debt under this Agreement) that is outstanding in a principal amount in excess of $75,000,000 in the aggregate when the same becomes due and payable (whether by scheduled maturity, required prepayment, acceleration, demand or otherwise), and such failure shall continue after the applicable grace period, if any, specified in the agreement or instrument relating to such Debt; or any other event shall occur or condition shall exist under any agreement or instrument relating to any such Debt and shall continue after the applicable grace period, if any, specified in such agreement or instrument, if the effect of such event or condition is to accelerate, or to permit the acceleration of, the maturity of such Debt; or any such Debt shall be declared to be due and payable, or required to be prepaid or redeemed (other than by a regularly scheduled required prepayment or redemption), prior to the stated maturity thereof; or

or order or (ii) there shall be any period of 30 consecutive days during which a stay of enforcement of such judgment or order, by reason of a pending appeal or otherwise, shall not be in effect; or

(g) An ERISA Event shall have occurred that, when taken together with all other ERISA Events that have occurred, has resulted in, or is reasonably likely to result in, a Material Adverse Effect; or

(i) At any time prior to the Collateral Release, any of the Loan Documents shall cease for any reason to be in full force and effect or any material provision of the General and Refunding Mortgage Indenture (or any security documents executed in connection therewith) shall cease for any reason to be in full force and effect, or the Borrower or any Affiliate of the Borrower shall so assert; or any Lien created by any of the Loan Documents or the General and Refunding Mortgage Indenture (or any security documents executed in connection therewith) shall cease to be enforceable and of the same effect and priority purported to be created thereby with respect to any material portion of the collateral; or

(j) At any time prior to the Collateral Release, any “Event of Default” under (and as defined in) the General and Refunding Mortgage Indenture shall occur;

the Borrower, declare the outstanding Borrowings, all interest thereon and all other Obligations (other than Hedging Obligations and Treasury Management Obligations) to be forthwith due and payable, whereupon the outstanding Borrowings, all such interest and all such other Obligations shall become and be forthwith due and payable by the Borrower, without presentment, demand, protest or further notice of any kind, all of which are hereby expressly waived by the Borrower; (iii) shall at the request, or may with the consent, of the Required Lenders by notice to the Borrower, give notice of the occurrence of an Event of Default to the Bond Trustee for each series of Bonds supported by a Bond Letter of Credit issued for the account of the Borrower and instruct such Bond Trustee either to accelerate such Bonds, thereby causing such Bond Letter of Credit to expire thereafter, per the terms of such Bond Letter of Credit, or to effect a mandatory tender of such Bonds; (iv) shall at the request, or may with the consent, of the Required Lenders by notice to the Borrower, pursue any rights and remedies on behalf of the Lenders and the applicable LC Issuing Bank that the Administrative Agent may have under the Related Documents executed and delivered in connection with any Bond Letter of Credit; and (v) shall at the request, or may with the consent, of the Required Lenders, by notice to the Borrower, exercise on behalf of the Lenders all of its other rights and remedies under this Agreement, the General and Refunding Mortgage Bonds, the General and Refunding Mortgage Indenture, the other Loan Documents and Applicable Law, in order to satisfy all of the Obligations; provided , however , that in the event of an actual or deemed entry of an order for relief with respect to the Borrower under the Bankruptcy Code of the United States of America, (A) the obligation of each Lender and each LC Issuing Bank to make Extensions of Credit shall automatically be terminated and (B) the outstanding Borrowings, all such interest and all such other Obligations (other than Hedging Obligations and Treasury Management Obligations) shall automatically become and be due and payable, without presentment, demand, protest or any notice of any kind, all of which are hereby expressly waived by the Borrower.

In addition, if an “Event of Default” (or any other similar term) under and as defined in any Bond Indenture executed and delivered in connection with any Bond Letter of Credit (a “ Bond Event of Default ”) shall have occurred and be continuing, such circumstance shall constitute an Event of Default hereunder solely for the purpose of permitting the exercise of the remedies described in clauses (iii) and (iv) of the immediately preceding paragraph with respect to the Bonds for which such Bond Event of Default exists and the related Bond Letter of Credit and not for any other purpose under this Agreement. For the avoidance of doubt, a Bond Event of Default shall not give the Administrative Agent the right to exercise any other remedy described in the immediately preceding paragraph, unless such Bond Event of Default, or the facts and circumstances underlying such Bond Event of Default, gives rise to another Event of Default otherwise described in Section 6.01.

SECTION 6.02. Actions in Respect of the Letters of Credit upon Default.

(the “ LC Collateral Account ”) with the Administrative Agent, in the name of the Administrative Agent and for the benefit of the Lenders and LC Issuing Banks, in same day funds, an amount equal to 103% of the aggregate undrawn stated amounts of all Letters of Credit that are outstanding on such date. If at any time the Administrative Agent determines that any funds held in the LC Collateral Account are subject to any right or claim of any Person other than the Administrative Agent, the Lenders and the LC Issuing Banks or that the total amount of such funds is less than 103% of the aggregate undrawn stated amounts of all Letters of Credit that are outstanding on such date, the Borrower will, forthwith upon demand by the Administrative Agent, pay to the Administrative Agent, as additional funds to be deposited and held in the LC Collateral Account, an amount equal to the excess of (i) 103% of such aggregate undrawn stated amounts of all Letters of Credit that are outstanding on such date over (ii) the total amount of funds, if any, then held in the LC Collateral Account that the Administrative Agent determines to be free and clear of any such right and claim. Upon the drawing of any Letter of Credit for which funds are on deposit in the LC Collateral Account, such funds shall be applied to reimburse the relevant LC Issuing Bank or Lender holding a participation in the reimbursement obligation of the Borrower to such LC Issuing Bank to the extent permitted by Applicable Law.

ARTICLE VII
THE ADMINISTRATIVE AGENT

SECTION 7.01. Appointment and Authority.

Each Lender and each LC Issuing Bank hereby irrevocably appoints Wells Fargo Bank to act on its behalf as the Administrative Agent hereunder, under the other Loan Documents and the Related Documents and authorizes the Administrative Agent to take such actions on its behalf and to exercise such powers as are delegated to the Administrative Agent by the terms hereof or thereof, together with such actions and powers as are reasonably incidental thereto. Each Lender and each LC Issuing Bank hereby authorizes the Administrative Agent to vote the General and Refunding Mortgage Bonds, or consent with respect thereto, at any meeting (or where the vote or consent of the bondholders is requested without a meeting) of the bondholders under the General and Refunding Mortgage Indenture. The provisions of this Article are solely for the benefit of the Administrative Agent, the Lenders and the LC Issuing Banks, and the Borrower shall not have rights as a third-party beneficiary of any of such provisions. It is understood and agreed that the use of the term “agent” herein, in any other Loan Document or any Related Document (or any other similar term) with reference to the Administrative Agent is not intended to connote any fiduciary or other implied (or express) obligations arising under agency doctrine of any Applicable Law. Instead such term is used as a matter of market custom, and is intended to create or reflect only an administrative relationship between contracting parties.

SECTION 7.02. Rights as a Lender.

Agent hereunder in its individual capacity. Such Person and its Affiliates may accept deposits from, lend money to, own securities of, act as the financial advisor or in any other advisory capacity for, and generally engage in any kind of business with, the Borrower or any Subsidiary or other Affiliate thereof as if such Person were not the Administrative Agent hereunder and without any duty to account therefor to the Lenders.

SECTION 7.03. Exculpatory Provisions.

(i) shall not be subject to any fiduciary or other implied duties, regardless of whether a Default has occurred and is continuing;

(b) The Administrative Agent shall not be liable for any action taken or not taken by it (i) with the consent or at the request of the Required Lenders (or such other number or percentage of the Lenders as shall be necessary, or as the Administrative Agent shall believe in good faith shall be necessary, under the circumstances as provided in Sections 6.01, 6.02 and 8.01), or (ii) in the absence of its own gross negligence or willful misconduct as determined by a court of competent jurisdiction by final and nonappealable judgment. The Administrative Agent shall be deemed not to have knowledge of any Default unless and until notice describing such Default is given to the Administrative Agent in writing by the Borrower, a Lender or an LC Issuing Bank.

(c) The Administrative Agent shall not be responsible for or have any duty to ascertain or inquire into (i) any statement, warranty or representation made in or in connection with this

Agreement, any other Loan Document or any Related Document, (ii) the contents of any certificate, report or other document delivered hereunder or thereunder or in connection herewith or therewith, (iii) the performance or observance of any of the covenants, agreements or other terms or conditions set forth herein or therein or the occurrence of any Default, (iv) the validity, enforceability, effectiveness or genuineness of this Agreement, any other Loan Document, any Related Document or any other agreement, instrument or document, or (v) the satisfaction of any condition set forth in Article III or elsewhere herein, other than to confirm receipt of items expressly required to be delivered to the Administrative Agent.

SECTION 7.04. Reliance by Administrative Agent.

The Administrative Agent shall be entitled to rely upon, and shall not incur any liability for relying upon, any notice, request, certificate, consent, statement, instrument, document or other writing (including any electronic message, Internet or intranet website posting or other distribution) believed by it to be genuine and to have been signed, sent or otherwise authenticated by the proper Person. The Administrative Agent also may rely upon any statement made to it orally or by telephone and believed by it to have been made by the proper Person, and shall not incur any liability for relying thereon. In determining compliance with any condition hereunder to the making of a Loan, or the issuance, extension, renewal or increase of a Letter of Credit, that by its terms must be fulfilled to the satisfaction of any Lender or an LC Issuing Bank, the Administrative Agent may presume that such condition is satisfactory to such Lender or such LC Issuing Bank unless the Administrative Agent shall have received notice to the contrary from such Lender or such LC Issuing Bank prior to the making of such Loan or the issuance of such Letter of Credit. The Administrative Agent may consult with legal counsel (who may be counsel for the Borrower), independent accountants and other experts selected by it, and shall not be liable for any action taken or not taken by it in accordance with the advice of any such counsel, accountants or experts.

SECTION 7.05. Resignation of Administrative Agent.

(c) With effect from the Resignation Effective Date or the Removal Effective Date (as applicable) (1) the retiring or removed Administrative Agent shall be discharged from its duties and obligations hereunder and under the other Loan Documents and (2) except for any indemnity payments owed to the retiring or removed Administrative Agent, all payments, communications and determinations provided to be made by, to or through the Administrative Agent shall instead be made by or to each Lender and each LC Issuing Bank directly, until such time, if any, as the Required Lenders appoint a successor Administrative Agent as provided for above. Upon the acceptance of a successor’s appointment as Administrative Agent hereunder, such successor shall succeed to and become vested with all of the rights, powers, privileges and duties of the retiring or removed Administrative Agent (other than any rights to indemnity payments owed to the retiring or removed Administrative Agent), and the retiring or removed Administrative Agent shall be discharged from all of its duties and obligations hereunder, under the other Loan Documents or under the Related Documents. The fees payable by the Borrower to a successor Administrative Agent shall be the same as those payable to its predecessor unless otherwise agreed between the Borrower and such successor. After the retiring or removed Administrative Agent’s resignation or removal hereunder, under the other Loan Documents and under the Related Documents, the provisions of this Article and Section 8.04 shall continue in effect for the benefit of such retiring or removed Administrative Agent, its sub‑agents and their respective Related Parties in respect of any actions taken or omitted to be taken by any of them while the retiring or removed Administrative Agent was acting as Administrative Agent.

SECTION 7.06. Non-Reliance on Administrative Agent and Other Lenders.

that it will, independently and without reliance upon the Administrative Agent or any other Lender or any of their Related Parties and based on such documents and information as it shall from time to time deem appropriate, continue to make its own decisions in taking or not taking action under or based upon this Agreement, any other Loan Document, any Related Document or any related agreement or any document furnished hereunder or thereunder.

SECTION 7.07. Indemnification.

SECTION 7.08. No Other Duties, etc.

Anything herein to the contrary notwithstanding, none of the Joint Lead Arrangers, the “Joint Bookrunners”, the “Syndication Agents” or the “Documentation Agents” listed on the cover page hereof shall have any powers, duties or responsibilities under this Agreement, any other Loan Document or any Related Document, except in its capacity, as applicable, as the Administrative Agent, a Lender or an LC Issuing Bank hereunder or thereunder.

SECTION 7.09. Collateral Release Matters.

(a) Notwithstanding any provision herein to the contrary, after the occurrence of the Collateral Release Trigger, the Borrower may, by written notice to the Administrative Agent, elect

to release the General and Refunding Mortgage Bonds, and the Administrative Agent will take any action reasonably requested by the Borrower to effect such release (the “ Collateral Release ”).

(b) Each Lender and each LC Issuing Bank irrevocably authorizes the Administrative Agent, at its option and in its discretion, to release any Lien on any collateral granted to or held by the Administrative Agent under any Loan Document or to release the General and Refunding Mortgage Bonds (i) with notice to the Lenders, as permitted pursuant to Section 7.09(a), (ii) upon termination of the Commitments and payment in full of all Obligations under the Loan Documents (other than (A) contingent indemnification obligations as to which no claim has been asserted and (B) Obligations under Hedge Agreements and Treasury Management Agreements either (x) as to which arrangements satisfactory to the applicable parties to such agreements shall have been made or (y) notice has not been received by the Administrative Agent from such parties that amounts are due and payable under such Hedge Agreement or Treasury Management Agreement, as the case may be) and the expiration or termination of all Letters of Credit (other than Letters of Credit as to which other arrangements satisfactory to the Administrative Agent and the applicable LC Issuing Bank in their sole discretion shall have been made) or (iii) if approved, authorized or ratified in writing in accordance with Section 8.01.

(c) In each case as specified in clauses (i) through (iii) of Section 7.09(b), the Administrative Agent will take any action reasonably requested by the Borrower to effect such release in accordance with the terms of the Loan Documents and this Section.

(d) Upon request by the Administrative Agent at any time, each Lender will confirm in writing the Administrative Agent’s authority to release its interest in particular types or items of property pursuant to this Section.

ARTICLE VIII

MISCELLANEOUS

SECTION 8.01. Amendments, Etc.

waive this Section 8.01 or any provision of this Agreement that requires pro rata treatment of the Lenders, (vii) take any action that would result in the General and Refunding Mortgage Bonds no longer being secured equally and ratably with all other Securities (as defined in the General and Refunding Mortgage Indenture) issued and outstanding under the General and Refunding Mortgage Indenture or no longer being secured by direct and valid, duly perfected Liens on and security interests in the Mortgaged Property, subject only to Permitted Liens (as defined in the General and Refunding Mortgage Indenture), (viii) release the General and Refunding Mortgage Bonds, except pursuant to the terms thereof or in accordance with Section 7.09 hereof, or, prior to the Collateral Release, change any provision of the General and Refunding Mortgage Bonds providing for the release of the General and Refunding Mortgage Bonds; and provided further that (x) no amendment, waiver or consent shall, unless in writing and signed by the Administrative Agent or any LC Issuing Bank in addition to the Lenders required above to take such action, affect the rights or duties of the Administrative Agent or such LC Issuing Bank, as the case may be, under this Agreement and (y) no amendment, waiver or consent shall, unless in writing and signed by the Administrative Agent, each LC Issuing Bank and the Required Lenders, amend or waive Section 2.21. Prior to the Collateral Release, the Administrative Agent, as holder of the General and Refunding Mortgage Bonds, will not consent to any amendment or other modification of the General and Refunding Mortgage Indenture that requires the consent of holders of all securities issued thereunder, without the consent of each Lender. Notwithstanding the foregoing, any provision of this Agreement may be amended by an agreement in writing entered into by the Borrower, the Required Lenders and the Administrative Agent if by the terms of such agreement the Commitment of each Non-Consenting Lender and the obligations of each LC Issuing Bank not consenting to the amendment provided for therein shall terminate (but such Non-Consenting Lender or LC Issuing Bank shall continue to be entitled to the benefits of Sections 2.15, 2.18 and 8.04) upon the effectiveness of such amendment, and such Non-Consenting Lender or LC Issuing Bank shall have received or shall at the time of such termination receive payment of an amount equal to the outstanding principal of its Loans and any participations in Letters of Credit funded pursuant to Section 2.04(e), together with all applicable accrued interest thereon, accrued fees and all other amounts then payable to it hereunder and under the other Loan Documents.

SECTION 8.02. Notices, Etc.

(i) if to the Borrower, to it at 6226 West Sahara Avenue, Las Vegas, Nevada 89146, Attention: E. Kevin Bethel, Senior Vice President and Chief Financial Officer (Facsimile No.: (702) 402-2250; Telephone No. (702) 402-5622);

(ii) if to the Administrative Agent, to Wells Fargo Bank, National Association at 90 S. 7 ^th Street, MAC: N9305-06G, Minneapolis, MN 55402, Attention: Greg Gredvig (Facsimile No. (612) 316-0506; Telephone No. (612) 667-4832; Email: gregory.r.gredvig@wellsfargo.com );

(c) Change of Address, etc. Any party hereto may change its address or facsimile number for notices and other communications hereunder by notice to the other parties hereto.

(d) Platform.

(i) The Borrower agrees that the Administrative Agent may, but shall not be obligated to, make the Communications (as defined below) available to the LC Issuing

Banks and the other Lenders by posting the Communications on Debt Domain, Intralinks, Syndtrak or a substantially similar electronic transmission system (the “ Platform ”).

SECTION 8.03. No Waiver; Remedies.

SECTION 8.04. Costs and Expenses; Indemnification.

Agent, the Lenders and the LC Issuing Banks, if any, (A) in connection with the enforcement (whether through negotiations, legal proceedings or otherwise) of this Agreement and the other Loan Documents, including its rights under this Section, or (B) in connection with the Loans made or Letters of Credit issued hereunder, including all such reasonable out-of-pocket expenses incurred during any workout, restructuring or negotiations in respect of such Loans or Letters of Credit, including, without limitation, reasonable fees and expenses of one outside counsel for the Administrative Agent, the Lenders and the LC Issuing Banks taken as a whole in connection with the enforcement of rights under this Section 8.04(a) (and, with respect to matters referred to in clause (A) of this sentence only, separate counsel for the Administrative Agent, any Lender and any LC Issuing Banks to the extent needed to avoid an actual or potential conflict of interest).

(c) If any payment of principal of, or Conversion of, any Eurodollar Rate Revolving Loan is made by the Borrower to or for the account of a Lender other than on the last day of the Interest Period for such Revolving Loan, as a result of a payment or Conversion pursuant to Section 2.06(c), 2.07(c), 2.09, 2.12(b), 2.13, 2.14, 2.15 or 2.16, acceleration of the maturity of the outstanding Borrowings pursuant to Section 6.01, assignment to another Lender upon demand of the Borrower pursuant to Section 2.20(b) or for any other reason (in the case of any such payment or Conversion), the Borrower shall, promptly upon demand by such Lender (with a copy of such demand to the Administrative Agent), pay to the Administrative Agent for the account of such Lender any amounts required to compensate such Lender for any additional losses, costs or expenses that it may reasonably incur as a result of such payment or Conversion, including, without limitation, any loss (other than loss of Applicable Margin), cost or expense incurred by reason of the liquidation or reemployment of deposits or other funds acquired by any Lender to fund or maintain such Loan.

SECTION 8.05. Right of Set-off.

such Affiliate shall have made any demand under this Agreement or any other Loan Document and although such obligations of the Borrower may be contingent or unmatured or are owed to a branch, office or Affiliate of such Lender, such LC Issuing Bank different from the branch, office or Affiliate holding such deposit or obligated on such indebtedness; provided that in the event that any Defaulting Lender shall exercise any such right of setoff, (x) all amounts so set off shall be paid over immediately to the Administrative Agent for further application in accordance with the provisions of Section 2.21 and, pending such payment, shall be segregated by such Defaulting Lender from its other funds and deemed held in trust for the benefit of the Administrative Agent, the LC Issuing Banks, and the Lenders, and (y) the Defaulting Lender shall provide promptly to the Administrative Agent a statement describing in reasonable detail the obligations of the Borrower owing to such Defaulting Lender as to which it exercised such right of setoff. The rights of each Lender, each LC Issuing Bank and their respective Affiliates under this Section are in addition to other rights and remedies (including other rights of setoff) that such Lender, such LC Issuing Bank or their respective Affiliates may have. Each Lender and each LC Issuing Bank agrees to notify the Borrower and the Administrative Agent promptly after any such setoff and application; provided that the failure to give such notice shall not affect the validity of such setoff and application.

SECTION 8.06. Binding Effect.

This Agreement shall become effective when it shall have been executed by the Borrower and the Administrative Agent and when the Administrative Agent shall have been notified by each Initial Lender that such Initial Lender has executed it and thereafter shall be binding upon and inure to the benefit of the Borrower, the Administrative Agent, each Lender and each LC Issuing Bank (upon its appointment pursuant to Section 2.04) and their respective successors and assigns, except that the Borrower shall not have the right to assign its rights hereunder or any interest herein without the prior written consent of all of the Lenders.

SECTION 8.07. Assignments and Participations.

(a) Successors and Assigns Generally. The provisions of this Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns permitted hereby, except that the Borrower may not assign or otherwise transfer any of its rights or obligations hereunder without the prior written consent of the Administrative Agent, each Lender and each LC Issuing Bank, and no Lender may assign or otherwise transfer any of its rights or obligations hereunder except (i) to an assignee in accordance with the provisions of subsection (b) of this Section, (ii) by way of participation in accordance with the provisions of subsection (d) of this Section, or (iii) by way of pledge or assignment of a security interest subject to the restrictions of subsection (e) of this Section (and any other attempted assignment or transfer by any party hereto shall be null and void). Nothing in this Agreement, expressed or implied, shall be construed to confer upon any Person (other than the parties hereto, their respective successors and assigns permitted hereby, Participants to the extent provided in subsection (d) of this Section and, to the extent expressly contemplated hereby, the Related Parties of each of the Administrative Agent, the LC Issuing Banks and the Lenders) any legal or equitable right, remedy or claim under or by reason of this Agreement.

(i) Minimum Amounts.

(iii) Required Consents. No consent shall be required for any assignment except to the extent required by subsection (b)(i)(B) of this Section and, in addition:

(C) the consent of each LC Issuing Bank (such consent not to be unreasonably withheld or delayed) shall be required for any assignment.

(vi) No Assignment to Natural Persons. No such assignment shall be made to a natural Person.

and the assigning Lender thereunder shall, to the extent of the interest assigned by such Assignment and Assumption, be released from its obligations under this Agreement (and, in the case of an Assignment and Assumption covering all of the assigning Lender’s rights and obligations under this Agreement, such Lender shall cease to be a party hereto) but shall continue to be entitled to the benefits of Sections 2.15, 2.18 and 8.04 with respect to facts and circumstances occurring prior to the effective date of such assignment; provided , that except to the extent otherwise expressly agreed by the affected parties, no assignment by a Defaulting Lender will constitute a waiver or release of any claim of any party hereunder arising from that Lender’s having been a Defaulting Lender. Any assignment or transfer by a Lender of rights or obligations under this Agreement that does not comply with this subsection shall be treated for purposes of this Agreement as a sale by such Lender of a participation in such rights and obligations in accordance with subsection (d) of this Section.

(c) Register. The Administrative Agent, acting solely for this purpose as a non-fiduciary agent of the Borrower, shall maintain at its address referred to in Section 8.02 a copy of each Assignment and Assumption delivered to it and a register for the recordation of the names and addresses of the Lenders, and the Commitments and Termination Date of, and principal amounts (and stated interest) of the Loans owing to, each Lender pursuant to the terms hereof from time to time (the “ Register ”). The entries in the Register shall be conclusive absent manifest error, and the Borrower, the Administrative Agent and the Lenders shall treat each Person whose name is recorded in the Register pursuant to the terms hereof as a Lender hereunder for all purposes of this Agreement. The Register shall be available for inspection by the Borrower, any LC Issuing Bank and any Lender, at any reasonable time and from time to time upon reasonable prior notice.

2.18(g) (it being understood that the documentation required under Section 2.18(g) shall be delivered to the participating Lender or the applicable Withholding Agent to the extent required by Applicable Law)) to the same extent as if it were a Lender and had acquired its interest by assignment pursuant to subsection (b) of this Section; provided that such Participant (A) agrees to be subject to the provisions of Section 2.20 as if it were an assignee under subsection (b) of this Section; and (B) shall not be entitled to receive any greater payment under Section 2.15 or 2.18, with respect to any participation, than its participating Lender would have been entitled to receive. Each Lender that sells a participation agrees, at the Borrower’s request and expense, to use reasonable efforts to cooperate with the Borrower to effectuate the provisions of Section 2.20(b) with respect to any Participant. To the extent permitted by law, each Participant also shall be entitled to the benefits of Section 8.05 as though it were a Lender; provided that such Participant agrees to be subject to Section 2.19 as though it were a Lender. Each Lender that sells a participation shall, acting solely for this purpose as a non-fiduciary agent of the Borrower, maintain a register on which it enters the name and address of each Participant and the principal amounts (and stated interest) of each Participant’s interest in the Loans or other obligations under the Loan Documents (the “ Participant Register ”); provided that no Lender shall have any obligation to disclose all or any portion of the Participant Register (including the identity of any Participant or any information relating to a Participant’s interest in any Commitments, Loans, Letters of Credit or its other obligations under any Loan Document) to any Person except to the extent that such disclosure is necessary to establish that such Commitment, Loan, Letter of Credit or other obligation is in registered form under Section 5f.103-1(c) of the United States Treasury Regulations or to comply with other requirements under applicable tax law. The entries in the Participant Register shall be conclusive absent manifest error, and such Lender shall treat each Person whose name is recorded in the Participant Register as the owner of such participation for all purposes of this Agreement notwithstanding any notice to the contrary. For the avoidance of doubt, the Administrative Agent (in its capacity as Administrative Agent) shall have no responsibility for maintaining a Participant Register.

SECTION 8.08. Confidentiality.

banking or other financial institutions, (v) to any direct, indirect, actual or prospective counterparty (and its advisor) to any swap, derivative or securitization transaction related to the obligations under this Agreement on a confidential basis, (vi) to any credit insurance provider relating to the Borrower and its obligations on a confidential basis and (vii) pursuant to a request or requirement from a regulatory authority (governmental or non-governmental self-regulatory authority) having jurisdiction over a Lender; provided that unless prohibited by Applicable Law, each Lender and the Administrative Agent agree, prior to disclosure thereof, to notify the Borrower of any request for disclosure of any such Confidential Information (x) by any Governmental Authority or representative thereof (other than any such request in connection with an examination of such Lender or the Administrative Agent by such Governmental Authority) or (y) pursuant to legal process.

SECTION 8.09. Governing Law.

SECTION 8.10. Severability.

SECTION 8.11. Execution in Counterparts.

SECTION 8.12. Jurisdiction, Etc.

(a) Each party hereto hereby irrevocably and unconditionally agrees that it will not commence any action, litigation or proceeding of any kind or description, whether in law or equity, whether in contract or in tort or otherwise, against the Administrative Agent, any Lender, any LC Issuing Bank, or any Related Party of the foregoing in any way relating to this Agreement or any other Loan Document or the transactions relating hereto or thereto, in any forum other than the courts of the State of New York sitting in the Borough of Manhattan in New York City, and of the United States District Court of the Southern District of New York sitting in the Borough of Manhattan in New York City, and any appellate court from any thereof, and each of the parties hereto irrevocably and unconditionally submits to the jurisdiction of such courts and agrees that all claims in respect of any such action, litigation or proceeding may be heard and determined in such New York State

court or, to the fullest extent permitted by applicable law, in such federal court. Each party hereto agrees that a final judgment in any such action, litigation or proceeding shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by law.

SECTION 8.13. Waiver of Jury Trial.

SECTION 8.14. USA Patriot Act.

to obtain, verify and record information that identifies the Borrower, which information includes the name and address of the Borrower and other information that will allow such Lender or the Administrative Agent, as applicable, to identify the Borrower in accordance with the Patriot Act. The Borrower shall, and shall cause each of its Subsidiaries to, provide to the extent commercially reasonable, such information and take such actions as are reasonably requested by the Administrative Agent or any Lender in order to assist the Administrative Agent and the Lenders in maintaining compliance with the Patriot Act.

SECTION 8.15. No Fiduciary Duty.

SECTION 8.16. Acknowledgement and Consent to Bail-In of EEA Financial Institutions.

(b) the effects of any Bail-In Action on any such liability, including, if applicable:

(i) a reduction in full or in part or cancellation of any such liability;

(iii) the variation of the terms of such liability in connection with the exercise of the write-down and conversion powers of any EEA Resolution Authority.

SECTION 8.17. Reaffirmation of Loan Documents.

The Borrower hereby ratifies and reaffirms all of its payment and performance obligations, contingent or otherwise, under each of the Loan Documents. The Borrower acknowledges and agrees that (i) its obligations under each of the Loan Documents are not impaired or affected by the execution, delivery and performance of this Agreement or the consummation of the transactions contemplated thereby, including the making of the Loans and other extensions of credit hereunder, and that all Liens granted as security for the Obligations continue in full force and effect, (ii) the execution, delivery and performance of this Agreement and the consummation of the transactions contemplated hereby, including the making of the Loans and other extensions of credit hereunder, is not a defense to the obligations of the Borrower under any Loan Document, and (iii) each Loan Document remains in full force and effect and is hereby ratified and reaffirmed in all respects. The Borrower agrees that each reference to the “Credit Agreement” in each Loan Document shall mean and refer to this Agreement, as from time to time further amended, restated, supplemented or otherwise modified.

[Remainder of page intentionally left blank.]

NEVADA POWER COMPANY,

as Borrower


By: /s/ E. Kevin Bethel	E. Kevin Bethel Senior Vice President and Chief Financial Officer

WELLS FARGO BANK, NATIONAL ASSOCIATION,

as Administrative Agent and Lender

By /s/ Gregory R. Gredvig

Name: Gregory R. Gredvig

Title: Director

LENDERS:

JPMORGAN CHASE BANK, N.A.,

as Lender

By /s/ Amit Gaur

Name: Amit Gaur

Title: Vice President

MIZUHO BANK, LTD.,

as Lender


By	/s/ Nelson Chang Name: Nelson Chang Title: Authorized Signatory

MUFG UNION BANK, N.A.,

as Lender

By /s/ Jeffrey Flagg

Name: Gregory R. Gredvig

Title: Vice President

CITIBANK, N.A.,

as Lender and LC Issuing Bank

By /s/ Richard D. Rivera

Name: Richard D. Rivera

Title: Vice President

U.S. BANK NATIONAL ASSOCIATION,

as Lender

By /s/ Holland H. Williams

Name: Holland H. Williams

Title: Vice President

BNP PARIBAS,

as Lender

By /s/ Nicole Rodriguez

Name: Nicole Rodriguez

Title: Director

By /s/ Julien Pecoud-Bouvet

Name: Julien Pecoud-Bouvet

Title: Vice President

BARCLAYS BANK PLC,

as Lender

By /s/ Christopher Aitkin

Name: Christopher Aitkin

Title: Assistant Vice President

ROYAL BANK OF CANADA,

as Lender

By /s/ Rahul Shah

Name: Rahul Shah

Title: Authorized Signatory

BANK OF NOVA SCOTIA,

as Lender and LC Issuing Bank


By	/s/ David Dewar Name: David Dewar Title: Director

BANK OF MONTREAL, CHICAGO BRANCH,

as Lender


By	/s/ Brian Banke Name: Brian Banke Title: Managing Director

SUMITOMO MITSUI BANKING CORP.,

as Lender

By /s/ Katsuyuki Kubo

Name: Katsuyuki Kubo

Title: Managing Director

CANADIAN IMPERIAL BANK OF COMMERCE, NEW YORK BRANCH, as Lender

By /s/ Anju Abraham

Name: Anju Abraham

Title: Authorized Signatory

By /s/ Darrel Ho

Name: Darrel Ho

Title: Authorized Signatory

COBANK, ACB,

as Lender

By /s/ John H. Kemper

Name: John H. Kemper

Title: Vice President

KEYBANK NATIONAL ASSOCIATION,

as Lender

By /s/ Benjamin C. Cooper

Name: Benjamin C. Cooper

Title: Vice President

PNC BANK, NATIONAL ASSOCIATION,

as Lender

By /s/ Jon R. Hinard

Name: Jon R. Hinard

Title: Managing Director

SUNTRUST BANK,

as Lender

By /s/ Yann Pirio

Name: Yann Pirio

Title: Managing Director

TD BANK, N.A.,

as Lender

By /s/ Vijay Prasad

Name: Vijay Prasad

Title: Senior Vice President

THE BANK OF NEW YORK MELLON,

as Lender

By /s/ Hussam S. Alsahlani

Name: Hussam S. Alsahlani

Title: Vice President

THE NORTHERN TRUST COMPANY,

as Lender

By /s/ Robert Jank

Name: Robert Jank

Title: Managing Director Corporate Banking

EXHIBIT A

(to the Second Amended and Restated Credit Agreement)

FORM OF NOTICE OF BORROWING

Wells Fargo Bank, National Association, as Administrative Agent

for the Lenders party

to the Credit Agreement

referred to below

Attention: Agency Group

[Date]

Ladies and Gentlemen:

The undersigned, Nevada Power Company, refers to the Second Amended and Restated Credit Agreement, dated as of June 30, 2017 (as further amended, restated, supplemented or otherwise modified from time to time, the “ Credit Agreement ,” the terms defined therein being used herein as therein defined), among the undersigned, certain Lenders and LC Issuing Banks party thereto, and Wells Fargo Bank, National Association, as Administrative Agent, and hereby gives you notice, irrevocably, pursuant to Section 2.02(a) of the Credit Agreement that the undersigned hereby requests a Borrowing under the Credit Agreement, and in that connection sets forth below the information relating to such Borrowing (the “ Proposed Borrowing ”) as required by Section 2.02(a) of the Credit Agreement:

(i) The Business Day of the Proposed Borrowing is __________________, 20__.

(ii) The Type of Loans comprising the Proposed Borrowing is [Base Rate Loans][Eurodollar Rate Revolving Loans].

(iii) The aggregate amount of the Proposed Borrowing is $___________________.

[(iv) The initial Interest Period for each Eurodollar Rate Revolving Loan made as part of the Proposed Borrowing is _____ month[s].]

The undersigned hereby certifies that the following statements are true on the date hereof, and will be true on the date of the Proposed Borrowing:

material respects on and as of the date hereof, before and after giving effect to the Proposed Borrowing and to the application of the proceeds therefrom, as though made on the date hereof; and

(B) no event has occurred and is continuing, or would result from the Proposed Borrowing or from the application of the proceeds therefrom, that constitutes a Default.

Very truly yours,

NEVADA POWER COMPANY

Name:

Title:

EXHIBIT B

(to the Second Amended and Restated Credit Agreement)

FORM OF REQUEST FOR ISSUANCE

Wells Fargo Bank, National Association, as Administrative Agent

for the Lenders party

to the Credit Agreement

referred to below

Attention: Letter of Credit Department

[ ], as LC Issuing Bank

[Date]

Ladies and Gentlemen:

The undersigned, Nevada Power Company, refers to the Second Amended and Restated Credit Agreement, dated as of June 30, 2017 (as further amended, restated, supplemented or otherwise modified from time to time, the “ Credit Agreement ,” the terms defined therein being used herein as therein defined), among the undersigned, certain Lenders and LC Issuing Banks party thereto, and Wells Fargo Bank, National Association, as Administrative Agent, and hereby gives you notice pursuant to Section 2.04(a) of the Credit Agreement that the undersigned hereby requests the issuance of a Letter of Credit (the “ Requested Letter of Credit ”) in accordance with the following terms:

(i) the LC Issuing Bank is _____________;

(ii) the requested date of [issuance] [extension] [modification] [amendment] of the Requested Letter of Credit (which is a Business Day) is _____________;

(iii) the expiration date of the Requested Letter of Credit requested hereby is ___________;

(iv) the proposed stated amount of the Requested Letter of Credit is _______________;

(v) the beneficiary of the Requested Letter of Credit is _____________, with an address at ______________; and

(vi) the conditions under which a drawing may be made under the Requested Letter of Credit are as follows: ___________________; and


(vii)	any other additional conditions are as follows: ___________________.

NEVADA POWER COMPANY

Name:

Title:

Consented to as of the date

first above written:

[NAME OF LETTER OF CREDIT BENEFICIARY]

By____________________________________

Name:

Title:

EXHIBIT C

(to the Second Amended and Restated Credit Agreement)

ASSIGNMENT AND ASSUMPTION

This Assignment and Assumption (the “ Assignment and Assumption ”) is dated as of the Effective Date set forth below and is entered into by and between [the][each] Assignor identified in item 1 below ([the][each, an] “ Assignor ”) and [the][each] Assignee identified in item 2 below ([the][each, an] “ Assignee ”). [It is understood and agreed that the rights and obligations of [the Assignors][the Assignees] hereunder are several and not joint.] Capitalized terms used but not defined herein shall have the meanings given to them in the Credit Agreement identified below (as amended, the “ Credit Agreement ”), receipt of a copy of which is hereby acknowledged by [the][each] Assignee. The Standard Terms and Conditions set forth in Annex 1 attached hereto are hereby agreed to and incorporated herein by reference and made a part of this Assignment and Assumption as if set forth herein in full.

1. Assignor[s]: ________________________________

______________________________

[Assignor [is] [is not] a Defaulting Lender]


2.	Assignee[s]: ______________________________

______________________________

[for each Assignee, indicate [Affiliate][Approved Fund] of [ identify Lender ]]


3.	Borrower(s): Nevada Power Company


4.	Administrative Agent: Wells Fargo Bank, National Association, as the administrative agent under the Credit Agreement


5.	Credit Agreement: The $400,000,000 Second Amended and Restated Credit Agreement dated as of June 30, 2017 among Nevada Power Company, the Lenders parties thereto, Wells Fargo Bank, National Association, as Administrative Agent, and the LC Issuing Banks parties thereto


6.	Assigned Interest[s]:



Assignor[s]	Assignee[s]	Facility Assigned	Aggregate Amount of Commitment/Loans for all Lenders	Amount of Commitment/Loans Assigned ⁸	Percentage Assigned of Commitment/ Loans	CUSIP Number
			$	$	%
			$	$	%
			$	$	%

[7. Trade Date: ______________]

[Page break]

Effective Date: _____________ ___, 20___ [TO BE INSERTED BY ADMINISTRATIVE AGENT AND WHICH SHALL BE THE EFFECTIVE DATE OF RECORDATION OF TRANSFER IN THE REGISTER THEREFOR.]

The terms set forth in this Assignment and Assumption are hereby agreed to:

ASSIGNOR[S]

[NAME OF ASSIGNOR]

By______________________________

Title:

[NAME OF ASSIGNOR]

By______________________________

Title:

ASSIGNEE[S]

[NAME OF ASSIGNEE]

By______________________________

Title:

[NAME OF ASSIGNEE]

By______________________________

Title:

[Consented to and] Accepted:

WELLS FARGO BANK, NATIONAL ASSOCIATION, as

Administrative Agent

By _________________________________

Title:

[Consented to:]

[NAME OF RELEVANT PARTY]

By ________________________________

Title:

ANNEX 1

$400,000,000 Second Amended and Restated Credit Agreement, dated as of June 30, 2017, among Nevada Power Company, the Lenders parties thereto, Wells Fargo Bank, National Association, as Administrative Agent, and the LC Issuing Banks parties thereto

STANDARD TERMS AND CONDITIONS FOR
ASSIGNMENT AND ASSUMPTION

1. Representations and Warranties .

information as it has deemed appropriate, made its own credit analysis and decision to enter into this Assignment and Assumption and to purchase [the][such] Assigned Interest, and (vii) attached to the Assignment and Assumption is any documentation required to be delivered by it pursuant to the terms of the Credit Agreement, duly completed and executed by [the][such] Assignee; and (b) agrees that (i) it will, independently and without reliance on the Administrative Agent, [the][any] Assignor or any other Lender, and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit decisions in taking or not taking action under the Loan Documents, and (ii) it will perform in accordance with their terms all of the obligations which by the terms of the Loan Documents are required to be performed by it as a Lender.

EXHIBIT F-1

(to the Second Amended and Restated Credit Agreement)

[FORM OF]

U.S. TAX COMPLIANCE CERTIFICATE

(For Foreign Lenders That Are Not Partnerships For U.S. Federal Income Tax Purposes)

Reference is hereby made to the Second Amended and Restated Credit Agreement, dated as of June 30, 2017 (as further amended, restated, supplemented or otherwise modified from time to time, the “ Credit Agreement ”), among Nevada Power Company (the “ Borrower ”), the Lenders party thereto from time to time, Wells Fargo Bank, National Association, as Administrative Agent and the LC Issuing Banks party thereto from time to time.

Unless otherwise defined herein, terms defined in the Credit Agreement and used herein shall have the meanings given to them in the Credit Agreement.



[NAME OF LENDER]
By:
	Name:
	Title:

Date: ________ __, 20[ ]

EXHIBIT F-2

(to the Second Amended and Restated Credit Agreement)

[FORM OF]

U.S. TAX COMPLIANCE CERTIFICATE

(For Foreign Participants That Are Not Partnerships For U.S. Federal Income Tax Purposes)

Unless otherwise defined herein, terms defined in the Credit Agreement and used herein shall have the meanings given to them in the Credit Agreement.



[NAME OF PARTICIPANT]
By:
	Name:
	Title:

Date: ________ __, 20[ ]

EXHIBIT F-3

(to the Second Amended and Restated Credit Agreement)

[FORM OF]

U.S. TAX COMPLIANCE CERTIFICATE

(For Foreign Participants That Are Partnerships For U.S. Federal Income Tax Purposes)

Unless otherwise defined herein, terms defined in the Credit Agreement and used herein shall have the meanings given to them in the Credit Agreement.



[NAME OF PARTICIPANT]
By:
	Name:
	Title:

Date: ________ __, 20[ ]

EXHIBIT F-4

(to the Second Amended and Restated Credit Agreement)

[FORM OF]

U.S. TAX COMPLIANCE CERTIFICATE

(For Foreign Lenders That Are Partnerships For U.S. Federal Income Tax Purposes)

Unless otherwise defined herein, terms defined in the Credit Agreement and used herein shall have the meanings given to them in the Credit Agreement.



[NAME OF LENDER]
By:
	Name:
	Title:

Date: ________ __, 20[ ]

SCHEDULE I

LIST OF COMMITMENT AMOUNTS AND APPLICABLE LENDING OFFICES

NEVADA POWER COMPANY

U.S. $400,000,000 Second Amended and Restated Credit Agreement



Name of Bank	Commitment Amount	Domestic Lending Office	Eurodollar Lending Office
Wells Fargo Bank, National Association	$26,563,102.91	90 S. 7 ^th Street MAC: N9305-06G Minneapolis, MN 55402 Contact : Greg Gredvig Phone: (612) 667-4832 Fax : (612) 316-0506 Email: gregory.r.gredvig@wellsfargo.com Group Email: RKELCLNSVPayments@wellsfargo.com	Same as Domestic Lending Office

JPMorgan Chase Bank, N.A.	$26,563,102.91	500 Stanton Christiana Road, Ops 2 Floor 3 Newark, Delaware 19713-2107 Contact : Juan Javellana Phone: (212) 270-4272 Email: juan.j.javellana@jpmorgan.com Group Email : na_cpg@jpmorgan.com	Same as Domestic Lending Office

Mizuho Bank, Ltd.	$26,563,102.91	1251 Avenue of the Americas New York, New York 10020 Contact : Nelson Chang Phone: (212) 282-3465 Fax: (212) 282-4488 Email: nelson.chang@mizuhocbus.com Group Email: LAU_USCorp3@mizuhocbus.com	Same as Domestic Lending Office

MUFG Union Bank, N.A.	$26,563,102.91	445 South Figueroa Street, 15th Floor Los Angeles, California 90071 Contact: Jeffrey Flagg Phone: (213) 236-6911 Email: jflagg@us.mufg.jp Group Email: #CLOSYND@unionbank.com	Same as Domestic Lending Office



Name of Bank	Commitment Amount	Domestic Lending Office	Eurodollar Lending Office
Citibank, N.A.	$26,563,102.91	399 Park Avenue, 16 ^th Floor 5 New York, New York 10043 Contact : Loan Administration Phone: (302) 894-6052 Fax: (212) 994-0847 Email: GLOriginationOps@citi.com	Same as Domestic Lending Office

US Bank, National Association	$15,821,798.82	800 Nicollet Mall Minneapolis, Minnesota 55402 Contact : Holland H. Williams Phone: (208) 383-7565 Fax: (208) 383-7489 Email: hollandhuffman.williams@usbank.com	Same as Domestic Lending Office

BNP Paribas	$15,821,798.82	787 Seventh Avenue New York, New York 10019 Contact : Denis O’Meara Phone: (212) 471-8108 Fax: (212) 841-2745 Email: denis.omeara@americas.bnpparibas.com	Same as Domestic Lending Office

Barclays Bank PLC	$26,563,102.91	745 Seventh Avenue, 24 ^th FL New York, New York 10019 Contact : Leah Kaniampuram Phone: (212) 526-4763 Email: leah.kaniampuram@barclays.com Group Email: xraUSLoanOps4@Barclays.com	Same as Domestic Lending Office

Royal Bank of Canada	$15,821,798.82	Three World Financial Center New York, New York 10281 Contact : Rahul Shah Phone: (212) 858-6053 Fax: (212) 428-6201 Email: rahul.shah@rbccm.com	Same as Domestic Lending Office

The Bank of Nova Scotia	$26,563,102.91	720 King Street W-2nd floor, Toronto, Ontario, Canada M5V 2T3 Contact : Mona Nagpaul Phone: (212) 225-5705 Fax: (212) 225-5709 Email: mona.nagpaul@scotiabank.com Group Email: GWSUSCorp_LoanOps@scotiabank.com	Same as Domestic Lending Office



Name of Bank	Commitment Amount	Domestic Lending Office	Eurodollar Lending Office
Bank of Montreal, Chicago Branch	$14,307,972.35	115 S. LaSalle St., 17 ^th Floor West Chicago, IL 60603 Contact: Carol McDonald Phone: (403) 515-3663 Fax: (403) 515-3650 Email: carol.mcdonald@bmo.com	Same as Domestic Lending Office

Sumitomo Mitsui Banking Corp.	$17,372,862.69	277 Park Avenue New York, New York 10172 Contact : Emily Estevez Phone: (212) 224-4177 Fax : (212) 224-4384 Email: eestevez@smbclf.com	Same as Domestic Lending Office

Canadian Imperial Bank of Commerce, New York Branch	$14,157,858.57	595 Bay Street, 5 ^th Floor Toronto, ON M5G 2C2 Contact : Angela Tom Phone: (416) 542-4446 Fax: (905) 948-1934	Same as Domestic Lending Office

CoBank, ACB	$16,033,277.64	6340 S. Fiddlers Green Circle Greenwood Village, CO 80111 Contact : Courtney Baird Phone: (303) 793-2121 Fax : (303) 740-4002 Email: cbaird@cobank.com Group Email: agencybank@cobank.com	Same as Domestic Lending Office

KeyBank National Association	$17,908,696.71	4900 Tiedeman Road Brooklyn, OH 44144 Contact : KAS Servicing Phone: (216) 813-5647 Fax : (216) 370-5997 (Note: All notices must be faxed) Email: kas_servicing@keybank.com Group Email: kas_servicing@keybank.com	Same as Domestic Lending Office

PNC Bank, National Association	$17,104,945.68	249 Fifth Avenue One PNC Plaza Pittsburgh, Pennsylvania 15222 Contact : Janet Gordon Phone: (440) 546-6564 Fax: (877) 717-5502 Email: janet.gordon@pnc.com Group Email: ParticipationCloserRequests@pnc.com	Same as Domestic Lending Office



Name of Bank	Commitment Amount	Domestic Lending Office	Eurodollar Lending Office

SunTrust Bank	$21,391,617.85	211 Perimeter Center Parkway Atlanta, GA 30346 Contact: Meta Tshimanga Phone: (770) 352-5231 Fax: (844) 288-3379 Email: Meta.Tshimanga@suntrust.com	Same as Domestic Lending Office

TD Bank, N.A.	$21,391,617.85	2005 Market Street Philadelphia, Pennsylvania 19103 Contact: Vijay Prasad Phone: (646) 652-1427 Email: Vijay.prasad2@td.com Group Email: investor.processing@yesbank.com	Same as Domestic Lending Office

The Bank of New York Mellon	$13,622,024.55	6023 Airport Road Oriskany, NY 13424 Contact : Brian K. Brown Phone: (315) 801-2433 Fax: (315) 765-4822 Email: brian.brown@bnymellon.com	Same as Domestic Lending Office

The Northern Trust Company	$13,302,009.28	50 S. LaSalle Street Chicago, Illinois 60603 Contact: Murtuza Ziauddin Phone: (312) 557-3075 Fax: (312) 557-1425 Email: mz14@ntrs.com	Same as Domestic Lending Office

TOTAL	$400,000,000

SCHEDULE II

LIST OF FRONTING COMMITMENTS

NEVADA POWER COMPANY

U.S. $400,000,000 Second Amended and Restated Credit Agreement



LC Issuing Bank	LC Issuing Bank Address	Fronting Commitment

Citibank, N.A.	399 Park Avenue, 16 ^th Floor 5 New York, New York 10043 Contact : Loan Administration Phone: (302) 894-6052 Fax: (212) 994-0847 Email: GLOriginationOps@citi.com	$50,000,000

The Bank of Nova Scotia	720 King Street W-2nd floor, Toronto, Ontario, Canada M5V 2T3 Contact : Mona Nagpaul Phone: (212) 225-5705 Fax: (212) 225-5709 Email: mona.nagpaul@scotiabank.com Group Email: GWSUSCorp_LoanOps@scotiabank.com	$50,000,000

SCHEDULE III

LIST OF MATERIAL SUBSIDIARIES

NEVADA POWER COMPANY

U.S. $400,000,000 Second Amended and Restated Credit Agreement

None.

EXECUTION VERSION

______________________________________________________________________________

U.S. $250,000,000

SECOND AMENDED AND RESTATED CREDIT AGREEMENT

Dated as of June 30, 2017

Among

SIERRA PACIFIC POWER COMPANY

as the Borrower

THE INITIAL LENDERS NAMED HEREIN

as Initial Lenders

WELLS FARGO BANK, NATIONAL ASSOCIATION

as Administrative Agent

and

THE LC ISSUING BANKS

PARTY HERETO FROM TIME TO TIME

as LC Issuing Banks



WELLS FARGO SECURITIES, LLC JPMORGAN CHASE BANK, N.A. MIZUHO BANK, LTD.	MUFG UNION BANK, N.A. CITIGROUP GLOBAL MARKETS INC. BARCLAYS BANK PLC THE BANK OF NOVA SCOTIA

Joint Lead Arrangers and Joint Bookrunners



JPMORGAN CHASE BANK, N.A. MIZUHO BANK, LTD. MUFG UNION BANK, N.A. CITIBANK, N.A. BARCLAYS BANK PLC THE BANK OF NOVA SCOTIA Syndication Agents	U.S. BANK NATIONAL ASSOCIATION BNP PARIBAS ROYAL BANK OF CANADA SUMITOMO MITSUI BANKING CORPORATION BANK OF MONTREAL, CHICAGO BRANCH KEYBANK NATIONAL ASSOCIATION SUNTRUST BANK Documentation Agents

DMSLIBRARY01\30351218.v6

TABLE OF CONTENTS



			Page

ARTICLE I DEFINITIONS AND ACCOUNTING TERMS			1

	SECTION 1.01.	Certain Defined Terms	1
	SECTION 1.02.	Computation of Time Periods	26
	SECTION 1.03.	Accounting Terms	26
	SECTION 1.04.	Classification of Loans and Borrowings	26
	SECTION 1.05.	Other Interpretive Provisions	26

ARTICLE II AMOUNTS AND TERMS OF THE EXTENSIONS OF CREDIT			27

	SECTION 2.01.	The Revolving Loans	27
	SECTION 2.02.	Making the Revolving Loans	27
	SECTION 2.03.	[Reserved]	28
	SECTION 2.04.	Letters of Credit	28
	SECTION 2.05.	Fees	34
	SECTION 2.06.	Extension of the Termination Date	35
	SECTION 2.07.	Increase of the Commitments	36
	SECTION 2.08.	Termination or Reduction of the Commitments	37
	SECTION 2.09.	Repayment of Loans	38
	SECTION 2.10.	Evidence of Indebtedness	38
	SECTION 2.11.	Interest on Loans	39
	SECTION 2.12.	Interest Rate Determination	40
	SECTION 2.13.	Conversion of Revolving Loans	40
	SECTION 2.14.	Optional Prepayments of Loans	41
	SECTION 2.15.	Increased Costs	41
	SECTION 2.16.	Illegality	43
	SECTION 2.17.	Payments and Computations	43
	SECTION 2.18.	Taxes	45
	SECTION 2.19.	Sharing of Payments, Etc	49
	SECTION 2.20.	Mitigation Obligations; Replacement of Lenders	49
	SECTION 2.21.	Defaulting Lenders	50
	SECTION 2.22.	Cash Collateral	53

ARTICLE III CONDITIONS PRECEDENT			54

	SECTION 3.01.	Conditions Precedent to Effectiveness	54
	SECTION 3.02.	Conditions Precedent to each Extension of Credit	55
	SECTION 3.03.	Conditions Precedent to Issuance of Each Bond Letter of Credit	56

ARTICLE IV REPRESENTATIONS AND WARRANTIES			58

	SECTION 4.01.	Representations and Warranties of the Borrower	58

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ARTICLE V COVENANTS OF THE BORROWER			62

	SECTION 5.01.	Affirmative Covenants	62
	SECTION 5.02.	Negative Covenants	65
	SECTION 5.03.	Financial Covenant	68

ARTICLE VI EVENTS OF DEFAULT			68

	SECTION 6.01.	Events of Default	68
	SECTION 6.02.	Actions in Respect of the Letters of Credit upon Default	71

ARTICLE VII THE ADMINISTRATIVE AGENT			72

	SECTION 7.01.	Appointment and Authority	72
	SECTION 7.02.	Rights as a Lender	72
	SECTION 7.03.	Exculpatory Provisions	72
	SECTION 7.04.	Reliance by Administrative Agent	73
	SECTION 7.05.	Resignation of Administrative Agent	74
	SECTION 7.06.	Non-Reliance on Administrative Agent and Other Lenders	75
	SECTION 7.07.	Indemnification	75
	SECTION 7.08.	No Other Duties, etc	76
	SECTION 7.09.	Collateral Release Matters	76

ARTICLE VIII MISCELLANEOUS			77

	SECTION 8.01.	Amendments, Etc	77
	SECTION 8.02.	Notices, Etc	78
	SECTION 8.03.	No Waiver; Remedies	80
	SECTION 8.04.	Costs and Expenses; Indemnification	80
	SECTION 8.05.	Right of Set-off	82
	SECTION 8.06.	Binding Effect	82
	SECTION 8.07.	Assignments and Participations	83
	SECTION 8.08.	Confidentiality	87
	SECTION 8.09.	Governing Law	87
	SECTION 8.10.	Severability	87
	SECTION 8.11.	Execution in Counterparts	87
	SECTION 8.12.	Jurisdiction, Etc	88
	SECTION 8.13.	Waiver of Jury Trial	88
	SECTION 8.14.	USA Patriot Act	89
	SECTION 8.15.	No Fiduciary Duty	89
	SECTION 8.16.	Acknowledgment and Consent to Bail-In of EEA Financial
		Institutions	90
	SECTION 8.17.	Reaffirmation of Loan Documents	90

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EXHIBITS AND SCHEDULES

EXHIBIT A --------------- Form of Notice of Borrowing

EXHIBIT B --------------- Form of Request for Issuance

EXHIBIT C --------------- Form of Assignment and Assumption

EXHIBIT F-1 --------------- Form of U.S. Tax Compliance Certificate (For Foreign Lenders That Are Not Partnerships For U.S. Federal Income Tax Purposes)

EXHIBIT F-2 --------------- Form of U.S. Tax Compliance Certificate (For Foreign Participants That Are Not Partnerships For U.S. Federal Income Tax Purposes)

EXHIBIT F-3 --------------- Form of U.S. Tax Compliance Certificate (For Foreign Participants That Are Partnerships For U.S. Federal Income Tax Purposes)

EXHIBIT F-4 --------------- Form of U.S. Tax Compliance Certificate (For Foreign Lenders That Are Partnerships For U.S. Federal Income Tax Purposes)

SCHEDULE I --------------- List of Commitment Amounts and Applicable Lending Offices

SCHEDULE II --------------- List of Fronting Commitments

SCHEDULE III--------------- List of Material Subsidiaries

DMSLIBRARY01\30351218.v6

SECOND AMENDED AND RESTATED CREDIT AGREEMENT

SECOND AMENDED AND RESTATED CREDIT AGREEMENT, dated as of June 30, 2017 (as further amended, restated, supplemented or otherwise modified from time to time, this “ Agreement ”), among SIERRA PACIFIC POWER COMPANY, a Nevada corporation (the “ Borrower ”), the banks, financial institutions and other institutional lenders listed on the signatures pages hereof (the “ Initial Lenders ”), WELLS FARGO BANK, NATIONAL ASSOCIATION (“ Wells Fargo Bank ”), as administrative agent (in such capacity, the “ Administrative Agent ”) for the Lenders (as hereinafter defined), and the LC Issuing Banks (as hereinafter defined) party hereto from time to time.

ARTICLE I
DEFINITIONS AND ACCOUNTING TERMS

SECTION 1.01. Certain Defined Terms.

As used in this Agreement, the following terms shall have the following meanings (such meanings to be equally applicable to both the singular and plural forms of the terms defined):

“ Administrative Agent ” has the meaning specified in the first paragraph of this Agreement.

“ Administrative Questionnaire ” means an administrative questionnaire in a form supplied by the Administrative Agent.

“ Agent Fee Letter ” means the letter agreement dated April 24, 2017 among the Borrower and the Administrative Agent, as amended, restated, supplemented or otherwise modified from time to time.

“ Agent Parties ” has the meaning specified in Section 8.02(d)(ii).

DMSLIBRARY01\30351218.v6



Applicable Rating Level	Applicable Margin for Eurodollar Rate Revolving Loans		Applicable Margin for Base Rate Loans
1	0.550	%	0.000	%
2	0.625	%	0.000	%
3	0.750	%	0.000	%
4	0.875	%	0.000	%
5	1.000	%	0.000	%

“ Applicable Rating Level ” at any time shall be determined in accordance with the then-applicable S&P Rating or the then-applicable Moody’s Rating as follows:



S&P Rating/Moody’s Rating	Applicable Rating Level
S&P Rating AA or higher or Moody’s Rating Aa2 or higher	1
S&P Rating AA- or Moody’s Rating Aa3	2
S&P Rating A+ or Moody’s Rating A1	3
S&P Rating A or Moody’s Rating A2	4
S&P Rating A- or below or Moody’s Rating A3 or below or unrated	5

DMSLIBRARY01\30351218.v6

“ Assignment and Assumption ” means an assignment and assumption entered into by a Lender and an Eligible Assignee (with the consent of any party whose consent is required by Section 8.07), and accepted by the Administrative Agent, in substantially the form of Exhibit C or any other form approved by the Administrative Agent.

“ Bail-In Action ” means the exercise of any Write-Down and Conversion Powers by the applicable EEA Resolution Authority in respect of any liability of an EEA Financial Institution.

“ Base Rate” means a fluctuating interest rate per annum in effect from time to time, which rate per annum shall at all times be equal to the highest of:

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(i)	the rate of interest announced by Wells Fargo Bank from time to time as Wells Fargo Bank’s prime rate;


(ii)	1/2 of 1% per annum above the NYFRB Rate in effect on such date; and

(iii)

; provided , that in no event shall the Base Rate be less than 0%.

“ Base Rate Loan” means a Loan that bears interest as provided in Section 2.11(a).

“ Berkshire Hathaway ” means Berkshire Hathaway Inc.

“ Bond Event of Default ” has the meaning specified in Section 6.01.

“ Bond Indenture ” means, for any series of Bonds, the indenture pursuant to which such Bonds are issued and any supplement thereto relating to such Bonds.

“ Bond Trustee ” means, for any series of Bonds, the Person acting in the capacity of trustee for the holders of such Bonds under the Bond Indenture pursuant to which such Bonds were issued.

“ Borrower ” has the meaning specified in the first paragraph of this Agreement.

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case may be. All Revolving Loans to the Borrower of the same Type, having the same Interest Period and made or Converted on the same day shall be deemed a single Borrowing hereunder until repaid or next Converted.

“ Borrowing Date ” means the date of any Borrowing.

“ Change of Control ” has the meaning specified in Section 6.01(h).

“ Closing Date ” means June 30, 2017.

“ Collateral Release ” has the meaning specified in Section 7.09(a).

“ Collateral Release Trigger ” means the satisfaction of each of the following conditions: (i) the receipt by the Borrower of an S&P Unsecured Rating of BBB- or higher or a Moody’s Unsecured Rating of Baa3 or higher (in each case, with a stable or better outlook), (ii) no Default exists, and (iii) the Administrative Agent’s receipt of a certificate signed by a duly authorized officer of the Borrower certifying to the foregoing.

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“ Commitment Fee Rate ” means, at any time, the rate per annum set forth below next to the Applicable Rating Level in effect at such time:



Applicable Rating Level	Commitment Fee Rate
1	0.045%
2	0.050%
3	0.060%
4	0.075%
5	0.100%

“ Commitments ” means the aggregate of each Lender’s Commitment hereunder.

“ Communications ” has the meaning specified in Section 8.02(d)(ii).

“ Consolidated Assets ” means, on any date of determination, the total of all assets (including revaluations thereof as a result of commercial appraisals, price level restatement

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or otherwise) appearing on the consolidated balance sheet of the Borrower and its Consolidated Subsidiaries most recently delivered to the Lenders pursuant to Section 5.01(h) as of such date of determination.

“ Credit Party ” means the Administrative Agent, any LC Issuing Bank or any Lender.

“ Debt ” of any Person means, at any date, without duplication, (i) all indebtedness of such Person for borrowed money, (ii) all obligations of such Person for the deferred purchase price of property or services (other than trade payables incurred in the ordinary course of such Person’s business), (iii) all obligations of such Person evidenced by notes, bonds, debentures or other similar instruments, (iv) all obligations of such Person as lessee under leases that have been, in accordance with GAAP, recorded as capital leases, (v) all obligations of such Person in respect of reimbursement agreements with respect to acceptances, letters of credit (other than trade letters of credit) or similar extensions of credit, and (vi) all Guaranties. Solely for the purpose of calculating compliance with the covenant in Section 5.03, Debt shall not include Debt of the Borrower or its Consolidated Subsidiaries arising from the qualification of an arrangement as a lease due to that arrangement conveying the right to use or to control the use of property, plant or equipment under the application of the Financial Accounting Standards Board’s Accounting Standards Codification Topic 840 – Leases paragraph 840-10-15-6 (or the Accounting Standards Codification Topic 842 – Leases paragraphs 842-10-15-3 through 5), nor shall Debt include Debt of any variable interest entity consolidated by the Borrower under the requirements of Topic 810 – Consolidation.

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“ Declining Lender ” has the meaning specified in Section 2.06(b).

“ Default ” means any Event of Default or any event that would constitute an Event of Default but for the requirement that notice be given or time elapse or both.

“ Defaulting Lender ” means, subject to Section 2.21(b), any Lender that (i) has failed, within two Business Days after the date required to be funded or paid, to (A) fund all or any portion of its Loans, (B) fund any portion of its participations in Letters of Credit or (C) pay over to any Credit Party any other amount required to be paid by it under this Agreement, unless, in the case of clause (A) above, such failure is the result of such Lender’s good faith determination that one or more conditions precedent to funding (each of which conditions precedent, together with any applicable default, shall be specifically identified in writing) has not been satisfied, as notified by such Lender to the Administrative Agent and the Borrower in such writing, (ii) has notified the Borrower or any Credit Party in writing that it does not intend to comply with any of its funding obligations under this Agreement or has made a public statement to the effect that it does not intend to comply with its funding obligations under this Agreement (unless such writing or public statement relates to such Lender’s obligation to fund a Loan hereunder and such position is based on such Lender’s good faith determination that a condition precedent (which condition precedent, together with any applicable default, shall be specifically identified in such writing or public statement) to funding a Loan under this Agreement cannot be satisfied), (iii) has failed, within three Business Days after written request by the Administrative Agent, any LC Issuing Bank or the Borrower, acting in good faith, to confirm in writing to such requesting party that it will comply with its obligations to fund prospective Loans and participations in then outstanding Letters of Credit under this Agreement, provided that such Lender shall cease to be a Defaulting Lender pursuant to clause (iii) upon such requesting party’s receipt of such written confirmation in form and substance reasonably satisfactory to it and the Administrative Agent, or (iv) has become the subject of a (A) Bankruptcy Event or (B) Bail-In Action. Any determination by the Administrative Agent that a Lender is a Defaulting Lender under any one or more of clauses (i) through (iv) above shall be conclusive and binding absent manifest error, and such Lender shall be deemed to be a Defaulting Lender (subject to Section 2.21(b)) upon delivery of written notice of such determination to the Borrower, each LC Issuing Bank and each Lender.

“ Designated Lender ” has the meaning specified in Section 2.07(a).

“ Dollars ” and the symbol “$” mean lawful currency of the United States of America.

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office of such Lender as such Lender may from time to time specify in writing to the Borrower and the Administrative Agent.

“ EEA Member Country ” means any of the member states of the European Union, Iceland, Liechtenstein, and Norway.

“ ERISA ” means the Employee Retirement Income Security Act of 1974, as amended from time to time, and the regulations promulgated and rulings issued thereunder.

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reasonably expected to be, in at-risk status under Title IV of ERISA; (iii) the filing of a notice of intent to terminate any Pension Plan, if such termination would require material additional contributions in order to be considered a standard termination within the meaning of Section 4041(b) of ERISA, the filing under Section 4041(c) of ERISA of a notice of intent to terminate any Pension Plan, or the termination of any Pension Plan under Section 4041(c) of ERISA; (iv) the institution of proceedings, or the occurrence of an event or condition that would reasonably be expected to constitute grounds for the institution of proceedings by the PBGC, under Section 4042 of ERISA, for the termination of, or the appointment of a trustee to administer, any Pension Plan; (v) the complete or partial withdrawal of the Borrower or any of its ERISA Affiliates from a Multiemployer Plan, the reorganization or insolvency under Title IV of ERISA of any Multiemployer Plan, or the receipt by the Borrower or any of its ERISA Affiliates of any notice that a Multiemployer Plan is in endangered or critical status under Section 305 of ERISA; (vi) the failure by the Borrower or any of its ERISA Affiliates to comply with ERISA or the related provisions of the Internal Revenue Code with respect to any Pension Plan; (vii) the Borrower or any of its ERISA Affiliates incurring any liability under Title IV of ERISA with respect to any Pension Plan (other than premiums due and not delinquent under Section 4007 of ERISA); or (viii) the failure by the Borrower or any of its Subsidiaries to comply with Applicable Law with respect to any Foreign Plan.

“ EU Bail-In Legislation Schedule ” means the EU Bail-In Legislation Schedule published by the Loan Market Association (or any successor Person), as in effect from time to time.

“ Eurocurrency Liabilities ” has the meaning assigned to that term in Regulation D of the Board of Governors of the Federal Reserve System, as in effect from time to time.

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“ Eurodollar Rate Revolving Loan ” means a Revolving Loan that bears interest as provided in Section 2.11(b).

“ Events of Default ” has the meaning specified in Section 6.01.

“ Extension Effective Date ” has the meaning specified in Section 2.06(c).

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“ Foreign Lender ” means a Lender that is not a U.S. Person.

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“ GAAP ” has the meaning specified in Section 1.03.

“ General and Refunding Mortgage Bonds ” means, collectively, (a) the Borrower’s General and Refunding Mortgage Bond, Series S-2, due on June 30, 2020, issued as of June 30, 2017 to the Administrative Agent under the General and Refunding Mortgage Indenture and any supplemental indenture or Officer’s Certificate related thereto, in a principal amount equal to the Commitments, and (b) any additional General and Refunding Mortgage Bonds issued by the Borrower to the Administrative Agent under the General and Refunding Mortgage Indenture and any supplemental indentures or Officer’s Certificate related thereto in connection with any increase in the Commitments pursuant to Section 2.07, in each case, together with all amendments or replacements thereof (including any Replacement Collateral) and as collateral securing the Obligations.

“ Governmental Approval ” means any authorization, consent, approval, license or exemption of, registration or filing with, or report or notice to, any Governmental Authority.

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“ Indemnified Party ” has the meaning specified in Section 8.04(b).

“ Initial Lenders ” has the meaning specified in the first paragraph of this Agreement.

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two, three or six months or such other period acceptable to all the Lenders, as the Borrower may, upon notice received by the Administrative Agent not later than 12:00 noon (New York City Time) on the third Business Day prior to the first day of such Interest Period, select; provided, however, that:


(i)	the Borrower may not select any Interest Period that ends after the latest Termination Date in effect at such time;


(ii)	Interest Periods commencing on the same date for Eurodollar Rate Revolving Loans comprising part of the same Borrowing shall be of the same duration;

(iii)


(iv)	whenever the first day of any Interest Period occurs on a day of an initial calendar month for which there is no numerically corresponding day in the calendar month that succeeds such initial calendar month by the number of months equal to the number of months in such Interest Period, such Interest Period shall end on the last Business Day of such succeeding calendar month.

“ Internal Revenue Code ” means the Internal Revenue Code of 1986, as amended from time to time, and the regulations promulgated and rulings issued thereunder.

“ IRS ” means the U.S. Internal Revenue Service.

“ Issuer ” means, for any series of Bonds, the issuer of such Bonds under the applicable Bond Indenture.

“ LC Collateral Account ” has the meaning specified in Section 6.02.

“ LC Commitment Amount ” means $150,000,000 as the same may be reduced permanently from time to time pursuant to Section 2.08.

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“ LC Fee ” has the meaning specified in Section 2.05(c).

“ LC Fronting Fee ” has the meaning specified in Section 2.05(d).

“ LC Payment Notice ” has the meaning specified in Section 2.04(e).

“ Loans ” means the loans made by the Lenders to the Borrower pursuant to this Agreement.

“ Margin Regulations ” means Regulations T, U and X of the Board of Governors of the Federal Reserve System, as in effect from time to time.

“ Margin Stock ” has the meaning specified in the Margin Regulations.

“ Material Adverse Effect ” means a material adverse effect on (i) on the business, operations, properties, financial condition, assets or liabilities (including, without limitation,

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contingent liabilities) of the Borrower and its Subsidiaries, taken as a whole, (ii) the ability of the Borrower to perform its obligations under the Loan Documents or (iii) the ability of the Administrative Agent, any LC Issuing Bank or any Lender to enforce its rights under the Loan Documents.

“ Minimum Collateral Amount ” means, at any time, (i) with respect to Cash Collateral consisting of cash or deposit account balances, an amount equal to 103% of the Fronting Exposure of all LC Issuing Banks with respect to Letters of Credit issued and outstanding at such time and (ii) otherwise, an amount determined by the Administrative Agent and the LC Issuing Banks in their sole discretion.

“ Moody’s ” means Moody’s Investors Service, Inc.

“ Moody’s Secured Rating ” means the rating most recently announced by Moody’s with respect to any senior secured long term Debt of the Borrower.

“ Moody’s Unsecured Rating ” means the rating most recently announced by Moody’s with respect to any senior unsecured, non-credit enhanced Debt of the Borrower.

“ Mortgaged Property ” has the meaning assigned to that term in the General and Refunding Mortgage Indenture.

“ New York City Time ” means the time in New York, New York.

“ Non-Defaulting Lender ” means, at the time of determination, a Lender that is not a Defaulting Lender.

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“ non-performing Lender ” has the meaning specified in Section 2.04(f).

“ Notice of Borrowing ” has the meaning specified in Section 2.02(a).

“ NPC Credit Agreement ” means the Second Amended and Restated Credit Agreement, dated as of June 30, 2017, among Nevada Power Company, Wells Fargo Bank, as administrative agent, and certain other financial institutions party thereto, as the same may be further amended, restated, supplemented or otherwise modified from time to time.

“ NYFRB ” means the Federal Reserve Bank of New York.

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“ OFAC ” means The Office of Foreign Assets Control of the U.S. Department of the Treasury.

“ Participant ” has the meaning assigned to such term in Section 8.07(d).

“ Participant Register ” has the meaning specified in Section 8.07(d).

“ Patriot Act ” has the meaning specified in Section 8.14.

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“ PBGC ” means the U.S. Pension Benefit Guaranty Corporation (or any successor).

“ Permitted Liens ” means such of the following as to which no enforcement, collection, execution, levy or foreclosure proceeding shall have been commenced: (i) Liens for taxes, assessments and governmental charges or levies to the extent not required to be paid under Section 5.01(a) hereof; (ii) Liens imposed by law, such as materialmen’s, mechanics’, carriers’, workmen’s and repairmen’s Liens, and other similar Liens arising in the ordinary course of business; (iii) Liens incurred or deposits made to secure obligations under workers’ compensation laws or similar legislation or to secure public or statutory obligations; (iv) easements, rights of way and other encumbrances on title to real property that do not render title to the property encumbered thereby unmarketable, including zoning and landmarking restrictions; (v) any judgment Lien, unless an Event of Default under Section 6.01(e) shall have occurred and be continuing with respect thereto; (vi) any Lien on any asset of any Person existing at the time such Person is acquired by or merged or consolidated with or into the Borrower or any Subsidiary of the Borrower and not created in contemplation of such event; (vii) pledges and deposits made in the ordinary course of business to secure the performance of bids, trade contracts (other than for Debt), operating leases and surety and appeal bonds, performance bonds and other obligations of a like nature incurred in the ordinary course of business; (viii) Liens upon or in any real property or equipment acquired, constructed, improved or held by the Borrower or any Subsidiary in the ordinary course of business to secure the purchase price of such property or equipment or to secure Debt incurred solely for the purpose of financing the acquisition, construction or improvement of such property or equipment, or Liens existing on such property or equipment at the time of its acquisition (other than any such Liens created in contemplation of such acquisition that were not incurred to finance the acquisition of such property), (ix) Liens securing Project Finance Debt, (x) any Lien on the Borrower’s or any Material Subsidiary’s interest in Bonds or cash or cash equivalents securing (A) the obligation of the Borrower or any Material Subsidiary to reimburse the issuer of a letter of credit supporting payments to be made in respect of such Bonds (including any Bond Letter of Credit) for a drawing on such letter of credit for the purpose of purchasing Bonds or (B) the obligation of the Borrower or any Material Subsidiary to reimburse or repay amounts advanced under any facility entered into to provide liquidity or credit support for any issue of Bonds; and (xi) extensions, renewals or replacements of any Lien described in clause (vi), (vii), (viii), (ix) or (x) for the same or a lesser amount, provided, however, that no such Lien shall extend to or cover any properties (other than after-acquired property already within the scope of the relevant Lien grant) not theretofore subject to the Lien being extended, renewed or replaced.

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“ Person ” means any natural Person, corporation, limited liability company, trust, joint venture, association, company, partnership, Governmental Authority or other entity.

“ Platform ” has the meaning specified in Section 8.02(d)(i).

“ PUCN ” means the Public Utilities Commission of Nevada, or any successor agency.

(B) from and after the Collateral Release, the S&P Unsecured Rating is reduced to any rating level below BBB+ or the Moody’s Unsecured Rating is reduced to any rating level below Baa1 (or both the S&P Unsecured Rating and the Moody’s Unsecured Rating become unavailable).