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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
☒ Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
For the quarterly period ended March 31, 2022
or
☐ Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
For the transition period from ______ to _______
Exact name of registrant as specified in its charter
State or other jurisdiction of incorporation or organization
CommissionAddress of principal executive officesIRS Employer
File NumberRegistrant's telephone number, including area codeIdentification No.
001-14881 BERKSHIRE HATHAWAY ENERGY COMPANY 94-2213782
  
(An Iowa Corporation)
  
  
666 Grand Avenue
  
  
Des Moines, Iowa 50309-2580
  
  
515-242-4300
  
001-05152 PACIFICORP 93-0246090
  
(An Oregon Corporation)
  
  
825 N.E. Multnomah Street, Suite 1900
  
  
Portland, Oregon 97232
  
  
888-221-7070
  
333-90553MIDAMERICAN FUNDING, LLC47-0819200
(An Iowa Limited Liability Company)
666 Grand Avenue
Des Moines, Iowa 50309-2580
515-242-4300
333-15387MIDAMERICAN ENERGY COMPANY42-1425214
(An Iowa Corporation)
666 Grand Avenue
Des Moines, Iowa 50309-2580
515-242-4300
000-52378NEVADA POWER COMPANY88-0420104
(A Nevada Corporation)
6226 West Sahara Avenue
Las Vegas, Nevada 89146
702-402-5000
000-00508SIERRA PACIFIC POWER COMPANY88-0044418
(A Nevada Corporation)
6100 Neil Road
Reno, Nevada 89511
775-834-4011
001-37591EASTERN ENERGY GAS HOLDINGS, LLC46-3639580
(A Virginia Limited Liability Company)
6603 West Broad Street
Richmond, Virginia 23230
804-613-5100
N/A
(Former name or former address, if changed from last report)



RegistrantSecurities registered pursuant to Section 12(b) of the Act:
BERKSHIRE HATHAWAY ENERGY COMPANYNone
PACIFICORPNone
MIDAMERICAN FUNDING, LLCNone
MIDAMERICAN ENERGY COMPANYNone
NEVADA POWER COMPANYNone
SIERRA PACIFIC POWER COMPANYNone
EASTERN ENERGY GAS HOLDINGS, LLCNone
RegistrantName of exchange on which registered:
BERKSHIRE HATHAWAY ENERGY COMPANYNone
PACIFICORPNone
MIDAMERICAN FUNDING, LLCNone
MIDAMERICAN ENERGY COMPANYNone
NEVADA POWER COMPANYNone
SIERRA PACIFIC POWER COMPANYNone
EASTERN ENERGY GAS HOLDINGS, LLCNone
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.
RegistrantYesNo
BERKSHIRE HATHAWAY ENERGY COMPANY
PACIFICORP
MIDAMERICAN FUNDING, LLC
MIDAMERICAN ENERGY COMPANY
NEVADA POWER COMPANY
SIERRA PACIFIC POWER COMPANY
EASTERN ENERGY GAS HOLDINGS, LLC
Indicate by check mark whether the registrants have submitted electronically every Interactive Data File required to be submitted 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 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.
RegistrantLarge accelerated filerAccelerated filerNon-accelerated filerSmaller reporting companyEmerging growth company
BERKSHIRE HATHAWAY ENERGY COMPANY
PACIFICORP
MIDAMERICAN FUNDING, LLC
MIDAMERICAN ENERGY COMPANY
NEVADA POWER COMPANY
SIERRA PACIFIC POWER COMPANY
EASTERN ENERGY GAS HOLDINGS, LLC
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    No  x
All shares of outstanding common stock of Berkshire Hathaway Energy Company are privately held by a limited group of investors. As of April 28, 2022, 76,368,874 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 April 28, 2022, 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 April 28, 2022.
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 April 28, 2022, 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 April 28, 2022, 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 April 28, 2022, 1,000 shares of common stock, $3.75 par value, were outstanding.
All of the member's equity of Eastern Energy Gas Holdings, LLC is held indirectly by its parent company, Berkshire Hathaway Energy Company, as of April 28, 2022.
This combined Form 10-Q is separately filed by Berkshire Hathaway Energy Company, PacifiCorp, MidAmerican Funding, LLC, MidAmerican Energy Company, Nevada Power Company, Sierra Pacific Power Company and Eastern Energy Gas Holdings, LLC. 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
 
 
PART II
 
 

i


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
BHEBerkshire Hathaway Energy Company
Berkshire HathawayBerkshire Hathaway Inc.
Berkshire Hathaway Energy or the CompanyBerkshire Hathaway Energy Company and its subsidiaries
PacifiCorpPacifiCorp and its subsidiaries
MidAmerican FundingMidAmerican Funding, LLC and its subsidiaries
MidAmerican EnergyMidAmerican Energy Company
NV EnergyNV Energy, Inc. and its subsidiaries
Nevada PowerNevada Power Company and its subsidiaries
Sierra PacificSierra Pacific Power Company and its subsidiaries
Nevada UtilitiesNevada Power Company and its subsidiaries and Sierra Pacific Power Company and its subsidiaries
Eastern Energy GasEastern Energy Gas Holdings, LLC and its subsidiaries
RegistrantsBerkshire Hathaway Energy Company, PacifiCorp and its subsidiaries, MidAmerican Funding, LLC and its subsidiaries, MidAmerican Energy Company, Nevada Power Company and its subsidiaries, Sierra Pacific Power Company and its subsidiaries and Eastern Energy Gas Holdings, LLC and its subsidiaries
Northern PowergridNorthern Powergrid Holdings Company and its subsidiaries
BHE Pipeline GroupBHE GT&S, LLC, Northern Natural Gas Company and Kern River Gas Transmission Company
BHE GT&SBHE GT&S, LLC and its subsidiaries
Northern Natural GasNorthern Natural Gas Company
Kern RiverKern River Gas Transmission Company
BHE TransmissionBHE Canada Holdings Corporation and BHE U.S. Transmission, LLC
BHE CanadaBHE Canada Holdings Corporation and its subsidiaries
AltaLinkAltaLink, L.P.
BHE U.S. TransmissionBHE U.S. Transmission, LLC and its subsidiaries
BHE RenewablesBHE Renewables, LLC and its subsidiaries
HomeServicesHomeServices of America, Inc. and its subsidiaries
UtilitiesPacifiCorp and its subsidiaries, MidAmerican Energy Company, Nevada Power Company and its subsidiaries and Sierra Pacific Power Company and its subsidiaries
EGTSEastern Gas Transmission and Storage, Inc.
ii


Certain Industry Terms
2017 Tax ReformThe Tax Cuts and Jobs Act enacted on December 22, 2017, effective January 1, 2018
AFUDCAllowance for Funds Used During Construction
AUCAlberta Utilities Commission
BART
Best Available Retrofit Technology
COVID-19Coronavirus Disease 2019
CSAPRCross-State Air Pollution Rule
D.C. CircuitUnited States Court of Appeals for the District of Columbia Circuit
DthDecatherm
EPAUnited States Environmental Protection Agency
FERCFederal Energy Regulatory Commission
FIPFederal Implementation Plan
GAAPAccounting principles generally accepted in the United States of America
GHGGreenhouse Gases
GTAGeneral Tariff Application
GWhGigawatt Hour
IRPIntegrated Resource Plan
IUBIowa Utilities Board
kVKilovolt
MWMegawatt
MWhMegawatt Hour
NAAQSNational Ambient Air Quality Standards
NOx
Nitrogen Oxides
OPUCOregon Public Utility Commission
PTCProduction Tax Credit
PUCNPublic Utilities Commission of Nevada
RFPRequest for Proposals
RPSRenewable Portfolio Standards
SCRSelective Catalytic Reduction
SECUnited States Securities and Exchange Commission
SIPState Implementation Plan
SO2
Sulfur Dioxide
UPSCUtah Public Service Commission
WUTCWashington Utilities and Transportation Commission
iii


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:
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 associated 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 severe storms, floods, fires, extreme temperature events, wind events, earthquakes, explosions, landslides, an electromagnetic pulse, mining incidents, litigation, wars (including, for example, Russia's invasion of Ukraine in February 2022), terrorism, pandemics, embargoes, and cyber security attacks, data security breaches, disruptions, or other malicious acts;
the risks and uncertainties associated with wildfires that have occurred, are occurring or may occur in the respective Registrant's service territory, including the wildfires that began in September 2020 in Oregon and California, and any other wildfires for which the cause has yet to be determined; the damage caused by such wildfires; the extent of the respective Registrant's liability in connection with such wildfires (including the risk that the respective Registrant may be found liable for damages regardless of fault); investigations into such wildfires; the outcome of any legal proceedings initiated against the respective Registrant; the risk that the respective Registrant is not able to recover costs from insurance or through rates; and the effect on the respective Registrant's reputation of such wildfires, investigations and proceedings;
the respective Registrant's ability to reduce wildfire threats and improve safety, including the ability to comply with the targets and metrics set forth in its wildfire mitigation plans; to retain or contract for the workforce necessary to execute its wildfire mitigation plans; the effectiveness of its system hardening; ability to achieve vegetation management targets; and the cost of these programs and the timing and outcome of any proceeding to recover such costs through rates;
the ability to economically obtain insurance coverage, or any insurance coverage at all, sufficient to cover losses arising from catastrophic events, such as wildfires where the Registrants may be found liable for real and personal property damages regardless of fault;
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;
the financial condition, creditworthiness and operational stability of the respective Registrant's significant customers and suppliers;
iv


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, certain participant elections such as lump sum distributions and changes in interest rates, legislation, healthcare cost trends, mortality, morbidity on pension and other postretirement benefits expense and funding requirements;
changes in the residential real estate brokerage, mortgage and franchising industries and regulations that could affect brokerage, mortgage and franchising transactions;
the ability to successfully integrate future acquired operations into a Registrant's business;
the impact of supply chain disruptions and workforce availability on the respective Registrant's ongoing operations and its ability to timely complete construction projects;
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 financial results of the respective Registrants; 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.

v


Item 1.Financial Statements
Berkshire Hathaway Energy Company and its subsidiaries
PacifiCorp and its subsidiaries
MidAmerican Energy Company
MidAmerican Funding, LLC and its subsidiaries
Nevada Power Company and its subsidiaries
Sierra Pacific Power Company and its subsidiaries
Eastern Energy Gas Holdings, LLC and its subsidiaries


1


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

2


Berkshire Hathaway Energy Company and its subsidiaries
Consolidated Financial Section

3


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

Results of Review of Interim Financial Information

We have reviewed the accompanying consolidated balance sheet of Berkshire Hathaway Energy Company and subsidiaries (the "Company") as of March 31, 2022, the related consolidated statements of operations, comprehensive (loss) income, changes in equity, and cash flows for the three-month periods ended March 31, 2022 and 2021, and the related notes (collectively referred to as the "interim financial information"). Based on our reviews, we are not aware of any material modifications that should be made to the accompanying interim financial information for it 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) (PCAOB), the consolidated balance sheet of the Company as of December 31, 2021, 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 25, 2022, 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, 2021, is fairly stated, in all material respects, in relation to the consolidated balance sheet from which it has been derived.

Basis for Review Results

This interim financial information is the responsibility of the Company's management. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our reviews in accordance with standards of the PCAOB. 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 PCAOB, 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.


/s/ Deloitte & Touche LLP


Des Moines, Iowa
April 29, 2022
4


BERKSHIRE HATHAWAY ENERGY COMPANY AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS (Unaudited)
(Amounts in millions)

 As of
 March 31,December 31,
20222021
ASSETS
Current assets:
Cash and cash equivalents$1,432 $1,096 
Restricted cash and cash equivalents129 127 
Trade receivables, net2,342 2,468 
Income tax receivable656 344 
Inventories1,091 1,122 
Mortgage loans held for sale975 1,263 
Derivative contracts437 188 
Regulatory assets627 544 
Other current assets815 1,096 
Total current assets8,504 8,248 
   
Property, plant and equipment, net90,283 89,816 
Goodwill11,649 11,650 
Regulatory assets3,458 3,419 
Investments and restricted cash, cash equivalents and investments14,394 15,788 
Other assets3,181 3,144 
  
Total assets$131,469 $132,065 

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

5


BERKSHIRE HATHAWAY ENERGY COMPANY AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS (Unaudited) (continued)
(Amounts in millions)

 As of
 March 31,December 31,
20222021
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable$1,820 $2,136 
Accrued interest644 537 
Accrued property, income and other taxes606 606 
Accrued employee expenses398 372 
Short-term debt1,849 2,009 
Current portion of long-term debt1,494 1,265 
Other current liabilities1,647 1,837 
Total current liabilities8,458 8,762 
  
BHE senior debt12,605 13,003 
BHE junior subordinated debentures100 100 
Subsidiary debt35,706 35,394 
Regulatory liabilities7,063 6,960 
Deferred income taxes12,786 12,938 
Other long-term liabilities4,327 4,319 
Total liabilities81,045 81,476 
   
Commitments and contingencies (Note 8)
   
Equity:  
BHE shareholders' equity:  
Preferred stock - 100 shares authorized, $0.01 par value, 2 shares issued and outstanding
1,650 1,650 
Common stock - 115 shares authorized, no par value, 76 shares issued and outstanding
— — 
Additional paid-in capital6,374 6,374 
Long-term income tax receivable(744)(744)
Retained earnings40,608 40,754 
Accumulated other comprehensive loss, net(1,358)(1,340)
Total BHE shareholders' equity46,530 46,694 
Noncontrolling interests3,894 3,895 
Total equity50,424 50,589 
  
Total liabilities and equity$131,469 $132,065 

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

6


BERKSHIRE HATHAWAY ENERGY COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
(Amounts in millions)

 Three-Month Periods
Ended March 31,
 20222021
Operating revenue:
Energy$4,823 $4,849 
Real estate1,207 1,232 
Total operating revenue6,030 6,081 
  
Operating expenses: 
Energy: 
Cost of sales1,460 1,569 
Operations and maintenance943 934 
Depreciation and amortization1,007 915 
Property and other taxes205 210 
Real estate1,179 1,120 
Total operating expenses4,794 4,748 
   
Operating income1,236 1,333 
  
Other income (expense): 
Interest expense(532)(530)
Capitalized interest17 14 
Allowance for equity funds38 26 
Interest and dividend income23 21 
Losses on marketable securities, net(1,257)(1,118)
Other, net
Total other income (expense)(1,706)(1,579)
  
Loss before income tax benefit and equity loss(470)(246)
Income tax benefit(507)(535)
Equity loss(57)(179)
Net (loss) income(20)110 
Net income attributable to noncontrolling interests109 106 
Net (loss) income attributable to BHE shareholders(129)
Preferred dividends16 38 
Loss on common shares$(145)$(34)

The accompanying notes are an integral part of these consolidated financial statements.
 
7


BERKSHIRE HATHAWAY ENERGY COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME (Unaudited)
(Amounts in millions)

 Three-Month Periods
Ended March 31,
 20222021
 
Net (loss) income$(20)$110 
 
Other comprehensive (loss) income, net of tax:
Unrecognized amounts on retirement benefits, net of tax of $3 and $4
15 
Foreign currency translation adjustment(110)91 
Unrealized gains on cash flow hedges, net of tax of $28 and $5
77 14 
Total other comprehensive (loss) income, net of tax(18)112 
   
Comprehensive (loss) income(38)222 
Comprehensive income attributable to noncontrolling interests109 106 
Comprehensive (loss) income attributable to BHE shareholders$(147)$116 

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

8


BERKSHIRE HATHAWAY ENERGY COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY (Unaudited)
(Amounts in millions)
 BHE Shareholders' Equity
Long-termAccumulated
AdditionalIncomeOther
PreferredCommonPaid-inTaxRetainedComprehensiveNoncontrollingTotal
 StockStockCapitalReceivableEarningsLoss, NetInterestsEquity
Balance, December 31, 2020$3,750 $— $6,377 $(658)$35,093 $(1,552)$3,967 $46,977 
Net income— — — — — 106 110 
Other comprehensive income— — — — — 112 — 112 
Preferred stock dividend— — — — (38)— — (38)
Distributions— — — — — — (113)(113)
Other equity transactions— — — — — 
Balance, March 31, 2021$3,750 $— $6,377 $(658)$35,060 $(1,440)$3,962 $47,051 
Balance, December 31, 2021$1,650 $— $6,374 $(744)$40,754 $(1,340)$3,895 $50,589 
Net (loss) income— — — — (129)— 109 (20)
Other comprehensive loss— — — — — (18)— (18)
Preferred stock dividend— — — — (16)— — (16)
Distributions— — — — — — (116)(116)
Other equity transactions— — — — (1)— 
Balance, March 31, 2022$1,650 $— $6,374 $(744)$40,608 $(1,358)$3,894 $50,424 

The accompanying notes are an integral part of these consolidated financial statements.
9


BERKSHIRE HATHAWAY ENERGY COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
(Amounts in millions)
 Three-Month Periods
Ended March 31,
 20222021
Cash flows from operating activities:
Net (loss) income$(20)$110 
Adjustments to reconcile net (loss) income to net cash flows from operating activities:
Losses on marketable securities, net1,257 1,118 
Depreciation and amortization1,022 927 
Allowance for equity funds(38)(26)
Equity loss, net of distributions88 221 
Changes in regulatory assets and liabilities(42)(9)
Deferred income taxes and investment tax credits, net(203)(135)
Other, net
Changes in other operating assets and liabilities, net of effects from acquisitions:
Trade receivables and other assets333 (249)
Derivative collateral, net85 14 
Pension and other postretirement benefit plans(11)(21)
Accrued property, income and other taxes, net(347)(453)
Accounts payable and other liabilities91 19 
Net cash flows from operating activities2,221 1,525 
Cash flows from investing activities:  
Capital expenditures(1,553)(1,295)
Purchases of marketable securities(170)(128)
Proceeds from sales of marketable securities149 104 
Equity method investments(17)(26)
Other, net19 (29)
Net cash flows from investing activities(1,572)(1,374)
Cash flows from financing activities:  
Repayments of BHE senior debt— (450)
Proceeds from subsidiary debt405 — 
Repayments of subsidiary debt(193)(26)
Net (repayments of) proceeds from short-term debt(165)409 
Distributions to noncontrolling interests(117)(115)
Other, net(240)(9)
Net cash flows from financing activities(310)(191)
Effect of exchange rate changes(1)
Net change in cash and cash equivalents and restricted cash and cash equivalents338 (39)
Cash and cash equivalents and restricted cash and cash equivalents at beginning of period1,244 1,445 
Cash and cash equivalents and restricted cash and cash equivalents at end of period$1,582 $1,406 

The accompanying notes are an integral part of these consolidated financial statements.
10


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 and operated 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's operations are organized as eight business segments: PacifiCorp and its subsidiaries ("PacifiCorp"), MidAmerican Funding, LLC and its subsidiaries ("MidAmerican Funding") (which primarily consists of MidAmerican Energy Company ("MidAmerican Energy")), NV Energy, Inc. and its subsidiaries ("NV Energy") (which primarily consists of Nevada Power Company and its subsidiaries ("Nevada Power") and Sierra Pacific Power Company and its subsidiaries ("Sierra Pacific")), Northern Powergrid Holdings Company and its subsidiaries ("Northern Powergrid") (which primarily consists of Northern Powergrid (Northeast) plc and Northern Powergrid (Yorkshire) plc), BHE Pipeline Group, LLC and its subsidiaries (which primarily consists of BHE GT&S, LLC and its subsidiaries ("BHE GT&S"), Northern Natural Gas Company ("Northern Natural Gas") and Kern River Gas Transmission Company ("Kern River")), BHE Transmission (which consists of BHE Canada Holdings Corporation and its subsidiaries ("BHE Canada") (which primarily consists of AltaLink, L.P. ("AltaLink")) and BHE U.S. Transmission, LLC and its subsidiaries), BHE Renewables, LLC and its subsidiaries ("BHE Renewables") and HomeServices of America, Inc. and its subsidiaries ("HomeServices"). The Company, through these locally managed and operated businesses, owns four utility companies in the U.S. serving customers in 11 states, two electricity distribution companies in Great Britain, five interstate natural gas pipeline companies and interests in a liquefied natural gas ("LNG") export, import and storage facility in the U.S., an electric transmission business in Canada, interests in electric transmission businesses in the U.S., a renewable energy business primarily investing in wind, solar, geothermal and hydroelectric projects, the largest residential real estate brokerage firm in the U.S. and one of the largest residential real estate brokerage franchise networks in the U.S.

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 March 31, 2022 and for the three-month periods ended March 31, 2022 and 2021. The results of operations for the three-month period ended March 31, 2022 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, 2021 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 three-month period ended March 31, 2022.
11


(2)    Property, Plant and Equipment, Net

Property, plant and equipment, net consists of the following (in millions):
   As of
 Depreciable March 31, December 31,
Life20222021
Regulated assets:   
Utility generation, transmission and distribution systems
5-80 years
 $90,560  $90,223 
Interstate natural gas pipeline assets
3-80 years
 17,526  17,423 
   108,086 107,646 
Accumulated depreciation and amortization  (33,248) (32,680)
Regulated assets, net  74,838 74,966 
      
Nonregulated assets:     
Independent power plants
2-50 years
 7,932  7,665 
Cove Point LNG facility40 years3,366 3,364 
Other assets
2-30 years
 2,688  2,666 
   13,986 13,695 
Accumulated depreciation and amortization  (3,146) (3,041)
Nonregulated assets, net  10,840 10,654 
      
Net operating assets  85,678 85,620 
Construction work-in-progress  4,605  4,196 
Property, plant and equipment, net  $90,283 $89,816 

Construction work-in-progress includes $4.3 billion as of March 31, 2022 and $3.8 billion as of December 31, 2021, related to the construction of regulated assets.

12


(3)    Investments and Restricted Cash, Cash Equivalents and Investments

Investments and restricted cash, cash equivalents and investments consists of the following (in millions):
 As of
 March 31,December 31,
20222021
Investments:
BYD Company Limited common stock$6,446 $7,693 
Rabbi trusts475 492 
Other315 305 
Total investments7,236 8,490 
   
Equity method investments:
BHE Renewables tax equity investments4,812 4,931 
Iroquois Gas Transmission System, L.P.744 735 
Electric Transmission Texas, LLC598 595 
JAX LNG, LLC93 92 
Bridger Coal Company44 45 
Other152 156 
Total equity method investments6,443 6,554 
Restricted cash, cash equivalents and investments:  
Quad Cities Station nuclear decommissioning trust funds733 768 
Other restricted cash and cash equivalents150 148 
Total restricted cash, cash equivalents and investments883 916 
   
Total investments and restricted cash, cash equivalents and investments$14,562 $15,960 
Reflected as:
Current assets$168 $172 
Noncurrent assets14,394 15,788 
Total investments and restricted cash, cash equivalents and investments$14,562 $15,960 

Investments

Losses on marketable securities, net recognized during the period consists of the following (in millions):
Three-Month Periods
Ended March 31,
20222021
Unrealized losses recognized on marketable securities still held at the reporting date$(1,257)$(1,119)
Net gains recognized on marketable securities sold during the period— 
Losses on marketable securities, net$(1,257)$(1,118)


13


Cash and Cash Equivalents and Restricted Cash and Cash Equivalents

Cash equivalents consist of funds invested in money market mutual funds, U.S. Treasury Bills and other investments with a maturity of three months or less when purchased. Cash and cash equivalents exclude amounts where availability is restricted by legal requirements, loan agreements or other contractual provisions. Restricted cash and cash equivalents consist substantially of funds restricted for debt service obligations for certain of the Company's nonregulated renewable energy projects. A reconciliation of cash and cash equivalents and restricted cash and cash equivalents as presented in the Consolidated Statements of Cash Flows is outlined below and disaggregated by the line items in which they appear on the Consolidated Balance Sheets (in millions):
As of
March 31,December 31,
20222021
Cash and cash equivalents$1,432 $1,096 
Restricted cash and cash equivalents129 127 
Investments and restricted cash, cash equivalents and investments21 21 
Total cash and cash equivalents and restricted cash and cash equivalents$1,582 $1,244 

(4)    Recent Financing Transactions

Long-Term Debt

In April 2022, BHE issued $1 billion of its 4.6% Senior Notes due 2053 and intends to use the net proceeds for general corporate purposes, which may include repaying a portion of BHE's outstanding commercial paper obligations and redeeming a portion of its 4.00% Perpetual Preferred Stock issued to certain subsidiaries of Berkshire Hathaway.

In April 2022, Sierra Pacific purchased the following series of bonds that were held by the public: $30 million of its variable-rate tax-exempt Water Facilities Refunding Revenue Bonds, Series 2016C, due 2036; $25 million of its variable-rate tax-exempt Water Facilities Refunding Revenue Bonds, Series 2016D, due 2036; $25 million of its variable-rate tax-exempt Water Facilities Refunding Revenue Bonds, Series 2016E, due 2036; $75 million of its variable-rate tax-exempt Water Facilities Refunding Revenue Bonds, Series 2016F, due 2036; $20 million of its variable-rate tax-exempt Water Facilities Refunding Revenue Bonds, Series 2016G, due 2036; and $30 million of its variable-rate tax-exempt Pollution Control Refunding Revenue Bonds, Series 2016B, due 2029. Sierra Pacific purchased these bonds as required by the bond indentures. Sierra Pacific is holding these bonds and can re-offer them at a future date.

In April 2022, Northern Powergrid (Northeast) plc issued £350 million of its 3.25% bonds due 2052 and intends to use the net proceeds for general corporate purposes.

In January 2022, Nevada Power entered into a $300 million secured delayed draw term loan facility maturing in January 2024. Amounts borrowed under the facility bear interest at variable rates based on the Secured Overnight Financing Rate or a base rate, at Nevada Power's option, plus a pricing margin. In January 2022, Nevada Power borrowed $200 million under the facility at an initial interest rate of 0.55%. Nevada Power may draw all or none of the remaining unused commitment through June 2022. Nevada Power used the proceeds to repay amounts outstanding under its existing secured credit facility and for general corporate purposes.
14


(5)    Income Taxes

The effective income tax rate for the three-month period ended March 31, 2022, is 108% and results from a $507 million income tax benefit associated with a $470 million pre-tax loss, primarily relating to a pre-tax unrealized loss of $1,247 million on the Company's investment in BYD Company Limited. The $507 million income tax benefit is primarily comprised of a $99 million benefit (21%) from the application of the statutory income tax rate to the pre-tax loss and a $339 million benefit (72%) from income tax credits.

The effective income tax rate for the three-month period ended March 31, 2021, is 217% and results from a $535 million income tax benefit associated with a $246 million pre-tax loss, primarily relating to a pre-tax unrealized loss of $1,124 million on the Company's investment in BYD Company Limited. The $535 million income tax benefit is primarily comprised of a $52 million benefit (21%) from the application of the statutory income tax rate to the pre-tax loss, a $334 million benefit (136%) from income tax credits and a $51 million benefit (21%) from state income tax benefits, net of federal income tax impacts.

A reconciliation of the federal statutory income tax rate to the effective income tax rate applicable to income before income tax benefit is as follows:
Three-Month Periods
Ended March 31,
 20222021
 
Federal statutory income tax rate21 %21 %
Income tax credits72 136 
State income tax, net of federal income tax impacts(3)21 
Income tax effect of foreign income
Effects of ratemaking10 
Equity income15 
Noncontrolling interest
Other, net(1)(1)
Effective income tax rate108 %217 %

Income tax credits relate primarily to PTCs from wind-powered generating facilities owned by MidAmerican Energy, PacifiCorp and BHE Renewables. Federal renewable electricity PTCs 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. PTCs for the three-month periods ended March 31, 2022 and 2021 totaled $338 million and $315 million, respectively.

The Company's provision for income taxes has been computed on a stand-alone basis. Berkshire Hathaway includes the Company in its consolidated U.S. federal and Iowa state income tax returns and the majority of the Company's U.S. federal income tax is remitted to or received from Berkshire Hathaway. The Company made no payments for federal income taxes to Berkshire Hathaway for the three-month periods ended March 31, 2022 and 2021.

15


(6)    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
Ended March 31,
 20222021
Pension:
Service cost$$
Interest cost19 20 
Expected return on plan assets(27)(33)
Settlement— 
Net amortization
Net periodic benefit cost$$— 
Other postretirement:
Service cost$$
Interest cost
Expected return on plan assets(7)(5)
Net amortization— (1)
Net periodic benefit cost$— $

Amounts other than the service cost for pension and other postretirement benefit plans are recorded in Other, net in the Consolidated Statements of Operations. Employer contributions to the domestic pension and other postretirement benefit plans are expected to be $13 million and $4 million, respectively, during 2022. As of March 31, 2022, $4 million and $3 million of contributions had been made to the domestic pension and other postretirement benefit plans, respectively.

Foreign Operations

Net periodic benefit credit for the United Kingdom pension plan included the following components (in millions):
Three-Month Periods
Ended March 31,
 20222021
 
Service cost$$
Interest cost10 
Expected return on plan assets(25)(28)
Net amortization14 
Net periodic benefit credit$(5)$(2)

Amounts other than the service cost for the United Kingdom pension plan are recorded in Other, net in the Consolidated Statements of Operations. Employer contributions to the United Kingdom pension plan are expected to be £12 million during 2022. As of March 31, 2022, £3 million, or $4 million, of contributions had been made to the United Kingdom pension plan.

16


(7)    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 1Level 2Level 3
Other(1)
Total
As of March 31, 2022:
Assets:
Commodity derivatives$13 $534 $59 $(64)$542 
Interest rate derivatives11 58 25 — 94 
Mortgage loans held for sale— 975 — — 975 
Money market mutual funds715 — — — 715 
Debt securities:
U.S. government obligations225 — — — 225 
International government obligations— — — 
Corporate obligations— 79 — — 79 
Municipal obligations— — — 
Agency, asset and mortgage-backed obligations— — — 
Equity securities:
U.S. companies415 — — — 415 
International companies6,455 — — — 6,455 
Investment funds285 — — — 285 
 $8,119 $1,651 $84 $(64)$9,790 
Liabilities:     
Commodity derivatives$(1)$(88)$(298)$69 $(318)
Foreign currency exchange rate derivatives— (3)— — (3)
Interest rate derivatives— — (12)— (12)
$(1)$(91)$(310)$69 $(333)
17


Input Levels for Fair Value Measurements
Level 1Level 2Level 3
Other(1)
Total
As of December 31, 2021:
Assets:
Commodity derivatives$$271 $73 $(47)$302 
Foreign currency exchange rate derivatives— — — 
Interest rate derivatives20 — 24 
Mortgage loans held for sale— 1,263 — — 1,263 
Money market mutual funds554 — — — 554 
Debt securities:
U.S. government obligations232 — — — 232 
International government obligations— — — 
Corporate obligations— 90 — — 90 
Municipal obligations— — — 
Agency, asset and mortgage-backed obligations— — — 
Equity securities:
U.S. companies428 — — — 428 
International companies7,703 — — — 7,703 
Investment funds237 — — — 237 
 $9,160 $1,637 $93 $(47)$10,843 
Liabilities:
Commodity derivatives$(2)$(113)$(224)$73 $(266)
Foreign currency exchange rate derivatives— (3)— — (3)
Interest rate derivatives— (7)(1)— (8)
$(2)$(123)$(225)$73 $(277)

(1)Represents netting under master netting arrangements and a net cash collateral receivable of $5 million and $26 million as of March 31, 2022 and December 31, 2021, respectively.
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 the underlying forward commodity prices, interest rates, currency rates, related volatility, counterparty creditworthiness and duration of contracts.

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.


18


The Company's investments in money market mutual funds and debt and equity securities 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. 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 financial assets and liabilities measured at fair value on a recurring basis using significant Level 3 inputs (in millions):
 Three-Month Periods
Ended March 31,
Interest
 CommodityRate
DerivativesDerivatives
2022:
Beginning balance$(151)$19 
Changes included in earnings(1)
(56)(6)
Changes in fair value recognized in OCI
— 
Changes in fair value recognized in net regulatory assets
(60)— 
Settlements23 — 
Ending balance$(239)$13 
2021:
Beginning balance$116 $62 
Changes included in earnings(1)
(6)(21)
Changes in fair value recognized in OCI
(1)— 
Changes in fair value recognized in net regulatory assets
16 — 
Settlements(1)— 
Ending balance$124 $41 

(1)Changes included in earnings for interest rate derivatives are reported net of amounts related to the satisfaction of the associated loan commitment.

The Company's long-term debt is carried at cost, including fair value adjustments and unamortized premiums, discounts and debt issuance costs as applicable, 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 March 31, 2022As of December 31, 2021
 CarryingFairCarryingFair
ValueValueValueValue
 
Long-term debt$49,905 $52,246 $49,762 $57,189 

19


(8)    Commitments and Contingencies

Legal Matters

The Company is party to a variety of legal actions arising out of the normal course of business. Plaintiffs occasionally seek punitive or exemplary damages. The Company does not believe that such normal and routine litigation will have a material impact on its consolidated financial results. The Company is also involved in other kinds of legal actions, some of which assert or may assert claims or seek to impose fines, penalties and other costs in substantial amounts and are described below.
    
California and Oregon 2020 Wildfires

In September 2020, a severe weather event resulting in high winds, low humidity and warm temperatures contributed to several major wildfires, real and personal property and natural resource damage, personal injuries and loss of life and widespread power outages in Oregon and Northern California (the "2020 Wildfires"). The wildfires spread across certain parts of PacifiCorp's service territory and surrounding areas across multiple counties in Oregon and California, including Siskiyou County, California; Jackson County, Oregon; Douglas County, Oregon; Marion County, Oregon; Lincoln County, Oregon; and Klamath County, Oregon burning over 500,000 acres in aggregate. Third party reports for these wildfires indicate over 2,000 structures destroyed, including residences; several structures damaged; multiple individuals injured; and several fatalities. Fire suppression costs estimated by various agencies total approximately $150 million. Investigations into the cause and origin of each wildfire are complex and ongoing and being conducted by various entities, including the United States Forest Service, the California Public Utilities Commission, the Oregon Department of Forestry, the Oregon Department of Justice, PacifiCorp and various experts engaged by PacifiCorp.

Multiple lawsuits have been filed in Oregon and California, including a putative class action complaint in Oregon, on behalf of citizens and businesses who suffered damages from fires allegedly caused by PacifiCorp. Additionally, several insurance carriers have filed subrogation complaints in Oregon and California with allegations similar to those made in the aforementioned lawsuits. The final determinations of liability, however, will only be made following comprehensive investigations and litigation processes.

In California, under inverse condemnation, courts have held that investor-owned utilities can be liable for real and personal property damages without the utility being found negligent and regardless of fault. California law also permits inverse condemnation plaintiffs to recover reasonable attorney fees and costs. In both Oregon and California, PacifiCorp has equipment in areas accessed through special use permits, easements or similar agreements that may contain provisions requiring it to pay for damages caused by its equipment regardless of fault. Even if inverse condemnation or other provisions do not apply, PacifiCorp could nevertheless be found liable for all damages proximately caused by negligence, including real and personal property and natural resource damage; fire suppression costs; personal injury and loss of life damages; and interest.

PacifiCorp has accrued $136 million as its best estimate of the potential losses net of expected insurance recoveries associated with the 2020 Wildfires that are considered probable of being incurred. These accruals include estimated losses for fire suppression costs, real and personal property damage, personal injury damages and loss of life damages, but exclude estimated potential losses for natural resource damage as PacifiCorp is unable to reasonably estimate such losses at this time. It is reasonably possible that PacifiCorp will incur additional losses beyond the amounts accrued; however, PacifiCorp is currently unable to estimate the range of possible additional losses that could be incurred due to the number of properties and parties involved and the variation in those types of properties and lack of available details. To the extent losses beyond the amounts accrued are incurred, additional insurance coverage is expected to be available to cover at least a portion of the losses.
20


Environmental Laws and Regulations

The Company is subject to federal, state, local and foreign laws and regulations regarding climate change, renewable portfolio standards, air and water quality, emissions performance standards, 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 is a party to the 2016 amended Klamath Hydroelectric Settlement Agreement ("KHSA"), which is intended to resolve disputes surrounding PacifiCorp's efforts to relicense the Klamath Hydroelectric Project. The KHSA establishes a process for PacifiCorp, the states of Oregon and California ("States") and other stakeholders to assess whether dam removal can occur consistent with the settlement's terms. For PacifiCorp, the key elements of the settlement include: (1) a contribution from PacifiCorp's Oregon and California customers capped at $200 million plus $250 million in California bond funds; (2) complete indemnification from harms associated with dam removal; (3) transfer of the FERC license to a third-party dam removal entity, the Klamath River Renewal Corporation ("KRRC"), who would conduct dam removal; and (4) ability for PacifiCorp to operate the facilities for the benefit of customers until dam removal commences.

In September 2016, the KRRC and PacifiCorp filed a joint application with the FERC to transfer the license for the four mainstem Klamath dams from PacifiCorp to the KRRC. The FERC approved partial transfer of the Klamath license in a July 2020 order, subject to the condition that PacifiCorp remains co-licensee. Under the amended KHSA, PacifiCorp did not agree to remain co-licensee during the surrender and removal process given concerns about liability protections for PacifiCorp and its customers. In November 2020, PacifiCorp entered a memorandum of agreement (the "MOA") with the KRRC, the Karuk Tribe, the Yurok Tribe and the States to continue implementation of the KHSA. The agreement required the States, PacifiCorp and KRRC to file a new license transfer application to remove PacifiCorp from the license for the Klamath Hydroelectric Project and add the States and KRRC as co-licensees for the purposes of surrender. In addition, the MOA provides for additional contingency funding of $45 million, equally split between PacifiCorp and the States, and for PacifiCorp and the States to equally share in any additional cost overruns in the unlikely event that dam removal costs exceed the $450 million in funding to ensure dam removal is complete. The MOA also requires PacifiCorp to cover the costs associated with certain pre-existing environmental conditions. In June 2021, the FERC approved transfer of the four mainstem Klamath dams from PacifiCorp to the KRRC and the States as co-licensees. In July 2021, the Oregon, Wyoming, Idaho and California state public utility commissions conditionally approved the required property transfer applications. In August 2021, PacifiCorp notified the Public Service Commission of Utah of the property transfer, however no formal approval is required in Utah. The transfer will be effective within 30 days following the issuance of a license surrender from the FERC for the project, which remains pending. In February 2022, the FERC staff issued a draft environmental impact statement for the project, concluding that dam removal is the preferred alternative. Comments on the draft were due in April 2022, and a final environmental impact statement is expected later in 2022.

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.
21


(9)    Revenue from Contracts with Customers

Energy Products and Services

The following table summarizes the Company's energy products and services revenue from contracts with customers ("Customer Revenue") by regulated and nonregulated, with further disaggregation of regulated by line of business, including a reconciliation to the Company's reportable segment information included in Note 11 (in millions):
For the Three-Month Period Ended March 31, 2022
PacifiCorpMidAmerican FundingNV EnergyNorthern PowergridBHE Pipeline GroupBHE TransmissionBHE Renewables
BHE and
Other(1)
Total
Customer Revenue:
Regulated:
Retail electric$1,185 $472 $599 $— $— $— $— $— $2,256 
Retail gas— 337 51 — — — — — 388 
Wholesale55 161 20 — — — — — 236 
Transmission and
   distribution
32 15 17 269 — 176 — — 509 
Interstate pipeline— — — — 745 — — (41)704 
Other20 — — — — — 22 
Total Regulated1,292 985 688 269 746 176 — (41)4,115 
Nonregulated— — 15 278 169 133 604 
Total Customer Revenue1,292 987 688 284 1,024 183 169 92 4,719 
Other revenue18 31 11 — (2)36 104 
Total$1,297 $1,005 $693 $315 $1,035 $183 $167 $128 $4,823 
For the Three-Month Period Ended March 31, 2021
PacifiCorpMidAmerican FundingNV EnergyNorthern PowergridBHE Pipeline GroupBHE TransmissionBHE Renewables
BHE and
Other(1)
Total
Customer Revenue:
Regulated:
Retail electric$1,145 $452 $511 $— $— $— $— $— $2,108 
Retail gas— 460 38 — — — — — 498 
Wholesale36 125 15 — 17 — — — 193 
Transmission and
   distribution
25 15 21 263 — 172 — — 496 
Interstate pipeline— — — — 815 — — (41)774 
Other23 — — — — — — 25 
Total Regulated1,229 1,052 585 263 834 172 — (41)4,094 
Nonregulated— 10 — 10 237 166 187 618 
Total Customer Revenue1,229 1,062 585 273 1,071 180 166 146 4,712 
Other revenue13 27 22 — 24 40 137 
Total$1,242 $1,067 $591 $300 $1,093 $180 $190 $186 $4,849 

(1)The BHE and Other reportable segment represents amounts related principally to other entities, including MidAmerican Energy Services, LLC, corporate functions and intersegment eliminations.

22


Real Estate Services

The following table summarizes the Company's real estate services Customer Revenue by line of business (in millions):
HomeServices
Three-Month Periods
Ended March 31,
20222021
Customer Revenue:
Brokerage$1,092 $1,022 
Franchise20 18 
Total Customer Revenue1,112 1,040 
Mortgage and other revenue95 192 
Total$1,207 $1,232 

Remaining Performance Obligations

The following table summarizes the Company's revenue it expects to recognize in future periods related to significant unsatisfied remaining performance obligations for fixed contracts with expected durations in excess of one year as of March 31, 2022, by reportable segment (in millions):
Performance obligations expected to be satisfied:
Less than 12 monthsMore than 12 monthsTotal
BHE Pipeline Group$2,878 $22,103 $24,981 

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

The following table shows the change in accumulated other comprehensive income (loss) by each component of other comprehensive income (loss), net of applicable income tax (in millions):
UnrecognizedForeignUnrealizedAOCI
Amounts onCurrency(Losses) GainsAttributable
RetirementTranslationon CashNoncontrollingTo BHE
BenefitsAdjustmentFlow HedgesInterestsShareholders, Net
Balance, December 31, 2020$(492)$(1,062)$(8)$10 $(1,552)
Other comprehensive income91 14 — 112 
Balance, March 31, 2021$(485)$(971)$$10 $(1,440)
Balance, December 31, 2021$(318)$(1,086)$59 $$(1,340)
Other comprehensive income (loss)15 (110)77 — (18)
Balance, March 31, 2022$(303)$(1,196)$136 $$(1,358)

23


(11)    Segment Information

The Company's reportable segments with foreign operations include Northern Powergrid, whose business is principally in the United Kingdom, and BHE Transmission, whose business includes operations in Canada. 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
Ended March 31,
 20222021
Operating revenue:
PacifiCorp$1,297 $1,242 
MidAmerican Funding1,005 1,067 
NV Energy693 591 
Northern Powergrid315 300 
BHE Pipeline Group1,035 1,093 
BHE Transmission183 180 
BHE Renewables167 190 
HomeServices1,207 1,232 
BHE and Other(1)
128 186 
Total operating revenue$6,030 $6,081 
Depreciation and amortization:
PacifiCorp$280 $264 
MidAmerican Funding250 207 
NV Energy140 136 
Northern Powergrid80 71 
BHE Pipeline Group131 118 
BHE Transmission58 58 
BHE Renewables65 60 
HomeServices15 11 
BHE and Other(1)
Total depreciation and amortization$1,022 $927 

24


 Three-Month Periods
Ended March 31,
 20222021
Operating income:
PacifiCorp$216 $234 
MidAmerican Funding100 48 
NV Energy62 70 
Northern Powergrid159 151 
BHE Pipeline Group538 618 
BHE Transmission83 81 
BHE Renewables(2)33 
HomeServices28 112 
BHE and Other(1)
52 (14)
Total operating income1,236 1,333 
Interest expense(532)(530)
Capitalized interest17 14 
Allowance for equity funds38 26 
Interest and dividend income23 21 
Losses on marketable securities, net(1,257)(1,118)
Other, net
Total loss before income tax benefit and equity loss$(470)$(246)
Interest expense:
PacifiCorp$106 $107 
MidAmerican Funding82 78 
NV Energy51 52 
Northern Powergrid32 33 
BHE Pipeline Group37 38 
BHE Transmission38 38 
BHE Renewables41 40 
HomeServices
BHE and Other(1)
144 143 
Total interest expense$532 $530 
Loss on common shares:
PacifiCorp$130 $169 
MidAmerican Funding241 144 
NV Energy29 34 
Northern Powergrid111 104 
BHE Pipeline Group322 383 
BHE Transmission62 59 
BHE Renewables104 16 
HomeServices21 84 
BHE and Other(1)
(1,165)(1,027)
Total loss on common shares$(145)$(34)

25


 As of
 March 31,December 31,
20222021
Assets:
PacifiCorp$27,999 $27,615 
MidAmerican Funding25,451 25,352 
NV Energy15,430 15,239 
Northern Powergrid9,175 9,326 
BHE Pipeline Group20,486 20,434 
BHE Transmission9,618 9,476 
BHE Renewables12,138 11,829 
HomeServices4,036 4,574 
BHE and Other(1)
7,136 8,220 
Total assets$131,469 $132,065 

(1)The differences between the reportable segment amounts and the consolidated amounts, described as BHE and Other, relate principally to other entities, including MidAmerican Energy Services, LLC, corporate functions and intersegment eliminations.
 Three-Month Periods
Ended March 31,
 20222021
Operating revenue by country:
U.S.$5,534 $5,597 
United Kingdom315 300 
Canada181 177 
Other— 
Total operating revenue by country$6,030 $6,081 
Loss before income tax benefit and equity loss by country:
U.S.$(654)$(423)
United Kingdom139 132 
Canada46 39 
Other(1)
Total loss before income tax benefit and equity loss by country$(470)$(246)

The following table shows the change in the carrying amount of goodwill by reportable segment for the three-month period ended March 31, 2022 (in millions):
BHE Pipeline Group
PacifiCorpMidAmerican FundingNV EnergyNorthern PowergridBHE TransmissionBHE RenewablesHomeServices
Total
 
December 31, 2021$1,129 $2,102 $2,369 $992 $1,814 $1,563 $95 $1,586 $11,650 
Acquisitions— — — — — — — 
Foreign currency translation
— — — (20)— 16 — — (4)
March 31, 2022$1,129 $2,102 $2,369 $972 $1,814 $1,579 $95 $1,589 $11,649 

26


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, usage trends 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.

Berkshire Hathaway Energy's operations are 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) plc and Northern Powergrid (Yorkshire) plc), BHE Pipeline Group (which primarily consists of BHE GT&S, Northern Natural Gas and Kern River), BHE Transmission (which consists of BHE Canada (which primarily 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 U.S. serving customers in 11 states, two electricity distribution companies in Great Britain, five interstate natural gas pipeline companies, one of which owns a liquefied natural gas ("LNG") export, import and storage facility, in the U.S., an electric transmission business in Canada, interests in electric transmission businesses in the U.S., a renewable energy business primarily investing in wind, solar, geothermal and hydroelectric projects, the largest residential real estate brokerage firm in the U.S. and one of the largest residential real estate brokerage franchise networks in the U.S. 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, including MidAmerican Energy Services, LLC, corporate functions and intersegment eliminations.

27


Results of Operations for the First Quarter of 2022 and 2021

Overview

Operating revenue and earnings on common shares for the Company's reportable segments are summarized as follows (in millions):
First Quarter
20222021Change
Operating revenue:
PacifiCorp$1,297 $1,242 $55 %
MidAmerican Funding1,005 1,067 (62)(6)
NV Energy693 591 102 17 
Northern Powergrid315 300 15 
BHE Pipeline Group1,035 1,093 (58)(5)
BHE Transmission183 180 
BHE Renewables167 190 (23)(12)
HomeServices1,207 1,232 (25)(2)
BHE and Other128 186 (58)(31)
Total operating revenue$6,030 $6,081 $(51)(1)%
Loss on common shares:
PacifiCorp$130 $169 $(39)(23)%
MidAmerican Funding241 144 97 67 
NV Energy29 34 (5)(15)
Northern Powergrid111 104 7
BHE Pipeline Group322 383 (61)(16)
BHE Transmission62 59 
BHE Renewables(1)
104 16 88 *
HomeServices21 84 (63)(75)
BHE and Other(1,165)(1,027)(138)(13)
Total loss on common shares$(145)$(34)$(111)*

(1)Includes the tax attributes of disregarded entities that are not required to pay income taxes and the earnings of which are taxable directly to BHE.

*    Not meaningful

Earnings on common shares decreased $111 million for the first quarter of 2022 compared to 2021. The first quarter of 2022 included a pre-tax unrealized loss of $1,247 million ($985 million after-tax) compared to a pre-tax unrealized loss in the first quarter of 2021 of $1,124 million ($818 million after-tax) on the Company's investment in BYD Company Limited. Excluding the impact of this item, adjusted earnings on common shares for the first quarter of 2022 was $840 million, an increase of $56 million, or 7%, compared to adjusted earnings on common shares in the first quarter of 2021 of $784 million.

28


The decrease in earnings on common shares for the first quarter of 2022 compared to 2021 was primarily due to the following:
The Utilities' earnings increased $53 million for the first quarter of 2022 compared to 2021, reflecting higher electric utility margin and favorable income tax expense from higher PTCs recognized, partially offset by higher depreciation and amortization expense and higher operations and maintenance expense. Electric retail customer volumes increased 3.4% for the first quarter of 2022 compared to 2021, primarily due to higher customer usage, an increase in the average number of customers and the favorable impact of weather;
BHE Pipeline Group's earnings decreased $61 million for the first quarter of 2022 compared to 2021, primarily due to lower earnings of $70 million at Northern Natural Gas from higher gross margin on gas sales and higher transportation revenue recognized in the first quarter of 2021 from the February 2021 polar vortex weather event, partially offset by favorable recurring transportation revenue due to higher volumes and rates;
BHE Renewables' earnings increased $88 million for the first quarter of 2022 compared to 2021, primarily due to higher earnings on tax equity investments of $96 million as a result of the unfavorable impacts recognized in the first quarter of 2021 from the February 2021 polar vortex weather event;
HomeServices' earnings decreased $63 million for the first quarter of 2022 compared to 2021, primarily due to lower earnings from mortgage services of $48 million, from a decrease in funded volume, and lower earnings from brokerage and settlement services of $16 million, largely attributable to a decrease in closed units at existing companies; and
BHE and Other's earnings decreased $138 million for the first quarter of 2022 compared to 2021, mainly due to the $167 million unfavorable comparative change in the after-tax unrealized position of the Company's investment in BYD Company Limited, partially offset by $21 million of lower dividends on BHE's 4.00% Perpetual Preferred Stock issued to certain subsidiaries of Berkshire Hathaway.

Reportable Segment Results

PacifiCorp

Operating revenue increased $55 million for the first quarter of 2022 compared to 2021, primarily due to higher retail revenue of $40 million and higher wholesale and other revenue of $15 million. Retail revenue increased primarily due to higher retail volumes of $25 million and price impacts of $15 million from higher tariffs. Retail customer volumes increased 1.9%, primarily due to an increase in the average number of customers, the favorable impact of weather and higher customer usage. Wholesale and other revenue increased primarily due to higher average wholesale prices and higher wheeling revenue.

Earnings decreased $39 million for the first quarter of 2022 compared to 2021, primarily due to higher operations and maintenance expense of $18 million, higher depreciation and amortization expense of $16 million, from additional assets placed in-service, and increased income tax expense, partially offset by higher utility margin of $14 million. Operations and maintenance expense increased mainly due to higher thermal plant maintenance and higher costs associated with additional wind-powered generating facilities placed in-service. Utility margin increased primarily due to the higher retail, wholesale and other revenues and higher deferred net power costs in accordance with established adjustment mechanisms, partially offset by higher purchased power and thermal generation costs.

MidAmerican Funding

Operating revenue decreased $62 million for the first quarter of 2022 compared to 2021, primarily due to lower natural gas operating revenue of $116 million, partially offset by higher electric operating revenue of $63 million. Natural gas operating revenue decreased due to a lower average per-unit cost of natural gas sold resulting in lower purchased gas adjustment recoveries of $134 million (fully offset in cost of sales), partially offset by the impacts of tax reform of $8 million, the impacts of certain regulatory recovery mechanisms of $7 million and the favorable impacts of weather of $4 million. Electric operating revenue increased due to higher wholesale and other revenue of $43 million and higher retail revenue of $20 million. Electric wholesale and other revenue increased mainly due to higher wholesale volumes of $24 million and higher average wholesale per-unit prices of $19 million. Electric retail revenue increased primarily due to higher customer volumes of $18 million and higher recoveries through adjustment clauses of $4 million (fully offset in expense, primarily cost of sales), partially offset by price impacts from changes in sales mix of $2 million. Electric retail customer volumes increased 5.6% due to higher customer usage and the favorable impact of weather.


29


Earnings increased $97 million for the first quarter of 2022 compared to 2021, primarily due to higher electric utility margin of $89 million, a favorable income tax benefit and higher natural gas utility margin of $18 million, partially offset by higher depreciation and amortization expense of $43 million and lower nonregulated utility margin of $9 million. Electric utility margin increased primarily due to the higher retail and wholesale revenues as well as lower purchased power costs. The favorable income tax benefit was largely due to higher PTCs recognized of $52 million, from new wind-powered generating facilities placed in-service, and the effects of ratemaking. Depreciation and amortization expense increased primarily from the impacts of certain regulatory mechanisms and additional assets placed in-service.

NV Energy

Operating revenue increased $102 million for the first quarter of 2022 compared to 2021, primarily due to higher electric operating revenue of $90 million and higher natural gas operating revenue of $13 million. Electric operating revenue increased primarily due to higher fully-bundled energy rates (fully offset in cost of sales) of $88 million, higher retail customer volumes of $4 million and higher transmission and wholesale revenue of $4 million, partially offset by lower regulatory-related revenue deferrals. Electric retail customer volumes increased 4.0%, primarily due to an increase in the average number of customers and higher customer usage, partially offset by the unfavorable impact of weather. Natural gas operating revenue increased due to a higher average per-unit cost of natural gas sold (fully offset in cost of sales).

Earnings decreased $5 million for the first quarter of 2022 compared to 2021, mainly due to higher operations and maintenance expense of $6 million largely from increased plant operations and maintenance expenses and an unfavorable change in earnings sharing at the Nevada Utilities.

Northern Powergrid

Operating revenue increased $15 million for the first quarter of 2022 compared to 2021, primarily due to higher distribution revenue of $10 million, revenue from a gas project reaching commercial operation in March 2022 totaling $10 million and higher smart metering revenue of $6 million, partially offset by $9 million from the stronger U.S. dollar. Distribution revenue increased from higher tariff rates of $14 million, partially offset by a 2.6% decline in units distributed of $3 million.

Earnings increased $7 million for the first quarter of 2022 compared to 2021, primarily due to the higher distribution revenue, partially offset by $3 million from the stronger U.S. dollar.

BHE Pipeline Group

Operating revenue decreased $58 million for the first quarter of 2022 compared to 2021, primarily due to lower gas sales of $41 million related to system balancing activities at Northern Natural Gas, lower transportation revenue of $20 million at Northern Natural Gas and lower gas sales of $17 million at EGTS used for operational and system balancing purposes, partially offset by higher LNG variable revenue of $13 million at BHE GT&S and higher non-regulated revenue of $11 million at BHE GT&S. The variances in gas sales and transportation revenue at Northern Natural Gas included favorable impacts recognized in the first quarter of 2021 of $77 million and $49 million, respectively, from the February 2021 polar vortex weather event. Excluding this item, gas sales increased $36 million (largely offset in cost of sales) and transportation revenue increased $29 million due to higher volumes and rates.

Earnings decreased $61 million for the first quarter of 2022 compared to 2021, primarily due to lower earnings of $70 million at Northern Natural Gas as the higher gross margin on gas sales and higher transportation revenue recognized in the first quarter of 2021 from the February 2021 polar vortex weather event were partially offset by the favorable transportation revenue due to higher volumes and rates.

BHE Transmission

Operating revenue increased $3 million for the first quarter of 2022 compared to 2021, mainly due to higher revenue at AltaLink from recovery of higher costs and from additional assets placed in-service.

Earnings increased $3 million for the first quarter of 2022 compared to 2021, mainly due to the additional assets placed in-service at AltaLink and improved equity earnings at Electric Transmission Texas, LLC.
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BHE Renewables

Operating revenue decreased $23 million for the first quarter of 2022 compared to 2021, primarily due to unfavorable changes in the valuation of certain derivative contracts totaling $43 million and lower hydro revenues of $8 million due to the transfer of the Casecnan generating facility to the National Irrigation Administration in December 2021, partially offset by higher wind, solar and geothermal revenues of $27 million from higher generation and pricing.

Earnings increased $88 million for the first quarter 2022 compared to 2021, primarily due to higher wind earnings of $92 million and higher solar earnings of $6 million, largely due to the higher operating revenue, partially offset by lower hydro earnings of $10 million due to the Casecnan generating facility transfer. Wind earnings increased primarily due to higher earnings on tax equity investments of $96 million as a result of the unfavorable impacts recognized in the first quarter of 2021 from the February 2021 polar vortex weather event.

HomeServices

Operating revenue decreased $25 million for the first quarter of 2022 compared to 2021, primarily due to lower mortgage revenue of $97 million from a 41% decrease in funded volume due to lower refinance activity, partially offset by higher brokerage revenue of $78 million from a 9% increase in closed transaction volume. The increase in brokerage volume was due to acquisitions and an 11% increase in average sales price at existing companies offset by 12% fewer closed units at existing companies.

Earnings decreased $63 million for the first quarter of 2022 compared to 2021, primarily due to lower earnings from mortgage services of $48 million, from the decrease in funded volume, and lower earnings from brokerage and settlement services of $16 million, largely attributable to the decrease in closed units at existing companies.

BHE and Other

Operating revenue decreased $58 million for the first quarter of 2022 compared to 2021, primarily due to lower electricity sales revenue at MidAmerican Energy Services, LLC, from unfavorable pricing.

Earnings decreased $138 million for the first quarter of 2022 compared to 2021, primarily due to the $167 million unfavorable comparative change in the after-tax unrealized position of the Company's investment in BYD Company Limited and $54 million of lower federal income tax credits recognized on a consolidated basis, partially offset by higher earnings of $41 million at MidAmerican Energy Services, LLC, mainly due to favorable changes in unrealized positions on derivative contracts, lower corporate costs and $21 million of lower dividends on BHE's 4.00% Perpetual Preferred Stock issued to certain subsidiaries of Berkshire Hathaway.
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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 18 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, 2021 for further discussion regarding the limitation of distributions from BHE's subsidiaries.

As of March 31, 2022, the Company's total net liquidity was as follows (in millions):
BHE Pipeline
MidAmericanNVNorthernBHEGroup and
BHEPacifiCorpFundingEnergyPowergridCanadaHomeServicesOtherTotal
Cash and cash equivalents$163 $335 $132 $40 $75 $60 $363 $264 $1,432 
Credit facilities3,500 1,200 1,509 650 263 860 3,300 — 11,282 
Less:
Short-term debt(110)— — (161)— (375)(1,203)— (1,849)
Tax-exempt bond support and letters of credit— (218)(370)— — (1)— — (589)
Net credit facilities3,390 982 1,139 489 263 484 2,097 — 8,844 
Total net liquidity(1)
$3,553 $1,317 $1,271 $529 $338 $544 $2,460 $264 $10,276 
Credit facilities:
Maturity dates202420242022, 2024202420242022, 20262022, 2023, 2026

(1)    Excludes $100 million of available liquidity under a delayed draw term loan at Nevada Power.

Operating Activities

Net cash flows from operating activities for the three-month periods ended March 31, 2022 and 2021 were $2.2 billion and $1.5 billion, respectively. The increase was primarily due to changes in working capital.

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 selected and assumptions made for each payment date.

Investing Activities

Net cash flows from investing activities for the three-month periods ended March 31, 2022 and 2021 were $(1.6) billion and $(1.4) billion, respectively. The change was primarily due to higher capital expenditures of $258 million. Refer to "Future Uses of Cash" for a discussion of capital expenditures.
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Financing Activities

Net cash flows from financing activities for the three-month period ended March 31, 2022 was $(310) million. Sources of cash totaled $405 million and consisted of proceeds from subsidiary debt issuances. Uses of cash totaled $715 million and consisted mainly of repayments of subsidiary debt totaling $193 million, net repayments of short-term debt totaling $165 million and distributions to noncontrolling interests of $117 million.

For a discussion of recent financing transactions, refer to Note 4 of Notes to Consolidated Financial Statements in Part I, Item 1 of this Form 10-Q.

Net cash flows from financing activities for the three-month period ended March 31, 2021 was $(191) million. Sources of cash totaled $409 million and consisted of net proceeds from short-term debt. Uses of cash totaled $600 million and consisted mainly of repayments of BHE senior debt totaling $450 million, distributions to noncontrolling interests of $115 million and repayments of subsidiary debt totaling $26 million.

Future Uses of Cash

The Company has available a variety of sources of liquidity and capital resources, both internal and external, including net cash flows from operating activities, public and private debt offerings, the issuance of commercial paper, the use of unsecured revolving credit facilities, the issuance of equity and other sources. These sources are expected to provide funds required for current operations, capital expenditures, acquisitions, investments, debt retirements and other capital requirements. The availability and terms under which BHE and each subsidiary has access to external financing depends on a variety of factors, including regulatory approvals, 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, impacts to customers' rates; changes in environmental and other rules and regulations; 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.

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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):
Three-Month PeriodsAnnual
Ended March 31,Forecast
202120222022
Capital expenditures by business:
PacifiCorp$439 $374 $2,359 
MidAmerican Funding298 459 2,013 
NV Energy167 272 1,282 
Northern Powergrid179 169 652 
BHE Pipeline Group102 205 1,243 
BHE Transmission77 47 191 
BHE Renewables18 19 184 
HomeServices12 60 
BHE and Other(1)
(4)13 
Total$1,295 $1,553 $7,997 
Capital expenditures by type:
Wind generation$97 $155 $990 
Electric distribution427 392 1,737 
Electric transmission157 258 1,820 
Natural gas transmission and storage85 103 982 
Solar generation51 220 
Other525 594 2,248 
Total$1,295 $1,553 $7,997 
(1)BHE and Other represents amounts related principally to other entities, including MidAmerican Energy Services, LLC, corporate functions and intersegment eliminations.

The Company's historical and forecast capital expenditures consisted mainly of the following:
Wind generation includes both growth and operating expenditures. Growth expenditures include spending for the following:
Construction of wind-powered generating facilities at MidAmerican Energy totaling $3 million for the three-month period ended March 31, 2022. Planned spending for the construction of additional wind-powered generating facilities totals $142 million for the remainder of 2022.
Repowering of wind-powered generating facilities at MidAmerican Energy totaling $120 million and $24 million for the three-month periods ended March 31, 2022 and 2021, respectively. Planned spending for the repowering of wind-powered generating facilities totals $386 million for the remainder of 2022. MidAmerican Energy expects its repowered facilities to meet Internal Revenue Service guidelines for the re-establishment of PTCs for 10 years from the date the facilities are placed in-service. The rate at which PTCs are re-established for a facility depends upon the date construction begins. Of the 812 MWs of current repowering projects not in-service as of March 31, 2022, 511 MWs are currently expected to qualify for 80% of the PTCs available for 10 years following each facility's return to service and 301 MWs are expected to qualify for 60% of such credits.
Construction of wind-powered generating facilities at PacifiCorp totaling $3 million and $27 million for the three-month periods ended March 31, 2022 and 2021, respectively. Construction includes 516 MWs of new wind-powered generating facilities that were placed in-service in 2021. Planned spending for the construction of additional wind-powered generating facilities totals $109 million for the remainder of 2022. The energy production from the new wind-powered generating facilities placed in-service by the end of 2024 is expected to qualify for 60% of the federal PTCs available for 10 years once the equipment is placed in-service.
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Planned acquisition and repowering of two wind-powered generating facilities by PacifiCorp totaling $3 million and $1 million for the three-month periods ended March 31, 2022 and 2021, respectively. The repowered facilities are expected to be placed in-service in 2023 and 2024. Planned spending for acquiring and repowering generating facilities totals $18 million for the remainder of 2022.
Repowering of wind-powered generating facilities at BHE Renewables totaling $25 million for the three-month period ended March 31, 2022. Planned spending for repowering generating facilities totals $64 million for the remainder of 2022.
Electric distribution includes both growth and operating expenditures. Growth expenditures include spending for new customer connections and enhancements to existing customer connections. Operating expenditures include spending for ongoing distribution systems infrastructure needed at the Utilities and Northern Powergrid, wildfire mitigation, storm damage restoration and repairs and investments in routine expenditures for distribution needed to serve existing and expected demand.
Electric transmission includes both growth and operating expenditures. Growth expenditures include spending for the following:
PacifiCorp's transmission investment primarily reflects planned costs for the 416-mile, 500-kV high-voltage transmission line between the Aeolus substation near Medicine Bow in Wyoming and the Clover substation near Mona, Utah; the 59-mile, 230-kV high-voltage transmission line between the Windstar substation near Glenrock, Wyoming and the Aeolus substation; and the 290-mile, 500-kV high-voltage transmission line from the Longhorn substation near Boardman, Oregon to the Hemingway substation near Boise, Idaho. Expenditures for these segments totaled $95 million and $16 million for the three-month periods ended March 31, 2022 and 2021, respectively. Planned spending for these Energy Gateway Transmission segments to be placed in-service in 2024-2026 totals $814 million for the remainder of 2022.
Nevada Utilities' Greenlink Nevada transmission expansion program. In this project, the company has received approval from the PUCN to build a 350-mile, 525-kV transmission line, known as Greenlink West, connecting the Ft. Churchill substation to the Northwest substation to the Harry Allen substation; a 235-mile, 525-kV transmission line, known as Greenlink North, connecting the new Ft. Churchill substation to the Robinson Summit substation; a 46-mile, 345-kV transmission line from the new Ft. Churchill substation to the Mira Loma substations; and a 38-mile, 345-kV transmission line from the new Ft. Churchill substation to the Robinson Summit substations. Expenditures for the expansion program and other growth projects totaled $30 million and $19 million for the three-month periods ended March 31, 2022 and 2021, respectively. Planned spending for the expansion program estimated to be placed in-service in 2026-2028 and other growth projects totals $166 million for the remainder of 2022.
Operating expenditures include spending for system reinforcement, upgrades and replacements of facilities to maintain system reliability and investments in routine expenditures for transmission needed to serve existing and expected demand.
Natural gas transmission and storage includes both growth and operating expenditures. Growth expenditures include, among other items, spending for the Northern Natural Gas Twin Cities Area Expansion and Spraberry Compression projects. Operating expenditures include, among other items, spending for asset modernization, pipeline integrity projects and natural gas transmission, storage and liquefied natural gas terminalling infrastructure needs to serve existing and expected demand.
Solar generation includes growth expenditures, including spending for the following:
Construction of solar-powered generating facilities at MidAmerican Energy totaling 141 MWs of small- and utility-scale solar generation, with total spend of $44 million and $3 million for the three-month periods ended March 31, 2022 and 2021, respectively and planned spending of $96 million for the remainder of 2022.
Construction of a solar-powered generating facility at Nevada Power totaling $7 million for the three-month period ended March 31, 2022 and planned spending of $74 million for the remainder of 2022. Construction includes expenditures for a 150-MW solar photovoltaic facility with an additional 100 MWs of co-located battery storage that will be developed in Clark County, Nevada. Commercial operation is expected by the end of 2023.
Other capital expenditures includes both growth and operating expenditures, including spending for routine expenditures for generation and other infrastructure needed to serve existing and expected demand, natural gas distribution, technology, and environmental spending relating to emissions control equipment and the management of coal combustion residuals.
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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 no contributions for the three-month period ended March 31, 2022, and has commitments as of March 31, 2022, subject to satisfaction of certain specified conditions, to provide equity contributions of $356 million for the remainder of 2022 pursuant to these equity capital contribution agreements as the various projects achieve commercial operation. However, the Company expects to assign its rights and obligations under these equity capital contribution agreements, including any related funding commitments, to an entity affiliated through common ownership. 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.

Material Cash Requirements

As of March 31, 2022, there have been no material changes outside the normal course of business in material cash requirements from the information provided in Item 7 of the Company's Annual Report on Form 10-K for the year ended December 31, 2021 other than the recent financing transactions previously discussed.

Quad Cities Generating Station Operating Status

Constellation Energy Corp. ("Constellation Energy," previously Exelon Generation Company, LLC, which was a subsidiary of Exelon Corporation prior to February 1, 2022), 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. 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 ZECs and recover the costs from certain ratepayers in Illinois, subject to certain limitations. The proceeds from the ZECs will provide Constellation Energy additional revenue through 2027 as an incentive for continued operation of Quad Cities Station. MidAmerican Energy will not receive additional revenue from the subsidy.

The PJM Interconnection, L.L.C. ("PJM") capacity market includes a Minimum Offer Price Rule ("MOPR"). If a generation resource is subjected to a MOPR, its offer price in the market is adjusted to effectively remove the revenues it receives through a state government-provided financial support program, resulting in a higher offer that may not clear the capacity market. Prior to December 19, 2019, the PJM MOPR applied only to certain new gas-fired resources. An expanded PJM MOPR to include existing resources would require exclusion of ZEC compensation when bidding into future capacity auctions, resulting in an increased risk of Quad Cities Station not receiving capacity revenues in future auctions.

On December 19, 2019, the FERC issued an order requiring the PJM to broadly apply the MOPR to all new and existing resources, including nuclear. This greatly expanded the breadth and scope of the PJM's MOPR, which became effective as of the PJM's capacity auction for the 2022-2023 planning year in May 2021. While the FERC included some limited exemptions, no exemptions were available to state-supported nuclear resources, such as Quad Cities Station. The FERC provided no new mechanism for accommodating state-supported resources other than the existing Fixed Resource Requirement ("FRR") mechanism under which an entire utility zone would be removed from PJM's capacity auction along with sufficient resources to support the load in such zone. In response to the FERC's order, the PJM submitted a compliance filing on March 18, 2020, wherein the PJM proposed tariff language reflecting the FERC's directives and a schedule for resuming capacity auctions. On April 16, 2020, the FERC issued an order largely denying requests for rehearing of the FERC's December 2019 order but granting a few clarifications that required an additional PJM compliance filing, which the PJM submitted on June 1, 2020. A number of parties, including Constellation Energy, have filed petitions for review of the FERC's orders in this proceeding, which remain pending before the D.C. Circuit.

As a result, the MOPR applied to Quad Cities Station in the capacity auction for the 2022-2023 planning year, which prevented Quad Cities Station from clearing in that capacity auction.
36


At the direction of the PJM Board of Managers, the PJM and its stakeholders developed further MOPR reforms to ensure that the capacity market rules respect and accommodate state resource preferences such as the ZEC programs. The PJM filed related tariff revisions at the FERC on July 30, 2021, and, on September 29, 2021, the PJM's proposed MOPR reforms became effective by operation of law. Under the new tariff provisions, the MOPR will no longer apply to Quad Cities Station. Requests for rehearing of the FERC's notice establishing the effective date for the PJM's proposed market reforms were filed in October 2021 and denied by operation of law on November 4, 2021. Several parties have filed petitions for review of the FERC's orders in this proceeding, which remain pending before the Court of Appeals for the Third Circuit. Constellation Energy is strenuously opposing these appeals.

Assuming the continued effectiveness of the Illinois zero emission standard, Constellation Energy no longer considers Quad Cities Station to be at heightened risk for early retirement. However, to the extent the Illinois zero emission standard does not operate as expected over its full term, Quad Cities Station would be at heightened risk for early retirement. The FERC's December 19, 2019 order on the PJM MOPR may undermine the continued effectiveness of the Illinois zero emission standard unless the PJM adopts further changes to the MOPR or Illinois implements an FRR mechanism, under which Quad Cities Station would be removed from the PJM's capacity auction.

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, 2021 and new regulatory matters occurring in 2022.

PacifiCorp

Oregon

In March 2022, PacifiCorp filed a general rate case requesting an overall rate change of $82 million, or 6.6%, to become effective January 1, 2023. A hearing in the rate case will be held in September 2022 with an order expected in December 2022.

Washington

In June 2021, PacifiCorp filed a power cost only rate case to update baseline net power costs for 2022. The proposed $13 million, or 3.7%, rate increase has a requested effective date of January 1, 2022. In November 2021, PacifiCorp reached a proposed settlement with most of the parties, which includes an agreement to adjust the PTC rate in base rates and apply a production factor and to include a net power cost update as part of the compliance filing. A hearing was held in January 2022 and the WUTC issued an order approving the settlement in March 2022. A compliance filing, reflecting a $43 million, or 12.2%, increase was filed in April 2022 with rates effective May 1, 2022.

NV Energy (Nevada Power and Sierra Pacific)

Senate Bill 448 ("SB 448")

SB 448 was signed into law on June 10, 2021. The legislation is intended to accelerate transmission development, renewable energy and storage, and accelerate transportation electrification within the state of Nevada. In September 2021, the Nevada Utilities filed an amendment to the 2021 Joint IRP for the approval of their Transmission Infrastructure for a Clean Energy Economy Plan that sets forth a plan for the construction of high-voltage transmission infrastructure, Greenlink North among others, that will be placed into service no later than December 31, 2028, and requires the IRP to include at least one scenario that uses sources of supply that will achieve certain reductions in carbon dioxide emissions. In September 2021, the Nevada Utilities filed an application for the approval of their Economic Recovery Transportation Electrification Plan to accelerate transportation electrification in the state of Nevada. The plan establishes requirements for the contents of the transportation electrification investment as well as requirements for review, cost recovery and monitoring. The plan covers an initial period beginning January 1, 2022 and ending on December 31, 2024. In November 2021, the PUCN issued an order granting the application and accepting the Economic Recovery Transportation Electrification Plan with some modifications. The PUCN opened rulemakings to address other regulations that resulted from SB 448. In February 2022, the PUCN adopted regulations regarding the Economic Development Electric Rate Rider Program to revise the discounted electric rates to ease the economic burden on small businesses who take advantage of the discounted rates under the tariff. The remaining two SB 448 rulemakings are ongoing.

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ON Line Temporary Rider ("ONTR")

In October 2021, Sierra Pacific filed an application with the PUCN for approval of the ONTR with corresponding updates to its electric rate tariffs to authorize recovery of the One Nevada Transmission Line ("ON Line") regulatory asset being accumulated as a result of the ON Line cost reallocation as well as the related on-going reallocated revenue requirement. Sierra Pacific's application would have, if approved by the PUCN as filed, resulted in a one-time rate increase of $28 million to be collected over a nine-month period starting on April 1, 2022. In March 2022, the PUCN issued an order directing Sierra Pacific to recover $14 million of the ON Line regulatory asset as a one-time rate increase collectable over a nine-month period effective April 1, 2022, with the expected remaining balance at December 31, 2022 to be included in rate base in the 2022 regulatory rate review for inclusion in the rates set in that case.

Merger Application

In March 2022, the Nevada Utilities filed a joint application with the PUCN for authorization to merge Sierra Pacific with and into Nevada Power, with Nevada Power being the surviving entity. If approved by the PUCN as filed, Nevada Power will have two distinct electric service territories in northern and southern Nevada each with their own rates and one natural gas service territory in the Reno and Sparks area. An order is expected in 2022.

BHE Pipeline Group

BHE GT&S

In September 2021, EGTS filed a general rate case for its FERC-jurisdictional services, with proposed rates to be effective November 1, 2021. EGTS' previous general rate case was settled in 1998. EGTS proposed an annual cost-of-service of approximately $1.1 billion, and requested increases in various rates, including general system storage rates by 85% and general system transportation rates by 60%. In October 2021, the FERC issued an order that accepted the November 1, 2021 effective date for certain changes in rates, while suspending the other changes for five months following the proposed effective date, until April 1, 2022, subject to refund and the outcome of hearing procedures. This matter is pending.

BHE Transmission

AltaLink

2022-2023 General Tariff Application

In April 2021, AltaLink filed its 2022-2023 GTA delivering on the last two years of its commitment to keep rates flat for customers at or below the 2018 level of C$904 million for the five-year period from 2019 to 2023. The two-year application achieves flat tariffs by continuing to transition to the AUC-approved salvage recovery method and continuing the use of the flow-through income tax method, with an overall year-over-year increase of approximately 2% in 2022 and 2023 revenue requirements. In addition, similar to the refund of previously collected accumulated depreciation surplus approved by the AUC for 2021, AltaLink proposed to provide further tariff reductions over the two years by refunding an additional C$60 million per year. The application requested the approval of transmission tariffs of C$824 million and C$847 million for 2022 and 2023, respectively.

In September 2021, AltaLink provided responses to information requests from the AUC and filed an amended application to reflect certain adjustments and forecast updates. The amended application requested the approval of transmission tariffs of C$820 million and C$843 million for 2022 and 2023, respectively. In November 2021, the AUC approved the 2022 interim refundable transmission tariff at C$57 million per month effective January 2022.

In January 2022, the AUC issued its decision with respect to AltaLink's 2022-2023 GTA. The AUC approved a two-year total revenue requirement of C$1.7 billion as compared to AltaLink's requested revenue requirement of C$1.8 billion. AltaLink's 2022-2023 GTA reflected its continued commitment to provide rate stability to customers by maintaining flat tariffs and providing additional tariff relief measures, including a proposed tariff refund of C$60 million of accumulated depreciation in each of 2022 and 2023. The AUC did not approve AltaLink's proposed refund due to an anticipated improvement in general economic conditions in Alberta.
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In March 2022, AltaLink filed a review and variance application with the AUC. The application requested the AUC to review and vary its decision to deny AltaLink's proposed C$120 million refund of accumulated depreciation surplus, given material changes in circumstances since the decision was issued in January 2022. The existing pressures on Albertans and Alberta businesses that resulted from the COVID-19 pandemic have been compounded by cost increases due to higher inflation and global supply chain disruptions.

2023 Generic Cost of Capital Proceeding

In January 2022, the AUC initiated the 2023 generic cost of capital proceeding. The proceeding will be conducted in two stages. The first stage will determine the cost of capital parameters for 2023 and the second stage will consider returning to a formula-based approach to establish cost of capital adjustments, commencing in 2024. In March 2022, the AUC issued its decision with respect to the first stage of the 2023 GCOC proceeding by approving the extension of the 2022 return on equity of 8.5% and deemed equity ratio of 37% for 2023, recognizing lingering uncertainty and continued volatility of financial markets due to the COVID-19 pandemic. With respect to the second stage, the AUC plans to commence the 2024 GCOC proceeding to establish a formula-based approach in the third quarter of 2022 and to conclude in the second quarter of 2023.

Environmental Laws and Regulations

Each Registrant is subject to federal, state, local and foreign laws and regulations regarding climate change, RPS, air and water quality, emissions performance standards, 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 various federal, state, local and international agencies. Each Registrant 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. 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, 2021, and new environmental matters occurring in 2022.

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.

National Ambient Air Quality Standards

Under the authority of the Clean Air Act, the EPA sets minimum NAAQS for six principal pollutants, consisting of carbon monoxide, lead, NOx, particulate matter, ozone and SO2, considered harmful to public health and the environment. Areas that achieve the standards, as determined by ambient air quality monitoring, are characterized as being in attainment, while those that fail to meet the standards are designated as being nonattainment areas. Generally, sources of emissions in a nonattainment area that are determined to contribute to the nonattainment are required to reduce emissions. Currently, with the exceptions described in the following paragraphs, air quality monitoring data indicates that all counties where the relevant Registrant's major emission sources are located are in attainment of the current NAAQS.
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On June 4, 2018, the EPA published final ozone designations for much of the U.S. Relevant to the Registrants, these designations include classifying Yuma County, Arizona; Clark County, Nevada; and the Northern Wasatch Front, Southern Wasatch Front and Duchesne and Uintah counties in Utah as nonattainment-marginal with the 2015 ozone standard. These areas were required to meet the 2015 standard three years from the August 3, 2018, effective date. All other areas relevant to the Registrants were designated attainment/unclassifiable with this same action. However, on January 29, 2021, the D.C. Circuit vacated several provisions of the 2018 implementing rules for the 2015 ozone standards for contravening the Clean Air Act. The EPA and environmental groups finalized a consent decree in January 2022 that sets deadlines for the agency to approve or disapprove the "good neighbor" provisions of interstate ozone plans of dozens of states. Relevant to the Registrants, the EPA must, by April 30, 2022, propose to approve or disapprove the interstate ozone SIPs of Alabama, Iowa, Maryland, Michigan, Minnesota, New York, Ohio, Pennsylvania, Texas, West Virginia and Wisconsin. On February 22, 2022, the EPA published a series of proposed decisions to disapprove the SIPs for interstate ozone transport of 19 states. Relevant to the Registrants, these states include Alabama, Maryland, Michigan, Minnesota, New York, Ohio, West Virginia and Wisconsin. The EPA also proposed to approve Iowa's SIP after re-analyzing the state's data. The EPA must finalize the proposed rules by December 15, 2022. In addition, the EPA must, by December 15, 2022, approve or disapprove the interstate plans of Arizona, California, Nevada and Wyoming. On April 15, 2022, the EPA issued its final rule approving Iowa's SIP as meeting the good neighbor provisions for the 2015 ozone standard. Until the EPA takes final action consistent with this decree, additional impacts to the relevant Registrants cannot be determined.

Separately, on March 28, 2022, the EPA proposed determinations as to whether certain areas have achieved levels of ground-level ozone pollution that meet the 2008 and 2015 ozone NAAQS, respectively. Relevant to the Registrants, the Southern Wasatch Front in Utah and Yuma, Arizona are proposed to have met the 2015 ozone standard; and the Cincinnati area of Ohio and Kentucky and the Northern Wasatch Front in Utah are proposed to have not met the 2015 ozone, will be reclassified as Moderate Non-Attainment, and will have until August 3, 2024 to meet the standard. Until the EPA takes final action on the proposal and the affected states submit any required SIPs, the relevant Registrants cannot determine the impacts of the proposed rule.

Cross-State Air Pollution Rule

The EPA promulgated an initial rule in March 2005 to reduce emissions of NOx and SO2, precursors of ozone and particulate matter, from down-wind sources in the eastern U.S., including Iowa, to reduce emissions by implementing a plan based on a market-based cap-and-trade system, emissions reductions, or both. After numerous appeals, the CSAPR was promulgated to address interstate transport of SO2 and NOx emissions in 27 eastern and Midwestern states.

The first phase of the rule was implemented January 1, 2015. In November 2015, the EPA released a proposed rule that would further reduce NOx emissions in 2017. The final "CSAPR Update Rule" was published in the Federal Register in October 2016 and required additional reductions in NOx emissions beginning in May 2017. On December 6, 2018, the EPA finalized a rule to close out the CSAPR, having determined that the CSAPR Update Rule for the 2008 ozone NAAQS fully addressed Clean Air Act interstate transport obligations of 20 eastern states. The EPA determined that 2023 is an appropriate future analytic year to evaluate remaining good neighbor obligations and that there will be no remaining nonattainment or maintenance receptors with respect to the 2008 ozone NAAQS in the eastern U.S. in that year. Accordingly, the 20 CSAPR Update-affected states would not contribute significantly to nonattainment in, or interfere with maintenance of, any other state with regard to the 2008 ozone NAAQS. Both the CSAPR Update and the CSAPR Close-Out rules were challenged in the D.C. Circuit. The D.C. Circuit ruled September 13, 2019, that because the EPA allowed upwind States to continue to significantly contribute to downwind air quality problems beyond statutory deadlines, the CSAPR Update Rule provided only a partial remedy that did not fully address interstate ozone transport, and remanded the CSAPR Update Rule back to the EPA. The D.C. Circuit issued an opinion October 1, 2019, finding that because the CSAPR Close-Out Rule relied on the same faulty reasoning as the CSAPR Update Rule, the CSAPR Close-Out Rule must be vacated. On October 15, 2020, the EPA proposed to tighten caps on emissions of NOx from generating facilities in 12 states in the CSAPR trading program in response to the D.C. Circuit's decision to vacate the CSAPR Update Rule. The rule is intended to fully resolve 21 upwind states' remaining good neighbor obligations under the 2008 ozone NAAQS. Additional emissions reductions are required at generating facilities in 12 states, including Illinois; the EPA predicts that emissions from the remaining nine states, including Iowa and Texas, will not significantly contribute to downwind states' ability to attain or maintain the ozone standard. The EPA accepted comment on the proposal through December 15, 2020. On March 15, 2021, the EPA finalized the Revised CSAPR Update Rule largely as proposed. Significant new compliance obligations are not anticipated as a result of the rule. In June 2021, a new lawsuit was filed that challenges the Revised CSAPR Update Rule. Litigation is ongoing in the D.C. Circuit Court. Until litigation is exhausted, the relevant Registrants cannot determine whether additional action may be required.

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In March 2022, the EPA released its Good Neighbor Rule, which contains proposed revisions to the CSAPR framework and is intended to address ozone transport for the 2015 ozone NAAQS. The rule focuses on reductions of NOx, precursors to ozone formation and covers 26 states. Relevant to the Registrants, four states are included in the cross-state program for the first time - California, Nevada, Utah and Wyoming. Iowa is not included in the proposal. In a separate but related action in February 2022, the EPA proposed to approve the good neighbor provisions of Iowa's SIP addressing ozone transport and the 2015 ozone standard. The EPA proposes to retain emissions allowance trading for generating facilities. Beginning in 2023, emissions budgets would be set at the level of reductions achievable through immediately available measures such as consistently operating existing emissions controls. Starting in 2026, emissions budgets would be set at levels achievable by the installation of SCR controls at certain generating facilities. The proposal also includes additional industries beyond the power sector for the first time, with a focus on the top NOx emitting stationary source categories. These include natural gas pipeline compressor stations, pulp and paper mills, cement production, iron and steel boilers and furnaces, glass furnaces, chemical manufacturing and petroleum and coal product manufacturing. These sources will not have access to trading and will instead be subject to rate-based limits that are assigned for each source category. The EPA is accepting comments on the proposal through June 6, 2022. Until the EPA takes final action consistent with this decree, impacts to the relevant Registrants cannot be determined.

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 BART requirements and demonstrate progress towards achieving natural visibility requirements in Class I areas by 2064.
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The state of Utah issued a regional haze SIP requiring the installation of SO2, NOx and particulate matter controls on Hunter Units 1 and 2 and Huntington Units 1 and 2. In December 2012, the EPA approved the SO2 portion of the Utah regional haze SIP and disapproved the NOx and particulate matter portions. Subsequently, the Utah Division of Air Quality completed an alternative BART analysis for Hunter Units 1 and 2 and Huntington Units 1 and 2. In January 2016, the EPA published two alternative proposals to either approve the Utah SIP as written or reject the Utah SIP relating to NOx controls and require the installation of SCR equipment at Hunter Units 1 and 2 and Huntington Units 1 and 2 within five years. The 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 FIP requiring the installation of SCR equipment 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 filed requests with the EPA to reconsider and stay that decision, as well as filed motions for stay and petitions for review with the Tenth Circuit Court of Appeals ("Tenth Circuit") asking the court to overturn the EPA's actions. In July 2017, the EPA issued a letter indicating it would reconsider its FIP decision. In light of the EPA's grant of reconsideration and the EPA's position in the litigation, the Tenth Circuit held the litigation in abeyance and imposed a stay of the compliance obligations of the FIP for the number of days the stay is in effect while the EPA conducts its reconsideration process. To support the reconsideration, PacifiCorp undertook additional air quality modeling using the Comprehensive Air Quality Model with Extensions dispersion model. On January 14, 2019, the state of Utah submitted a SIP revision to the EPA, which includes the updated modeling information and additional analysis. On June 24, 2019, the Utah Air Quality Board unanimously voted to approve the Utah regional haze SIP revision, which incorporates a BART alternative into Utah's regional haze SIP. The BART alternative makes the shutdown of PacifiCorp's Carbon generating facility enforceable under the SIP and removes the requirement to install SCR equipment on Hunter Units 1 and 2 and Huntington Units 1 and 2. The Utah Division of Air Quality submitted the SIP revision to the EPA for approval at the end of 2019. In January 2020, the EPA published its proposed approval of the Utah Regional Haze SIP Alternative, which makes the shutdown of the Carbon generating facility federally enforceable and adopts as BART the existing NOx controls and emission limits on the Hunter and Huntington generating facilities. The proposed approval withdraws the FIP requirements to install SCR equipment on Hunter Units 1 and 2 and Huntington Units 1 and 2. The EPA released the final rule approving the Utah Regional Haze SIP Alternative on October 28, 2020. With the approval, the EPA also finalized its withdrawal of the FIP requirements for the Hunter and Huntington generating facilities. The Utah Regional Haze SIP Alternative took effect December 28, 2020. As a result of these actions, the Tenth Circuit dismissed the Utah regional haze petitions on January 11, 2021. On January 19, 2021, Heal Utah, National Parks Conservation Association, Sierra Club and Utah Physicians for a Healthy Environment filed a petition for review of the Utah Regional Haze SIP Alternative in the Tenth Circuit. PacifiCorp and the state of Utah moved to intervene in the litigation. After review of the rule by the Biden administration, the EPA determined it would defend the rule, and briefing in the case is ongoing. A date for oral arguments has not been scheduled. The Utah Air Quality Board approved the Utah Division of Air Quality's SIP for the regional haze second planning period on April 6, 2022. The public comment period is anticipated to begin in early May 2022. The proposed plan sets mass-based emissions limits for PacifiCorp's Hunter and Huntington generating facilities to ensure reasonable visibility progress for the second planning period. The division proposes to add existing SO2 emission limits for all five Hunter and Huntington units as enforceable regional haze controls. The division also proposes new enforceable mass-based NOx emission limits for both generating facilities based on actual emissions. The state is on track to submit a final implementation plan to the EPA by July 2022.

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The state of Wyoming issued two regional haze SIPs requiring the installation of SO2, NOx and particulate matter controls on certain PacifiCorp coal-fueled generating facilities in Wyoming. The EPA approved the SO2 SIP in December 2012 and the EPA's approval was upheld on appeal by the Tenth Circuit in October 2014. In addition, the EPA initially proposed in June 2012 to disapprove portions of the NOx and particulate matter SIP and instead issue a FIP. The EPA withdrew its initial proposed actions on the NOx and particulate matter SIP and the proposed FIP, published a re-proposed rule in June 2013, and finalized its determination in January 2014, which aligns more closely with the SIP proposed by the state of Wyoming. The EPA's final action on the Wyoming SIP approved the state's plan to have PacifiCorp install low-NOx burners at Naughton Units 1 and 2, SCR controls at Naughton Unit 3 by December 2014, SCR controls at Jim Bridger Units 1 through 4 between 2015 and 2022, and low-NOx burners at Dave Johnston Unit 4. The EPA disapproved a portion of the Wyoming SIP and issued a FIP for Dave Johnston Unit 3, where it required the installation of SCR controls by 2019 or, in lieu of installing SCR controls, a commitment to shut down Dave Johnston Unit 3 by 2027, its currently approved depreciable life. The EPA also disapproved a portion of the Wyoming SIP and issued a FIP for the Wyodak coal-fueled generating facility, requiring the installation of SCR controls within five years (i.e., by 2019). The EPA action became final on March 3, 2014. PacifiCorp filed an appeal of the EPA's final action on Wyodak in March 2014. The state of Wyoming also filed an appeal of the EPA's final action, as did the Powder River Basin Resource Council, National Parks Conservation Association and Sierra Club. In September 2014, the Tenth Circuit issued a stay of the March 2019 compliance deadline for Wyodak, pending further action by the Tenth Circuit in the appeal. The EPA, U.S. Department of Justice, state of Wyoming and PacifiCorp executed a settlement agreement December 16, 2020, removing the requirement to install SCR in lieu of monthly and annual NOx emissions limits. The settlement agreement was subject to a comment period which ended July 6, 2021. Litigation in the Tenth Circuit remains stayed pending finalization of the settlement agreement. The EPA did not proceed with final approval of the settlement agreement for Wyodak and is currently engaged with Wyoming and PacifiCorp concerning alternative paths for resolution. On February 5, 2019, PacifiCorp submitted a reasonable progress reassessment permit application and reasonable progress determination for Jim Bridger Units 1 and 2, seeking a rescission of the December 2017 permit requiring the installation of SCR, to be replaced with a permit imposing plant-wide emission limits to achieve better modeled visibility, fewer overall environmental impacts and lower costs of compliance. In May 2020, the Wyoming Air Quality Division issued a permit approving PacifiCorp's monthly and annual NOx and SO2 emission limits on the four Jim Bridger units and submitted a regional haze SIP revision to the EPA. The revised SIP would grant approval of PacifiCorp's Jim Bridger reasonable progress reassessment application and incorporates PacifiCorp's proposed emission limits in lieu of the requirement to install SCR systems on Jim Bridger Units 1 and 2. On December 27, 2021, Wyoming's governor issued an emergency suspension order under Section 110(g) of the Clean Air Act, allowing the operation of Jim Bridger Unit 2 through April 30, 2022, while the state, the EPA and PacifiCorp continue settlement discussions. On January 18, 2022, the EPA proposed to reject the SIP revisions. The EPA took comment on the proposal through February 17, 2022. On February 14, 2022, the First Judicial District Court for the State of Wyoming entered a consent decree reached between the state of Wyoming and PacifiCorp under Sections 201 and 209(a) of the Wyoming Environmental Quality Act, resolving claims of threatened violations of the Clean Air Act, the Wyoming Environmental Quality Act and the Wyoming Air Quality Standards and Regulations at the Jim Bridger facility. No penalties were imposed under the consent decree. Consistent with the terms and conditions of the consent decree and as forecasted in PacifiCorp's 2021 IRP, PacifiCorp must convert both units to natural gas and begin meeting emissions limits consistent with that conversion by January 1, 2024. In addition, PacifiCorp must propose an RFP by January 1, 2023, for carbon capture technology at Jim Bridger Units 3 and 4. Wyoming issued its proposed implementation plan for second planning period reasonable progress on February 18, 2022 and accepted comments through March 23, 2022. Wyoming determined that no controls will be necessary on any Wyoming resources to make reasonable progress for the second round of regional haze planning. It is estimated that the state will submit a final state-approved implementation plan to the EPA in May 2022.

In February 2022, NV Energy received 30-day notice letters from the Nevada Division of Environmental Protection regarding the reopening and revision of the Valmy and Tracy Generating Station's Title V air quality operating permits to add federally enforceable retirement dates of December 31, 2028 for Valmy Units 1 and 2 and December 31, 2031 for Tracy Unit 4. The enforceable retirement dates will implement Nevada's SIP for the regional haze second planning period. The revised permits were received in March and April 2022. It is anticipated that the Nevada Division of Environmental Protection will begin the public comment period for its SIP by May 2022 and submit the final SIP to the EPA by June 2022.
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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, 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, 2021. There have been no significant changes in the Company's assumptions regarding critical accounting estimates since December 31, 2021.

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PacifiCorp and its subsidiaries
Consolidated Financial Section

45


PART I
Item 1.Financial Statements


REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM


To the Board of Directors and Shareholders of
PacifiCorp

Results of Review of Interim Financial Information
We have reviewed the accompanying consolidated balance sheet of PacifiCorp and subsidiaries ("PacifiCorp") as of March 31, 2022, the related consolidated statements of operations, changes in shareholders' equity, and cash flows for the three-month periods ended March 31, 2022 and 2021, and the related notes (collectively referred to as the "interim financial information"). Based on our reviews, we are not aware of any material modifications that should be made to the accompanying interim financial information for it 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) (PCAOB), the consolidated balance sheet of PacifiCorp as of December 31, 2021, 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 25, 2022, 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, 2021, is fairly stated, in all material respects, in relation to the consolidated balance sheet from which it has been derived.

Basis for Review Results
This interim financial information is the responsibility of PacifiCorp's management. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to PacifiCorp in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our reviews in accordance with standards of the PCAOB. 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 PCAOB, 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.

/s/ Deloitte & Touche LLP

Portland, Oregon
April 29, 2022

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PACIFICORP AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS (Unaudited)
(Amounts in millions)

 As of
 March 31,December 31,
20222021
ASSETS
Current assets:
Cash and cash equivalents$335 $179 
Trade receivables, net674 725 
Other receivables, net49 52 
Inventories479 474 
Derivative contracts145 76 
Regulatory assets125 65 
Other current assets163 150 
Total current assets1,970 1,721 
 
Property, plant and equipment, net23,081 22,914 
Regulatory assets1,231 1,287 
Other assets562 534 
 
Total assets$26,844 $26,456 

The accompanying notes are an integral part of these consolidated financial statements.
47


PACIFICORP AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS (Unaudited) (continued)
(Amounts in millions)

 As of
 March 31,December 31,
20222021
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable$724 $680 
Accrued interest115 121 
Accrued property, income and other taxes113 78 
Accrued employee expenses109 89 
Current portion of long-term debt155 155 
Regulatory liabilities114 118 
Other current liabilities196 219 
Total current liabilities1,526 1,460 
 
Long-term debt8,567 8,575 
Regulatory liabilities2,807 2,650 
Deferred income taxes2,886 2,847 
Other long-term liabilities1,014 1,011 
Total liabilities16,800 16,543 
 
Commitments and contingencies (Note 8)
 
Shareholders' equity:
Preferred stock
Common stock - 750 shares authorized, no par value, 357 shares issued and outstanding
— — 
Additional paid-in capital4,479 4,479 
Retained earnings5,579 5,449 
Accumulated other comprehensive loss, net(16)(17)
Total shareholders' equity10,044 9,913 
 
Total liabilities and shareholders' equity$26,844 $26,456 

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

48


PACIFICORP AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
(Amounts in millions)

 Three-Month Periods
 Ended March 31,
 20222021
 
Operating revenue$1,297 $1,242 
  
Operating expenses:
Cost of fuel and energy465 424 
Operations and maintenance277 259 
Depreciation and amortization280 264 
Property and other taxes59 61 
Total operating expenses1,081 1,008 
  
Operating income216 234 
  
Other income (expense): 
Interest expense(106)(107)
Allowance for borrowed funds
Allowance for equity funds13 13 
Interest and dividend income
Other, net(4)
Total other income (expense)(84)(76)
  
Income before income tax expense (benefit)132 158 
Income tax expense (benefit)(11)
Net income$130 $169 

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

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PACIFICORP AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY (Unaudited)
(Amounts in millions)

 Accumulated 
   Additional OtherTotal
PreferredCommonPaid-inRetainedComprehensiveShareholders'
 StockStockCapitalEarningsLoss, NetEquity
 
Balance, December 31, 2020$$— $4,479 $4,711 $(19)$9,173 
Net income— — — 169 — 169 
Balance, March 31, 2021$$— $4,479 $4,880 $(19)$9,342 
       
Balance, December 31, 2021$$— $4,479 $5,449 $(17)$9,913 
Net income— — — 130 — 130 
Other comprehensive income— — — — 
Balance, March 31, 2022$$— $4,479 $5,579 $(16)$10,044 

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

50


PACIFICORP AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
(Amounts in millions)

 Three-Month Periods
 Ended March 31,
 20222021
Cash flows from operating activities: 
Net income$130  $169 
Adjustments to reconcile net income to net cash flows from operating activities: 
Depreciation and amortization280  264 
Allowance for equity funds(13)(13)
Changes in regulatory assets and liabilities(9) (4)
Deferred income taxes and amortization of investment tax credits19  13 
Other, net(2)
Changes in other operating assets and liabilities:  
Trade receivables, other receivables and other assets59  61 
Inventories(5) 
Derivative collateral, net22  
Prepaid expenses— 
Accrued property, income and other taxes, net15 12 
Accounts payable and other liabilities35  (51)
Net cash flows from operating activities537  469 
   
Cash flows from investing activities:  
Capital expenditures(374) (439)
Other, net (1)
Net cash flows from investing activities(371) (440)
   
Cash flows from financing activities:  
Repayments of long-term debt(9)— 
Net proceeds from short-term debt— 
Other, net(2)(1)
Net cash flows from financing activities(11) 
   
Net change in cash and cash equivalents and restricted cash and cash equivalents155  30 
Cash and cash equivalents and restricted cash and cash equivalents at beginning of period186  19 
Cash and cash equivalents and restricted cash and cash equivalents at end of period$341  $49 
 
The accompanying notes are an integral part of these consolidated financial statements.

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PACIFICORP AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

(1)    General

PacifiCorp, which includes PacifiCorp and its subsidiaries, is a U.S. 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 March 31, 2022 and for the three-month periods ended March 31, 2022 and 2021. The Consolidated Statements of Comprehensive Income have been omitted as net income materially equals comprehensive income for the three-month periods ended March 31, 2022 and 2021. The results of operations for the three-month periods ended March 31, 2022 and 2021 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, 2021 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 three-month period ended March 31, 2022.

(2)    Cash and Cash Equivalents and Restricted Cash and Cash Equivalents

Cash equivalents consist of funds invested in money market mutual funds, U.S. Treasury Bills and other investments with a maturity of three months or less when purchased. Cash and cash equivalents exclude amounts where availability is restricted by legal requirements, loan agreements or other contractual provisions. Restricted cash and cash equivalents consist substantially of funds representing vendor retention, custodial and nuclear decommissioning funds. Restricted amounts are included in other current assets and other assets on the Consolidated Balance Sheets. A reconciliation of cash and cash equivalents and restricted cash and cash equivalents as presented in the Consolidated Statements of Cash Flows is outlined below and disaggregated by the line items in which they appear on the Consolidated Balance Sheets (in millions):
As of
March 31,December 31,
20222021
Cash and cash equivalents$335 $179 
Restricted cash and cash equivalents included in other current assets
Restricted cash included in other assets
Total cash and cash equivalents and restricted cash and cash equivalents$341 $186 

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(3)    Property, Plant and Equipment, Net

Property, plant and equipment, net consists of the following (in millions):
  As of
 March 31,December 31,
Depreciable Life20222021
Utility Plant: 
Generation
15 - 59 years
$13,688 $13,679 
Transmission
60 - 90 years
7,914 7,894 
Distribution
20 - 75 years
8,125 8,044 
Intangible plant(1)
5 - 75 years
1,112 1,106 
Other
5 - 60 years
1,563 1,539 
Utility plant in-service32,402 32,262 
Accumulated depreciation and amortization (10,704)(10,507)
Utility plant in-service, net 21,698 21,755 
Other non-regulated, net of accumulated depreciation and amortization
14 - 95 years
18 18 
Plant, net21,716 21,773 
Construction work-in-progress 1,365 1,141 
Property, plant and equipment, net $23,081 $22,914 

(1)Computer software costs included in intangible plant are initially assigned a depreciable life of 5 to 10 years.

(4)    Income Taxes

A reconciliation of the federal statutory income tax rate to the effective income tax rate applicable to income before income tax (benefit) expense is as follows:
Three-Month Periods
Ended March 31,
20222021
Federal statutory income tax rate21 %21 %
State income tax, net of federal income tax benefit
Federal income tax credits(20)(20)
Effects of ratemaking(1)
(11)(13)
Valuation allowance— 
Other
Effective income tax rate%(7)%
(1)Effects of ratemaking is primarily attributable to activity associated with excess deferred income taxes.

Income tax credits relate primarily to production tax credits ("PTCs") earned by PacifiCorp's wind-powered generating facilities. Federal renewable electricity PTCs 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. PTCs for the three-month periods ended March 31, 2022 and 2021 totaled $26 million and $31 million, respectively.

For the three-month period ended March 31, 2022 PacifiCorp recorded a valuation allowance related to state net operating loss carryforwards.

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(5)    Employee Benefit Plans

Net periodic benefit cost (credit) for the pension and other postretirement benefit plans included the following components (in millions):
Three-Month Periods
Ended March 31,
20222021
Pension:
Service cost$— $— 
Interest cost
Expected return on plan assets(10)(13)
Net amortization
Net periodic benefit cost (credit)$$(1)
Other postretirement:
Service cost$— $— 
Interest cost
Expected return on plan assets(2)(2)
Net amortization— — 
Net periodic benefit cost (credit)$— $— 

Amounts other than the service cost for pension and other postretirement benefit plans are recorded in Other, net in the Consolidated Statements of Operations. Employer contributions to the pension and other postretirement benefit plans are expected to be $4 million and $— million, respectively, during 2022. As of March 31, 2022, $1 million of contributions had been made to the pension plans.

(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 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 and report on 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, futures, 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.

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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):
Derivative
Contracts -OtherOther 
CurrentOtherCurrentLong-term
AssetsAssetsLiabilitiesLiabilitiesTotal
As of March 31, 2022
Not designated as hedging contracts(1):
Commodity assets$165 $37 $$(1)$207 
Commodity liabilities(3)— (9)— (12)
Total162 37 (3)(1)195 
     
Total derivatives162 37 (3)(1)195 
Cash collateral payable(17)— — — (17)
Total derivatives - net basis$145 $37 $(3)$(1)$178 
As of December 31, 2021
Not designated as hedging contracts(1):
Commodity assets$81 $21 $$— $104 
Commodity liabilities(5)(1)(38)(7)(51)
Total76 20 (36)(7)53 
      
Total derivatives76 20 (36)(7)53 
Cash collateral receivable— — — 
Total derivatives - net basis$76 $20 $(31)$(7)$58 

(1)PacifiCorp's commodity derivatives are generally included in rates. As of March 31, 2022 a regulatory liability of $195 million was recorded related to the net derivative asset of $195 million. As of December 31, 2021 a regulatory liability of $53 million was recorded related to the net derivative asset of $53 million.

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
Ended March 31,
20222021
Beginning balance$(53)$17 
Changes in fair value recognized in regulatory assets(168)(17)
Net losses reclassified to operating revenue(3)— 
Net gains reclassified to energy costs29 — 
Ending balance$(195)$— 

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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 ofMarch 31,December 31,
Measure20222021
Electricity purchases, netMegawatt hours
Natural gas purchasesDecatherms105 106 

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 agreements, including derivative contracts, contain credit support provisions that in part base certain collateral requirements on credit ratings for senior unsecured debt as reported by one or more of the recognized credit rating agencies. These agreements may either specifically provide bilateral rights to demand cash or other security if credit exposures on a net basis exceed specified rating-dependent threshold levels ("credit-risk-related contingent features") or provide the right for counterparties to demand "adequate assurance" if there is a material adverse change in PacifiCorp's creditworthiness. These rights can vary by contract and by counterparty. As of March 31, 2022, PacifiCorp's credit ratings for its senior secured debt and its issuer credit ratings for senior unsecured debt from the 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 $10 million and $37 million as of March 31, 2022 and December 31, 2021, respectively, for which PacifiCorp had posted collateral of $— million and $5 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 March 31, 2022 and December 31, 2021, PacifiCorp would have been required to post $2 million and $23 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.

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(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 March 31, 2022:    
Assets:    
Commodity derivatives$— $207 $— $(25)$182 
Money market mutual funds319 — — — 319 
Investment funds28 — — — 28 
 $347 $207 $— $(25)$529 
Liabilities - Commodity derivatives$— $(12)$— $$(4)
As of December 31, 2021:
Assets:
Commodity derivatives$— $104 $— $(8)$96 
Money market mutual funds181 — — — 181 
Investment funds27 — — — 27 
$208 $104 $— $(8)$304 
Liabilities - Commodity derivatives$— $(51)$— $13 $(38)

(1)Represents netting under master netting arrangements and a net cash collateral payable of $17 million and a net cash collateral receivable of $5 million as of March 31, 2022 and December 31, 2021, respectively.

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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 three 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 three 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. 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 March 31, 2022As of December 31, 2021
 CarryingFairCarryingFair
 ValueValueValueValue
     
Long-term debt$8,722 $9,423 $8,730 $10,374 

(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. PacifiCorp 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.

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California and Oregon 2020 Wildfires

In September 2020, a severe weather event resulting in high winds, low humidity and warm temperatures contributed to several major wildfires, real and personal property and natural resource damage, personal injuries and loss of life and widespread power outages in Oregon and Northern California (the "2020 Wildfires"). The wildfires spread across certain parts of PacifiCorp's service territory and surrounding areas across multiple counties in Oregon and California, including Siskiyou County, California; Jackson County, Oregon; Douglas County, Oregon; Marion County, Oregon; Lincoln County, Oregon; and Klamath County, Oregon burning over 500,000 acres in aggregate. Third party reports for these wildfires indicate over 2,000 structures destroyed, including residences; several structures damaged; multiple individuals injured; and several fatalities. Fire suppression costs estimated by various agencies total approximately $150 million. Investigations into the cause and origin of each wildfire are complex and ongoing and being conducted by various entities, including the United States Forest Service, the California Public Utilities Commission, the Oregon Department of Forestry, the Oregon Department of Justice, PacifiCorp and various experts engaged by PacifiCorp.

Multiple lawsuits have been filed in Oregon and California, including a putative class action complaint in Oregon, on behalf of citizens and businesses who suffered damages from fires allegedly caused by PacifiCorp. Additionally, several insurance carriers have filed subrogation complaints in Oregon and California with allegations similar to those made in the aforementioned lawsuits. The final determinations of liability, however, will only be made following comprehensive investigations and litigation processes.

In California, under inverse condemnation, courts have held that investor-owned utilities can be liable for real and personal property damages without the utility being found negligent and regardless of fault. California law also permits inverse condemnation plaintiffs to recover reasonable attorney fees and costs. In both Oregon and California, PacifiCorp has equipment in areas accessed through special use permits, easements or similar agreements that may contain provisions requiring it to pay for damages caused by its equipment regardless of fault. Even if inverse condemnation or other provisions do not apply, PacifiCorp could nevertheless be found liable for all damages proximately caused by negligence, including real and personal property and natural resource damage; fire suppression costs; personal injury and loss of life damages; and interest.

PacifiCorp has accrued $136 million as its best estimate of the potential losses net of expected insurance recoveries associated with the 2020 Wildfires that are considered probable of being incurred. These accruals include estimated losses for fire suppression costs, real and personal property damage, personal injury damages and loss of life damages, but exclude estimated potential losses for natural resource damage as PacifiCorp is unable to reasonably estimate such losses at this time. It is reasonably possible that PacifiCorp will incur additional losses beyond the amounts accrued; however, PacifiCorp is currently unable to estimate the range of possible additional losses that could be incurred due to the number of properties and parties involved and the variation in those types of properties and lack of available details. To the extent losses beyond the amounts accrued are incurred, additional insurance coverage is expected to be available to cover at least a portion of the losses.

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 is a party to the 2016 amended Klamath Hydroelectric Settlement Agreement ("KHSA"), which is intended to resolve disputes surrounding PacifiCorp's efforts to relicense the Klamath Hydroelectric Project. The KHSA establishes a process for PacifiCorp, the states of Oregon and California ("States") and other stakeholders to assess whether dam removal can occur consistent with the settlement's terms. For PacifiCorp, the key elements of the settlement include: (1) a contribution from PacifiCorp's Oregon and California customers capped at $200 million plus $250 million in California bond funds; (2) complete indemnification from harms associated with dam removal; (3) transfer of the Federal Energy Regulatory Commission ("FERC") license to a third-party dam removal entity, the Klamath River Renewal Corporation ("KRRC"), who would conduct dam removal; and (4) ability for PacifiCorp to operate the facilities for the benefit of customers until dam removal commences.

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In September 2016, the KRRC and PacifiCorp filed a joint application with the FERC to transfer the license for the four mainstem Klamath dams from PacifiCorp to the KRRC. The FERC approved partial transfer of the Klamath license in a July 2020 order, subject to the condition that PacifiCorp remains co-licensee. Under the amended KHSA, PacifiCorp did not agree to remain co-licensee during the surrender and removal process given concerns about liability protections for PacifiCorp and its customers. In November 2020, PacifiCorp entered a memorandum of agreement (the "MOA") with the KRRC, the Karuk Tribe, the Yurok Tribe and the States to continue implementation of the KHSA. The agreement required the States, PacifiCorp and KRRC to file a new license transfer application to remove PacifiCorp from the license for the Klamath Hydroelectric Project and add the States and KRRC as co-licensees for the purposes of surrender. In addition, the MOA provides for additional contingency funding of $45 million, equally split between PacifiCorp and the States, and for PacifiCorp and the States to equally share in any additional cost overruns in the unlikely event that dam removal costs exceed the $450 million in funding to ensure dam removal is complete. The MOA also requires PacifiCorp to cover the costs associated with certain pre-existing environmental conditions. In June 2021, the FERC approved transfer of the four mainstem Klamath dams from PacifiCorp to the KRRC and the States as co-licensees. In July 2021, the Oregon, Wyoming, Idaho and California state public utility commissions conditionally approved the required property transfer applications. In August 2021, PacifiCorp notified the Public Service Commission of Utah of the property transfer, however no formal approval is required in Utah. The transfer will be effective within 30 days following the issuance of a license surrender from the FERC for the project, which remains pending. In February 2022, the FERC staff issued a draft environmental impact statement for the project, concluding that dam removal is the preferred alternative. Comments on the draft were due in April 2022, and a final environmental impact statement is expected later in 2022.

Guarantees

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

(9)    Revenue from Contracts with Customers

The following table summarizes PacifiCorp's revenue from contracts with customers ("Customer Revenue") by line of business, with further disaggregation of retail by customer class (in millions):
Three-Month Periods
Ended March 31,
20222021
Customer Revenue:
Retail:
Residential
$505 $483 
Commercial
370 359 
Industrial
273 271 
Other retail
37 32 
Total retail
1,185 1,145 
Wholesale
55 36 
Transmission32 25 
Other Customer Revenue20 23 
Total Customer Revenue
1,292 1,229 
Other revenue13 
Total operating revenue
$1,297 $1,242 

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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, usage trends 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 First Quarter of 2022 and 2021

Overview

Net income for the first quarter of 2022 was $130 million, a decrease of $39 million, or 23%, compared to 2021. Net income decreased primarily due to higher operations and maintenance expense, higher depreciation and amortization expense, higher income tax expense and higher other expense, partially offset by higher utility margin. Utility margin increased primarily due to higher retail revenue from higher volumes and higher average prices, higher average wholesale market prices, lower coal-fueled generation volumes and higher net power cost deferrals, partially offset by higher purchased electricity prices and volumes and higher natural gas-fueled generation prices and volumes. Retail customer volumes increased 1.9%, primarily due to an increase in the average number of customers, favorable impacts of weather and an increase in customer usage. Energy generated was essentially flat for the first quarter of 2022 compared to 2021. Wholesale electricity sales volumes decreased 2% and purchased electricity volumes increased 6%.

Non-GAAP Financial Measure

Management utilizes various key financial measures that are prepared in accordance with GAAP, as well as non-GAAP financial measures such as utility margin, to help evaluate results of operations. Utility margin is calculated as operating revenue less cost of fuel and energy, which are captions presented on the Consolidated Statements of Operations.

PacifiCorp's cost of fuel and energy is generally recovered from its customers through regulatory recovery mechanisms and as a result, changes in PacifiCorp's revenue are comparable to changes in such expenses. As such, management believes utility margin more appropriately and concisely explains profitability rather than a discussion of revenue and cost of fuel and energy separately. Management believes the presentation of utility margin provides meaningful and valuable insight into the information management considers important to running the business and a measure of comparability to others in the industry.
Utility margin is not a measure calculated in accordance with GAAP and should be viewed as a supplement to and not a substitute for operating income which is the most comparable financial measure prepared in accordance with GAAP. The following table provides a reconciliation of utility margin to operating income (in millions):
First Quarter
20222021Change
Utility margin:
Operating revenue$1,297 $1,242 $55 %
Cost of fuel and energy465 424 41 10 
Utility margin832 818 14 
Operations and maintenance277 259 18 
Depreciation and amortization280 264 16 
Property and other taxes59 61 (2)(3)
Operating income$216 $234 $(18)(8)%
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Utility Margin

A comparison of key operating results related to utility margin is as follows:
First Quarter
20222021Change
Utility margin (in millions):
Operating revenue$1,297 $1,242 $55 %
Cost of fuel and energy465 424 41 10 
Utility margin$832 $818 $14 %
Sales (GWhs):
Residential4,764 4,632 132 %
Commercial4,550 4,470 80 
Industrial, irrigation and other4,523 4,474 49 
Total retail13,837 13,576 261 
Wholesale1,553 1,591 (38)(2)
Total sales15,390 15,167 223 %
Average number of retail customers
 (in thousands)
2,025 1,989 36 %
Average revenue per MWh:
Retail$85.46 $84.15 $1.31 %
Wholesale$39.12 $30.89 $8.23 27 %
Heating degree days4,745 4,687 58 %
Cooling degree days— N/A
Sources of energy (GWhs)(1):
Coal6,911 7,644 (733)(10)%
Natural gas3,115 3,065 50 
Wind(2)
2,392 1,738 654 38 
Hydroelectric and other(2)
984 988 (4)— 
Total energy generated13,402 13,435 (33)— 
Energy purchased3,223 3,028 195 
Total16,625 16,463 162 %
Average cost of energy per MWh:
Energy generated(3)
$18.83 $17.66 $1.17 %
Energy purchased$55.49 $47.13 $8.36 18 %

(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 sources 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 Renewable Energy Credits or other environmental commodities.

(3)    The average cost per MWh of energy generated includes only the cost of fuel associated with the generating facilities.
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Quarter Ended March 31, 2022 compared to Quarter Ended March 31, 2021

Utility margin increased $14 million, or 2%, for the first quarter of 2022 compared to 2021 primarily due to:
$40 million increase in retail revenue due to higher volumes and higher average prices. Retail customer volumes increased 1.9%, primarily due to an increase in the average number of customers, favorable impacts of weather and an increase in customer usage;
$12 million increase in wholesale revenue due to higher average market prices, partially offset by lower volumes;
$12 million of lower coal-fueled generation costs due to lower volumes, partially offset by higher average prices;
$8 million of higher deferred net power costs in accordance with established adjustment mechanisms; and
$8 million of favorable wheeling activities.
The increases above were partially offset by:
$36 million of higher purchased electricity costs from higher average market prices and volumes; and
$27 million of higher natural gas-fueled generation costs due to higher average prices and higher volumes.
Operations and maintenance increased $18 million, or 7%, for the first quarter of 2022 compared to 2021 primarily due to higher maintenance costs, higher DSM amortization of regulatory balances, and higher insurance premiums due to cost increases related to wildfire coverage, partially offset by lower labor expenses and lower vegetation management costs.

Depreciation and amortization increased $16 million, or 6%, for the first quarter of 2022 compared to 2021 primarily due to higher plant in-service balances.

Other, net decreased $10 million for the first quarter of 2022 compared to 2021 primarily due to market movements related to corporate-owned life insurance policies and higher pension and postretirement costs.

Income tax expense (benefit) increased $13 million to an expense of $2 million for the first quarter of 2022 compared to a benefit of $11 million for the first quarter of 2021. The effective tax rate was 2% for the first quarter of 2022 and (7)% for the first quarter of 2021. The effective tax rate increased primarily due to a valuation allowance PacifiCorp recorded in the first quarter of 2022 against state net operating loss carryforwards.

Liquidity and Capital Resources

As of March 31, 2022, PacifiCorp's total net liquidity was as follows (in millions):
Cash and cash equivalents$335 
 
Credit facilities1,200 
Less:
Tax-exempt bond support(218)
Net credit facilities982 
 
Total net liquidity$1,317 
 
Credit facilities:
Maturity dates2024 
Operating Activities

Net cash flows from operating activities for the three-month periods ended March 31, 2022 and 2021 were $537 million and $469 million, respectively. The change was primarily due to timing of operating payables and higher collections from retail customers, partially offset by higher wholesale purchases.

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.
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Investing Activities

Net cash flows from investing activities for the three-month periods ended March 31, 2022 and 2021 were $(371) million and $(440) million, respectively. The change is primarily due to a decrease in capital expenditures of $65 million. Refer to "Future Uses of Cash" for discussion of capital expenditures.

Financing Activities

Net cash flows from financing activities for the three-month period ended March 31, 2022 were $(11) million. Uses of cash consisted substantially of $9 million for the repayment of long-term debt.

Net cash flows from financing activities for the three-month period ended March 31, 2021 were $1 million. Sources of cash consisted of $2 million from the borrowing of short-term debt.

Short-term Debt

Regulatory authorities limit PacifiCorp to $1.5 billion of short-term debt. As of March 31, 2022 and December 31, 2021, PacifiCorp had no short-term debt outstanding.

Debt Authorizations

PacifiCorp currently has regulatory authority from the OPUC and the Idaho Public Utilities Commission to issue an additional $2 billion of long-term debt. PacifiCorp must make a notice filing with the WUTC prior to any future issuance. PacifiCorp currently has an effective shelf registration statement with the SEC to issue an indeterminate amount of first mortgage bonds through September 2023.

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 associated with PacifiCorp 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, impacts to customers' rates; changes in environmental and other rules and regulations; 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):
Three-Month PeriodsAnnual
Ended March 31,Forecast
202120222022
Wind generation$33 $$154 
Electric distribution195 142 660 
Electric transmission60 153 1,185 
Other151 71 360 
Total$439 $374 $2,359 

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PacifiCorp's 2021 IRP identified a roadmap for a significant increase in renewable and carbon free generation resources, coal to natural gas conversion of certain coal-fueled units, energy storage and associated transmission. PacifiCorp's 2021 IRP identified over 1,800 MWs of new wind-powered generating resources that are expected to be online by 2025. PacifiCorp anticipates that the additional new wind-powered generation will be a mixture of owned and contracted resources. PacifiCorp has included an estimate for these new generation resources and associated transmission in its forecast capital expenditures for 2022 through 2024. These estimates are likely to change as a result of the RFP process. PacifiCorp's historical and forecast capital expenditures include the following:

Wind generation includes both growth projects and operating expenditures. Growth projects include:
Construction of wind-powered generating facilities at PacifiCorp totaling $3 million and $27 million for the three-month periods ended March 31, 2022 and 2021, respectively. Construction includes 516 MWs of new wind-powered generating facilities that were placed in-service in 2021. Planned spending for the construction of additional wind-powered generating facilities totals $109 million for the remainder of 2022.
Planned acquisition and repowering of two wind-powered generating facilities by PacifiCorp totaling $3 million and $1 million for the three-month periods ended March 31, 2022 and 2021, respectively. The repowered facilities are expected to be placed in-service in 2023 and 2024. Planned spending for acquiring and repowering generating facilities totals $18 million for the remainder of 2022.
Electric distribution includes both growth projects and operating expenditures. Operating expenditures includes spend on wildfire mitigation and wildfire and storm damage restoration. Expenditures for these items totaled $25 million and $83 million for the three-month periods ended March 31, 2022 and 2021, respectively. Planned spending for wildfire mitigation and wildfire and storm damage restoration totals $118 million for the remainder of 2022. Remaining investments relate to expenditures for new connections and distribution operations.

Electric transmission includes both growth projects and operating expenditures. Transmission investment primarily reflects planned costs for the 416-mile, 500-kV high-voltage transmission line between the Aeolus substation near Medicine Bow in Wyoming and the Clover substation near Mona, Utah; the 59-mile, 230-kV high-voltage transmission line between the Windstar substation near Glenrock, Wyoming and the Aeolus substation; and the 290-mile, 500-kV high-voltage transmission line from the Longhorn substation near Boardman, Oregon to the Hemingway substation near Boise, Idaho. Expenditures for these segments totaled $95 million and $16 million for the three-month periods ended March 31, 2022 and 2021, respectively. Planned spending for these Energy Gateway Transmission segments to be placed in-service in 2024-2026 totals $814 million for the remainder of 2022.

Other includes both growth projects and operating expenditures. Expenditures for information technology totaled $45 million and $13 million for the three-month periods ended March 31, 2022 and 2021, respectively. Planned information technology spending totals $127 million for the remainder of 2022. Remaining investments relate to operating projects that consist of routine expenditures for generation and other infrastructure needed to serve existing and expected demand.

Energy Supply Planning

As required by certain state regulations, PacifiCorp uses an IRP to develop a long-term resource plan to ensure that PacifiCorp can continue to provide reliable and cost-effective electric service to its customers while maintaining compliance with existing and evolving environmental laws and regulations.

In September 2021, PacifiCorp filed its 2021 IRP with its state commissions and subsequently filed its 2021 IRP Update in March and April 2022. In March 2022, the OPUC acknowledged PacifiCorp's 2021 IRP and its preferred portfolio. Reviews of the 2021 IRP by the UPSC, the Wyoming Public Service Commission, the WUTC and the Idaho Public Utilities Commission are ongoing.

Requests for Proposals

PacifiCorp issues individual RFPs to procure resources identified in the IRP or resources driven by customer demands. The IRP and the RFPs provide for the identification and staged procurement of resources to meet load or state-specific compliance obligations. Depending upon the specific RFP, applicable laws and regulations may require PacifiCorp to file draft RFPs with the UPSC, the OPUC and the WUTC. Approval by the UPSC, the OPUC or the WUTC may be required depending on the nature of the RFPs.

65


A draft of PacifiCorp's 2022 All Source RFP ("2022AS RFP") was filed for approval with the WUTC in December 2021, and with the UPSC and the OPUC in January 2022. The draft 2022AS RFP was approved by the WUTC in March 2022 and by the UPSC and the OPUC in April 2022. PacifiCorp expects to issue the 2022AS RFP to market in the second quarter of 2022.

Material Cash Requirements

As of March 31, 2022, there have been no material changes outside the normal course of business in material cash requirements from the information provided in Item 7 of PacifiCorp's Annual Report on Form 10-K for the year ended December 31, 2021.

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 and local laws and regulations regarding climate change, wildfire prevention and mitigation, RPS, air and water quality, emissions performance standards, 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 various federal, state and local 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 "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.

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, 2021. There have been no significant changes in PacifiCorp's assumptions regarding critical accounting estimates since December 31, 2021.
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MidAmerican Funding, LLC and its subsidiaries and MidAmerican Energy Company
Consolidated Financial Section

67


PART I
Item 1.Financial Statements


REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM


To the Board of Directors and Shareholder of
MidAmerican Energy Company

Results of Review of Interim Financial Information

We have reviewed the accompanying balance sheet of MidAmerican Energy Company ("MidAmerican Energy") as of March 31, 2022, the related statements of operations, changes in shareholder's equity, and cash flows for the three-month periods ended March 31, 2022 and 2021, and the related notes (collectively referred to as the "interim financial information"). Based on our reviews, we are not aware of any material modifications that should be made to the accompanying interim financial information for it 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) (PCAOB), the balance sheet of MidAmerican Energy as of December 31, 2021, and the related 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 25, 2022, 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, 2021, is fairly stated, in all material respects, in relation to the balance sheet from which it has been derived.

Basis for Review Results

This interim financial information is the responsibility of MidAmerican Energy's management. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to MidAmerican Energy in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our reviews in accordance with standards of the PCAOB. 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 PCAOB, 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.


/s/ Deloitte & Touche LLP


Des Moines, Iowa
April 29, 2022

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MIDAMERICAN ENERGY COMPANY
BALANCE SHEETS (Unaudited)
(Amounts in millions)

As of
March 31,December 31,
20222021
ASSETS
Current assets:
Cash and cash equivalents$131 $232 
Trade receivables, net468 526 
Income tax receivable297 79 
Inventories185 234 
Other current assets187 123 
Total current assets1,268 1,194 
Property, plant and equipment, net20,344 20,301 
Regulatory assets492 473 
Investments and restricted investments985 1,026 
Other assets262 263 
Total assets$23,351 $23,257 

The accompanying notes are an integral part of these financial statements.
69


MIDAMERICAN ENERGY COMPANY
BALANCE SHEETS (Unaudited) (continued)
(Amounts in millions)

As of
March 31,December 31,
20222021
LIABILITIES AND SHAREHOLDER'S EQUITY
Current liabilities:
Accounts payable$429 $531 
Accrued interest88 84 
Accrued property, income and other taxes144 158 
Current portion of long-term debt— 
Other current liabilities144 145 
Total current liabilities812 918 
Long-term debt7,719 7,721 
Regulatory liabilities1,057 1,080 
Deferred income taxes3,373 3,389 
Asset retirement obligations723 714 
Other long-term liabilities463 475 
Total liabilities14,147 14,297 
Commitments and contingencies (Note 7)
Shareholder's equity:
Common stock - 350 shares authorized, no par value, 71 shares issued and outstanding
— — 
Additional paid-in capital561 561 
Retained earnings8,643 8,399 
Total shareholder's equity9,204 8,960 
Total liabilities and shareholder's equity$23,351 $23,257 

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

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MIDAMERICAN ENERGY COMPANY
STATEMENTS OF OPERATIONS (Unaudited)
(Amounts in millions)
Three-Month Periods
Ended March 31,
20222021
Operating revenue:
Regulated electric$608 $545 
Regulated natural gas and other397 522 
Total operating revenue1,005 1,067 
Operating expenses:
Cost of fuel and energy125 151 
Cost of natural gas purchased for resale and other298 432 
Operations and maintenance192 193 
Depreciation and amortization250 207 
Property and other taxes40 36 
Total operating expenses905 1,019 
Operating income100 48 
Other income (expense):
Interest expense(78)(74)
Allowance for borrowed funds
Allowance for equity funds15 
Other, net(3)11 
Total other income (expense)(62)(55)
Income (loss) before income tax benefit38 (7)
Income tax benefit(206)(154)
Net income$244 $147 

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

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MIDAMERICAN ENERGY COMPANY
STATEMENTS OF CHANGES IN SHAREHOLDER'S EQUITY (Unaudited)
(Amounts in millions)

Common StockAdditional Paid-in CapitalRetained
Earnings
Total Shareholder's
Equity
Balance, December 31, 2020$— $561 $7,504 $8,065 
Net income— — 147 147 
Balance, March 31, 2021$— $561 $7,651 $8,212 
Balance, December 31, 2021$— $561 $8,399 $8,960 
Net income— — 244 244 
Balance, March 31, 2022$— $561 $8,643 $9,204 

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

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MIDAMERICAN ENERGY COMPANY
STATEMENTS OF CASH FLOWS (Unaudited)
(Amounts in millions)

Three-Month Periods
Ended March 31,
20222021
Cash flows from operating activities:
Net income$244 $147 
Adjustments to reconcile net income to net cash flows from operating activities:
Depreciation and amortization250 207 
Amortization of utility plant to other operating expenses
Allowance for equity funds(15)(6)
Deferred income taxes and investment tax credits, net16 154 
Settlements of asset retirement obligations(7)(4)
Other, net10 (18)
Changes in other operating assets and liabilities:
Trade receivables and other assets42 (299)
Inventories49 46 
Pension and other postretirement benefit plans
Accrued property, income and other taxes, net(244)(331)
Accounts payable and other liabilities10 
Net cash flows from operating activities360 (85)
Cash flows from investing activities:
Capital expenditures(459)(298)
Purchases of marketable securities(105)(52)
Proceeds from sales of marketable securities102 47 
Other, net— 
Net cash flows from investing activities(461)(303)
Cash flows from financing activities:
Repayments of long-term debt(1)— 
Net proceeds from short-term debt— 387 
Other, net— 
Net cash flows from financing activities— 387 
Net change in cash and cash equivalents and restricted cash and cash equivalents(101)(1)
Cash and cash equivalents and restricted cash and cash equivalents at beginning of period239 45 
Cash and cash equivalents and restricted cash and cash equivalents at end of period$138 $44 

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

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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. MHC's nonregulated subsidiary is Midwest Capital Group, Inc. 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 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 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 March 31, 2022, and for the three-month periods ended March 31, 2022 and 2021. The results of operations for the three-month periods ended March 31, 2022, 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, 2021, 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 three-month period ended March 31, 2022.

(2)    Cash and Cash Equivalents and Restricted Cash and Cash Equivalents

Cash equivalents consist of funds invested in money market mutual funds, U.S. Treasury Bills and other investments with a maturity of three months or less when purchased. Cash and cash equivalents exclude amounts where availability is restricted by legal requirements, loan agreements or other contractual provisions. Restricted cash and cash equivalents consist substantially of funds restricted for wildlife preservation. A reconciliation of cash and cash equivalents and restricted cash and cash equivalents as presented in the Statements of Cash Flows is outlined below and disaggregated by the line items in which they appear on the Balance Sheets (in millions):
As of
March 31,December 31,
20222021
Cash and cash equivalents$131 $232 
Restricted cash and cash equivalents in other current assets
Total cash and cash equivalents and restricted cash and cash equivalents$138 $239 

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(3)    Property, Plant and Equipment, Net

Property, plant and equipment, net consists of the following (in millions):
As of
March 31,December 31,
Depreciable Life20222021
Utility plant in-service, net:
Generation
20-70 years
$17,466 $17,397 
Transmission
52-75 years
2,488 2,474 
Electric distribution
20-75 years
4,713 4,661 
Natural gas distribution
29-75 years
2,055 2,039 
Utility plant in-service26,722 26,571 
Accumulated depreciation and amortization(7,555)(7,376)
Utility plant in-service, net19,167 19,195 
Nonregulated property, net:
Nonregulated property gross
20-50 years
Accumulated depreciation and amortization(1)(1)
Nonregulated property, net
19,173 19,201 
Construction work-in-progress1,171 1,100 
Property, plant and equipment, net$20,344 $20,301 

(4)    Income Taxes

The effective income tax rate for the three-month period ended March 31, 2021, is 2,200% and results from a $154 million income tax benefit associated with a $7 million pretax loss. The $154 million income tax benefit is primarily comprised of a $2 million benefit (21%) from the application of the statutory income tax rate to the pretax loss and a $168 million benefit (2,400%) from income tax credits, partially offset by a $13 million expense (186%) from the effects of ratemaking.

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
Ended March 31,
20222021
Federal statutory income tax rate21 %21 %
Income tax credits(534)2,400 
State income tax, net of federal income tax impacts(21)(29)
Effects of ratemaking(8)(186)
Other, net— (6)
Effective income tax rate(542)%2,200 %

Income tax credits relate primarily to production tax credits ("PTCs") from MidAmerican Energy's wind-powered generating facilities. Federal renewable electricity PTCs 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. MidAmerican Energy recognizes its renewable electricity PTCs throughout the year based on when the credits are earned and excludes them from the annual effective tax rate that is the basis for the interim recognition of other income tax expense. Wind-powered generating facilities are eligible for the credits for 10 years from the date the qualifying generating facilities are placed in-service. PTCs for the three-month periods ended March 31, 2022 and 2021 totaled $203 million and $151 million, respectively.

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Berkshire Hathaway includes BHE and subsidiaries in its U.S. federal and Iowa state income tax returns. Consistent with established regulatory practice, MidAmerican Energy's provision for income tax has been computed on a stand-alone basis, and substantially all of its currently payable or receivable income tax is remitted to or received from BHE. MidAmerican Energy made no cash payments for income tax to BHE for each of the three-month periods ended March 31, 2022 and 2021.

(5)    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 for the plans of MidAmerican Energy and the aforementioned affiliates included the following components (in millions):
Three-Month Periods
Ended March 31,
20222021
Pension:
Service cost$$
Interest cost
Expected return on plan assets(7)(9)
Settlement— 
Net periodic benefit cost$$
Other postretirement:
Service cost$$
Interest cost
Expected return on plan assets(4)(2)
Net amortization— (1)
Net periodic benefit cost$— $

Amounts other than the service cost for pension and other postretirement benefit plans are recorded in Other, net in the Statements of Operations. Employer contributions to the pension and other postretirement benefit plans are expected to be $7 million and $3 million, respectively, during 2022. As of March 31, 2022, $2 million and $1 million of contributions had been made to the pension and other postretirement benefit plans, respectively.

(6)    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 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 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.
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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 1Level 2Level 3
Other(1)
Total
As of March 31, 2022:
Assets:
Commodity derivatives$— $66 $$— $70 
Money market mutual funds132 — — — 132 
Debt securities:
U.S. government obligations225 — — — 225 
International government obligations— — — 
Corporate obligations— 79 — — 79 
Municipal obligations— — — 
Agency, asset and mortgage-backed obligations— — — 
Equity securities:
U.S. companies415 — — — 415 
International companies— — — 
Investment funds23 — — — 23 
$804 $150 $$— $958 
Liabilities - commodity derivatives$(1)$— $— $— $(1)

Input Levels for Fair Value Measurements
Level 1Level 2Level 3
Other(1)
Total
As of December 31, 2021:
Assets:
Commodity derivatives$— $32 $$(7)$28 
Money market mutual funds228 — — — 228 
Debt securities:
U.S. government obligations232 — — — 232 
International government obligations— — — 
Corporate obligations— 90 — — 90 
Municipal obligations— — — 
Agency, asset and mortgage-backed obligations— — — 
Equity securities:
U.S. companies428 — — — 428 
International companies10 — — — 10 
Investment funds18 — — — 18 
$916 $129 $$(7)$1,041 
Liabilities - commodity derivatives$— $(6)$(8)$12 $(2)

(1)Represents netting under master netting arrangements and a net cash collateral receivable of $— million and $5 million as of March 31, 2022 and December 31, 2021, respectively.

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MidAmerican Energy's investments in money market mutual funds and debt and equity securities are stated at fair value, with debt securities 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.

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 March 31, 2022As of December 31, 2021
Carrying
Value
Fair
Value
Carrying
Value
Fair
Value
Long-term debt$7,726 $8,196 $7,721 $9,037 

(7)    Commitments and Contingencies

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

MidAmerican Energy is subject to federal, state and local laws and regulations regarding climate change, renewable portfolio standards, air and water quality, emissions performance standards, 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. MidAmerican Energy believes it is in material compliance with all applicable laws and regulations.

Transmission Rates

MidAmerican Energy's wholesale transmission rates are set annually using Federal Energy Regulatory Commission ("FERC")-approved formula rates subject to true-up for actual cost of service. MidAmerican Energy is authorized by the FERC to include a 0.50% adder beyond the approved base return on equity ("ROE") effective January 2015. Prior to September 2016, the rates in effect were based on a 12.38% 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. In September 2016, the FERC issued an order for the first complaint, which reduces the base ROE to 10.32% and required refunds, plus interest, for the period from November 2013 through February 2015. Customer refunds relative to the first complaint occurred in February 2017. In November 2019, the FERC issued an order addressing the second complaint and issues on appeal in the first complaint. The order established a ROE of 9.88% (10.38% including the 0.50% adder) for the 15-month refund period of the first complaint and prospectively from September 2016 forward. In May 2020, the FERC issued an order on rehearing of the November 2019 order. The May 2020 order affirmed the FERC's prior decision to dismiss the second complaint and established an ROE of 10.02% (10.52% including the 0.50% adder) for the 15-month refund period of the first complaint and prospectively from September 2016 to the date of the May 2020 order. These orders continue to be subject to judicial appeal. MidAmerican Energy cannot predict the ultimate outcome of these matters and, as of March 31, 2022, has accrued an $8 million liability for refunds of amounts collected under the higher ROE during the periods covered by both complaints.

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(8)    Revenue from Contracts with Customers

The following table summarizes MidAmerican Energy's revenue from contracts with customers ("Customer Revenue") by line of business, with further disaggregation of retail by customer class, including a reconciliation to MidAmerican Energy's reportable segment information included in Note 9 (in millions):
For the Three-Month Period Ended March 31, 2022
ElectricNatural GasOtherTotal
Customer Revenue:
Retail:
Residential$168 $225 $— $393 
Commercial74 88 — 162 
Industrial198 — 207 
Natural gas transportation services— 14 — 14 
Other retail(1)
32 — 33 
Total retail472 337 — 809 
Wholesale104 58 — 162 
Multi-value transmission projects15 — — 15 
Other Customer Revenue— — 
Total Customer Revenue591 395 987 
Other revenue17 — 18 
Total operating revenue$608 $396 $$1,005 

For the Three-Month Period Ended March 31, 2021
ElectricNatural GasOtherTotal
Customer Revenue:
Retail:
Residential$161 $308 $— $469 
Commercial71 129 — 200 
Industrial190 12 — 202 
Natural gas transportation services— 10 — 10 
Other retail(1)
30 — 31 
Total retail452 460 — 912 
Wholesale74 51 — 125 
Multi-value transmission projects15 — — 15 
Other Customer Revenue— — 10 10 
Total Customer Revenue541 511 10 1,062 
Other revenue— 
Total operating revenue$545 $512 $10 $1,067 

(1)    Other retail includes provisions for rate refunds, for which any actual refunds will be reflected in the applicable customer classes upon resolution of the related regulatory proceeding.

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(9)    Segment Information

MidAmerican Energy has identified two reportable 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 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
 Ended March 31,
20222021
Operating revenue:
Regulated electric$608 $545 
Regulated natural gas396 512 
Other10 
Total operating revenue$1,005 $1,067 
Operating income:
Regulated electric$51 $
Regulated natural gas49 39 
Total operating income100 48 
Interest expense(78)(74)
Allowance for borrowed funds
Allowance for equity funds15 
Other, net(3)11 
Income (loss) before income tax benefit$38 $(7)

As of
March 31,
2022
December 31,
2021
Assets:
Regulated electric$21,613 $21,385 
Regulated natural gas1,737 1,871 
Other
Total assets$23,351 $23,257 


80




REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM


To the Board of Managers and Member of
MidAmerican Funding, LLC

Results of Review of Interim Financial Information

We have reviewed the accompanying consolidated balance sheet of MidAmerican Funding, LLC and subsidiaries ("MidAmerican Funding") as of March 31, 2022, the related consolidated statements of operations, changes in member's equity, and cash flows for the three-month periods ended March 31, 2022 and 2021, and the related notes (collectively referred to as the "interim financial information"). Based on our reviews, we are not aware of any material modifications that should be made to the accompanying interim financial information for it 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) (PCAOB) and in accordance with auditing standards generally accepted in the United States of America, the consolidated balance sheet of MidAmerican Funding as of December 31, 2021, and the related consolidated statements of operations, changes in member's equity, and cash flows for the year then ended (not presented herein); and in our report dated February 25, 2022, 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, 2021, is fairly stated, in all material respects, in relation to the consolidated balance sheet from which it has been derived.

Basis for Review Results

This interim financial information is the responsibility of MidAmerican Funding's management. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to MidAmerican Funding in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our reviews in accordance with standards of the PCAOB 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 PCAOB 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.


/s/ Deloitte & Touche LLP


Des Moines, Iowa
April 29, 2022

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MIDAMERICAN FUNDING, LLC AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS (Unaudited)
(Amounts in millions)

As of
March 31,December 31,
20222021
ASSETS
Current assets:
Cash and cash equivalents$132 $233 
Trade receivables, net468 526 
Income tax receivable299 80 
Inventories185 234 
Other current assets187 123 
Total current assets1,271 1,196 
Property, plant and equipment, net20,345 20,302 
Goodwill1,270 1,270 
Regulatory assets492 473 
Investments and restricted investments987 1,028 
Other assets261 262 
Total assets$24,626 $24,531 

The accompanying notes are an integral part of these consolidated financial statements.
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MIDAMERICAN FUNDING, LLC AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS (Unaudited) (continued)
(Amounts in millions)

As of
March 31,December 31,
20222021
LIABILITIES AND MEMBER'S EQUITY
Current liabilities:
Accounts payable$429 $531 
Accrued interest89 89 
Accrued property, income and other taxes144 158 
Note payable to affiliate197 189 
Current portion of long-term debt— 
Other current liabilities145 146 
Total current liabilities1,011 1,113 
Long-term debt7,959 7,961 
Regulatory liabilities1,057 1,080 
Deferred income taxes3,371 3,387 
Asset retirement obligations723 714 
Other long-term liabilities463 475 
Total liabilities14,584 14,730 
Commitments and contingencies (Note 7)
Member's equity:
Paid-in capital1,679 1,679 
Retained earnings8,363 8,122 
Total member's equity10,042 9,801 
Total liabilities and member's equity$24,626 $24,531 

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

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MIDAMERICAN FUNDING, LLC AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
(Amounts in millions)

Three-Month Periods
Ended March 31,
20222021
Operating revenue:
Regulated electric$608 $545 
Regulated natural gas and other397 522 
Total operating revenue1,005 1,067 
Operating expenses:
Cost of fuel and energy125 151 
Cost of natural gas purchased for resale and other298 432 
Operations and maintenance192 193 
Depreciation and amortization250 207 
Property and other taxes40 36 
Total operating expenses905 1,019 
Operating income100 48 
Other income (expense):
Interest expense(82)(78)
Allowance for borrowed funds
Allowance for equity funds15 
Other, net(4)10 
Total other income (expense)(67)(60)
Income (loss) before income tax benefit33 (12)
Income tax benefit(208)(156)
Net income$241 $144 

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

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MIDAMERICAN FUNDING, LLC AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN MEMBER'S EQUITY (Unaudited)
(Amounts in millions)

Paid-in
Capital
Retained
Earnings
Total Member's
Equity
Balance, December 31, 2020$1,679 $7,240 $8,919 
Net income— 144 144 
Balance, March 31, 2021$1,679 $7,384 $9,063 
Balance, December 31, 2021$1,679 $8,122 $9,801 
Net income— 241 241 
Balance, March 31, 2022$1,679 $8,363 $10,042 

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

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MIDAMERICAN FUNDING, LLC AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
(Amounts in millions)

Three-Month Periods
Ended March 31,
20222021
Cash flows from operating activities:
Net income$241 $144 
Adjustments to reconcile net income to net cash flows from operating activities:
Depreciation and amortization250 207 
Amortization of utility plant to other operating expenses
Allowance for equity funds(15)(6)
Deferred income taxes and investment tax credits, net16 153 
Settlements of asset retirement obligations(7)(4)
Other, net10 (17)
Changes in other operating assets and liabilities:
Trade receivables and other assets43 (298)
Inventories49 46 
Pension and other postretirement benefit plans
Accrued property, income and other taxes, net(245)(332)
Accounts payable and other liabilities(1)
Net cash flows from operating activities353 (92)
Cash flows from investing activities:
Capital expenditures(459)(298)
Purchases of marketable securities(105)(52)
Proceeds from sales of marketable securities102 47 
Other, net— 
Net cash flows from investing activities(461)(303)
Cash flows from financing activities:
Repayments of long-term debt(1)— 
Net change in note payable to affiliate
Net proceeds from short-term debt— 387 
Net cash flows from financing activities394 
Net change in cash and cash equivalents and restricted cash and cash equivalents(101)(1)
Cash and cash equivalents and restricted cash and cash equivalents at beginning of period240 46 
Cash and cash equivalents and restricted cash and cash equivalents at end of period$139 $45 

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

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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 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"). 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. MHC's principal subsidiary is MidAmerican Energy Company ("MidAmerican Energy"), a public utility with electric and natural gas operations, and its direct, wholly owned nonregulated subsidiary is Midwest Capital Group, Inc.

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 March 31, 2022, and for the three-month periods ended March 31, 2022 and 2021. The results of operations for the three-month periods ended March 31, 2022, 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, 2021, 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 three-month period ended March 31, 2022.

(2)    Cash and Cash Equivalents and Restricted Cash and Cash Equivalents

Cash equivalents consist of funds invested in money market mutual funds, U.S. Treasury Bills and other investments with a maturity of three months or less when purchased. Cash and cash equivalents exclude amounts where availability is restricted by legal requirements, loan agreements or other contractual provisions. Restricted cash and cash equivalents consist substantially of funds restricted for wildlife preservation. A reconciliation of cash and cash equivalents and restricted cash and cash equivalents as presented in the Consolidated Statements of Cash Flows is outlined below and disaggregated by the line items in which they appear on the Consolidated Balance Sheets (in millions):
As of
March 31,December 31,
20222021
Cash and cash equivalents$132 $233 
Restricted cash and cash equivalents in other current assets
Total cash and cash equivalents and restricted cash and cash equivalents$139 $240 

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(3)    Property, Plant and Equipment, Net

Refer to Note 3 of MidAmerican Energy's Notes to Financial Statements.

(4)    Income Taxes

The effective income tax rate for the three-month period ended March 31, 2021, is 1,300% and results from a $156 million income tax benefit associated with a $12 million pretax loss. The $156 million income tax benefit is primarily comprised of a $3 million benefit (21%) from the application of the statutory income tax rate to the pretax loss and a $168 million benefit (1,400%) from income tax credits, partially offset by a $13 million expense (108%) from the effects of ratemaking.

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
Ended March 31,
20222021
Federal statutory income tax rate21 %21 %
Income tax credits(618)1,400 
State income tax, net of federal income tax impacts(24)(8)
Effects of ratemaking(9)(108)
Other, net— (5)
Effective income tax rate(630)%1,300 %

Income tax credits relate primarily to production tax credits ("PTCs") from MidAmerican Energy's wind-powered generating facilities. Federal renewable electricity PTCs 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. MidAmerican Funding recognizes its renewable electricity PTCs throughout the year based on when the credits are earned and excludes them from the annual effective tax rate that is the basis for the interim recognition of other income tax expense. Wind-powered generating facilities are eligible for the credits for 10 years from the date the qualifying generating facilities are placed in-service. PTCs for the three-month periods ended March 31, 2022 and 2021 totaled $203 million and $151 million, respectively.

Berkshire Hathaway includes BHE and subsidiaries in its U.S. federal and Iowa state income tax returns. Consistent with established regulatory practice, MidAmerican Funding's and MidAmerican Energy's provisions for income tax have been computed on a stand-alone basis, and substantially all of their currently payable or receivable income tax is remitted to or received from BHE. MidAmerican Funding made no cash payments for income tax to BHE for each of the three-month periods ended March 31, 2022 and 2021.

(5)    Employee Benefit Plans

Refer to Note 5 of MidAmerican Energy's Notes to Financial Statements.

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(6)    Fair Value Measurements

Refer to Note 6 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 March 31, 2022As of December 31, 2021
Carrying
Value
Fair
Value
Carrying
Value
Fair
Value
Long-term debt$7,966 $8,480 $7,961 $9,350 

(7)    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 7 of MidAmerican Energy's Notes to Financial Statements.

(8)    Revenue from Contracts with Customers

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

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(9)    Segment Information

MidAmerican Funding has identified two reportable 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 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
Ended March 31,
20222021
Operating revenue:
Regulated electric$608 $545 
Regulated natural gas396 512 
Other10 
Total operating revenue$1,005 $1,067 
Operating income:
Regulated electric$51 $
Regulated natural gas49 39 
Total operating income100 48 
Interest expense(82)(78)
Allowance for borrowed funds
Allowance for equity funds15 
Other, net(4)10 
Income (loss) before income tax benefit$33 $(12)

As of
March 31,
2022
December 31,
2021
Assets(1):
Regulated electric$22,804 $22,576 
Regulated natural gas1,816 1,950 
Other
Total assets$24,626 $24,531 
(1)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

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 during the periods included herein. 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, usage trends and other factors. This discussion should be read in conjunction with MidAmerican Funding's historical unaudited Consolidated Financial Statements and Notes to Consolidated Financial Statements and MidAmerican Energy's historical unaudited Financial Statements and Notes to Financial Statements in Part I, Item 1 of this Form 10-Q. MidAmerican Funding's and MidAmerican Energy's actual results in the future could differ significantly from the historical results.

Results of Operations for the First Quarter of 2022 and 2021

Overview

MidAmerican Energy -

MidAmerican Energy's net income for the first quarter of 2022 was $244 million, an increase of $97 million, or 66%, compared to 2021, primarily due to higher electric utility margin of $89 million, higher natural gas utility margin of $18 million, higher income tax benefit of $52 million and higher allowances for equity and borrowed funds of $11 million, offset by higher depreciation and amortization expense of $43 million, unfavorable other, net of $14 million, lower nonregulated utility margins of $9 million, higher property and other taxes of $4 million and higher interest expense of $4 million. Electric retail customer volumes increased 6% primarily due to higher usage for certain industrial customers and the favorable impact of weather. Wholesale electricity sales volumes increased 31% due to favorable market conditions. Energy generated increased 17% primarily due to greater wind-powered generation, resulting in a 10% decrease in the average per-unit cost of energy generated. Natural gas retail customer volumes increased 8% due to the favorable impact of weather.

MidAmerican Funding -

MidAmerican Funding's net income for the first quarter of 2022 was $241 million, an increase of $97 million, or 67%, compared to 2021. The variances in net income were primarily due to the changes in MidAmerican Energy's earnings discussed above.

Non-GAAP Financial Measure

Management utilizes various key financial measures that are prepared in accordance with GAAP, as well as non-GAAP financial measures such as, electric utility margin and natural gas utility margin, to help evaluate results of operations. Electric utility margin is calculated as regulated electric operating revenue less cost of fuel and energy, which are captions presented on the Statements of Operations. Natural gas utility margin is calculated as regulated natural gas operating revenue less regulated cost of natural gas purchased for resale, which are included in regulated natural gas and other and cost of natural gas purchased for resale and other, respectively, on the Statements of Operations.

MidAmerican Energy's cost of fuel and energy and cost of natural gas purchased for resale are generally recovered from its retail customers through regulatory recovery mechanisms, and as a result, changes in MidAmerican Energy's expense included in regulatory recovery mechanisms result in comparable changes to revenue. As such, management believes electric utility margin and natural gas utility margin more appropriately and concisely explain profitability rather than a discussion of revenue and cost of sales separately. Management believes the presentation of electric utility margin and natural gas utility margin provides meaningful and valuable insight into the information management considers important to running the business and a measure of comparability to others in the industry.
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Electric utility margin and natural gas utility margin are not measures calculated in accordance with GAAP and should be viewed as a supplement to, and not a substitute for, operating income, which is the most comparable financial measure prepared in accordance with GAAP. The following table provides a reconciliation of utility margin to MidAmerican Energy's operating income (in millions):
First Quarter
20222021Change
Electric utility margin:
Operating revenue$608 $545 $63 12 %
Cost of fuel and energy125 151 (26)(17)
Electric utility margin483 394 89 23 %
Natural gas utility margin:
Operating revenue396 512 (116)(23)%
Natural gas purchased for resale298 432 (134)(31)
Natural gas utility margin98 80 18 23 %
Utility margin581 474 107 23 %
Other operating revenue10 (9)(90)%
Operations and maintenance192 193 (1)(1)
Depreciation and amortization250 207 43 21 
Property and other taxes40 36 11 
Operating income$100 $48 $52 *

*    Not meaningful.

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Electric Utility Margin

A comparison of key operating results related to electric utility margin is as follows:
First Quarter
20222021Change
Utility margin (in millions):
Operating revenue$608 $545 $63 12 %
Cost of fuel and energy125 151 (26)(17)
Utility margin$483 $394 $89 23 %
Sales (GWhs):
Residential1,853 1,738 115 %
Commercial1,013 938 75 
Industrial3,979 3,819 160 
Other403 370 33 
Total retail7,248 6,865 383 
Wholesale5,325 4,051 1,274 31 
Total sales12,573 10,916 1,657 15 %
Average number of retail customers (in thousands)
810801%
Average revenue per MWh:
Retail$65.10 $65.82 $(0.72)(1)%
Wholesale$20.65 $16.64 $4.01 24 %
Heating degree days3,315 3,211 104 %
Sources of energy (GWhs)(1):
Wind and other(2)
8,290 6,122 2,168 35 %
Coal2,359 2,902 (543)(19)
Nuclear920 895 25 
Natural gas234 143 91 64 
Total energy generated11,803 10,062 1,741 17 
Energy purchased962 1,018 (56)(6)
Total12,765 11,080 1,685 15 %
Average cost of energy per MWh:
Energy generated(3)
$5.56 $6.15 $(0.59)(10)%
Energy purchased$62.04 $87.45 $(25.41)(29)%

(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 RPS or other regulatory requirements or (b) sold to third parties in the form of renewable energy credits or other environmental commodities.

(3)    The average cost per MWh of energy generated includes only the cost of fuel associated with the generating facilities.
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Natural Gas Utility Margin

A comparison of key operating results related to natural gas utility margin is as follows:
First Quarter
20222021Change
Utility margin (in millions):
Operating revenue$396 $512 $(116)(23)%
Natural gas purchased for resale298 432 (134)(31)
Utility margin$98 $80 $18 23 %
Throughput (000's Dths):
Residential27,099 25,282 1,817 %
Commercial12,460 11,733 727 
Industrial1,844 1,437 407 28 
Other35 37 (2)(5)
Total retail sales41,438 38,489 2,949 
Wholesale sales12,232 10,773 1,459 14 
Total sales53,670 49,262 4,408 
Natural gas transportation service31,313 29,640 1,673 
Total throughput84,983 78,902 6,081 %
Average number of retail customers (in thousands)
785 777 %
Average revenue per retail Dth sold$7.84 $11.70 $(3.86)(33)%
Heating degree days3,485 3,301 184 %
Average cost of natural gas per retail Dth sold
$5.80 $9.87 $(4.07)(41)%
Combined retail and wholesale average cost of natural gas per Dth sold
$5.55 $8.76 $(3.21)(37)%


Quarter Ended March 31, 2022 Compared to Quarter Ended March 31, 2021

MidAmerican Energy -

Electric utility margin increased $89 million, or 23%, for the first quarter of 2022 compared to 2021, due to:
a $64 million increase in wholesale utility margin due to higher margins per unit of $58 million, reflecting lower energy costs and higher market prices, and higher volumes of 31.4%; and
a $25 million increase in retail utility margin primarily due to $17 million from higher customer usage; $9 million, net of energy costs, from higher recoveries through bill riders (offset in operations and maintenance expense and income tax benefit); and $1 million from the favorable impact of weather; partially offset by $2 million due to price impacts from changes in sales mix. Retail customer volumes increased 5.6%.
Natural gas utility margin increased $18 million, or 23%, for the first quarter of 2022 compared to 2021 primarily due to:
an $8 million increase from lower refunds related to amortization of excess accumulated deferred income taxes arising from 2017 Tax Reform (offset in income tax benefit);
a $5 million increase from higher average prices primarily due to the timing of recoveries through a capital tracker mechanism; and
a $4 million increase from the favorable impact of weather.
94


Depreciation and amortization for the first quarter of 2022 increased $43 million, or 21%, compared to 2021 primarily due to $42 million from higher Iowa revenue sharing accruals, $7 million from wind-powered generating facilities and other plant placed in-service and $6 million from a regulatory mechanism that provides customers the retail energy benefits of certain wind-powered generation projects, partially offset by $12 million from a regulatory mechanism deferring certain depreciation expense in 2022.

Allowance for borrowed and equity funds increased $11 million, or 138%, for the first quarter of 2022 compared to 2021 primarily due to higher construction work-in-progress balances related to wind- and solar-powered generation.

Other, net decreased $14 million, or 127%, for the first quarter of 2022 compared to 2021 primarily due to unfavorable investment earnings, largely attributable to lower cash surrender values of corporate-owned life insurance policies, and higher non-service costs of postretirement employee benefit plans.

Income tax benefit increased $52 million, or 34%, for the first quarter of 2022 compared to 2021, and the effective tax rate was (542)% for 2022 and 2,200% for 2021. The change in the effective tax rates for 2022 compared to 2021 was primarily due to higher PTCs, the timing of state income tax benefits and the effects of ratemaking, partially offset by higher pretax income. PTCs for the first quarter of 2022 and 2021 totaled $203 million and $151 million, respectively.

MidAmerican Funding -

Income tax benefit increased $52 million, or 33%, for the first quarter of 2022 compared to 2021, and the effective tax rate was (630)% for 2022 and 1,300% for 2021. The changes in the effective tax rates were principally due to the factors discussed for MidAmerican Energy.

Liquidity and Capital Resources

As of March 31, 2022, the total net liquidity for MidAmerican Energy and MidAmerican Funding was as follows (in millions):

MidAmerican Energy:
Cash and cash equivalents$131 
 
Credit facilities, maturing 2022 and 20241,505 
Less:
Tax-exempt bond support(370)
Net credit facilities1,135 
 
MidAmerican Energy total net liquidity$1,266 
 
MidAmerican Funding:
MidAmerican Energy total net liquidity$1,266 
Cash and cash equivalents
MHC, Inc. credit facility, maturing 2022
MidAmerican Funding total net liquidity$1,271 

Operating Activities

MidAmerican Energy's net cash flows from operating activities for the three-month periods ended March 31, 2022 and 2021, were $360 million and $(85) million, respectively. MidAmerican Funding's net cash flows from operating activities for the three-month periods ended March 31, 2022 and 2021, were $353 million and $(92) million, respectively. Cash flows from operating activities reflect higher utility margins for MidAmerican Energy's regulated electric and natural gas businesses, lower payments to vendors and lower derivative collateral posted, partially offset by higher interest expense. Higher utility margins are largely attributable to the recovery of higher natural gas costs caused by the February 2021 polar vortex weather event.

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.
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Investing Activities

MidAmerican Energy's net cash flows from investing activities for the three-month periods ended March 31, 2022 and 2021, were $(461) million and $(303) million, respectively. MidAmerican Funding's net cash flows from investing activities for the three-month periods ended March 31, 2022 and 2021, were $(461) million and $(303) million, respectively. Net cash flows from investing activities consist almost entirely of capital expenditures. Refer to "Future Uses of Cash" for further discussion of capital expenditures. Purchases and proceeds related to marketable securities substantially consist of activity within the Quad Cities Generating Station nuclear decommissioning trust and other trust investments.

Financing Activities

MidAmerican Energy's net cash flows from financing activities for the three-month periods ended March 31, 2022 and 2021 were $— million and $387 million, respectively. MidAmerican Funding's net cash flows from financing activities for the three-month periods ended March 31, 2022 and 2021, were $7 million and $394 million, respectively. Through its commercial paper program, MidAmerican Energy received $387 million in 2021. MidAmerican Funding received $8 million and $7 million in 2022 and 2021, respectively, through its note payable with BHE.

Debt Authorizations and Related Matters

Short-term Debt

MidAmerican Energy has authority from the FERC to issue through April 2, 2024, commercial paper and bank notes aggregating $1.5 billion at interest rates not to exceed the applicable London Interbank Offered Rate plus a spread of 400 basis points. MidAmerican Energy has a $1.5 billion unsecured credit facility expiring in June 2024. 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.

Long-term Debt and Preferred Stock

MidAmerican Energy currently has an effective automatic registration statement with the SEC to issue an indeterminate amount of long-term debt securities and preferred stock through June 13, 2024. MidAmerican Energy has authorization from the FERC to issue, through June 30, 2023, long-term debt securities up to an aggregate of $2.0 billion and preferred stock up to an aggregate of $500 million and from the Illinois Commerce Commission to issue long-term debt securities up to an aggregate of $350 million through August 20, 2022. Additionally, MidAmerican Energy has authority from the Illinois Commerce Commission through October 15, 2024, to issue $750 million of long-term debt securities for the purpose of refinancing $250 million of its 3.70% Senior notes due September 2023 and $500 million of its 2.40% Senior notes due October 2024.

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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 regulatory approvals, their credit ratings, investors' judgment of risk and conditions in the overall capital markets, including the condition of the utility industry.

Capital Expenditures

MidAmerican Energy 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, impacts to customers' rates; changes in environmental and other rules and regulations; 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.

MidAmerican Energy'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):
Three-Month PeriodsAnnual
Ended March 31,Forecast
202120222022
Wind generation$32 $133 $762 
Electric distribution46 54 260 
Electric transmission23 21 171 
Solar generation44 139 
Other194 207 681 
Total$298 $459 $2,013 

MidAmerican Energy's capital expenditures provided above consist of the following:

Wind generation includes the construction, repowering and operation of wind-powered generating facilities in Iowa.
Construction of wind-powered generating facilities totaling $3 million for the three-month period ended March 31, 2022. Planned spending for the construction of additional wind-powered generating facilities totals $142 million for the remainder of 2022.
Repowering of wind-powered generating facilities totaling $120 million and $24 million for the three-month periods ended March 31, 2022 and 2021, respectively. Planned spending for the repowering of wind-powered generating facilities totals $386 million for the remainder of 2022. MidAmerican Energy expects its repowered facilities to meet Internal Revenue Service guidelines for the re-establishment of PTCs for 10 years from the date the facilities are placed in-service. The rate at which PTCs are re-established for a facility depends upon the date construction begins. Of the 812 MWs of current repowering projects not in-service as of March 31, 2022, 511 MWs are currently expected to qualify for 80% of the PTCs available for 10 years following each facility's return to service and 301 MWs are expected to qualify for 60% of such credits.
Electric distribution includes expenditures for new facilities to meet retail demand growth and for replacement of existing facilities to maintain system reliability.
Electric transmission includes expenditures to meet retail demand growth, upgrades to accommodate third-party generator requirements and replacement of existing facilities to maintain system reliability.
Solar generation includes the construction of solar-powered generating facilities totaling 141 MWs of small- and utility-scale solar generation, with total spend of $44 million and $3 million for the three-month periods ended March 31, 2022 and 2021, respectively and planned spending of $96 million for the remainder of 2022.
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Remaining expenditures primarily relate to routine expenditures for other generation, natural gas distribution, technology, facilities and other operational needs to serve existing and expected demand.

Material Cash Requirements

As of March 31, 2022, there have been no material changes outside the normal course of business in MidAmerican Energy's and MidAmerican Funding's material cash requirements from the information provided in Item 7 of their Annual Report on Form 10-K for the year ended December 31, 2021.

Quad Cities Generating Station Operating Status

Constellation Energy Corp. ("Constellation Energy," previously Exelon Generation Company, LLC, which was a subsidiary of Exelon Corporation prior to February 1, 2022), 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. 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 ZECs and recover the costs from certain ratepayers in Illinois, subject to certain limitations. The proceeds from the ZECs will provide Constellation Energy additional revenue through 2027 as an incentive for continued operation of Quad Cities Station. MidAmerican Energy will not receive additional revenue from the subsidy.

The PJM Interconnection, L.L.C. ("PJM") capacity market includes a Minimum Offer Price Rule ("MOPR"). If a generation resource is subjected to a MOPR, its offer price in the market is adjusted to effectively remove the revenues it receives through a state government-provided financial support program, resulting in a higher offer that may not clear the capacity market. Prior to December 19, 2019, the PJM MOPR applied only to certain new gas-fired resources. An expanded PJM MOPR to include existing resources would require exclusion of ZEC compensation when bidding into future capacity auctions, resulting in an increased risk of Quad Cities Station not receiving capacity revenues in future auctions.

On December 19, 2019, the FERC issued an order requiring the PJM to broadly apply the MOPR to all new and existing resources, including nuclear. This greatly expanded the breadth and scope of the PJM's MOPR, which became effective as of the PJM's capacity auction for the 2022-2023 planning year in May 2021. While the FERC included some limited exemptions, no exemptions were available to state-supported nuclear resources, such as Quad Cities Station. The FERC provided no new mechanism for accommodating state-supported resources other than the existing Fixed Resource Requirement ("FRR") mechanism under which an entire utility zone would be removed from PJM's capacity auction along with sufficient resources to support the load in such zone. In response to the FERC's order, the PJM submitted a compliance filing on March 18, 2020, wherein the PJM proposed tariff language reflecting the FERC's directives and a schedule for resuming capacity auctions. On April 16, 2020, the FERC issued an order largely denying requests for rehearing of the FERC's December 2019 order but granting a few clarifications that required an additional PJM compliance filing, which the PJM submitted on June 1, 2020. A number of parties, including Constellation Energy, have filed petitions for review of the FERC's orders in this proceeding, which remain pending before the D.C. Circuit.

As a result, the MOPR applied to Quad Cities Station in the capacity auction for the 2022-2023 planning year, which prevented Quad Cities Station from clearing in that capacity auction.

At the direction of the PJM Board of Managers, the PJM and its stakeholders developed further MOPR reforms to ensure that the capacity market rules respect and accommodate state resource preferences such as the ZEC programs. The PJM filed related tariff revisions at the FERC on July 30, 2021, and, on September 29, 2021, the PJM's proposed MOPR reforms became effective by operation of law. Under the new tariff provisions, the MOPR will no longer apply to Quad Cities Station. Requests for rehearing of the FERC's notice establishing the effective date for the PJM's proposed market reforms were filed in October 2021 and denied by operation of law on November 4, 2021. Several parties have filed petitions for review of the FERC's orders in this proceeding, which remain pending before the Court of Appeals for the Third Circuit. Constellation Energy is strenuously opposing these appeals.

Assuming the continued effectiveness of the Illinois zero emission standard, Constellation Energy no longer considers Quad Cities Station to be at heightened risk for early retirement. However, to the extent the Illinois zero emission standard does not operate as expected over its full term, Quad Cities Station would be at heightened risk for early retirement. The FERC's December 19, 2019 order on the PJM MOPR may undermine the continued effectiveness of the Illinois zero emission standard unless the PJM adopts further changes to the MOPR or Illinois implements an FRR mechanism, under which Quad Cities Station would be removed from the PJM's capacity auction.
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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.

Environmental Laws and Regulations

MidAmerican Energy is subject to federal, state and local laws and regulations regarding climate change, RPS, air and water quality, emissions performance standards, coal combustion byproduct disposal, hazardous and solid waste disposal, protected species and other environmental matters that have the potential to impact MidAmerican Energy'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 various federal, state and local agencies. MidAmerican Energy 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 MidAmerican Energy is unable to predict the impact of the changing laws and regulations on its operations and consolidated financial results.

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.

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, 2021. There have been no significant changes in MidAmerican Energy's and MidAmerican Funding's assumptions regarding critical accounting estimates since December 31, 2021.
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Nevada Power Company and its subsidiaries
Consolidated Financial Section

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PART I
Item 1.Financial Statements


REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM


To the Board of Directors and Shareholder of
Nevada Power Company

Results of Review of Interim Financial Information

We have reviewed the accompanying consolidated balance sheet of Nevada Power Company and subsidiaries ("Nevada Power") as of March 31, 2022, the related consolidated statements of operations, changes in shareholder's equity, and cash flows for the three-month periods ended March 31, 2022 and 2021, and the related notes (collectively referred to as the "interim financial information"). Based on our reviews, we are not aware of any material modifications that should be made to the accompanying interim financial information for it 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) (PCAOB), the consolidated balance sheet of Nevada Power as of December 31, 2021, 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 25, 2022, 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, 2021, is fairly stated, in all material respects, in relation to the consolidated balance sheet from which it has been derived.

Basis for Review Results

This interim financial information is the responsibility of Nevada Power's management. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to Nevada Power in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our reviews in accordance with standards of the PCAOB. 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 PCAOB, 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.


/s/ Deloitte & Touche LLP


Las Vegas, Nevada
April 29, 2022

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NEVADA POWER COMPANY AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS (Unaudited)
(Amounts in millions, except share data)

As of
March 31,December 31,
20222021
ASSETS
Current assets:
Cash and cash equivalents$47 $33 
Trade receivables, net187 227 
Inventories61 64 
Regulatory assets327 291 
Prepayments48 33 
Other current assets59 53 
Total current assets729 701 
Property, plant and equipment, net6,992 6,891 
Regulatory assets759 728 
Other assets431 432 
Total assets$8,911 $8,752 
LIABILITIES AND SHAREHOLDER'S EQUITY
Current liabilities:
Accounts payable$224 $242 
Accrued interest38 32 
Accrued property, income and other taxes30 29 
Short-term debt104 180 
Regulatory liabilities49 49 
Customer deposits45 44 
Derivative contracts88 55 
Other current liabilities59 62 
Total current liabilities637 693 
Long-term debt 2,700 2,499 
Finance lease obligations306 310 
Regulatory liabilities1,083 1,100 
Deferred income taxes799 782 
Other long-term liabilities358 338 
Total liabilities5,883 5,722 
Commitments and contingencies (Note 8)
Shareholder's equity:
Common stock - $1.00 stated value; 1,000 shares authorized, issued and outstanding
— — 
Additional paid-in capital2,308 2,308 
Retained earnings722 724 
Accumulated other comprehensive loss, net(2)(2)
Total shareholder's equity3,028 3,030 
Total liabilities and shareholder's equity$8,911 $8,752 
The accompanying notes are an integral part of the consolidated financial statements.
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NEVADA POWER COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
(Amounts in millions)

Three-Month Periods
Ended March 31,
20222021
Operating revenue$415 $370 
Operating expenses:
Cost of fuel and energy212 165 
Operations and maintenance65 63 
Depreciation and amortization103 101 
Property and other taxes13 12 
Total operating expenses393 341 
Operating income22 29 
Other income (expense):
Interest expense(38)(38)
Allowance for borrowed funds
Allowance for equity funds
Interest and dividend income
Other, net
Total other income (expense)(24)(27)
Net (loss) income$(2)$
The accompanying notes are an integral part of these consolidated financial statements.

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NEVADA POWER COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDER'S EQUITY (Unaudited)
(Amounts in millions, except shares)

Accumulated
AdditionalOtherTotal
Common StockPaid-inRetainedComprehensiveShareholder's
SharesAmountCapitalEarningsLoss, NetEquity
Balance, December 31, 20201,000 $— $2,308 $634 $(3)$2,939 
Net income— — — — 
Balance, March 31, 20211,000 $— $2,308 $636 $(3)$2,941 
Balance, December 31, 20211,000 $— $2,308 $724 $(2)$3,030 
Net loss— — — (2)— (2)
Balance, March 31, 20221,000 $— $2,308 $722 $(2)$3,028 
The accompanying notes are an integral part of these consolidated financial statements.

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NEVADA POWER COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
(Amounts in millions)

Three-Month Periods
Ended March 31,
20222021
Cash flows from operating activities:
Net (loss) income $(2)$
Adjustments to reconcile net income to net cash flows from operating activities:
Depreciation and amortization103 101 
Allowance for equity funds(3)(1)
Changes in regulatory assets and liabilities(8)(15)
Deferred income taxes and amortization of investment tax credits(10)
Deferred energy(51)41 
Amortization of deferred energy13 — 
Other, net(1)
Changes in other operating assets and liabilities:
Trade receivables and other assets33 41 
Inventories
Accrued property, income and other taxes(15)
Accounts payable and other liabilities14 
Net cash flows from operating activities85 179 
Cash flows from investing activities:
Capital expenditures(189)(106)
Net cash flows from investing activities(189)(106)
Cash flows from financing activities:
Proceeds from long-term debt200 — 
Net repayment of short-term debt(76)— 
Other, net(4)(5)
Net cash flows from financing activities120 (5)
Net change in cash and cash equivalents and restricted cash and cash equivalents16 68 
Cash and cash equivalents and restricted cash and cash equivalents at beginning of period45 36 
Cash and cash equivalents and restricted cash and cash equivalents at end of period$61 $104 
The accompanying notes are an integral part of these consolidated financial statements.

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NEVADA POWER COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

(1)    General

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 and its subsidiaries ("Sierra Pacific") and certain other subsidiaries. Nevada Power is a U.S. 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 March 31, 2022 and for the three-month periods ended March 31, 2022 and 2021. The Consolidated Statements of Comprehensive Income have been omitted as net income equals comprehensive income for the three-month periods ended March 31, 2022 and 2021. The results of operations for the three-month period ended March 31, 2022 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, 2021 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 three-month period ended March 31, 2022.

(2)    Cash and Cash Equivalents and Restricted Cash and Cash Equivalents

Cash equivalents consist of funds invested in money market mutual funds, U.S. Treasury Bills and other investments with a maturity of three months or less when purchased. Cash and cash equivalents exclude amounts where availability is restricted by legal requirements, loan agreements or other contractual provisions. Restricted cash and cash equivalents consist of funds restricted by the Public Utilities Commission of Nevada ("PUCN") for a certain renewable energy contract. A reconciliation of cash and cash equivalents and restricted cash and cash equivalents as presented in the Consolidated Statements of Cash Flows is outlined below and disaggregated by the line items in which they appear on the Consolidated Balance Sheets (in millions):
As of
March 31,December 31,
20222021
Cash and cash equivalents$47 $33 
Restricted cash and cash equivalents included in other current assets14 12 
Total cash and cash equivalents and restricted cash and cash equivalents$61 $45 

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(3)    Property, Plant and Equipment, Net

Property, plant and equipment, net consists of the following (in millions):
As of
Depreciable LifeMarch 31,December 31,
20222021
Utility plant:
Generation
30 - 55 years
$3,810 $3,793 
Transmission
45 - 70 years
1,508 1,503 
Distribution
20 - 65 years
3,979 3,920 
General and intangible plant
5 - 65 years
831 836 
Utility plant10,128 10,052 
Accumulated depreciation and amortization(3,478)(3,406)
Utility plant, net6,650 6,646 
Other non-regulated, net of accumulated depreciation and amortization
45 years
Plant, net6,651 6,647 
Construction work-in-progress341 244 
Property, plant and equipment, net$6,992 $6,891 

(4)    Recent Financing Transactions

Long-Term Debt

In January 2022, Nevada Power entered into a $300 million secured delayed draw term loan facility maturing in January 2024. Amounts borrowed under the facility bear interest at variable rates based on the Secured Overnight Financing Rate or a base rate, at Nevada Power's option, plus a pricing margin. In January 2022, Nevada Power borrowed $200 million under the facility at an initial interest rate of 0.55%. Nevada Power may draw all or none of the remaining unused commitment through June 2022. Nevada Power used the proceeds to repay amounts outstanding under its existing secured credit facility and for general corporate purposes.

(5)    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. 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.

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Amounts receivable from (payable to) NV Energy are included on the Consolidated Balance Sheets and consist of the following (in millions):
As of
March 31,December 31,
20222021
Qualified Pension Plan:
Other non-current assets$42 $42 
Non-Qualified Pension Plans:
Other current liabilities(1)(1)
Other long-term liabilities(8)(8)
Other Postretirement Plans:
Other non-current assets

(6)    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 and report on 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 7 for additional information on derivative contracts.
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The following table, which excludes contracts that have been designated as normal under the normal purchases and normal sales exception afforded by GAAP, summarizes the fair value of Nevada Power's derivative contracts, on a gross basis, and reconciles those amounts presented on a net basis on the Consolidated Balance Sheets (in millions):

Derivative
OtherContracts -Other
CurrentCurrentLong-term
AssetsLiabilitiesLiabilitiesTotal
As of March 31, 2022
Not designated as hedging contracts (1):
Commodity liabilities$— $(88)$(80)$(168)
Total derivative - net basis$— $(88)$(80)$(168)
As of December 31, 2021
Not designated as hedging contracts(1):
Commodity assets$$— $— $
Commodity liabilities— (55)(62)(117)
Total derivative - net basis$$(55)$(62)$(113)

(1)Nevada Power's commodity derivatives not designated as hedging contracts are included in regulated rates. As of March 31, 2022 a regulatory asset of $168 million was recorded related to the net derivative liability of $168 million. As of December 31, 2021 a regulatory asset of $113 million was recorded related to the net derivative liability of $113 million.

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 ofMarch 31,December 31,
Measure20222021
Electricity purchasesMegawatt hours
Natural gas purchasesDecatherms138 119 

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, 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, 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 agreements, including derivative contracts, contain credit support provisions that in part base certain collateral requirements on credit ratings for senior unsecured debt as reported by one or more of the recognized credit rating agencies. These agreements may either specifically provide bilateral rights to demand cash or other security if credit exposures on a net basis exceed specified rating-dependent threshold levels "credit-risk-related contingent features") or provide the right for counterparties to demand "adequate assurance" if there is a material adverse change in Nevada Power's creditworthiness. These rights can vary by contract and by counterparty. As of March 31, 2022, Nevada Power's credit ratings for its senior secured debt and its issuer credit ratings for senior unsecured debt from the recognized credit rating agencies were investment grade.
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The aggregate fair value of Nevada Power's derivative contracts in liability positions with specific credit-risk-related contingent features totaled $7 million and $6 million as of March 31, 2022 and December 31, 2021, respectively, 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.

(7)    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 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 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.

The following table presents Nevada Power's assets and liabilities recognized on the Consolidated Balance Sheets and measured at fair value on a recurring basis (in millions):
Input Levels for Fair Value Measurements
Level 1Level 2Level 3Total
As of March 31, 2022:
Assets:
Money market mutual funds$43 $— $— $43 
Investment funds— — 
$46 $— $— $46 
Liabilities - commodity derivatives$— $— $(168)$(168)
As of December 31, 2021:
Assets:
Commodity derivatives$— $— $$
Money market mutual funds34 — — 34 
Investment funds— — 
$37 $— $$41 
Liabilities - commodity derivatives$— $— $(117)$(117)

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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 March 31, 2022 and December 31, 2021, 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.

Nevada Power's investments in money market mutual funds and investment funds 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 assets and liabilities measured at fair value on a recurring basis using significant Level 3 inputs (in millions):
Three-Month Periods
Ended March 31,
20222021
Beginning balance$(113)$15 
Changes in fair value recognized in regulatory assets(56)11 
Settlements
Ending balance$(168)$27 

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 March 31, 2022As of December 31, 2021
CarryingFairCarryingFair
ValueValueValueValue
Long-term debt$2,700 $2,985 $2,499 $3,067 

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(8)    Commitments and Contingencies

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.

Environmental Laws and Regulations

Nevada Power is subject to federal, state and local laws and regulations regarding climate change, renewable portfolio standards, air and water quality, emissions performance standards, 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.

(9)    Revenue from Contracts with Customers

The following table summarizes Nevada Power's revenue from contracts with customers ("Customer Revenue") by line of business, with further disaggregation of retail by customer class (in millions):
Three-Month Periods
Ended March 31,
20222021
Customer Revenue:
Retail:
Residential$214 $196 
Commercial96 84 
Industrial78 63 
Other
Total fully bundled389 346 
Distribution only service
Total retail394 351 
Wholesale, transmission and other16 14 
Total Customer Revenue410 365 
Other revenue
Total revenue$415 $370 


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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 Nevada Power during the periods included herein. Explanations include management's best estimate of the impact of weather, customer growth, usage trends 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 First Quarter of 2022 and 2021

Overview

Net loss for the first quarter of 2022 was $2 million, a decrease of $4 million compared to 2021 primarily due to $3 million of lower other, net, mainly due to lower cash surrender value of corporate-owned life insurance policies, $2 million of lower utility margin, $2 million of higher operations and maintenance expenses, mainly due to higher plant operations and maintenance expenses and higher earnings sharing, and $2 million of higher depreciation and amortization, mainly due to higher plant placed in-service. Utility margin decreased primarily due to lower regulatory-related revenue deferrals and lower other retail revenue, partially offset by an increase in the average number of customers and favorable changes in customer usage patterns. These decreases are offset by $4 million of higher interest and dividend income, mainly from carrying charges on regulatory balances. Energy generated decreased 6% for the first quarter of 2022 compared to 2021 primarily due to lower natural gas-fueled generation. Wholesale electricity sales volumes increased 49% and purchased electricity volumes increased 30%.

Non-GAAP Financial Measure

Management utilizes various key financial measures that are prepared in accordance with GAAP, as well as non-GAAP financial measures such as, utility margin, to help evaluate results of operations. Utility margin is calculated as electric operating revenue less cost of fuel and energy, which are captions presented on the Consolidated Statements of Operations.

Nevada Power's cost of fuel and energy are directly recovered from its customers through regulatory recovery mechanisms and as a result, changes in Nevada Power's expenses result in comparable changes to revenue. As such, management believes utility margin more appropriately and concisely explains profitability rather than a discussion of revenue and cost of sales separately. Management believes the presentation of utility margin provides meaningful and valuable insight into the information management considers important to running the business and a measure of comparability to others in the industry.

Utility margin is not a measure calculated in accordance with GAAP and should be viewed as a supplement to, and not a substitute for, operating income which is the most directly comparable financial measure prepared in accordance with GAAP. The following table provides a reconciliation of utility margin to operating income (in millions):
First Quarter
20222021Change
Utility margin:
Operating revenue$415 $370 $45 12 %
Cost of fuel and energy212 165 47 28 
Utility margin203 205 (2)(1)
Operations and maintenance65 63 
Depreciation and amortization103 101 
Property and other taxes13 12 
Operating income$22 $29 $(7)(24)%

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Utility Margin

A comparison of key operating results related to utility margin is as follows:
First Quarter
20222021Change
Utility margin (in millions):
Operating revenue$415 $370 $45 12 %
Cost of fuel and energy212 165 47 28 
Utility margin$203 $205 $(2)(1)%
Sales (GWhs):
Residential1,585 1,587 (2)— %
Commercial998 954 44 
Industrial1,175 1,057 118 11 
Other46 47 (1)(2)
Total fully bundled(1)
3,804 3,645 159 
Distribution only service 569 516 53 10 
Total retail4,373 4,161 212 
Wholesale125 84 41 49 
Total GWhs sold4,498 4,245 253 %
Average number of retail customers (in thousands)
995 978 17 %
Average revenue per MWh:
Retail - fully bundled(1)
$102.11 $95.01 $7.10 %
Wholesale$42.91 $49.42 $(6.51)(13)%
Heating degree days954 994 (40)(4)%
Cooling degree days49 43 *
Sources of energy (GWhs)(2)(3):
Natural gas2,378 2,534 (156)(6)%
Renewables14 16 (2)(13)
Total energy generated2,392 2,550 (158)(6)
Energy purchased1,761 1,355 406 30 
Total4,153 3,905 248 %
Average cost of energy per MWh(4):
Energy generated$41.92 $14.96 $26.96 *
Energy purchased$63.27 $93.84 $(30.57)(33)%
*    Not meaningful
(1)    Fully bundled includes sales to customers for combined energy, transmission and distribution services.
(2)    The average cost of energy per MWh and sources of energy excludes 424 GWhs and 683 GWhs of gas generated energy that is purchased at cost by related parties for the first quarter of 2022 and 2021, respectively.
(3)    GWh amounts are net of energy used by the related generating facilities.
(4)    The average cost of energy per MWh includes only the cost of fuel associated with the generating facilities, purchased power and deferrals.
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Quarter Ended March 31, 2022 Compared to Quarter Ended March 31, 2021
Utility margin decreased $2 million, or 1%, for the first quarter of 2022 compared to 2021 primarily due to:
$2 million of lower energy efficiency program rates (offset in operations and maintenance expense);
$2 million of lower regulatory-related revenue deferrals; and
$2 million of lower other retail revenue.
The decrease in utility margin was offset by:
$3 million of higher electric retail utility margin primarily due to higher retail customer volumes. Retail customer volumes, including distribution only service customers, increased 5.1% primarily due to an increase in the average number of customers and favorable changes in customer usage patterns, offset by the unfavorable impact of weather; and
$1 million of higher transmission and wholesale revenue.

Operations and maintenance increased $2 million, or 3%, for the first quarter of 2022 compared to 2021 primarily due to higher plant operations and maintenance expenses and higher earnings sharing, partially offset by lower energy efficiency program costs (offset in operating revenue).

Depreciation and amortization increased $2 million, or 2%, for the first quarter of 2022 compared to 2021 primarily due to higher plant placed in-service.

Interest and dividend income increased $4 million, or 80%, for the first quarter of 2022 compared to 2021 primarily due to higher interest income, mainly from carrying charges on regulatory balances.

Other, net decreased $3 million, or 75%, for the first quarter of 2022 compared to 2021 primarily due to lower cash surrender value of corporate-owned life insurance policies.

Liquidity and Capital Resources

As of March 31, 2022, Nevada Power's total net liquidity was as follows (in millions):

Cash and cash equivalents$47 
Credit facility400 
Less -
Short-term debt(104)
Net credit facility296 
Delayed draw term loan facility
$300 
Less -
Long-term debt(200)
Net delayed draw term loan facility100 
Total net liquidity$443 
Credit facility and delayed draw term loan facility:
Maturity date2024


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Operating Activities
Net cash flows from operating activities for the three-month periods ended March 31, 2022 and 2021 were $85 million and $179 million, respectively. The change was primarily due to higher payments related to fuel and energy costs and the timing of payments for operating costs, partially offset by higher collections from customers.

Investing Activities
Net cash flows from investing activities for the three-month periods ended March 31, 2022 and 2021 were $(189) million and $(106) million, respectively. The change was primarily due to increased capital expenditures. Refer to "Future Uses of Cash" for further discussion of capital expenditures.

Financing Activities
Net cash flows from financing activities for the three-month periods ended March 31, 2022 and 2021 were $120 million and $(5) million, respectively. The change was primarily due to higher proceeds from the issuance of long-term debt, partially offset by higher repayments of short-term debt.

Long-Term Debt

In January 2022, Nevada Power entered into a $300 million secured delayed draw term loan facility maturing in January 2024. Amounts borrowed under the facility bear interest at variable rates based on the Secured Overnight Financing Rate or a base rate, at Nevada Power's option, plus a pricing margin. In January 2022, Nevada Power borrowed $200 million under the facility at an initial interest rate of 0.55%. Nevada Power may draw all or none of the remaining unused commitment through June 2022. Nevada Power used the proceeds to repay amounts outstanding under its existing secured credit facility and for general corporate purposes.
    
Debt Authorizations

Nevada Power currently has financing authority from the PUCN consisting of the ability to: (1) establish debt issuances limited to a debt ceiling of $3.8 billion (excluding borrowings under Nevada Power's $400 million secured credit facility); and (2) maintain a revolving credit facility of up to $1.3 billion. Nevada Power currently has an effective automatic shelf registration statement with the SEC to issue an indeterminate amount of general and refunding mortgage securities through October 2022.

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 regulatory approvals, Nevada Power's credit ratings, investors' judgment of risk and conditions in the overall capital markets, including the condition of the utility industry.
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Capital 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. 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.

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):
Three-Month PeriodsAnnual
Ended March 31,Forecast
202120222022
Electric distribution$41 $51 $223 
Electric transmission13 21 168 
Solar generation80 
Other51 110 386 
Total$106 $189 $857 

Nevada Power received PUCN approval through its recent IRP filings for an increase in solar generation and electric transmission. Nevada Power has included estimates from its latest IRP filing in its forecast capital expenditures for 2022. These estimates may change as a result of the RFP process. Nevada Power's historical and forecast capital expenditures include the following:
Electric distribution includes both growth projects and operating expenditures consisting of routine expenditures for distribution needed to serve existing and expected demand.
Electric transmission includes both growth projects and operating expenditures. Growth projects primarily relate to the Nevada Utilities' Greenlink Nevada transmission expansion program. In this project, the company has received approval from the PUCN to build a 350-mile, 525-kV transmission line, known as Greenlink West, connecting the Ft. Churchill substation to the Northwest substation to the Harry Allen substation; a 235-mile, 525-kV transmission line, known as Greenlink North, connecting the new Ft. Churchill substation to the Robinson Summit substation; a 46-mile, 345-kV transmission line from the new Ft. Churchill substation to the Mira Loma substations; and a 38-mile, 345-kV transmission line from the new Ft. Churchill substation to the Robinson Summit substations. Operating expenditures consist of routine expenditures for transmission and other infrastructure needed to serve existing and expected demand.
Solar generation investment includes expenditures for a 150-MW solar photovoltaic facility with an additional 100 MWs of co-located battery storage that will be developed in Clark County, Nevada. Commercial operation is expected by the end of 2023.
Other includes both growth projects and operating expenditures consisting of turbine upgrades at several generating facilities, routine expenditures for generation, other operating projects and other infrastructure needed to serve existing and expected demand.

Material Cash Requirements

As of March 31, 2022, there have been no material changes outside the normal course of business in material cash requirements from the information provided in Item 7 of Nevada Power's Annual Report on Form 10-K for the year ended December 31, 2021.
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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 climate change, RPS, air and water quality, emissions performance standards, 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, 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 various federal, state and local agencies. Nevada Power 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 Nevada Power is unable to predict the impact of the changing laws and regulations on its operations and consolidated financial results.

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.

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, 2021. There have been no significant changes in Nevada Power's assumptions regarding critical accounting estimates since December 31, 2021.
118


Sierra Pacific Power Company and its subsidiaries
Consolidated Financial Section

119


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

Results of Review of Interim Financial Information

We have reviewed the accompanying consolidated balance sheet of Sierra Pacific Power Company and subsidiaries ("Sierra Pacific") as of March 31, 2022, the related consolidated statements of operations, changes in shareholder's equity, and cash flows for the three-month periods ended March 31, 2022 and 2021, and the related notes (collectively referred to as the "interim financial information"). Based on our reviews, we are not aware of any material modifications that should be made to the accompanying interim financial information for it 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) (PCAOB), the consolidated balance sheet of Sierra Pacific as of December 31, 2021, 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 25, 2022, 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, 2021, is fairly stated, in all material respects, in relation to the consolidated balance sheet from which it has been derived.

Basis for Review Results

This interim financial information is the responsibility of Sierra Pacific's management. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to Sierra Pacific in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our reviews in accordance with standards of the PCAOB. 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 PCAOB, 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.


/s/ Deloitte & Touche LLP


Las Vegas, Nevada
April 29, 2022

120


SIERRA PACIFIC POWER COMPANY AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS (Unaudited)
(Amounts in millions, except share data)

As of
March 31,December 31,
20222021
ASSETS
Current assets:
Cash and cash equivalents$15 $10 
Trade receivables, net120 128 
Inventories71 65 
Regulatory assets164 177 
Other current assets36 35 
Total current assets406 415 
Property, plant and equipment, net3,386 3,340 
Regulatory assets282 263 
Other assets205 205 
Total assets$4,279 $4,223 
LIABILITIES AND SHAREHOLDER'S EQUITY
Current liabilities:
Accounts payable$125 $147 
Accrued property, income and other taxes28 16 
Short-term debt57 159 
Regulatory liabilities20 19 
Customer deposits16 15 
Derivative contracts28 16 
Other current liabilities39 42 
Total current liabilities313 414 
Long-term debt 1,164 1,164 
Regulatory liabilities440 444 
Deferred income taxes401 402 
Other long-term liabilities268 264 
Total liabilities2,586 2,688 
Commitments and contingencies (Note 9)
Shareholder's equity:
Common stock - $3.75 stated value, 20,000,000 shares authorized and 1,000 issued and outstanding
— — 
Additional paid-in capital1,241 1,111 
Retained earnings453 425 
Accumulated other comprehensive loss, net(1)(1)
Total shareholder's equity1,693 1,535 
Total liabilities and shareholder's equity$4,279 $4,223 
The accompanying notes are an integral part of the consolidated financial statements.

121


SIERRA PACIFIC POWER COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
(Amounts in millions)

Three-Month Periods
Ended March 31,
20222021
Operating revenue:
Regulated electric$227 $181 
Regulated natural gas52 39 
Total operating revenue279 220 
Operating expenses:
Cost of fuel and energy124 82 
Cost of natural gas purchased for resale34 21 
Operations and maintenance41 36 
Depreciation and amortization36 36 
Property and other taxes
Total operating expenses241 181 
Operating income38 39 
Other income (expense):
Interest expense(13)(14)
Allowance for borrowed funds— 
Allowance for equity funds
Interest and dividend income
Other, net
Total other income (expense)(5)(7)
Income before income tax expense33 32 
Income tax expense
Net income$28 $28 
The accompanying notes are an integral part of these consolidated financial statements.

122


SIERRA PACIFIC POWER COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDER'S EQUITY (Unaudited)
(Amounts in millions, except shares)

Accumulated
AdditionalOtherTotal
Common StockPaid-inRetainedComprehensiveShareholder's
SharesAmountCapitalEarningsLoss, NetEquity
Balance, December 31, 20201,000 $— $1,111 $301 $(1)$1,411 
Net income— — — 28 — 28 
Balance, March 31, 20211,000 $— $1,111 $329 $(1)$1,439 
Balance, December 31, 20211,000 $— $1,111 $425 $(1)$1,535 
Net income— — — 28 — 28 
Contributions— — 130 — — 130 
Balance, March 31, 20221,000 $— $1,241 $453 $(1)$1,693 
The accompanying notes are an integral part of these consolidated financial statements.

123


SIERRA PACIFIC POWER COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
(Amounts in millions)

Three-Month Periods
Ended March 31,
20222021
Cash flows from operating activities:
Net income$28 $28 
Adjustments to reconcile net income to net cash flows from operating activities:
Depreciation and amortization36 36 
Allowance for equity funds(2)(1)
Changes in regulatory assets and liabilities(4)(13)
Deferred income taxes and amortization of investment tax credits(3)
Deferred energy(7)(18)
Amortization of deferred energy23 (3)
Changes in other operating assets and liabilities:
Trade receivables and other assets12 
Inventories(6)
Accrued property, income and other taxes(3)
Accounts payable and other liabilities(21)
Net cash flows from operating activities63 42 
Cash flows from investing activities:
Capital expenditures(83)(61)
Net cash flows from investing activities(83)(61)
Cash flows from financing activities:
Net (repayment of) proceeds from short-term debt(102)10 
Contributions from parent130 — 
Other, net(2)(2)
Net cash flows from financing activities26 
Net change in cash and cash equivalents and restricted cash and cash equivalents(11)
Cash and cash equivalents and restricted cash and cash equivalents at beginning of period16 26 
Cash and cash equivalents and restricted cash and cash equivalents at end of period$22 $15 
The accompanying notes are an integral part of these consolidated financial statements.

124


SIERRA PACIFIC POWER COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

(1)    General

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 and its subsidiaries ("Nevada Power") and certain other subsidiaries. Sierra Pacific is a U.S. 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 March 31, 2022 and for the three-month periods ended March 31, 2022 and 2021. The Consolidated Statements of Comprehensive Income have been omitted as net income equals comprehensive income for the three-month periods ended March 31, 2022 and 2021. The results of operations for the three-month period ended March 31, 2022 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, 2021 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 three-month period ended March 31, 2022.

(2)    Cash and Cash Equivalents and Restricted Cash and Cash Equivalents

Cash equivalents consist of funds invested in money market mutual funds, U.S. Treasury Bills and other investments with a maturity of three months or less when purchased. Cash and cash equivalents exclude amounts where availability is restricted by legal requirements, loan agreements or other contractual provisions. Restricted cash and cash equivalents consist of funds restricted by the Public Utilities Commission of Nevada ("PUCN") for a certain renewable energy contract. A reconciliation of cash and cash equivalents and restricted cash and cash equivalents as presented in the Consolidated Statements of Cash Flows is outlined below and disaggregated by the line items in which they appear on the Consolidated Balance Sheets (in millions):
As of
March 31,December 31,
20222021
Cash and cash equivalents$15 $10 
Restricted cash and cash equivalents included in other current assets
Total cash and cash equivalents and restricted cash and cash equivalents$22 $16 

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(3)    Property, Plant and Equipment, Net

Property, plant and equipment, net consists of the following (in millions):
As of
Depreciable LifeMarch 31,December 31,
20222021
Utility plant:
Electric generation
25 - 60 years
$1,169 $1,163 
Electric transmission
50 - 100 years
937 940 
Electric distribution
20 - 100 years
1,885 1,846 
Electric general and intangible plant
5 - 70 years
206 204 
Natural gas distribution
35 - 70 years
445 438 
Natural gas general and intangible plant
5 - 70 years
14 14 
Common general
5 - 70 years
370 370 
Utility plant5,026 4,975 
Accumulated depreciation and amortization(1,878)(1,854)
Utility plant, net3,148 3,121 
Construction work-in-progress238 219 
Property, plant and equipment, net$3,386 $3,340 

(4)    Recent Financing Transactions

Long-Term Debt

In April 2022, Sierra Pacific entered into a $200 million unsecured loan with NV Energy payable upon demand. The net proceeds were used to purchase certain tax-exempt refunding revenue bond obligations that were subject to mandatory purchase by Sierra Pacific in April 2022. The loan has an underlying variable interest rate based on 30-day U.S. dollar deposits offered on the London Interbank Offer Rate market plus a spread of 0.75%.

In April 2022, Sierra Pacific purchased the following series of bonds that were held by the public: $30 million of its variable-rate tax-exempt Water Facilities Refunding Revenue Bonds, Series 2016C, due 2036; $25 million of its variable-rate tax-exempt Water Facilities Refunding Revenue Bonds, Series 2016D, due 2036; $25 million of its variable-rate tax-exempt Water Facilities Refunding Revenue Bonds, Series 2016E, due 2036; $75 million of its variable-rate tax-exempt Water Facilities Refunding Revenue Bonds, Series 2016F, due 2036; $20 million of its variable-rate tax-exempt Water Facilities Refunding Revenue Bonds, Series 2016G, due 2036; and $30 million of its variable-rate tax-exempt Pollution Control Refunding Revenue Bonds, Series 2016B, due 2029. Sierra Pacific purchased these bonds as required by the bond indentures. Sierra Pacific is holding these bonds and can re-offer them at a future date.

(5)    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
Ended March 31,
20222021
Federal statutory income tax rate21 %21 %
Effects of ratemaking(7)(10)
Other
Effective income tax rate15 %13 %

126


Effects of ratemaking is primarily attributable to the recognition of excess deferred income taxes related to the 2017 Tax Cuts and Jobs Act pursuant to an order issued by the PUCN effective January 1, 2020.

(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 $2 million to the Other Postretirement Plans for the three-month period ended March 31, 2022. 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.

Amounts receivable from (payable to) NV Energy are included on the Consolidated Balance Sheets and consist of the following (in millions):
As of
March 31,December 31,
20222021
Qualified Pension Plan:
Other non-current assets$63 $62 
Non-Qualified Pension Plans:
Other current liabilities(1)(1)
Other long-term liabilities(7)(7)
Other Postretirement Plans:
Other long-term liabilities(8)(10)

(7)    Risk Management and Hedging Activities

Sierra Pacific is exposed to the impact of market fluctuations in commodity prices and interest rates. Sierra Pacific is principally exposed to electricity, natural gas and coal market fluctuations primarily through Sierra Pacific's obligation to serve retail customer load in its regulated service territory. Sierra Pacific'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. Sierra Pacific does not engage in proprietary trading activities.

Sierra Pacific has established a risk management process that is designed to identify, assess, manage and report on each of the various types of risk involved in its business. To mitigate a portion of its commodity price risk, Sierra Pacific 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. Sierra Pacific 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, Sierra Pacific may from time to time enter into interest rate derivative contracts, such as interest rate swaps or locks, to mitigate Sierra Pacific's exposure to interest rate risk. Sierra Pacific 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 Sierra Pacific's accounting policies related to derivatives. Refer to Note 8 for additional information on derivative contracts.

127


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

Derivative
OtherContracts -Other
CurrentCurrentLong-term
AssetsLiabilitiesLiabilitiesTotal
As of March 31, 2022
Not designated as hedging contracts (1):
Commodity assets$$— $— $
Commodity liabilities— (28)(25)(53)
Total derivative - net basis$$(28)$(25)$(52)
As of December 31, 2021
Not designated as hedging contracts(1):
Commodity assets$$— $— $
Commodity liabilities— (16)(19)(35)
Total derivative - net basis$$(16)$(19)$(33)

(1)Sierra Pacific's commodity derivatives not designated as hedging contracts are included in regulated rates. As of March 31, 2022 a net regulatory asset of $52 million was recorded related to the net derivative liability of $52 million. As of December 31, 2021 a net regulatory asset of $33 million was recorded related to the net derivative liability of $33 million.

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 ofMarch 31,December 31,
Measure20222021
Electricity purchasesMegawatt hours
Natural gas purchasesDecatherms60 53 

Credit Risk

Sierra Pacific 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 Sierra Pacific's counterparties have similar economic, industry or other characteristics and due to direct and indirect relationships among the counterparties. Before entering into a transaction, Sierra Pacific 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, Sierra Pacific 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, Sierra Pacific 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 agreements, including derivative contracts, contain credit support provisions that in part base certain collateral requirements on credit ratings for senior unsecured debt as reported by one or more of the recognized credit rating agencies. These agreements may either specifically provide bilateral rights to demand cash or other security if credit exposures on a net basis exceed specified rating-dependent threshold levels ("credit-risk-related contingent features") or provide the right for counterparties to demand "adequate assurance" if there is a material adverse change in Sierra Pacific's creditworthiness. These rights can vary by contract and by counterparty. As of March 31, 2022, Sierra Pacific's credit ratings for its senior secured debt and its issuer credit ratings for senior unsecured debt from the recognized credit rating agencies were investment grade.

128


The aggregate fair value of Sierra Pacific's derivative contracts in liability positions with specific credit-risk-related contingent features totaled $2 million and $— million as of March 31, 2022 and December 31, 2021, respectively, 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. Sierra Pacific'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 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 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 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 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 1Level 2Level 3Total
As of March 31, 2022:
Assets:
Commodity derivatives$— $— $$
Money market mutual funds13 — — 13 
Investment funds— — 
$14 $— $$15 
Liabilities - commodity derivatives$— $— $(53)$(53)
As of December 31, 2021:
Assets:
Commodity derivatives$— $— $$
Money market mutual funds10 — — 10 
Investment funds— — 
$11 $— $$13 
Liabilities - commodity derivatives$— $— $(35)$(35)

Sierra Pacific's investments in money market mutual funds and investment funds 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.

129


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

Three-Month Periods
Ended March 31,
20222021
Beginning balance$(33)$
Changes in fair value recognized in regulatory assets(19)
Ending balance$(52)$12 

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 March 31, 2022As of December 31, 2021
CarryingFairCarryingFair
ValueValueValueValue
Long-term debt$1,164 $1,261 $1,164 $1,316 

(9)    Commitments and Contingencies

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.

Environmental Laws and Regulations

Sierra Pacific is subject to federal, state and local laws and regulations regarding climate change, renewable portfolio standards, air and water quality, emissions performance standards, 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.

130


(10)    Revenue from Contracts with Customers

The following table summarizes Sierra Pacific's revenue from contracts with customers ("Customer Revenue") by line of business, with further disaggregation of retail by customer class, including a reconciliation to Sierra Pacific's reportable segment information included in Note 11 (in millions):
Three-Month Periods
Ended March 31,
20222021
ElectricNatural GasTotalElectricNatural GasTotal
Customer Revenue:
Retail:
Residential$85 $32 $117 $71 $25 $96 
Commercial70 15 85 54 10 64 
Industrial49 53 39 42 
Other— — 
Total fully bundled205 51 256 165 38 203 
Distribution only service— — 
Total retail206 51 257 166 38 204 
Wholesale, transmission and other21 — 21 15 — 15 
Total Customer Revenue227 51 278 181 38 219 
Other revenue— — 
Total revenue$227 $52 $279 $181 $39 $220 

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(11)    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.

The following tables provide information on a reportable segment basis (in millions):
Three-Month Periods
Ended March 31,
20222021
Operating revenue:
Regulated electric$227 $181 
Regulated natural gas52 39 
Total operating revenue$279 $220 
Operating income:
Regulated electric$30 $31 
Regulated natural gas
Total operating income38 39 
Interest expense(13)(14)
Allowance for borrowed funds— 
Allowance for equity funds
Interest and dividend income
Other, net
Income before income tax expense$33 $32 

As of
March 31,December 31,
20222021
Assets:
Regulated electric$3,869 $3,829 
Regulated natural gas375 365 
Other(1)
35 29 
Total assets$4,279 $4,223 

(1)    Consists principally of cash and cash equivalents not included in either the regulated electric or regulated natural gas segments.
132


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 Sierra Pacific during the periods included herein. Explanations include management's best estimate of the impact of weather, customer growth, usage trends 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 First Quarter of 2022 and 2021

Overview

Net income for the first quarter of 2022 was $28 million, consistent when compared to 2021 primarily due to $5 million of higher operations and maintenance expenses, mainly due to higher plant operations and maintenance expenses and higher earnings sharing, and $2 million of lower other, net, mainly due to lower cash surrender value of corporate-owned life insurance policies, partially offset by $4 million of higher electric utility margin, mainly from higher transmission and wholesale revenue, partially offset by lower regulatory-related revenue deferrals, higher allowance for equity funds, mainly due to higher construction work-in-progress, and higher interest and dividend income, mainly from carrying charges on regulatory balances. Energy generated increased 3% for the first quarter of 2022 compared to 2021 primarily due to higher coal-fueled generation, partially offset by lower natural gas-fueled generation. Wholesale electricity sales volumes increased 66% and purchased electricity volumes decreased 25%.

Non-GAAP Financial Measure
Management utilizes various key financial measures that are prepared in accordance with GAAP, as well as non-GAAP financial measures such as, electric utility margin and natural gas utility margin, to help evaluate results of operations. Electric utility margin is calculated as electric operating revenue less cost of fuel and energy while natural gas utility margin is calculated as natural gas operating revenue less cost of natural gas purchased for resale, which are captions presented on the Consolidated Statements of Operations.
Sierra Pacific's cost of fuel and energy and cost of natural gas purchased for resale are generally recovered from its customers through regulatory recovery mechanisms and as a result, changes in Sierra Pacific's expenses result in comparable changes to revenue. As such, management believes electric utility margin and natural gas utility margin more appropriately and concisely explain profitability rather than a discussion of revenue and cost of sales separately. Management believes the presentation of electric utility margin and natural gas utility margin provides meaningful and valuable insight into the information management considers important to running the business and a measure of comparability to others in the industry.
133


Electric utility margin and natural gas utility margin are not measures calculated in accordance with GAAP and should be viewed as a supplement to, and not a substitute for, operating income which is the most directly comparable financial measure prepared in accordance with GAAP. The following table provides a reconciliation of utility margin to operating income (in millions):
First Quarter
20222021Change
Electric utility margin:
Operating revenue$227 $181 $46 25 %
Cost of fuel and energy124 82 42 51 
Electric utility margin103 99 
Natural gas utility margin:
Operating revenue52 39 13 33 %
Natural gas purchased for resale34 21 13 62 
Natural gas utility margin18 18 — — 
Utility margin121 117 %
Operations and maintenance41 36 14 %
Depreciation and amortization36 36 — — 
Property and other taxes— — 
Operating income$38 $39 $(1)(3)%

134


Electric Utility Margin

A comparison of key operating results related to electric utility margin is as follows:
First Quarter
20222021Change
Utility margin (in millions):
Operating revenue$227 $181 $46 25 %
Cost of fuel and energy124 82 42 51 
Utility margin$103 $99 $%
Sales (GWhs):
Residential663 671 (8)(1)%
Commercial700 677 23 
Industrial755 897 (142)(16)
Other— — 
Total fully bundled(1)
2,122 2,249 (127)(6)
Distribution only service585 397 188 47 
Total retail2,707 2,646 61 
Wholesale291 175 116 66 
Total GWhs sold2,998 2,821 177 %
Average number of retail customers (in thousands)
369 363 %
Average revenue per MWh:
Retail - fully bundled(1)
$96.40 $73.17 $23.23 32 %
Wholesale$51.14 $60.18 $(9.04)(15)%
Heating degree days2,0372,198(161)(7)%
Sources of energy (GWhs)(2):
Natural gas990 1,082 (92)(9)%
Coal153 29 124 *
Renewables(3)
(1)(17)
Total energy generated1,148 1,117 31 
Energy purchased1,033 1,373 (340)(25)
Total2,181 2,490 (309)(12)%
Average cost of energy per MWh(4):
Energy generated$59.86 $25.23 $34.63 *
Energy purchased$53.19 $38.93 $14.26 37 %
*    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)    Includes the Fort Churchill Solar Array which was under lease by Sierra Pacific until it was acquired in December 2021.
(4)    The average cost of energy per MWh includes only the cost of fuel associated with the generating facilities, purchased power and deferrals.
135


Natural Gas Utility Margin

A comparison of key operating results related to natural gas utility margin is as follows:
First Quarter
20222021Change
Utility margin (in millions):
Operating revenue$52 $39 $13 33 %
Natural gas purchased for resale34 21 13 62 
Utility margin$18 $18 $— — %
Sold (000's Dths):
Residential4,552 4,658 (106)(2)%
Commercial2,512 2,304 208 
Industrial653 745 (92)(12)
Total retail7,717 7,707 10 — %
Average number of retail customers (in thousands)179 176 %
Average revenue per retail Dth sold$6.69 $5.03 $1.66 33 %
Heating degree days2,037 2,198 (161)(7)%
Average cost of natural gas per retail Dth sold$4.36 $2.73 $1.63 60 %

Quarter Ended March 31, 2022 Compared to Quarter Ended March 31, 2021

Electric utility margin increased $4 million, or 4%, for the first quarter of 2022 compared to 2021 primarily due to:
$3 million of higher transmission and wholesale revenue;
$2 million of higher energy efficiency implementation rates; and
$1 million of higher electric retail utility margin primarily due to higher retail customer volumes. Retail customer volumes, including distribution only service customers, increased 2.3% primarily due to an increase in the average number of customers, offset by the unfavorable impact of weather.
The increase in utility margin was offset by:
$1 million of lower regulatory-related revenue deferrals; and
$1 million of lower energy efficiency programs rates (offset in operations and maintenance expense).

Operations and maintenance increased $5 million, or 14%, for the first quarter of 2022 compared to 2021 primarily due to higher plant operations and maintenance expenses and higher earnings sharing, partially offset by lower energy efficiency program costs (offset in operating revenue).

Allowance for equity funds increased $1 million for the first quarter of 2022 compared to 2021 primarily due to higher construction work-in progress.

Interest and dividend income increased $1 million for the first quarter of 2022 compared to 2021 primarily due to higher interest income, mainly from carrying charges on regulatory balances.

Other, net decreased $2 million, or 50%, for the first quarter of 2022 compared to 2021 primarily due to lower cash surrender value of corporate-owned life insurance policies.

Income tax expense increased $1 million, or 25%, for the first quarter of 2022 compared to 2021 primarily due to higher pretax income. The effective tax rate was 15% in 2022 and 13% in 2021.
136


Liquidity and Capital Resources

As of March 31, 2022, Sierra Pacific's total net liquidity was as follows (in millions):

Cash and cash equivalents$15 
 
Credit facility250 
Less -
Short-term debt(57)
Net credit facility193 
 
Total net liquidity$208 
Credit facility:
Maturity date2024

Operating Activities
Net cash flows from operating activities for the three-month periods ended March 31, 2022 and 2021 were $63 million and $42 million, respectively. The change was primarily due to higher collections from customers, partially offset by higher payments related to fuel and energy costs, higher inventory purchases and the timing of payments for operating costs.

Investing Activities
Net cash flows from investing activities for the three-month periods ended March 31, 2022 and 2021 were $(83) million and $(61) million, respectively. The change was primarily due to increased capital expenditures. Refer to "Future Uses of Cash" for further discussion of capital expenditures.

Financing Activities
Net cash flows from financing activities for the three-month periods ended March 31, 2022 and 2021 were $26 million and $8 million, respectively. The change was primarily due to contributions from NV Energy, Inc., partially offset by higher repayments of short-term debt.

Long-Term Debt

In April 2022, Sierra Pacific entered into a $200 million unsecured loan with NV Energy payable upon demand. The net proceeds were used to purchase certain tax-exempt refunding revenue bond obligations that were subject to mandatory purchase by Sierra Pacific in April 2022. The loan has an underlying variable interest rate based on 30-day U.S. dollar deposits offered on the London Interbank Offer Rate market plus a spread of 0.75%.

In April 2022, Sierra Pacific purchased the following series of bonds that were held by the public: $30 million of its variable-rate tax-exempt Water Facilities Refunding Revenue Bonds, Series 2016C, due 2036; $25 million of its variable-rate tax-exempt Water Facilities Refunding Revenue Bonds, Series 2016D, due 2036; $25 million of its variable-rate tax-exempt Water Facilities Refunding Revenue Bonds, Series 2016E, due 2036; $75 million of its variable-rate tax-exempt Water Facilities Refunding Revenue Bonds, Series 2016F, due 2036; $20 million of its variable-rate tax-exempt Water Facilities Refunding Revenue Bonds, Series 2016G, due 2036; and $30 million of its variable-rate tax-exempt Pollution Control Refunding Revenue Bonds, Series 2016B, due 2029. Sierra Pacific purchased these bonds as required by the bond indentures. Sierra Pacific is holding these bonds and can re-offer them at a future date.

Debt Authorizations

Sierra Pacific currently has financing authority from the PUCN consisting of the ability to: (1) establish debt issuances limited to a debt ceiling of $1.9 billion (excluding borrowings under Sierra Pacific's $250 million secured credit facility); and (2) maintain a revolving credit facility of up to $600 million.
137


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 regulatory approvals, 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

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.

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):
Three-Month PeriodsAnnual
Ended March 31,Forecast
202120222022
Electric distribution$20 $20 $125 
Electric transmission16 20 128 
Solar generation— — 
Other25 43 171 
Total$61 $83 $425 

Sierra Pacific received PUCN approval through its recent IRP filings for an increase in solar generation and electric transmission. Sierra Pacific has included estimates from its latest IRP filing in its forecast capital expenditures for 2022. These estimates may change as a result of the RFP process. Sierra Pacific's historical and forecast capital expenditures include the following:

Electric distribution includes both growth projects and operating expenditures consisting of routine expenditures for distribution needed to serve existing and expected demand.
Electric transmission includes both growth projects and operating expenditures. Growth projects primarily relate to the Nevada Utilities' Greenlink Nevada transmission expansion program. In this project, the company has received approval from the PUCN to build a 350-mile, 525-kV transmission line, known as Greenlink West, connecting the Ft. Churchill substation to the Northwest substation to the Harry Allen substation; a 235-mile, 525-kV transmission line, known as Greenlink North, connecting the new Ft. Churchill substation to the Robinson Summit substation; a 46-mile, 345-kV transmission line from the new Ft. Churchill substation to the Mira Loma substations; and a 38-mile, 345-kV transmission line from the new Ft. Churchill substation to the Robinson Summit substations. Operating expenditures consist of routine expenditures for transmission and other infrastructure needed to serve existing and expected demand.
Other includes both growth projects and operating expenditures consisting of turbine upgrades at the Tracy generating facility, routine expenditures for generation, other operating projects and other infrastructure needed to serve existing and expected demand.

Material Cash Requirements

As of March 31, 2022, there have been no material changes outside the normal course of business in material cash requirements from the information provided in Item 7 of Sierra Pacific's Annual Report on Form 10-K for the year ended December 31, 2021.
138


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 climate change, RPS, air and water quality, emissions performance standards, 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, 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 various federal, state and local agencies. Sierra Pacific 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 Sierra Pacific is unable to predict the impact of the changing laws and regulations on its operations and consolidated financial results.

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.

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, 2021. There have been no significant changes in Sierra Pacific's assumptions regarding critical accounting estimates since December 31, 2021.

139


Eastern Energy Gas Holdings, LLC and its subsidiaries
Consolidated Financial Section
140


PART I
Item 1.Financial Statements


REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM


To the Board of Directors of
Eastern Energy Gas Holdings, LLC

Results of Review of Interim Financial Information

We have reviewed the accompanying consolidated balance sheet of Eastern Energy Gas Holdings, LLC and subsidiaries ("Eastern Energy Gas") as of March 31, 2022, the related consolidated statements of operations, comprehensive income, changes in equity and cash flows for the three-month periods ended March 31, 2022 and 2021, and the related notes (collectively referred to as the "interim financial information"). Based on our reviews, we are not aware of any material modifications that should be made to the accompanying interim financial information for it 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) (PCAOB), the consolidated balance sheet of Eastern Energy Gas as of December 31, 2021, 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 25, 2022, 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, 2021, is fairly stated, in all material respects, in relation to the consolidated balance sheet from which it has been derived.

Basis for Review Results

This interim financial information is the responsibility of Eastern Energy Gas' management. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to Eastern Energy Gas in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our reviews in accordance with standards of the PCAOB. 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 PCAOB, 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.


/s/ Deloitte & Touche LLP


Richmond, Virginia
April 29, 2022

141


EASTERN ENERGY GAS HOLDINGS, LLC AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS (Unaudited)
(Amounts in millions)
As of
March 31, 2022December 31, 2021
ASSETS
Current assets:
Cash and cash equivalents$54 $22 
Trade receivables, net154 183 
Receivables from affiliates32 47 
Notes receivable from affiliates122 
Other receivables
Inventories124 122 
Natural gas imbalances105 100 
Other current assets132 131 
Total current assets726 621 
Property, plant and equipment, net10,183 10,200 
Goodwill1,286 1,286 
Investments423 412 
Other assets122 129 
Total assets$12,740 $12,648 

The accompanying notes are an integral part of these consolidated financial statements.
142


EASTERN ENERGY GAS HOLDINGS, LLC AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS (Unaudited) (continued)
(Amounts in millions)

As of
March 31, 2022December 31, 2021
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable$42 $79 
Accounts payable to affiliates13 38 
Accrued interest54 19 
Accrued property, income and other taxes59 89 
Accrued employee expenses21 13 
Regulatory liabilities44 40 
Other current liabilities110 87 
Total current liabilities343 365 
Long-term debt3,899 3,906 
Regulatory liabilities645 645 
Other long-term liabilities263 238 
Total liabilities5,150 5,154 
Commitments and contingencies (Note 8)
Equity:
Member's equity:
Membership interests3,595 3,501 
Accumulated other comprehensive loss, net(38)(43)
Total member's equity3,557 3,458 
Noncontrolling interests4,033 4,036 
Total equity7,590 7,494 
Total liabilities and equity$12,740 $12,648 

The accompanying notes are an integral part of these consolidated financial statements.
143


EASTERN ENERGY GAS HOLDINGS, LLC AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
(Amounts in millions)

Three-Month Periods
Ended March 31,
20222021
Operating revenue$482 $486 
Operating expenses:
Excess gas(1)— 
Operations and maintenance118 124 
Depreciation and amortization85 80 
Property and other taxes29 39 
Total operating expenses231 243 
Operating income251 243 
Other income (expense):
Interest expense(36)(44)
Allowance for equity funds
Other, net(1)
Total other income (expense)(35)(41)
Income before income tax expense and equity income216 202 
Income tax expense30 27 
Equity income19 16 
Net income205 191 
Net income attributable to noncontrolling interests111 102 
Net income attributable to Eastern Energy Gas$94 $89 

The accompanying notes are an integral part of these consolidated financial statements.
144


EASTERN ENERGY GAS HOLDINGS, LLC AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Unaudited)
(Amounts in millions)


Three-Month Periods
Ended March 31,
20222021
Net income$205 $191 
 
Other comprehensive income, net of tax:
Unrecognized amounts on retirement benefits, net of tax of $— and $—
Unrealized gains on cash flow hedges, net of tax of $1 and $3
10 
Total other comprehensive income, net of tax12 
 
Comprehensive income210 203 
Comprehensive income attributable to noncontrolling interests111 106 
Comprehensive income attributable to Eastern Energy Gas$99 $97 

The accompanying notes are an integral part of these consolidated financial statements.
145


EASTERN ENERGY GAS HOLDINGS, LLC AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY (Unaudited)
(Amounts in millions)

Accumulated
Other
MembershipComprehensiveNoncontrollingTotal
InterestsLoss, NetInterestsEquity
Balance, December 31, 2020$2,957 $(53)$4,091 $6,995 
Net income89 — 102 191 
Other comprehensive income— 12 
Contributions11 — — 11 
Distributions(22)— (109)(131)
Balance, March 31, 2021$3,035 $(45)$4,088 $7,078 
Balance, December 31, 2021$3,501 $(43)$4,036 $7,494 
Net income94 — 111 205 
Other comprehensive income— — 
Distributions— — (114)(114)
Balance, March 31, 2022$3,595 $(38)$4,033 $7,590 

The accompanying notes are an integral part of these consolidated financial statements.
146


EASTERN ENERGY GAS HOLDINGS, LLC AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
(Amounts in millions)

Three-Month Periods
Ended March 31,
20222021
Cash flows from operating activities:
Net income$205 $191 
Adjustments to reconcile net income to net cash flows from operating activities:
Losses on other items, net— 
Depreciation and amortization85 80 
Allowance for equity funds(2)(2)
Equity income, net of distributions(8)(5)
Changes in regulatory assets and liabilities(14)
Deferred income taxes27 30 
Other, net— 
Changes in other operating assets and liabilities:
Trade receivables and other assets44 (56)
Derivative collateral, net
Accrued property, income and other taxes(29)(25)
Accounts payable and other liabilities28 20 
Net cash flows from operating activities341 241 
Cash flows from investing activities:
Capital expenditures(75)(55)
Repayment of loans by affiliates— 
Loans to affiliates(117)— 
Other, net(5)(1)
Net cash flows from investing activities(194)(56)
Cash flows from financing activities:
Repayment of notes payable, net— (9)
Distributions(114)(109)
Net cash flows from financing activities(114)(118)
Net change in cash and cash equivalents and restricted cash and cash equivalents33 67 
Cash and cash equivalents and restricted cash and cash equivalents at beginning of period39 48 
Cash and cash equivalents and restricted cash and cash equivalents at end of period$72 $115 

The accompanying notes are an integral part of these consolidated financial statements.
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EASTERN ENERGY GAS HOLDINGS, LLC AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

(1)    General

Eastern Energy Gas Holdings, LLC is a holding company, and together with its subsidiaries ("Eastern Energy Gas") conducts business activities consisting of Federal Energy Regulatory Commission ("FERC")-regulated interstate natural gas transportation pipeline and underground storage operations in the eastern region of the U.S. and operates Cove Point LNG, LP ("Cove Point"), a liquefied natural gas ("LNG") export, import and storage facility. Eastern Energy Gas owns 100% of the general partner interest and 25% of the limited partnership interest in Cove Point. In addition, Eastern Energy Gas owns a 50% noncontrolling interest in Iroquois Gas Transmission System, L.P. ("Iroquois"), a 416-mile FERC-regulated interstate natural gas transportation pipeline. Eastern Energy Gas 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 the energy industry. 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 March 31, 2022 and for the three-month periods ended March 31, 2022 and 2021. The results of operations for the three-month period ended March 31, 2022 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 Eastern Energy Gas' Annual Report on Form 10-K for the year ended December 31, 2021 describes the most significant accounting policies used in the preparation of the unaudited Consolidated Financial Statements. There have been no significant changes in Eastern Energy Gas' assumptions regarding significant accounting estimates and policies during the three-month period ended March 31, 2022.

148


(2)    Property, Plant and Equipment, Net

Property, plant and equipment, net consists of the following (in millions):
As of
March 31,December 31,
Depreciable Life20222021
Utility Plant:
Interstate natural gas pipeline assets
21 - 44 years
$8,776 $8,675 
Intangible plant
5 - 10 years
110 110 
Utility plant in-service8,886 8,785 
Accumulated depreciation and amortization(2,936)(2,901)
Utility plant in-service, net5,950 5,884 
Nonutility Plant:
LNG facility40 years4,477 4,475 
Intangible plant14 years25 25 
Nonutility plant in-service4,502 4,500 
Accumulated depreciation and amortization(454)(423)
Nonutility plant in-service, net4,048 4,077 
Plant, net9,998 9,961 
Construction work-in-progress185 239 
Property, plant and equipment, net$10,183 $10,200 

Construction work-in-progress includes $151 million and $209 million as of March 31, 2022 and December 31, 2021, respectively, related to the construction of utility plant.

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(3)    Investments and Restricted Cash and Cash Equivalents

Investments and restricted cash and cash equivalents consists of the following (in millions):
As of
March 31,December 31,
20222021
Investments:
Investment funds$15 $13 
Equity method investments:
Iroquois408 399 
Total investments423 412 
Restricted cash and cash equivalents:
Customer deposits18 17 
Total restricted cash and cash equivalents18 17 
Total investments and restricted cash and cash equivalents$441 $429 
Reflected as:
Current assets$18 $17 
Noncurrent assets423 412 
Total investments and restricted cash and cash equivalents$441 $429 
Equity Method Investments

Eastern Energy Gas, through a subsidiary, owns 50% of Iroquois, which owns and operates an interstate natural gas pipeline located in the states of New York and Connecticut.

As of both March 31, 2022 and December 31, 2021, the carrying amount of Eastern Energy Gas' investments exceeded its share of underlying equity in net assets by $130 million. The difference reflects equity method goodwill and is not being amortized. Eastern Energy Gas received distributions from its investments of $11 million and $10 million for the three-month periods ended March 31, 2022 and 2021, respectively.


150


Cash and Cash Equivalents and Restricted Cash and Cash Equivalents

Cash equivalents consist of funds invested in money market mutual funds, U.S. Treasury Bills and other investments with a maturity of three months or less when purchased. Cash and cash equivalents exclude amounts where availability is restricted by legal requirements, loan agreements or other contractual provisions. Restricted cash and cash equivalents consist of customer deposits as allowed under the FERC gas tariffs. A reconciliation of cash and cash equivalents and restricted cash and cash equivalents as presented in the Consolidated Statements of Cash Flows is outlined below and disaggregated by the line items in which they appear on the Consolidated Balance Sheets (in millions):
As of
March 31,December 31,
20222021
Cash and cash equivalents$54 $22 
Restricted cash and cash equivalents included in other current assets18 17 
Total cash and cash equivalents and restricted cash and cash equivalents$72 $39 

(4)    Regulatory Matters

In September 2021, Eastern Gas Transmission and Storage, Inc. ("EGTS") filed a general rate case for its FERC-jurisdictional services, with proposed rates to be effective November 1, 2021. EGTS' previous general rate case was settled in 1998. EGTS proposed an annual cost-of-service of approximately $1.1 billion, and requested increases in various rates, including general system storage rates by 85% and general system transportation rates by 60%. In October 2021, the FERC issued an order that accepted the November 1, 2021 effective date for certain changes in rates, while suspending the other changes for five months following the proposed effective date, until April 1, 2022, subject to refund and the outcome of hearing procedures. This matter is pending.

(5)    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
Ended March 31,
20222021
Federal statutory income tax rate21 %21 %
State income tax, net of federal income tax benefit
Equity interest
Effects of ratemaking(4)(1)
Noncontrolling interest(11)(11)
Other, net(1)
Effective income tax rate14 %13 %

For the period ended March 31, 2022, Eastern Energy Gas' reconciliation of the federal statutory income tax rate to the effective income tax rate is driven primarily by an absence of tax on income attributable to Cove Point's 75% noncontrolling interest.

Eastern Energy Gas, as a subsidiary of BHE, is included in Berkshire Hathaway's U.S. federal income tax return. Consistent with established regulatory practice, Eastern Energy Gas' provisions for income tax have been computed on a stand-alone basis, and substantially all of its currently payable or receivable income tax is remitted to or received from BHE. Eastern Energy Gas made no cash payments for income tax to BHE for the three-month periods ended March 31, 2022 and 2021.

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(6)    Employee Benefit Plans

Eastern Energy Gas is a participant in benefit plans sponsored by MidAmerican Energy Company ("MidAmerican Energy"), an affiliate. The MidAmerican Energy Company Retirement Plan includes a qualified pension plan that provides pension benefits for eligible employees. The MidAmerican Energy Company Welfare Benefit Plan provides certain postretirement health care and life insurance benefits for eligible retirees on behalf of Eastern Energy Gas. Eastern Energy Gas contributed $3 million to the MidAmerican Energy Company Retirement Plan and $1 million to the MidAmerican Energy Company Welfare Benefit Plan for the three-month period ended March 31, 2022. Amounts attributable to Eastern Energy Gas were allocated from MidAmerican Energy in accordance with the intercompany administrative service agreement. 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. As of both March 31, 2022 and December 31, 2021, Eastern Energy Gas' amount due to MidAmerican Energy associated with these plans and reflected in other long-term liabilities on the Consolidated Balance Sheets was $95 million.

(7)    Fair Value Measurements

The carrying value of Eastern Energy Gas' cash, certain cash equivalents, receivables, payables, accrued liabilities and short-term borrowings approximates fair value because of the short-term maturity of these instruments. Eastern Energy Gas 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 Eastern Energy Gas 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 Eastern Energy Gas' judgments about the assumptions market participants would use in pricing the asset or liability since limited market data exists. Eastern Energy Gas develops these inputs based on the best information available, including its own data.

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The following table presents Eastern Energy Gas' 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 1Level 2Level 3Total
As of March 31, 2022:
Assets:
Money market mutual funds$28 $— $— $28 
Equity securities:
Investment funds15 — — 15 
$43 $— $— $43 
Liabilities:
Commodity derivatives$— $(2)$— $(2)
Foreign currency exchange rate derivatives— (3)— (3)
$— $(5)$— $(5)
As of December 31, 2021:
Assets:
Foreign currency exchange rate derivatives$— $$— $
Equity securities:
Investment funds13 — — 13 
$13 $$— $16 
Liabilities:
Foreign currency exchange rate derivatives$— $(3)$— $(3)
$— $(3)$— $(3)

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 purchase 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 Eastern Energy Gas transacts. When quoted prices for identical contracts are not available, Eastern Energy Gas uses forward price curves. Forward price curves represent Eastern Energy Gas' estimates of the prices at which a buyer or seller could contract today for delivery or settlement at future dates. Eastern Energy Gas 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 Eastern Energy Gas. Market price quotations are generally readily obtainable for the applicable term of Eastern Energy Gas' outstanding derivative contracts; therefore, Eastern Energy Gas' forward price curves reflect observable market quotes. Market price quotations for certain natural gas trading hubs are not as readily obtainable due to the length of the contracts. Given that limited market data exists for these contracts, as well as for those contracts that are not actively traded, Eastern Energy Gas 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.


153


Eastern Energy Gas' long-term debt is carried at cost, including unamortized premiums, discounts and debt issuance costs as applicable, on the Consolidated Financial Statements. The fair value of Eastern Energy Gas' 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 Eastern Energy Gas' 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 Eastern Energy Gas' long-term debt (in millions):

As of March 31, 2022As of December 31, 2021
CarryingFairCarryingFair
ValueValueValueValue
Long-term debt$3,899 $3,911 $3,906 $4,266 

(8)    Commitments and Contingencies

Legal Matters

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

Environmental Laws and Regulations

Eastern Energy Gas is subject to federal, state and local laws and regulations regarding climate change, renewable portfolio standards, air and water quality, emissions performance standards, hazardous and solid waste disposal, protected species and other environmental matters that have the potential to impact Eastern Energy Gas' current and future operations. Eastern Energy Gas believes it is in material compliance with all applicable laws and regulations.

(9)    Revenue from Contracts with Customers

The following table summarizes Eastern Energy Gas' revenue from contracts with customers ("Customer Revenue") by regulated and nonregulated, with further disaggregation of regulated by line of business (in millions):

Three-Month Periods
Ended March 31,
20222021
Customer Revenue:
Regulated:
Gas transportation and storage$285 $279 
Wholesale— 17 
Total regulated285 296 
Nonregulated203 190 
Total Customer Revenue488 486 
Other revenue(6)— 
Total operating revenue$482 $486 


154


Remaining Performance Obligations

The following table summarizes Eastern Energy Gas' revenue it expects to recognize in future periods related to significant unsatisfied remaining performance obligations for fixed contracts with expected durations in excess of one year as of March 31, 2022 (in millions):
Performance obligations expected to be satisfied
Less than 12 monthsMore than 12 monthsTotal
Eastern Energy Gas$1,832 $17,061 $18,893 

(10)    Components of Accumulated Other Comprehensive Loss, Net

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

UnrecognizedAccumulated
Amounts OnUnrealizedOther
RetirementLosses on CashNoncontrollingComprehensive
BenefitsFlow HedgesInterestsLoss, Net
Balance, December 31, 2020$(12)$(51)$10 $(53)
Other comprehensive income (loss)10 (4)
Balance, March 31, 2021$(10)$(41)$$(45)
Balance, December 31, 2021$(6)$(42)$$(43)
Other comprehensive income— 
Balance, March 31, 2022$(5)$(38)$$(38)

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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 Eastern Energy Gas during the periods included herein. This discussion should be read in conjunction with Eastern Energy Gas' historical Consolidated Financial Statements and Notes to Consolidated Financial Statements in Part I, Item 1 of this Form 10-Q. Eastern Energy Gas' actual results in the future could differ significantly from the historical results.

Results of Operations for the First Quarter of 2022 and 2021

Overview

Net income attributable to Eastern Energy Gas for the first quarter of 2022 was $94 million, an increase of $5 million compared to 2021. Net income increased primarily due to lower than estimated 2021 tax assessments of $10 million and lower interest expense of $8 million primarily due to the repayment of long-term debt in the second quarter of 2021. These increases were partially offset by lower margins from regulated gas transportation and storage operations of $16 million due to unfavorable natural gas prices and volumes.

Quarter Ended March 31, 2022 Compared to Quarter Ended March 31, 2021

Operating revenue decreased $4 million, or 1%, for the first quarter of 2022 compared to 2021, primarily due to a decrease in regulated gas revenues for operational and system balancing purposes due to decreased volumes of $17 million, partially offset by an increase in Cove Point liquefied natural gas variable revenue of $13 million.

Excess gas was a credit of $1 million for the first quarter of 2022, primarily due to a decrease in volumes sold of $14 million, partially offset by an unfavorable change in natural gas prices of $9 million and increased volumes of $4 million.

Operations and maintenance decreased $6 million, or 5%, for the first quarter of 2022 compared to 2021, primarily due to a decrease in postretirement benefit costs.

Depreciation and amortization increased $5 million, or 6%, for the first quarter of 2022 compared to 2021, primarily due to higher plant placed in-service.

Property and other taxes decreased $10 million, or 26%, for the first quarter of 2022 compared to 2021, primarily due to lower than estimated 2021 tax assessments.

Interest expense decreased $8 million, or 18%, for the first quarter of 2022 compared to 2021, primarily due to the repayment of $500 million of long-term debt in the second quarter of 2021.

Income tax expense increased $3 million, or 11%, for the first quarter of 2022 compared to 2021 primarily due to higher pre-tax income. The effective tax rate was 14% for the first quarter of 2022 and 13% for the first quarter of 2021.

Net income attributable to noncontrolling interests increased $9 million, or 9%, for the first quarter of 2022 compared to 2021, primarily due to an increase in Cove Point liquefied natural gas variable revenue.

156


Liquidity and Capital Resources

As of March 31, 2022, Eastern Energy Gas' total net liquidity was $454 million as follows (in millions):

Cash and cash equivalents$54 
Intercompany revolving credit agreement400 
Total net liquidity$454 
Intercompany revolving credit agreement:
Maturity date2022

Operating Activities
Net cash flows from operating activities for the three-month periods ended March 31, 2022 and 2021 were $341 million and $241 million, respectively. The change was primarily due to increased cash receipts from receivables and other working capital adjustments.

The timing of Eastern Energy Gas' income tax cash flows from period to period can be significantly affected by the estimated federal income tax payment methods elected and assumptions for each payment date.

Investing Activities

Net cash flows from investing activities for the three-month periods ended March 31, 2022 and 2021 were $(194) million and $(56) million, respectively. The change was primarily due to loans to its parent under an intercompany revolving credit agreement of $117 million and an increase in capital expenditures of $20 million.

Financing Activities

Net cash flows from financing activities for the three-month period ended March 31, 2022 were $(114) million. Uses of cash totaled $114 million and consisted of distributions to noncontrolling interests from Cove Point.

Net cash flows from financing activities for the three-month period ended March 31, 2021 were $(118) million. Uses of cash totaled $118 million and consisted primarily of distributions to noncontrolling interests from Cove Point of $109 million.

Future Uses of Cash

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

Capital 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; system reliability standards; the cost and efficiency of construction labor, equipment and materials; commodity prices; and the cost and availability of capital.
157


Eastern Energy Gas' historical and forecasted capital expenditures, each of which exclude amounts for non-cash equity AFUDC and other non-cash items, are as follows (in millions):
Three-Month PeriodsAnnual
Ended March 31,Forecast
202120222022
Natural gas transmission and storage$$$57 
Other47 68 319 
Total$55 $75 $376 

Eastern Energy Gas' natural gas transmission and storage capital expenditures primarily include growth capital expenditures related to planned regulated projects. Eastern Energy Gas' other capital expenditures consist primarily of non-regulated and routine capital expenditures for natural gas transmission, storage and liquefied natural gas terminalling infrastructure needed to serve existing and expected demand.

Material Cash Requirements

As of March 31, 2022, there have been no material changes outside the normal course of business in material cash requirements from the information provided in Item 7 of Eastern Energy Gas' Annual Report on Form 10-K for the year ended December 31, 2021.

Regulatory Matters

Eastern Energy Gas 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 Eastern Energy Gas' current regulatory matters.

Environmental Laws and Regulations

Eastern Energy Gas is subject to federal, state and local laws and regulations regarding climate change, RPS, air and water quality, emissions performance standards, hazardous and solid waste disposal, protected species and other environmental matters that have the potential to impact Eastern Energy Gas' 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 various federal, state and local agencies. Eastern Energy Gas 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 Eastern Energy Gas is unable to predict the impact of the changing laws and regulations on its operations and consolidated financial results.

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.

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, impairment of goodwill and long-lived assets and income taxes. For additional discussion of Eastern Energy Gas' critical accounting estimates, see Item 7 of Eastern Energy Gas' Annual Report on Form 10-K for the year ended December 31, 2021. There have been no significant changes in Eastern Energy Gas' assumptions regarding critical accounting estimates since December 31, 2021.
158


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, 2021. Each Registrant's exposure to market risk and its management of such risk has not changed materially since December 31, 2021. Refer to Note 6 of the Notes to Consolidated Financial Statements of PacifiCorp, Note 6 of the Notes to Consolidated Financial Statements of Nevada Power and Note 7 of the Notes to Consolidated Financial Statements of Sierra Pacific in Part I, Item 1 of this Form 10-Q for disclosure of the respective Registrant's derivative positions as of March 31, 2022.

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, Sierra Pacific Power Company and Eastern Energy Gas Holdings, LLC 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 March 31, 2022 that has materially affected, or is reasonably likely to materially affect, its internal control over financial reporting.

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PART II

Item 1.Legal Proceedings

Berkshire Hathaway Energy and PacifiCorp

On September 30, 2020, a putative class action complaint against PacifiCorp was filed, captioned Jeanyne James et al. v. PacifiCorp et al., Case No. 20cv33885, Circuit Court, Multnomah County, Oregon. The complaint was filed by Oregon residents and businesses who seek to represent a class of all Oregon citizens and entities whose real or personal property was harmed beginning on September 7, 2020, by wildfires in Oregon allegedly caused by PacifiCorp. On November 3, 2021, the plaintiffs filed an amended complaint to limit the class to include Oregon citizens allegedly impacted by the Echo Mountain, South Obenchain, Two Four Two and Santiam Canyon (also known as Beachie Creek) fires, as well as to add claims for noneconomic damages. The amended complaint alleges that PacifiCorp's assets contributed to the Oregon wildfires occurring on or after September 7, 2020 and that PacifiCorp acted with gross negligence, among other things. The amended complaint seeks the following damages for the plaintiffs and the putative class: (i) noneconomic damages, including mental suffering, emotional distress, inconvenience and interference with normal and usual activities, in excess of $1 billion; (ii) damages for real and personal property and other economic losses of not less than $600 million; (iii) double the amount of property and economic damages; (iv) treble damages for specific costs associated with loss of timber, trees and shrubbery; (v) double the damages for the costs of litigation and reforestation; (vi) prejudgment interest; and (vii) reasonable attorney fees, investigation costs and expert witness fees. The plaintiffs demand a trial by jury and have reserved their right to further amend the complaint to allege claims for punitive damages.

On August 20, 2021, a complaint against PacifiCorp was filed, captioned Shylo Salter et al. v. PacifiCorp, Case No. 21cv33595, Multnomah County, Oregon, in which two complaints, Case No. 21cv09339 and Case No. 21cv09520, previously filed in Circuit Court, Marion County, Oregon, were combined. The plaintiffs voluntarily dismissed the previously filed complaints in Marion County, Oregon. The refiled complaint was filed by Oregon residents and businesses who allege that they were injured by the Beachie Creek Fire, which the plaintiffs allege began on or around September 7, 2020, but which government reports indicate began on or around August 16, 2020. The complaint alleges that PacifiCorp's assets contributed to the Beachie Creek Fire and that PacifiCorp acted with gross negligence, among other things. The complaint seeks the following damages: (i) damages related to real and personal property in an amount determined by the jury to be fair and reasonable, estimated not to exceed $75 million; (ii) other economic losses in an amount determined by the jury to be fair and reasonable, but not to exceed $75 million; (iii) noneconomic damages in the amount determined by the jury to be fair and reasonable, but not to exceed $500 million; (iv) double the damages for economic and property damages under specified Oregon statutes; (v) alternatively, treble the damages under specified Oregon statutes; (vi) attorneys' fees and other costs; and (vii) pre- and post-judgment interest. The plaintiffs demand a trial by jury and have reserved their right to amend the complaint with an intent to add a claim for punitive damages.

Other individual lawsuits alleging similar claims have been filed in Oregon and California related to the 2020 Wildfires. Investigations into the causes and origins of those wildfires are ongoing. For more information regarding certain legal proceedings affecting Berkshire Hathaway Energy, refer to Note 8 of the Notes to Consolidated Financial Statements of Berkshire Hathaway Energy in Part I, Item 1 of this Form 10-Q, and PacifiCorp, refer to Note 8 of the Notes to Consolidated Financial Statements of PacifiCorp in Part I, Item 1 of this Form 10-Q.

PacifiCorp

On March 17, 2022, a complaint against PacifiCorp was filed, captioned Roseburg Resources Co et al. v. PacifiCorp, Case No. 22CV09346, Circuit Court, Douglas County, Oregon. The complaint was filed by nine businesses and public pension plans that own and/or operate timberlands or possess property in Douglas County who allege damages, losses and injuries associated with their timberlands as a result of the French Creek Fire, the Archie Creek Fire, the Susan Creek Fire and the Smith Springs Road Fire in Douglas County in September 2020. The complaint alleges (i) PacifiCorp's conduct constituted not only common law negligence but also gross negligence and that such conduct contributed to or caused the ignition and spread of the aforementioned fires; (ii) PacifiCorp violated certain Oregon rules and regulations; and (iii) as an alternative to negligence, inverse condemnation. The complaint seeks the following damages: (i) economic and property damages in excess of $175 million under a determination of negligence or inverse condemnation; (ii) doubling of those economic damages to in excess of $350 million under a determination of gross negligence pursuant to Oregon statutes; (iii) all costs of the lawsuit; (iv) prejudgment and post-judgment interest as allowed by law; and (v) attorneys' fees and other costs.
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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, 2021, except as disclosed below.

Potential terrorist activities and the impact of military or other actions, including sanctions, export controls and similar measures, could adversely affect each Registrant's financial results.

The ongoing threat of terrorism and the impact of military or other actions by nations or politically, ethnically or religiously motivated organizations regionally or globally may create increased political, economic, social and financial market instability, which could subject each Registrant's operations to increased risks. Additionally, the U.S. government has issued warnings that energy assets, specifically pipeline, nuclear generation, transmission and other electric utility infrastructure, are potential targets for terrorist attacks. Further, the potential or actual outbreak of war or other hostilities, such as Russia's invasion of Ukraine in February 2022 and the resulting economic sanctions on Russia and the sale of Russian natural gas and petroleum, as well as the existing and potential further responses from Russia or other countries to such sanctions and military actions, could adversely affect global and regional economies and financial markets. For instance, the current ban on imports of Russian oil, liquefied natural gas and coal to the U.S. could contribute to increases in prices for such commodities in the U.S. and elsewhere which could adversely affect each Registrant's business. Further, each Registrant's business must be conducted in compliance with applicable economic and trade sanctions laws and regulations, including those administered and enforced by the U.S. Department of Treasury's Office of Foreign Assets Control, the U.S. Department of State, the U.S. Department of Commerce, the United Nations Security Council and other relevant governmental authorities in the U.S., Canada, the United Kingdom and European Union, which include sanctions that could potentially restrict or prohibit each Registrant's relationships with certain suppliers and customers. Political, economic, social or financial market instability or damage to or interference with the operating assets of the Registrants, customers or suppliers, or continued increases in the price of natural gas and other petroleum commodities may result in business interruptions, lost revenue, higher costs, disruption in fuel supplies, lower energy consumption and unstable markets, particularly with respect to electricity and natural gas, and increased security, repair or other costs, any of which may materially adversely affect each Registrant in ways that cannot be predicted at this time. Any of these risks could materially affect its consolidated financial results. Furthermore, instability in the financial markets as a result of terrorism or war could also materially adversely affect each Registrant's ability to raise capital.

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 following is a list of exhibits filed as part of this Quarterly Report.

161


Exhibit No.Description

BERKSHIRE HATHAWAY ENERGY
4.1
4.2
15.1
31.1
31.2
32.1
32.2

PACIFICORP
15.2
31.3
31.4
32.3
32.4

BERKSHIRE HATHAWAY ENERGY AND PACIFICORP
95

MIDAMERICAN ENERGY
15.3
31.5
31.6
32.5
32.6

MIDAMERICAN FUNDING
31.7
31.8
32.7
32.8
162



Exhibit No.Description

NEVADA POWER
15.4
31.9
31.10
32.9
32.10

SIERRA PACIFIC
10.1
31.11
31.12
32.11
32.12

EASTERN ENERGY GAS
31.13
31.14
32.13
32.14

ALL REGISTRANTS
101
The following financial information from each respective Registrant's Quarterly Report on Form 10-Q for the quarter ended March 31, 2022, is formatted in iXBRL (Inline 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.
104Cover Page Interactive Data File formatted in iXBRL (Inline eXtensible Business Reporting Language) and contained in Exhibit 101.
163


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: April 29, 2022/s/ Calvin D. Haack
 Calvin D. Haack
 Senior Vice President and Chief Financial Officer
 (principal financial and accounting officer)
 PACIFICORP
Date: April 29, 2022/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: April 29, 2022/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: April 29, 2022/s/ Michael E. Cole
Michael E. Cole
Senior Vice President, Chief Financial Officer and Treasurer
(principal financial and accounting officer)
SIERRA PACIFIC POWER COMPANY
Date: April 29, 2022/s/ Michael E. Cole
Michael E. Cole
Senior Vice President, Chief Financial Officer and Treasurer
(principal financial and accounting officer)
EASTERN ENERGY GAS HOLDINGS, LLC
Date: April 29, 2022/s/ Scott C. Miller
Scott C. Miller
Vice President, Chief Financial Officer and Treasurer
(principal financial and accounting officer)
164
EXHIBIT 4.2

CLIFFORD CHANCE
CLIFFORD CHANCE LLP

EXECUTION VERSION
 
NORTHERN POWERGRID (NORTHEAST) PLC
£350,000,000 3.250 PER CENT. BONDS DUE 2052
TRUST DEED




CONTENTS
ClausePage
1.    Interpretation
1
2.    Amount of the Bonds and Covenant to Pay
5
3.    Form and Issue of the Bonds
8
4.    Stamp Duties and Taxes
10
5.    The Trust Deed and the Bonds
11
6.    Application of Moneys Received by the Trustee
11
7.    Covenants by the Issuer
12
8.    Remuneration and Indemnification of the Trustee
16
9.    Provisions Supplemental to the Trustee Act 1925 and the Trustee Act 2000
18
10.    Trustee Liable for Negligence
24
11.    Consequential Loss
24
12.    Waiver
25
13.    Trustee not Precluded from Entering into Contracts
25
14.    Modification and Substitution
26
15.    Appointment, Retirement and Removal of the Trustee
27
16.    Coupons
29
17.    Currency Indemnity
29
18.    Communications
30
19.    Governing Law
30
20.    Jurisdiction
31
21.    Severability
31
22.    Sanctions
31
23.    Contracts (Rights of Third Parties) Act 1999
32
24.    Counterparts
32
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Schedule 1 Form of Temporary Global Bond
33
Schedule 2 Form of Permanent Global Bond
42
Schedule 3 Form of Definitive Bond
48
Schedule 4 Terms and Conditions of the Bonds
52
Schedule 5 Provisions for Meetings of Bondholders
69

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THIS TRUST DEED is made on 1 April 2022
BETWEEN:
(1)NORTHERN POWERGRID (NORTHEAST) PLC (the "Issuer"), a public company incorporated in England and Wales with limited liability under registered number 02906593; and
(2)HSBC CORPORATE TRUSTEE COMPANY (UK) LIMITED (the "Trustee", which expression shall, where the content so admits, include all persons for the time being the trustee or trustees of this Trust Deed (as defined below) (including any successors)).
WHEREAS
(A)The Issuer has authorised the issue of £350,000,000 in aggregate principal amount of 3.250 per cent. Bonds due 2052 to be constituted by this Trust Deed.
(B)The Trustee has agreed to act as trustee of this Trust Deed on the following terms and conditions.
NOW THIS DEED WITNESSES AND IT IS HEREBY DECLARED as follows:
1.INTERPRETATION
1.1Definitions
The following expressions shall have the following meanings:
"Auditors" means the auditors for the time being of the Issuer and, if there are joint auditors, means all or any one of such joint auditors or, in the event of any of them being unable or unwilling to carry out any action requested of them pursuant to this Trust Deed, means such other firm of chartered accountants in England as may be nominated in writing by the Trustee for the purpose;
"Authorised Signatory" means a director of the Issuer or any person in respect of whom the Issuer has supplied to the Trustee a copy, certified by a director or the secretary of the Issuer, to be a true copy and in full force and effect, of a resolution or resolutions of the board of directors (or a committee of the board of directors) of the Issuer, authorising such person to sign on behalf of the Issuer all such certificates and other documents as are referred to therein, together with a certified specimen signature of such person, and in respect of whom the Trustee has not received written notification from the Issuer, that such person has ceased to be so authorised;
"Bondholder" and (in relation to a Bond) "holder" means the bearer of a Bond;
"Bonds" means the £350,000,000 3.250 per cent. Bonds due 2052 constituted by this Trust Deed and for the time being outstanding or, as the context may require, a specific number of them and includes the Temporary Global Bond (or any part thereof), the Permanent Global Bond (or any part thereof) and the Definitive Bonds (or any of them), including any replacement Definitive Bonds issued pursuant to Condition 13 (Replacement of Bonds and Coupons);
"Clearstream, Luxembourg" means Clearstream Banking, S.A.;
"Code" means the U.S. Internal Revenue Code of 1986, as amended.
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"Conditions" means the terms and conditions set out in Schedule 4 (Terms and Conditions of the Bonds) as modified, with respect to any Bonds represented by a Global Bond, by the provisions of such Global Bond and as from time to time modified in accordance with this Trust Deed and any reference to a particularly numbered Condition shall be construed accordingly;
"Couponholder" and (in relation to a Coupon) "holder" means the bearer of a Coupon;
"Coupons" means the bearer interest coupons appertaining to the Definitive Bonds in or substantially in the form set out in Schedule 3 (Form of Definitive Bond), or as the context may require, a specific number of them and includes any replacement Coupons issued pursuant to Condition 13 (Replacement of Bonds and Coupons);
"Definitive Bonds" means the Bonds in definitive form to be issued pursuant to, and in the circumstances specified in, Clause 3.3 (Exchange for Definitive Bonds), in or substantially in the form set out in Schedule 3 (Form of Definitive Bond), and includes any replacements therefor issued pursuant to Condition 13 (Replacement of Bonds and Coupons);
"Euroclear" means Euroclear Bank SA/NV, as operator of the Euroclear system;
"Event of Default" means any of the events set out in Condition 10 (Events of Default);
"Extraordinary Resolution" has the meaning set out in paragraph 1 of Schedule 5 (Provisions for Meetings of Bondholders);
"FATCA" means Sections 1471 to 1474 of the Code, any regulations thereunder or official interpretations thereof, an IGA or an agreement described in Section 1471(b) of the Code.
"FCA" means the Financial Conduct Authority in its capacity as competent authority under FSMA;
"FSMA" means the Financial Services and Markets Act 2000;
"Further Bonds" means all further bonds created and issued by the Issuer in accordance with Condition 17 (Further Bonds) and/or for the time being outstanding or, as the context may require, a specific proportion thereof;
"Global Bonds" means the Temporary Global Bond and the Permanent Global Bond and "Global Bond" means either of them;
"IGA" means an intergovernmental agreement between the United States and another jurisdiction to improve tax compliance and to implement FATCA.
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"outstanding" means, in relation to the Bonds, all the Bonds issued other than (a) those Bonds which have been redeemed in full and cancelled pursuant to Conditions 7 (Redemption and Purchase) or 11 (Restructuring Event) or otherwise pursuant to this Trust Deed; (b) those Bonds in respect of which the date for redemption in accordance with the Conditions has occurred and, in any such case, the redemption moneys for which (including all interest payable thereon) have been duly paid to the Trustee or to the Principal Paying Agent in the manner provided in the Paying Agency Agreement (and, where appropriate, notice to that effect has been given to the Bondholders in accordance with Condition 14 (Notices)) and remain available for payment against presentation of the relevant Bonds and/or Coupons; (c) those Bonds which have been purchased and surrendered for cancellation in accordance with Condition 7(e) (Cancellation); (d) those Bonds which have become void under Condition 9 (Prescription); (e) those mutilated or defaced Definitive Bonds which have been surrendered and cancelled and in respect of which replacements have been issued pursuant to Condition 13 (Replacement of Bonds and Coupons); (f) (for the purpose only of ascertaining the amount of Bonds outstanding and without prejudice to the status for any other purpose of the relevant Bonds) those Definitive Bonds which are alleged to have been lost, stolen or destroyed and in respect of which replacements have been issued pursuant to Condition 13 (Replacement of Bonds and Coupons); (g) the Temporary Global Bond to the extent that it shall have been exchanged for the Permanent Global Bond pursuant to the provisions contained therein and in Clause 3.3 (Exchange for Definitive Bonds), and (h) the Permanent Global Bond to the extent that it shall be exchanged for the Definitive Bonds pursuant to the provisions contained therein and in Clause 3.3 (Exchange for Definitive Bonds),
provided that for each of the following purposes, namely:
(a)the right to attend and vote at any meeting of the Bondholders;
(b)the determination of how many and which Bonds are for the time being outstanding for the purposes of the Conditions and Schedule 5 (Provisions for Meetings of Bondholders);
(c)any discretion, power or authority contained in this Trust Deed which the Trustee is required, expressly or impliedly, to exercise in or by reference to the interests of any of the Bondholders; and
(d)the determination by the Trustee whether any of the events specified in Condition 10 (Events of Default) is materially prejudicial to the interests of the Bondholders,
those Bonds which are for the time being held beneficially by or for the account of the Issuer or any Subsidiary of the Issuer, or Berkshire Hathaway Energy Company or any other Subsidiary of Berkshire Hathaway Energy Company shall (unless and until ceasing to be so held) be deemed not to remain outstanding;
"Paying Agency Agreement" means the Paying Agency Agreement dated 1 April 2022, as the same may be amended and/or supplemented from time to time, between the Issuer, the Trustee and the Principal Paying Agent and includes any other agreements approved in writing by the Trustee appointing Successor Paying Agents or altering any such agreements;
"Paying Agents" means the institutions (including the Principal Paying Agent) at their respective Specified Offices referred to in Condition 6 (Payments) and/or any Successor Paying Agents, in each case at their respective Specified Offices;
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"Permanent Global Bond" means the permanent global Bond to be issued by the Issuer pursuant to Clause 3.1 (The Global Bonds) representing the Bonds, in or substantially in the form set out in Schedule 2 (Form of Permanent Global Bond);
"Person" means any person, firm, company or body corporate, corporation, government, state or agency of a state or any association or partnership (whether or not having separate legal personality) or two or more of the foregoing;
"Potential Event of Default" means an event or circumstance which would with the giving of notice and/or lapse of time and/or the issuing of a certificate become an Event of Default;
"principal" and "principal amount" in relation to any payment in respect of Bonds includes, where applicable, the Redemption Price referred to in Condition 7(b) (Redemption at the option of the Issuer);
"Principal Paying Agent" means HSBC Bank plc or any Successor Principal Paying Agent appointed under the Paying Agency Agreement;
"Specified Office" means, in relation to any Paying Agent, either the office identified with its name at the end of the Conditions or any other office approved by the Trustee and notified to the Bondholders pursuant to Clause 7.12 (Change in Agents);
"Subscription Agreement" means the subscription agreement dated 30 March 2022 between the Issuer, Barclays Bank PLC, HSBC Bank plc and RBC Europe Limited;
"Successor" means, in relation to the Paying Agents, such other or further person as may from time to time be appointed by the Issuer as a Paying Agent, with the written approval of, and on terms approved in writing by, the Trustee and notice of whose appointment is given to Bondholders pursuant to Clause 7.12 (Change in Agents);
"Temporary Global Bond" means the temporary global Bond to be issued by the Issuer pursuant to Clause 3.1 (The Global Bonds) representing the Bonds, in or substantially in the form set out in Schedule 1 (Form of Temporary Global Bond);
"this Trust Deed" means this Deed, the Schedules (as from time to time altered in accordance with this Deed), the Conditions, the Bonds and the Coupons and any other document executed in accordance with this Deed (as from time to time altered in accordance with its terms) and expressed to be supplemental to this Deed; and
"trust corporation" means a corporation entitled by rules made under the Public Trustee Act 1906 or entitled pursuant to any other legislation applicable to a trustee in any jurisdiction other than England to carry out the functions of a custodian trustee.
1.2Terms defined elsewhere
Unless otherwise defined herein, terms defined in the Conditions shall have the same meanings in this Trust Deed.
1.3Construction of Certain References
References to:
1.3.1costs, charges, remuneration or expenses shall include any value added tax, turnover tax or similar tax charged in respect thereof;
1.3.2"£", "pounds" and "Sterling" shall be construed as references to the lawful currency for the time being of the United Kingdom;
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1.3.3any action, remedy or method of judicial proceedings for the enforcement of rights of creditors shall include, in respect of any jurisdiction other than England, references to such action, remedy or method of judicial proceedings available or appropriate in such jurisdiction as shall most nearly approximate thereto;
1.3.4all references in this Trust Deed or the Conditions involving compliance by the Trustee with a test of reasonableness shall be deemed to include a reference to a requirement that such reasonableness shall be determined by reference primarily to the interests of the holders of the Bonds as a class and in the event of any conflict between such interests and the interests of any other person, the former shall prevail as being paramount;
1.3.5in this Trust Deed references to Coupons and Couponholders shall apply only if Definitive Bonds have been issued by the Issuer in accordance with Clause 3 (Form and Issue of the Bonds); and
1.3.6any provision of any statute shall be deemed also to refer to any statutory modification or re-enactment thereof or any statutory instrument, order or regulation made thereunder or under such modification or re-enactment.
1.4Headings
Headings shall be ignored in construing this Trust Deed.
1.5Schedules
The Schedules are part of this Trust Deed and shall have effect accordingly.
2.AMOUNT OF THE BONDS AND COVENANT TO PAY
2.1Amount of the Bonds
The aggregate principal amount of the Bonds is limited to £350,000,000.
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2.2Covenant to pay
The Issuer covenants with the Trustee that it will in accordance with this Trust Deed on any date when the Bonds or any of them become due to be redeemed or any principal on the original Bonds or any of them becomes due to be repaid in accordance with the conditions unconditionally pay or procure to be paid to or to the order of the Trustee in London in Sterling in immediately available funds the principal amount of the Bonds or any of them becoming due for redemption or repayment on that date together with any applicable premium and will (subject to the Conditions) until such payment (both before and after judgment of a court of competent jurisdiction) unconditionally pay to or to the order of the Trustee as aforesaid interest on the principal amount of the Bonds outstanding as set out in the Conditions provided that (1) subject to sub-clause 2.4.2 of Clause 2.4 (Payment after a Default), every payment of any sum due in respect of the Bonds made to the Principal Paying Agent as provided in the Paying Agency Agreement shall, to such extent, satisfy such obligation except to the extent that there is failure in its subsequent payment (in the case of the Global Bonds) to or to the order of the bearer thereof in accordance with the provisions of the Temporary Global Bond or the Permanent Global Bond, as the case may be, or (in the case of the Definitive Bonds) to the relevant Bondholders or (as the case may be) Couponholders under the Conditions and (2) in the case of any payment made after the due date or pursuant to Condition 10 (Events of Default), payment will be deemed to have been made when the full amount due has been received by the Principal Paying Agent or the Trustee and notice to that effect has been given to the Bondholders (if required in accordance with Clause 7.9 (Notice of late payment)), except to the extent that there is failure in the subsequent payment to the relevant Bondholders or (as the case may be) Couponholders under the Conditions. The Trustee will hold the benefit of this covenant and the covenant in Clause 5 on trust for the original Bondholders and original Couponholders.
2.3Discharge
Subject to Clause 2.4 (Payment after a Default), any payment to be made in respect of the Bonds, the Coupons or this Trust Deed, as the case may be, by the Issuer or the Trustee may be made as provided herein, in the Conditions and the Paying Agency Agreement, and any payment so made will (subject to Clause 2.4 (Payment after a Default)) to such extent be a good discharge to the Issuer or the Trustee, as the case may be.
2.4Payment after a Default
At any time after an Event of Default or a Potential Event of Default has occurred the Trustee may:
2.4.1by notice in writing to the Issuer and the Paying Agents (or such of them as are specified by the Trustee), require the Paying Agents (or such of them as are specified by the Trustee):
(a)to act thereafter, until otherwise instructed by the Trustee, as agents of the Trustee under this Trust Deed and the Bonds on the terms of the Paying Agency Agreement (with consequential amendments as necessary and save that the Trustee's liability for the indemnification, remuneration and all other out-of-pocket expenses of any of the Paying Agents shall be limited to the amounts for the time being held by the Trustee on the trusts of this Trust Deed and available to the Trustee for such purpose) and thereafter to hold all Definitive Bonds and Coupons and all sums, documents and records held by them in respect of the Bonds and the Coupons to the order of the Trustee; and/or
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(b)to deliver all Definitive Bonds and Coupons and all sums, documents and records held by them in respect of the Bonds and Coupons (save for such documents and records which the Paying Agents are obliged not to release by virtue of any applicable law or regulation or by order of any court of competent jurisdiction) to the Trustee or as the Trustee directs in such notice; and
2.4.2by notice in writing to the Issuer require it to make all subsequent payments in respect of the Bonds and the Coupons to or to the order of the Trustee and not to the Principal Paying Agent.
2.5Further Issues
2.5.1The Issuer shall be at liberty from time to time (but subject always to the provisions of this Trust Deed) without the consent of the Bondholders or Couponholders to create and issue Further Bonds (whether in bearer or registered form) ranking pari passu in all respects (or in all respects save for the first payment of interest thereon), and so that the same shall be consolidated and form a single series, with the original Bonds and/or any Further Bonds of any series, provided that:
(a)the Trustee is satisfied (by means of a confirmation from S&P in the case of any rating by S&P and Fitch in the case of any rating by Fitch) that the rating granted in respect of the Bonds by S&P and Fitch will not thereby be adversely affected; and
(b)the Issuer shall not create and issue such Further Bonds while any default exists in relation to any payment by the Issuer of any amounts due under this Trust Deed.
2.5.2Any Further Bonds which are to be created and issued pursuant to the provisions of sub-clause 2.5.1 above shall be constituted by a deed supplemental to this Trust Deed in such form as the Trustee may approve. In such case the Issuer shall, prior to the issue of such Further Bonds, execute and deliver to the Trustee a deed supplemental to this Trust Deed (in relation to which all applicable stamp duties or other documentation fees, duties or taxes have been paid and, if applicable, duly stamped or denoted accordingly) and containing a covenant by the Issuer in the form mutatis mutandis of Clause 2.2 (Covenant to pay) in relation to the principal, premium (if any) and interest in respect of such Further Bonds and such other provisions (corresponding to the provisions contained in this Trust Deed) as the Trustee shall require.
2.5.3A memorandum of every such supplemental Trust Deed shall be endorsed by the Trustee on this Trust Deed and by the Issuer on its duplicate of this Trust Deed.
2.5.4Whenever it is proposed to create and issue any Further Bonds the Issuer shall give to the Trustee not less than 14 days' notice in writing of its intention so to do stating the amount of Further Bonds proposed to be created and issued.
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3.FORM AND ISSUE OF THE BONDS
3.1The Global Bonds
The Bonds will initially be represented by the Temporary Global Bond without Coupons in the principal amount at the date hereof of £350,000,000, when duly executed and authenticated, will be deposited by the Issuer with HSBC Bank plc (the "Common Depositary") as common depositary for Euroclear and Clearstream, Luxembourg on the date hereof on terms that the Common Depositary shall hold the Temporary Global Bond to or to the order of the Issuer against payment of the net proceeds of the issue of the Bonds in accordance with the Subscription Agreement, following which it shall hold the Temporary Global Bond for the account of the Bondholders. The Issuer shall also deposit on the date hereof the Permanent Global Bond without Coupons in the principal amount of up to £350,000,000 with the Common Depositary who shall hold the Permanent Global Bond pending exchange of the Temporary Global Bond (in whole or in part) therefore in accordance with their respective terms. Following exchange of the Temporary Global Bond in whole for the Permanent Global Bond in accordance with their respective terms the Bonds shall (subject as provided in Clause 3.3 (Exchange for Definitive Bonds) below) thereafter be represented by the Permanent Global Bond.
The procedures as regards the issue, exchange, execution, authentication, delivery, surrender, cancellation, presentation and endorsement of the Temporary Global Bond and the Permanent Global Bond (or part thereof) and any other matters to be carried out by the relevant parties upon such exchange (in whole or in part) shall be made in accordance with this Clause 3, their respective terms and the rules and procedures of Euroclear and Clearstream, Luxembourg for the time being.
3.2Signature and Authentication
The Global Bonds and the Definitive Bonds will be signed manually or in facsimile by a director of the Issuer. The Issuer may use the facsimile signature of any person who at the date of this Trust Deed is a director of the Issuer even if at the time of issue of any Bonds he/she no longer holds such office. The Issuer shall procure that, prior to the issue and delivery of each Global Bond, each Global Bond will be authenticated by an authorised signatory on behalf of the Principal Paying Agent and no Global Bond shall be valid for any purpose unless and until so authenticated. The Bonds so executed and, if applicable, so authenticated shall be binding and valid obligations of the Issuer. Until it (or part thereof) has been exchanged pursuant to Clauses 3.1 (The Global Bonds) or 3.3 (Exchange for Definitive Bonds) (but without prejudice to the escrow arrangements referred to in Clause 3.1 (The Global Bonds)), each Global Bond (or part thereof) shall in all respects be entitled to the same benefits as a Definitive Bond and each Global Bond shall be subject to the provisions hereof except that the bearer thereof shall be the only person entitled to receive payments of principal and interest as set out therein.
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3.3Exchange for Definitive Bonds
If while the Bonds are represented by one or more Global Bonds (i) either Euroclear or Clearstream, Luxembourg is closed for business for a continuous period of 14 days (other than by reason of holiday, statutory or otherwise) or announces an intention permanently to cease business or (ii) as a result of any change in, or amendment to, the laws or regulations of the United Kingdom or of any political sub-division of, or any authority in, the United Kingdom having power to tax or any change in the application or official interpretation of such laws or regulations which becomes effective on or after 30 March 2022, the Issuer or any Paying Agent is or will be required to make any withholding or deduction from any payment in respect of the Bonds which would not be required if the Bonds were in definitive form, then the Issuer shall, (subject as mentioned below), within 30 days of the occurrence of such relevant event but not prior to the expiry of a period of 40 days commencing on the date hereof, issue Definitive Bonds (with all unmatured Coupons attached) in exchange for the whole (or the remaining part(s) outstanding) of the Permanent Global Bond. If either of the events mentioned in (i) or (ii) occurs whilst the Bonds are represented by the Temporary Global Bond (or part thereof) the Temporary Global Bond (or that part) shall forthwith be exchanged for the Permanent Global Bond (or part thereof) in accordance with its terms and Clause 3.1 (The Global Bonds) above so that the Bonds are then represented solely by the Permanent Global Bond. All Definitive Bonds shall be printed, proofed, executed and delivered as aforesaid but shall be held by the Principal Paying Agent until a Bondholder requests the Issuer through the Principal Paying Agent that his interest in the Permanent Global Bond be exchanged for Definitive Bonds whereupon such Definitive Bonds shall be issued to such Bondholder as aforesaid without charge. The procedures to be carried out by the relevant parties upon such exchange shall be made in accordance with the provisions of the Permanent Global Bond and the rules and procedures of Euroclear and Clearstream, Luxembourg for the time being. The Permanent Global Bond shall be endorsed by or on behalf of the Principal Paying Agent in respect of those Definitive Bonds which are so delivered.
3.4The Definitive Bonds
The Definitive Bonds shall be serially numbered and issued in bearer form in the denominations of £100,000 and integral multiples of £1,000 in excess thereof up to and including £199,000 each with all unmatured Coupons attached. The Definitive Bonds and the Coupons will be security printed in accordance with all applicable stock exchange requirements in or substantially in the respective forms set out in Schedule 3 (Form of Definitive Bond) and the Definitive Bonds will be endorsed with the Conditions.
3.5Entitlement to treat holder as owner
The Issuer, the Trustee and any Paying Agent may deem and treat the holder of any Bond or Coupon (except as ordered by a court of competent jurisdiction or as otherwise required by law) as the absolute owner of such Bond or Coupon (as the case may be) for all purposes (whether or not it is overdue and regardless of any notice of ownership, trust, or any interest in it, any writing on it, or its theft or loss) and no person will be liable for so treating the holder.
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4.STAMP DUTIES AND TAXES
4.1Stamp Duties
The Issuer will pay any stamp, issue, registration, documentary or other taxes and duties, including interest and penalties, payable in Belgium, Luxembourg and the United Kingdom in respect of the creation, issue and offering of the Bonds and the Coupons and the execution or delivery of this Trust Deed. The Issuer will also indemnify the Trustee, the Bondholders and the Couponholders from and against all stamp, issue, registration, documentary or other taxes paid by any of them in any jurisdiction in connection with any action properly taken by or on behalf of the Trustee or, as the case may be, (where entitled under Condition 12 (Enforcement) to do so) the Bondholders or the Couponholders to enforce the obligations of the Issuer under this Trust Deed, the Bonds or the Coupons.
4.2Change of taxing jurisdiction
If the Issuer becomes subject generally to the taxing jurisdiction of any territory or any authority of or in that territory having power to tax other than or in addition to the United Kingdom or any such authority of or in the United Kingdom then the Issuer will (unless the Trustee otherwise agrees) in a trust deed supplemental hereto give to the Trustee an undertaking in form and manner satisfactory to the Trustee in terms corresponding to the terms of Condition 8 (Taxation) with the substitution for, or (as the case may be) the addition to, the references in that Condition to the United Kingdom or any authority thereof or therein having power to tax of references to that other or additional territory or authority to whose taxing jurisdiction the Issuer has become so subject and in such event this Trust Deed, the Bonds and the Coupons will be read accordingly. In addition, such supplemental Trust Deed shall also modify Condition 7(c) (Redemption for tax reasons) by the substitution for, or (as the case may be) the addition to, the references in that Condition to the United Kingdom or any authority in or of the United Kingdom having power to tax, of references to that other territory or authority to whose taxing jurisdiction the Issuer has become so subject and in such event this Trust Deed, the Bonds and the Coupons will be read accordingly.
4.3The Issuer shall, within ten business days of a written request by the Trustee, supply to the Trustee such forms, documentation and other information relating to the Issuer, its operations, or the Bonds as the Trustee reasonably requests for the purposes of the Trustee's compliance with applicable law and shall notify the Trustee reasonably promptly in the event that the Issuer becomes aware that any of the forms, documentation or other information provided by the Issuer is (or becomes) inaccurate in any material respect; provided, however, that the Issuer shall not be required to provide any forms, documentation or other information pursuant to this Clause 5.3 to the extent that: (i) any such form, documentation or other information (or the information required to be provided on such form or documentation) is not reasonably available to the Issuer and cannot be obtained by the Issuer using reasonable efforts; or (ii) doing so would or might in the reasonable opinion of the Issuer constitute a breach of any: (a) applicable law; (b) fiduciary duty; or (c) duty of confidentiality.
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4.4Notwithstanding any other provision of this Trust Deed, the Trustee shall be entitled to make a deduction or withholding from any payment which it makes under the Bonds for or on account of any tax, if and only to the extent so required by applicable law, in which event the Trustee shall make such payment after such deduction or withholding has been made and shall account to the relevant authority within the time allowed for the amount so deducted or withheld or, at its option, shall reasonably promptly after making such payment return to the Issuer the amount so deducted or withheld, in which case, the Issuer shall so account to the relevant authority for such amount. The Trustee shall have no obligation to gross-up any payment hereunder or to pay any additional amount as a result of such withholding or deduction.
5.THE TRUST DEED AND THE BONDS
5.1Bonds incorporated by reference
The Issuer hereby covenants with the Trustee that it will perform and comply with those provisions of this Trust Deed and the Conditions which are expressed to be binding on it. Subject to Condition 12 (Enforcement), the Trustee shall be entitled to enforce the obligations of the Issuer under the Bonds and the Coupons in the manner therein provided as if the Bonds and the Coupon were incorporated in this Trust Deed, which shall be read and construed as one document with the Bonds. The provisions contained in Schedule 4 (Terms and Conditions of the Bonds) shall have effect in the same manner as if herein set forth.
5.2Bonds subject to Trust Deed
The Bonds shall be subject to the provisions of this Trust Deed, all of which shall be binding upon the Issuer, the Bondholders and the Couponholders and all persons claiming through or under them respectively.
5.3Evidence of Default
If the Trustee makes any claim, institutes any legal proceeding or lodges any proof in a winding up of the Issuer, proof that the Issuer has failed to pay any principal or interest due and payable in respect of any particular Bond or Coupon shall (unless the contrary is proved) be sufficient evidence that the Issuer has made the same default as regards all other Bonds or Coupons in respect of which a corresponding payment is due and payable.
6.APPLICATION OF MONEYS RECEIVED BY THE TRUSTEE
6.1Declaration of Trust
All moneys received by the Trustee in respect of the Bonds and all other amounts payable under this Trust Deed will be held by the Trustee upon trust to apply them (subject to Clause 6.2 (Accumulation)):
6.1.1firstly, in payment of all costs, charges, expenses and liabilities incurred by the Trustee in carrying out the preparation and execution of the trusts of this Trust Deed (including remuneration payable to the Trustee);
6.1.2secondly, in payment of any interest owing in respect of the Bonds pari passu and rateably;
6.1.3thirdly, in payment of any principal and premium (if any) owing in respect of the Bonds pari passu and rateably, and
6.1.4fourthly, in payment to the Issuer.
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Without prejudice to this Clause 6.1, if the Trustee holds any moneys which represent principal, premium or interest in respect of Bonds or Coupons which have become void under Condition 9 (Prescription), the Trustee will hold such moneys upon the above trusts provided that the Trustee shall be required to treat the payments of interest and/or principal and/or premium as having been satisfied and no amounts as outstanding or owing in respect thereof. The Trustee shall as soon as practicable apply such moneys as aforesaid and promptly thereafter return such moneys (or the balance thereof, as the case may be) to the Issuer.
6.2Accumulation
The Trustee may, at its discretion, accumulate such moneys until the accumulations, together with any other funds for the time being under the control of the Trustee and available for such purpose, amount to at least 10 per cent. of the principal amount of the Bonds then outstanding and then such accumulations and funds (after deduction of, or provision for, any applicable taxes) shall be applied under Clause 6 (Application of Moneys Received by the Trustee). For the avoidance of doubt, the Trustee shall, in no circumstances, have any discretion to invest any moneys referred to in this Clause 6.2 in any investments or other assets.
6.3Investment
Moneys held by the Trustee may, at its election, be placed on deposit into an account bearing a market rate of interest (and for the avoidance of doubt, the Trustee shall not be required to obtain best rates, be responsible for any loss occasioned by such deposit or exercise any other form of investment discretion with respect to such deposits) in the name or under the control of the Trustee at such bank or other financial institution and in such currency as the Trustee may think fit in light of the cash needs of the transaction and not for purposes of generating income. If such moneys are placed on deposit with a bank or financial institution which is a Subsidiary, holding company, affiliate or associated company of the Trustee, it need only account for an amount of interest equal to the standard amount of interest payable by it on a deposit to an independent customer.
7.COVENANTS BY THE ISSUER
The Issuer hereby covenants with the Trustee that so long as any Bond is outstanding, the Issuer will:
7.1Books of account
Keep proper books of account and, at any time after the occurrence of an Event of Default or a Potential Event of Default or if the Trustee has reasonable grounds to believe that any such event has occurred so far as permitted by applicable law, allow and procure that each of its Subsidiaries (if any) will allow the Trustee and anyone appointed by either of them access to the books of account of the Issuer and/or the relevant Subsidiary respectively at all reasonable times during normal business hours and to discuss the same with a responsible officer of the Issuer.
7.2Notice of Event of Default
Notify the Trustee in writing immediately upon becoming aware of the occurrence of any Event of Default or Potential Event of Default and without waiting for the Trustee to take any further action.
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7.3Information
So far as permitted by applicable law and regulations, give to the Trustee such information, opinions, certificates and/or evidence as it shall require and in such form as it shall require (including without limitation the procurement by the Issuer of all such certificates called for by the Trustee pursuant to Clause 9 (Provisions Supplemental to the Trustee Act 1925 and the Trustee Act 2000)) for the performance or the discharge or exercise of their respective duties, powers, trusts, authorities and discretions vested in it under this Trust Deed, the Bonds or the Paying Agency Agreement or by operation of law.
7.4Financial statements etc.
Send to the Trustee at the time of their publication and in the case of annual financial statements in any event not more than 180 days after the end of each financial year one copy (in the English language) of every balance sheet and income statement prepared (in either case) in accordance with IFRS applied on a consistent basis (unless otherwise stated in the notes thereto) and one copy of every other document issued or sent by the Issuer to the holders of its publicly held securities generally.
7.5Certificate of director
So long as any Bonds remain outstanding, send to the Trustee, within 14 days of its annual audited balance sheet and income statement being made available to its members, and also within 14 days after any request by the Trustee, a certificate of the Issuer, signed by two directors on behalf of the Issuer to the effect that, having made all reasonable enquiries, as at a date (the "Certification Date") being not more than five days before the date of the certificate no Event of Default or Potential Event of Default had occurred since the date of this Trust Deed or, if later, the Certification Date of the last such certificate (if any) and is continuing or, if such an event had occurred, giving details of it.
7.6Notices to Bondholders
Send, or procure to be sent, to the Trustee at least five business days before the date of publication, a copy of the form of each notice to the Bondholders to be published in accordance with Condition 14 (Notices) and upon publication two copies of each notice so published, (such notice to be in a form approved by the Trustee such approval not to be unreasonably withheld or delayed), but such approval shall not, unless so stated, constitute approval of such notice for the purposes of section 21 of the FSMA.
7.7Further assurance
So far as permitted by applicable law, at all times execute all such further documents and do all such further acts and things as may be necessary in the opinion of the Trustee to give effect to the obligations of the Issuer under this Trust Deed.
7.8Notice of non-payment
Use its best efforts to procure that the Principal Paying Agent notifies the Trustee forthwith in accordance with the Paying Agency Agreement in the event that it does not receive unconditionally the full amount in the relevant currency of the moneys payable on the date on which such amount is to be received by the Principal Paying Agent in accordance with the terms of the Paying Agency Agreement.
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7.9Notice of late payment
Give notice to the Bondholders of any unconditional payment to the Principal Paying Agent or the Trustee of any sum due in respect of the Bonds or Coupons made after the due date for such payment.
7.10Listing
Use all reasonable endeavours to maintain the admission of the Bonds to listing on the Official List of the FCA and to trading on the Main Market of the London Stock Exchange plc. If, however, it is unable to do so, having used such endeavours, or if the maintenance of such listing is agreed by the Trustee to be unduly onerous and the Trustee is satisfied that the interests of the Bondholders would not be thereby materially prejudiced, the Issuer will instead use all reasonable endeavours to obtain and maintain a listing or quotation of the Bonds on such other stock exchange (giving notice to the Bondholders of any such new listing), which shall be in any case a "recognised stock exchange" for the purposes of section 1005 of the UK Income Tax Act 2007, as it may (with the written approval of the Trustee) decide, and the Issuer shall also use all reasonable endeavours to procure that there will at all times be furnished to any stock exchange or listing authority on which the Bonds are for the time being listed such information as such stock exchange or listing authority may require to be furnished in accordance with its normal requirements or in accordance with any arrangements for the time being made with any such stock exchange or listing authority.
7.11Maintenance of Paying Agents
At all times maintain a principal paying agent.
7.12Change in Agents
Give not less than 14 days' prior notice to the Bondholders of any future appointment or any resignation or removal of any Paying Agent or of any change by any Paying Agent of its specified office and not make any such appointment or removal or change without the written approval of the Trustee.
7.13Early Redemption
Give prior notice to the Trustee (within the period set out in such Conditions as applicable) of any proposed redemption pursuant to Condition 7(b) (Redemption at the option of the Issuer) or 7(c) (Redemption for tax reasons) and redeem Bonds accordingly.
7.14Negative Pledge
Give notice to the Trustee as soon as practicable after the Issuer has formed the intention to create or permit to arise or subsist any Security Interest to secure any Relevant Indebtedness or any guarantee of or indemnity in respect of any Relevant Indebtedness or becomes aware of the existence of any such Security Interest, in each case where the creation or existence of which would oblige the Security Interest to be extended to the Bonds pursuant to Condition 4 (Negative Pledge).
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7.15Obligations under Paying Agency Agreement
Comply with and perform all its obligations under the Paying Agency Agreement and use all its best endeavours to procure that the Paying Agents comply with and perform all their respective obligations thereunder and any notice given by the Trustee pursuant to sub-clause 2.4.1 of Clause 2.4 (Payment after a Default) and notify the Trustee forthwith on being notified in writing by the relevant Paying Agent of any material breach of the Paying Agency Agreement by such Paying Agent and not make any amendment or modification to such Agreement without the prior written approval of the Trustee.
7.16List of authorised signatories
Upon the execution of this Trust Deed and thereafter upon any change of the same, deliver to the Trustee (with a copy to the Principal Paying Agent) a list of the Authorised Signatories of the Issuer, together with a certified specimen signature of each such Authorised Signatory.
7.17Payments
Pay moneys payable by it to the Trustee for the Trustee's own account hereunder without set off, counterclaim, deduction or withholding, unless otherwise compelled by law and in the event of any deduction or withholding compelled by law will pay such additional amount as will result in the payment to the Trustee of the amount which would otherwise have been payable by it to the Trustee hereunder.
7.18Directors' certificate
Give to the Trustee a certificate of two directors of the Issuer on which the Trustee may conclusively rely without further enquiry:
7.18.1specifying the aggregate amount of any Relevant Indebtedness of the Issuer or guaranteed by the Issuer or any of its Subsidiaries in respect of which a Security Interest or Security Interests has or have been created or is or are outstanding, such certificate to be provided before the Issuer or such Subsidiary creates or has outstanding any new Security Interest in respect of Relevant Indebtedness;
7.18.2specifying details of:
(a)any revocation or surrender or any modification to the terms and conditions of the Issuer's Electricity Distribution Licence which is requisite to the conduct of the Issuer's business at the relevant time; and
(b)any legislation enacted which removes, qualifies or amends (other than an amendment which is of a formal, minor or technical nature) the duties of the Secretary of State (or any successor) and/or OFGEM under the Electricity Act as in force on the Issue Date; and
7.18.3at the request of the Trustee confirming any of the matters set out in Condition 10 (Events of Default).
7.19Rating of the Bonds
Promptly notify the Trustee of any change in the then current rating of the Bonds.
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7.20Certificate of outstandings
In order to enable the Trustee to ascertain the amount of Bonds for the time being outstanding, deliver to the Trustee promptly upon being requested in writing by the Trustee, a certificate in writing signed by two directors of the Issuer on behalf of the Issuer setting out the total number and principal amount of Bonds which as at the date of such certificate have been purchased and not cancelled and are held by or on behalf of the Issuer or any Subsidiary of the Issuer, or Berkshire Hathaway Energy Company or any other Subsidiary of Berkshire Hathaway Energy Company.
8.REMUNERATION AND INDEMNIFICATION OF THE TRUSTEE
8.1Normal remuneration
So long as any Bond is outstanding the Issuer will pay to the Trustee by way of remuneration for its services as Trustee such sum as may from time to time be agreed between them. Such remuneration will accrue from day to day from the date of this Trust Deed and shall be payable on such dates as may from time to time be agreed between the Issuer and the Trustee. However, if any payment to a Bondholder or Couponholder of the moneys due in respect of any Bond or Coupon is improperly withheld or refused upon due presentation of such Bond or Coupon, such remuneration will again accrue as from the date of such presentation until payment to such Bondholder or Couponholder is duly made.
8.2Extra remuneration
At any time after the occurrence of an Event of Default or if the Trustee finds it expedient or necessary or is requested by the Issuer to undertake duties which the Trustee and the Issuer agree to be of an exceptional nature or otherwise outside the scope of the normal duties of the Trustee under this Trust Deed, the Issuer will pay such additional remuneration as may be agreed between them or, failing agreement as to any of the matters in this Clause 8.2 (or as to such sums referred to in Clause 8.1 (Normal remuneration)) as determined by a merchant or investment bank (acting as an expert) selected by the Trustee and approved by the Issuer or, failing such approval, nominated by the President for the time being of The Law Society of England and Wales, the expenses involved in such nomination and the fee of such merchant or investment bank being paid by the Issuer. The determination of such merchant or investment bank will be conclusive and binding on the Issuer, the Trustee, the Bondholders and the Couponholders, save in the case of manifest error.
8.3Expenses
The Issuer will also pay or discharge all fees, costs, charges, liabilities and expenses properly incurred by the Trustee or any receiver (including any VAT) in relation to the preparation and execution of, the exercise of its powers and the performance of its duties under, and in any other manner in relation to, this Trust Deed, the Paying Agency Agreement and the Bonds or the Coupons including but not limited to, legal and travelling expenses and any stamp, issue, registration, documentary or other taxes or duties paid or payable by the Trustee or any receiver in connection with any action taken or contemplated by or on behalf of the Trustee or any receiver in relation to this transaction for enforcing or resolving any doubt concerning, or for any other purpose in relation to, the Trust Deed or the Paying Agency Agreement, the Bonds or the Coupons.
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8.4Payment of expenses
All costs, charges, liabilities and expenses properly incurred and payments properly made by the Trustee in the lawful performance of its functions under this Trust Deed will be payable or reimbursable by the Issuer on demand by the Trustee and:
8.4.1in the case of payments made by the Trustee prior to such demand will carry interest from the date on which the demand is made at the rate of 2 per cent. per annum over the Trustee's cost of funds on the date on which such payments were made by the Trustee; and
8.4.2in all other cases will carry interest at such rate from 30 days after the date on which the demand is made or (where the demand specifies that payment is to be made on an earlier date) from such earlier date.
8.5Indemnity
Subject to the provisions of Clause 10 (Trustee Liable for Negligence), without prejudice to the right of indemnity given by law to trustees, the Issuer will indemnify the Trustee and every receiver, attorney, manager, agent or other person appointed by the Trustee hereunder and keep it or him indemnified in respect of all liabilities and expenses (including any VAT payable) to which it or he may become subject or which may be incurred by it or him in the negotiation and preparation of this Trust Deed and the Paying Agency Agreement and the Bonds or the Coupons and the execution or purported execution or exercise in relation to this transaction of any of its or his trusts, duties, rights, powers, authorities and discretions under this Trust Deed or the Paying Agency Agreement or the Bonds or the Coupons or its or his functions under any such appointment or in respect of any other matter or thing done or omitted in any way relating to this Trust Deed or the Paying Agency Agreement or the Bonds or the Coupons or any such appointment (including, but not limited to, all liabilities, costs, charges and expenses paid or incurred in disputing or defending any of the foregoing).
8.6Provisions continuing
The provisions of Clauses 8.3 (Expenses), 8.4 (Payment of Expenses) and 8.5 (Indemnity) will continue in full force and effect in relation to the Trustee even if it may have ceased to be Trustee.
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9.PROVISIONS SUPPLEMENTAL TO THE TRUSTEE ACT 1925 AND THE TRUSTEE ACT 2000
By way of supplement to the Trustee Act 1925 and the Trustee Act 2000 it is expressly declared as follows:
9.1Advice
The Trustee may act on the opinion or advice of or report or information obtained from, any lawyer, valuer, accountant (including the Auditors), surveyor, banker, broker, auctioneer or other expert (whether obtained by the Issuer, the Trustee, the Principal Paying Agent, or any other person whatsoever, whether or not addressed to the Trustee, and whether or not the advice, opinion, report or information, or any engagement letter or other related document, contains a monetary or other limit on liability or limits the scope and/or basis of such advice, opinion, report or information) and which opinion, report, information or advice may be provided on such terms (including as to limitations on liability) as the Trustee may consider in its sole discretion to be consistent with prevailing market practice with regard to advice or opinions of that nature and will not be responsible to anyone for any loss occasioned by so acting. Any such opinion, advice or information may be sent or obtained by letter, telex or facsimile transmission and the Trustee will not be liable to anyone for acting in good faith on any opinion, advice or information purporting to be conveyed by such means even if it contains some error or is not authentic.
9.2Certificates and reports by valuers, Auditors and other experts
The Trustee shall be entitled to rely on any certificate, valuation or report given by the valuers, accountants, financial advisors, the Auditors or other experts approved by the Trustee under any provision of these presents whether or not such certificate, valuation or report is addressed to the Trustee and, if the Trustee does so rely, such certificate, valuation or report shall, save only for manifest error, be conclusive and binding for all the purposes of these presents as between the Trustee, the Bondholders and the Couponholders. The Issuer hereby covenants with the Trustee that it shall use reasonable endeavours to obtain all such certificates, valuations and reports by the valuers, accountants, financial advisors, the Auditors or other experts as the Trustee may reasonably request for the purposes of these presents. The Trustee shall be at liberty to accept any such certificate, report or confirmation notwithstanding that it, or the terms on which it was provided, may contain a limitation on the liability of the valuers or of the Auditors (whether in time, quantum or otherwise) and the Trustee shall not incur any liability to any Bondholders or Couponholders or any other person in connection with the acceptance by it of any such certificate, report or confirmation.
9.3Trustee to assume due performance
The Trustee need not notify anyone of the execution of this Trust Deed or any related documents or do anything to ascertain whether any Event of Default, Potential Event of Default, Restructuring Event, Negative Rating Event, Rating Downgrade or any event which could lead to the occurrence of or could constitute an Event of Default, a Potential Event of Default, a Restructuring Event, a Negative Rating Event or a Rating Downgrade has occurred and, until it has actual knowledge or express notice pursuant to this Trust Deed to the contrary, the Trustee may assume that no such event has occurred and that the Issuer is performing all of its obligations under this Trust Deed, the Bonds and the Coupons.
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9.4Resolutions of Bondholders
The Trustee will not be responsible for having acted in good faith upon a resolution purporting to be a written resolution or to have been passed at a meeting of Bondholders in respect of which minutes have been made and signed even though it may later be found that there was a defect in the constitution of such meeting or the passing of such resolution or that such resolution was not valid or binding upon the Bondholders or the Couponholders.
9.5Reliance on certification of clearing system
The Trustee may call for any certificate or other document issued by Euroclear, Clearstream, Luxembourg or any other relevant clearing system to the effect that at any particular time or throughout any particular period any particular person is, was or will be shown in the relevant clearing systems records as having a particular principal or nominal amount of Bonds credited to his securities account. Any such certificate or other document shall, in the absence of manifest error, be conclusive and binding for all purposes. Any such certificate or other document may comprise any form of statement or print out of electronic records provided by the relevant clearing system (including Euroclear's EUCLID or Clearstream, Luxembourg's Cedcom system) in accordance with its usual procedures and in which the holder of a particular principal or nominal amount of the Bonds is clearly identified together with the amount of such holding. The Trustee shall not be liable to any person by reason of having accepted as valid or not having rejected any certificate or other document to such effect purporting to be issued by Euroclear or Clearstream, Luxembourg or any other relevant clearing system and subsequently found to be forged or not authentic.
9.6Certificate signed by a director or Authorised Signatory
If the Trustee, in the exercise of its functions, requires to be satisfied or to have information as to any fact or the expediency of any act, it may call for and may accept as sufficient evidence of any fact or matter or of the expediency of any act a certificate by any two directors or Authorised Signatories of the Issuer and the Trustee need not call for further evidence and will not be responsible for any loss that may be occasioned by acting on any such certificate.
9.7Custodians and nominees
The Trustee may appoint and pay any person to act as a custodian or nominee on any terms in relation to such assets of the trust as the Trustee may determine, including for the purpose of depositing with a custodian this Trust Deed or any document relating to the trust created hereunder and the Trustee shall not be responsible for any loss, liability, expense, demand, cost, claim or proceedings incurred by reason of the misconduct, omission or default on the part of any person appointed by it hereunder or be bound to supervise the proceedings or acts of any such person; the Trustee is not obliged to appoint a custodian if the Trustee invests in securities payable to bearer.
9.8Agents
Whenever it considers it expedient in the interests of the Bondholders, the Trustee may, in the conduct of its trust business, instead of acting personally, employ and pay an agent selected by it, whether or not a lawyer or other professional person, to transact or conduct, or concur in transacting or conducting, any business and to do or concur in doing all acts required to be done by the Trustee (including the receipt and payment of money). Provided that it has exercised reasonable care in the selection of such agent the Trustee will not be responsible to anyone for any misconduct or omission on the part of any such agent so employed by it. In any case the Trustee shall not be bound to supervise the proceedings or acts of any such agent.
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9.9Delegation
Whenever it considers it expedient in the interests of the Bondholders, the Trustee may delegate to any person and on any terms (including power to sub-delegate) all or any of its functions. The Trustee will not be under any obligation to supervise such delegate and if the Trustee exercises reasonable care in the selection of such delegate it will not be responsible for any loss, liability, cost, claim, action, demand or expense incurred by reason of any misconduct or default by any such delegate or sub-delegate.
9.10No obligation to monitor
The Trustee shall be under no obligation to monitor or supervise the functions of any other person under the Bonds or Coupons or any other agreement or document relating to the transactions herein or therein contemplated and shall be entitled, in the absence of actual knowledge of a breach of obligation, to assume that each such person is properly performing and complying with its obligations.
9.11Bonds held by the Issuer
In the absence of knowledge or express notice to the contrary, the Trustee may assume without enquiry (other than requesting a certificate of the Issuer under Clause 7.20 (Certificate of outstandings)), that no Bonds are for the time being held by or for the benefit of the Issuer or any Subsidiary of the Issuer, or Berkshire Hathaway Energy Company or any other Subsidiary of Berkshire Hathaway Energy Company.
9.12Forged Bonds
The Trustee will not be liable to the Issuer or any Bondholder or Couponholder by reason of having accepted as valid or not having rejected any Bond or Coupon purporting to be such and later found to be forged or not authentic.
9.13Confidentiality
Unless ordered to do so by a court of competent jurisdiction the Trustee shall not be required to disclose to any Bondholder or Couponholder any confidential financial or other information made available to the Trustee by the Issuer or any of its Subsidiaries.
9.14Determinations conclusive
As between itself and the Bondholders and Couponholders the Trustee may determine all questions and doubts arising in relation to any of the provisions of this Trust Deed. Every such determination, whether made upon such a question actually raised or implied in the acts or proceedings of the Trustee, will be conclusive and shall bind the Trustee, the Bondholders and the Couponholders.
9.15Currency conversion
Where it is necessary or desirable to convert any sum from one currency to another, it will (unless otherwise provided hereby or required by law) be converted at such rate or rates, in accordance with such method and as at such date as may be specified by the Trustee but having regard to current rates of exchange, if available. Any rate, method and date so specified will be binding on the Issuer, the Bondholders and the Couponholders. This Clause 9.15 applies both to actual conversions and to notional conversions made for the purposes of establishing the equivalent of a sum in one currency in another currency.
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9.16Events of Default
The Trustee may determine whether or not a default in the performance or observance by the Issuer of any of its obligations under this Trust Deed or contained in the Bonds or Coupons is in its opinion capable of remedy and/or whether or not any event is in its opinion materially prejudicial to the interests of the Bondholders. Any such determination will be conclusive and binding upon the Issuer, the Bondholders and the Couponholders.
9.17Right to deduct or withhold
Notwithstanding anything contained in this Trust Deed, to the extent required by any applicable law, if the Trustee is or will be required to make any deduction or withholding from any distribution or payment made by it hereunder or if the Trustee is or will be otherwise charged to, or is or may become liable to, tax as a consequence of performing its duties hereunder whether as principal, agent or otherwise, and whether by reason of any assessment, prospective assessment or other imposition of liability to taxation of whatsoever nature and whensoever made upon the Trustee, and whether in connection with or arising from any sums received or distributed by it or to which it may be entitled under this Trust Deed (other than in connection with its remuneration as provided for herein) or any investments or deposits from time to time representing the same, including any income or gains arising therefrom or any action of the Trustee in connection with the trusts of this Trust Deed (other than the remuneration herein specified) or otherwise, then the Trustee shall be entitled to make such deduction or withholding or, as the case may be, to retain out of sums received by it an amount sufficient to discharge any liability to tax which relates to sums so received or distributed or to discharge any such other liability of the Trustee to tax from the funds held by the Trustee upon the trusts of this Trust Deed.
9.18Payment for and delivery of Bonds
The Trustee will not be responsible for the receipt or application by the Issuer of the proceeds of the issue of the Bonds, the exchange of the Temporary Global Bond for the Permanent Global Bond or of the Permanent Global Bond for any Definitive Bonds or the delivery of Definitive Bonds to the persons entitled to them.
9.19Responsibility
The Trustee assumes no responsibility for the correctness of Recital (A) to this Trust Deed which shall be taken as a statement by the Issuer, nor shall the Trustee by the execution of these presents be deemed to make any representation as to the validity, sufficiency or enforceability of this Trust Deed or any part thereof and makes no representation with respect thereto.
9.20Trustee's discretion
Save as expressly otherwise provided in this Trust Deed (including the Conditions), the Trustee shall have absolute and uncontrolled discretion as to the exercise or non-exercise of its trusts, powers, authorities and discretions under these presents (the exercise or non-exercise of which as between the Trustee, the Bondholders and the Couponholders shall be conclusive and binding on the Bondholders and Couponholders) and, subject to Clause 10 (Trustee Liable for Negligence), shall not be responsible for any loss, liability, cost, claim, action, demand, expense or inconvenience which may result from their exercise or non-exercise.
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9.21Consents
Save as expressly otherwise provided in this Trust Deed (including the Conditions), any consent or approval given by the Trustee for the purposes of this Trust Deed may be given on such terms and subject to such conditions (if any) as the Trustee thinks fit and notwithstanding anything to the contrary in this Trust Deed may be given retrospectively.
9.22Error of judgement
The Trustee shall not be liable for any error of judgement made in good faith by any officer or employee of the Trustee assigned by the Trustee to administer its corporate trust matters.
9.23Professional charges
Any trustee of this Trust Deed being a lawyer, accountant, broker or other person engaged in any professional or business shall be entitled to charge and be paid all usual professional and other charges for business transacted and acts done by him or his firm in connection with the trusts of this Trust Deed and also his reasonable charges in addition to disbursements for all other work and business done and all time spent by him or his firm in connection with matters arising in connection with this Trust Deed.
9.24Bondholders as a class
In connection with the exercise of its trusts, powers or discretions (including but not limited to those in relation to any proposed modification, waiver, authorisation, or substitution) the Trustee shall have regard to the general interests of the Bondholders as a class and, in particular, but without limitation, shall not have regard to the consequences of such exercise for individual Bondholders and Couponholders resulting from their being for any purpose domiciled or resident in, or otherwise connected with, or subject to the jurisdiction of, any particular territory and the Trustee shall not be entitled to require, nor shall any Bondholder or Couponholder be entitled to claim, from the Issuer or the Trustee any indemnification or payment in respect of any tax consequences of any such exercise upon individual Bondholders or Couponholders except to the extent provided for in Condition 8 (Taxation) and/or any undertaking given in addition to, or in substitution for, Condition 8 (Taxation) pursuant to this Trust Deed.
9.25Ratings
The Trustee shall have no responsibility for the maintenance of any rating of the Bonds by any rating agency or any other person.
9.26Validity of documents
The Trustee shall not be responsible for, or for investigating any matter which is the subject of, any recital, statement, representation, warranty or covenant of any person contained in this Trust Deed, the Bonds, or any other agreement or document relating to the transactions herein or therein contemplated or for the execution, delivery, legality, effectiveness, adequacy, genuineness, validity enforceability or admissibility in evidence of this Trust Deed or any other document relating or expressed to be supplemental thereto and shall not be liable for any failure to obtain any licence, consent or other authority for the execution, delivery, legality, effectiveness, adequacy, genuineness, validity, performance, enforceability or admissibility in evidence of this Trust Deed or any other document relating to or expressed to be supplemental thereto.
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9.27Listing Rules
Nothing in this Trust Deed shall require the Trustee to assume an obligation of the Issuer arising under any provisions of the listing, prospectus, disclosure or transparency rules (or equivalent rules of any other competent authority besides the FCA).
9.28FSMA
9.28.1Notwithstanding anything in the Trust Deed or the Paying Agency Agreement or the Bonds to the contrary, the Trustee shall not do, or be authorised or required to do, anything which might constitute a regulated activity for the purpose of FSMA, unless it is authorised under FSMA to do so.
9.28.2The Trustee shall have the discretion at any time:
(a)to delegate any of the functions which fall to be performed by an authorised person under FSMA to any other agent or person which also has the necessary authorisations and licences; and
(b)to apply for authorisation under FSMA and perform any or all such functions itself if, in its absolute discretion, it considers it necessary, desirable or appropriate to do so.
9.29Disapplication
9.29.1Section 1 of the Trustee Act 2000 shall not apply to the duties of the Trustee in relation to the trusts constituted by this Trust Deed. Where there are any inconsistencies between the Trustee Acts and the provisions of this Trust Deed, the provisions of this Trust Deed shall, to the extent allowed by law, prevail and, in the case of any such inconsistency with the Trustee Act 2000, the provisions of this Trust Deed shall constitute a restriction or exclusion for the purposes of that Act.
9.29.2Nothing contained in the Trust Deed or the Paying Agency Agreement or the Bonds shall require the Trustee to expend or risk its own funds or otherwise incur any financial liability in the performance of its duties or the exercise of any right, power, authority or discretion hereunder if it has grounds for believing the repayment of such funds or adequate indemnity against, or security for, such risk or liability is not reasonably assured to it.
9.29.3Notwithstanding anything else contained in the Trust Deed or the Paying Agency Agreement or the Bonds, the Trustee may refrain from (a) doing anything which would or might in its opinion be illegal or contrary to any law of any jurisdiction or any directive or regulation of any agency of any state (including, without limitation, Section 619 of the Dodd-Frank Wall Street Reform and Consumer Protection Act), or which would or might otherwise render it liable to any person and may do anything which is, in its opinion, necessary to comply with any such law, directive or regulation or (b) doing anything which may cause the Trustee to be considered a sponsor of a covered fund under Section 619 of the Dodd-Frank Wall Street Reform and Consumer Protection Act and any regulations promulgated thereunder.
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9.29.4In relation to any discretion to be exercised or action to be taken by the Trustee under the Trust Deed or the Paying Agency Agreement or the Bonds, the Trustee may, at its discretion and without further notice or shall, if it has been so directed by an Extraordinary Resolution of the Bondholders then outstanding or so requested in writing by the holders of at least 25 per cent. in principal amount of such Bonds, exercise such discretion or take such action, provided that, in either case, the Trustee shall not be obliged to exercise such discretion or take such action unless it shall have been indemnified, secured and/or prefunded to its satisfaction against all liabilities and provided that the Trustee shall not be held liable to the Bondholders for the consequences of exercising its discretion or taking any such action and may do so without having regard to the effect of such action on individual Bondholders or Couponholders.
10.TRUSTEE LIABLE FOR NEGLIGENCE
Subject to Sections 750 and 751 of the Companies Act 2006 (if applicable) and notwithstanding anything to the contrary in this Trust Deed, the Bonds or the Paying Agency Agreement:
10.1.1the Trustee shall not be liable to any person for any matter or thing done or omitted in any way in connection with or in relation to this Trust Deed, the Bonds or the Paying Agency Agreement save in relation to its own gross negligence, wilful default, or fraud; and
10.1.2nothing in this Trust Deed, the Bonds or the Paying Agency Agreement shall relieve the Trustee of any liability which would otherwise attach to it in respect of its own gross negligence, wilful default, or fraud,
in each case having regard to the provisions of this Trust Deed, the Bonds and the Paying Agency Agreement conferring on it any trusts, powers, authorities or discretions.
11.CONSEQUENTIAL LOSS
Any liability of the trustee arising out of the Trust Deed, the Bonds, the Coupons and the Paying Agency Agreement shall be limited to the amount of actual loss suffered (such loss shall be determined as at the date of default of the Trustee or, if later, the day on which the loss arises as a result of such default) but without reference to any special conditions or circumstances known to the Trustee at the time of entering into the Trust Deed, the Bonds, the Coupons and the Paying Agency Agreement, or at the time of accepting any relevant instructions, which increases the amount of the loss. In no event shall the Trustee be liable for any loss of profits, goodwill, reputation, business opportunity or anticipated saving, or for special, punitive or consequential damages, whether or not the Trustee has been advised of the possibility of such loss or damages.
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12.WAIVER
12.1Waiver
The Trustee may, other than in respect of Reserved Matters (as specified and defined in Schedule 5 (Provisions for Meetings of Bondholders)), without the consent of the Bondholders or Couponholders and without prejudice to its rights in respect of any subsequent breach, from time to time and at any time, if in its opinion the interests of the Bondholders will not be materially prejudiced thereby, waive or authorise, on such terms and conditions as seems expedient to it, any breach or proposed breach by the Issuer of any of the provisions of this Trust Deed or the Conditions or determine that any event, condition or act which would otherwise be an Event of Default or Potential Event of Default or Restructuring Event shall not be treated as such provided that it will not do so in contravention of any express direction given by any Extraordinary Resolution or a written request made pursuant to Condition 10 (Events of Default) but no such direction or request will affect any previous waiver, authorisation or determination. Any such waiver, authorisation or determination will be binding on the Bondholders and the Couponholders and, if the Trustee so requires, will be notified to the Bondholders as soon as practicable.
12.2Enforcement proceedings
At any time after amounts in respect of principal of and interest on the Bonds shall have become due and payable but are unpaid, the Trustee may, at its discretion, and without further notice but subject as mentioned below, take such proceedings against, the Issuer as it may think fit to enforce the provisions of this Trust Deed in accordance with the terms hereof.
The Trustee shall only be bound to take proceedings pursuant to this Clause 12.2 if (i) it has been indemnified and/or prefunded and/or secured to its satisfaction against all liabilities, proceedings, claims and demands to which it may thereby become liable and all costs, charges and expenses which may be incurred by it in connection therewith and provided that the Trustee shall not be held liable for the consequence of taking any such action on individual Bondholders or Couponholders and (ii) it has been so requested in writing by the holders of not less than 25 per cent. of the principal amount outstanding of the Bonds or has been so directed by an Extraordinary Resolution.
12.3No action by Bondholders or Couponholders
Only the Trustee may pursue the remedies available under general law or under this Trust Deed to enforce the rights of the Bondholders or Couponholders and no such holder will be entitled to proceed against the Issuer unless the Trustee, having become bound to act in accordance with the terms of this Trust Deed, fails to do so within a reasonable amount of time and such failure is continuing.
13.TRUSTEE NOT PRECLUDED FROM ENTERING INTO CONTRACTS
No person, whether acting for itself or in any other capacity, will be precluded from becoming the owner of, or acquiring any interest in, holding or disposing of any Bond or Coupon or any shares or securities of the Issuer or any of its subsidiaries, holding or associated companies with the same rights as it would have had if the Trustee were not Trustee or from entering into or being interested in any contracts or transactions with the Issuer or its Subsidiary, holding or associated companies or from acting on, or as depositary or agent for, any committee or body of holders of any securities of the Issuer or its Subsidiary, holding or associated companies and will not be liable to account for any profit.
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14.MODIFICATION AND SUBSTITUTION
14.1Modification
The Trustee may, without the consent of the Bondholders or Couponholders, agree (i) to any modification to the provisions of this Trust Deed or the Conditions which is of a formal, minor or technical nature or is made to correct a manifest error or (ii) other than in respect of Reserved Matters (as specified and defined in Schedule 5 (Provisions for Meetings of Bondholders)) to any modification to the provisions of this Trust Deed or the Conditions which is in its opinion not materially prejudicial to the interests of the Bondholders provided that it will not do so in contravention of any express direction given by any Extraordinary Resolution or a written request made pursuant to Condition 10 (Events of Default) but no such direction or request will affect any previous waiver, authorisation or determination. Any such modification shall be binding on the Bondholders and the Couponholders and, unless the Trustee agrees otherwise, the Issuer shall cause such modification to be notified to the Bondholders as soon as practicable thereafter in accordance with the Conditions.
14.2Substitution
14.2.1The Trustee may, without the consent of the Bondholders or Couponholders, agree with the Issuer to the substitution of any wholly-owned Subsidiary of the Issuer (the "Substituted Obligor") in place of the Issuer (or of any previous substitute under this sub-clause 14.2.1) as the principal debtor under this Trust Deed, the Bonds and the Coupons provided that, in the opinion of the Trustee, the interests of the Bondholders will not be materially prejudiced thereby and also provided that:
(a)a trust deed is executed or some other form of undertaking is given by the Substituted Obligor to the Trustee, in form and manner satisfactory to the Trustee, agreeing to be bound by the terms of this Trust Deed, the Bonds and the Coupons with any consequential amendments which the Trustee may deem appropriate as fully as if the Substituted Obligor had been named in this Trust Deed and on the Bonds and Coupons as the principal debtor in place of the Issuer (or any previous substitute under this Clause);
(b)the Issuer and the Substituted Obligor execute such other deeds, documents and instruments (if any) as the Trustee may require in order that the substitution is fully effective in relation to the obligations of the Substituted Obligor and comply with such other requirements as the Trustee may direct in the interests of the Bondholders;
(c)the Trustee is satisfied that (i) the Substituted Obligor has obtained all governmental and regulatory approvals and consents necessary for its assumption of liability as principal debtor in respect of the Bonds and the Coupons in place of the Issuer (or such previous substitute as aforesaid) and (ii) such approvals and consents are at the time of substitution in full force and effect;
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(d)where the Substituted Obligor is subject generally to the taxing jurisdiction of any territory or any authority of or in that territory having power to tax (the "Substituted Territory") other than the territory to the taxing jurisdiction of which (or to any such authority of or in which) the Issuer is subject generally (the "Issuer's Territory") the Substituted Obligor will (unless the Trustee otherwise agrees) give to the Trustee an undertaking in form and manner satisfactory to the Trustee in terms corresponding to the terms of Condition 8 (Taxation) with the substitution for the references in that Condition to the Issuer's Territory of references to the Substituted Territory and Condition 7(c) (Redemption for tax reasons) shall be modified accordingly; and in such event the Trust Deed, the Bonds and the Coupons will be read accordingly;
(e)if any two of the directors of the Substituted Obligor certify that it will be solvent immediately after such substitution, the Trustee need not have regard to the financial condition, profits or prospects of the Substituted Obligor or compare them with those of the Issuer; and
(f)(unless the Issuer's successor in business is the Substituted Obligor) the obligations of the Substituted Obligor under this Trust Deed, the Bonds and the Coupons are unconditionally and irrevocably guaranteed by the Issuer in form and manner satisfactory to the Trustee.
14.2.2Release of Substituted Issuer: Any such agreement by the Trustee pursuant to this Clause 14.2 will, if so expressed, operate to release the Issuer (or any such previous substitute) from any or all of its obligations under this Trust Deed, the Bonds and the Coupons. Not later than 14 days after the execution of any such documents and after compliance with such requirements, notice of the substitution will be given to the Bondholders.
14.2.3Completion of Substitution: Upon the execution of such documents and compliance with such requirements, the Substituted Obligor will be deemed to be named in this Trust Deed and on the Bonds and Coupons as the principal debtor in place of the Issuer (or of any previous substitute under this Clause 14.2) and this Trust Deed, the Bonds, the Coupons and the Paying Agency Agreement will be deemed to be modified in such manner as shall be necessary to give effect to the substitution and without prejudice to the generality of the foregoing any references in this Trust Deed, the Bonds, the Coupons or the Paying Agency Agreement to the Issuer shall be deemed to be references to the Substituted Obligor.
15.APPOINTMENT, RETIREMENT AND REMOVAL OF THE TRUSTEE
15.1Appointment
The Issuer will have the power of appointing new trustees but no person will be so appointed unless previously approved by an Extraordinary Resolution. A trust corporation may be appointed sole trustee hereof but subject thereto there shall be at least two trustees hereof one at least of which shall be a trust corporation. Any appointment of a new Trustee will be notified by the Issuer to the Bondholders as soon as practicable. The Bondholders shall together have the power exercisable by an Extraordinary Resolution, to remove any trustee or trustees for the time being hereof. The removal of any trustee shall not become effective unless there remains a trustee hereof (being a trust corporation) in office after such removal.
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15.2Retirement and removal
Any Trustee for the time being of this Trust Deed may retire at any time giving not less than three calendar months' notice in writing to the Issuer without assigning any reason therefor and without being responsible for any costs occasioned by such retirement. The Trustee may not resign its appointment unless there remains a trustee hereof (being a trust corporation) in office after such retirement. If a sole trustee or sole trust corporation gives notice of retirement or an Extraordinary Resolution is passed for its removal under this Clause 15.2, the Issuer will use its best endeavours to procure that another trust corporation be appointed as Trustee provided that if, having given notice in writing to the Issuer of its intention to resign its appointment, a successor is not appointed within 30 days before the expiry of such notice then, in that case, the Trustee shall be entitled to procure forthwith a new Trustee. The Bondholders may by Extraordinary Resolution remove any Trustee provided that the retirement or removal of any sole trustee or sole trust corporation will not become effective until a trust corporation is appointed as successor Trustee.
15.3Co-Trustees
The Trustee may, despite Clause 15.1 (Appointment), by notice in writing to the Issuer but without the consent of the Issuer or the Bondholders appoint anyone to act as a separate trustee or as a co-trustee in either case jointly with the Trustee:
15.3.1if the Trustee considers such appointment to be in the interests of the Bondholders and/or the Couponholders;
15.3.2for the purpose of conforming with any legal requirement, restriction or condition in any jurisdiction in which any particular act is to be performed; or
15.3.3for the purpose of obtaining a judgment in any jurisdiction or the enforcement in any jurisdiction against the Issuer of either a judgment already obtained or any of the provisions of this Trust Deed.
Subject to the provisions of this Trust Deed the Trustee may confer on any person so appointed such functions as it thinks fit. The Trustee may by notice in writing to the Issuer and such person remove any person so appointed. At the request of the Trustee, the Issuer, as applicable, will forthwith do all things as may be required to perfect such appointment or removal and it irrevocably appoints the Trustee to be its attorney in its name and on its behalf to do so. Such proper remuneration as the Trustee may pay to such separate trustee or co-trustee, together with any attributable costs, charges and expenses incurred by it in performing its function as a separate trustee or co-trustee, shall for the purposes of this Trust Deed be treated as costs and expenses incurred by the Trustee.
15.4Competence of a majority of Trustees
If there are more than two Trustees the majority of such Trustees will (provided such majority includes a trust corporation) be competent to carry out all or any of the Trustee's functions.
15.5Powers additional
The powers conferred by this Trust Deed upon the Trustee shall be in addition to any powers which may from time to time be vested in it by general law or as the holder of any of the Bonds or Coupons.
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16.COUPONS
16.1Notices
Neither the Trustee nor the Issuer need give any notice to the Couponholders and the Couponholders will be deemed to have notice of the contents of any notice given to the Bondholders in accordance with the Conditions.
16.2Bondholders assumed to hold Coupons
Even if it has express notice to the contrary, whenever the Trustee is required to exercise any of its functions by reference to the interests of the Bondholders, the Trustee will assume that each Bondholder is the holder of all Coupons appertaining to each Bond of which he is the bearer. The holders of Coupons shall be bound by and subject to the terms of this Trust Deed to the same extent as if they were Bondholders; provided that no holder of a Coupon shall have any right of action by virtue of this Trust Deed or its holding of such Coupon.
17.CURRENCY INDEMNITY
17.1Currency of account and payment
Sterling (the "Contractual Currency") is the sole currency of account and payment for all sums payable by the Issuer under or in connection with this Trust Deed, the Bonds and the Coupons, including damages.
17.2Extent of discharge
Any amount received or recovered in a currency other than the Contractual Currency (whether as a result of, or of the enforcement of, a judgment or order of a court of any jurisdiction, in the winding-up or dissolution of the Issuer or otherwise), by the Trustee any Bondholder or Couponholder in respect of any sum expressed to be due to it from the Issuer will only constitute a discharge to the Issuer to the extent of the Contractual Currency amount which the recipient is able to purchase with the amount so received or recovered in that other currency on the date of that receipt or recovery (or, if it is not practicable to make that purchase on that date, on the first date on which it is practicable to do so).
17.3Indemnities
If that Contractual Currency amount is less than the Contractual Currency amount expressed to be due to the recipient under this Trust Deed, the Bonds or the Coupons, the Issuer will indemnify it against any loss sustained by it as a result. In any event, the Issuer will indemnify the recipient against the cost of making any such purchases.
17.4Indemnities separate
These indemnities constitute a separate and independent obligation from the other obligations in this Trust Deed, will give rise to a separate and independent cause of action, will apply irrespective of any indulgence granted by the Trustee and/or any Bondholder or Couponholder and will continue in full force and effect despite any judgment, order, claim or proof for a liquidated amount in respect of any sum due under this Trust Deed, the Bonds and/or the Coupons or any judgment or order. No proof of evidence of any actual loss may be required.
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17.5Merger
Any corporation into which the Trustee may be merged or converted or with which it may be consolidated, or any corporation resulting from any merger, conversion or consolidation to which the Trustee shall be a party, or any corporation succeeding to all or substantially all the corporate trust business of the Trustee, shall be the successor of the Trustee hereunder, provided such corporation shall be otherwise qualified and eligible under this Trust Deed, without the execution or filing of any paper or any further act on the part of any of the parties hereto.
18.COMMUNICATIONS
Any notices and communications hereunder shall be made in writing (by letter, fax or email) and shall be sent as follows:
18.1.1in the case of the Issuer, to it at:
Lloyds Court
78 Grey Street
Newcastle-upon-Tyne NE1 6AF
Fax no:    + 44 191 223 5165
Attention:    Finance Director
18.1.2in the case of the Trustee, to it at:
Level 18
Issuer Services
8 Canada Square
Canary Wharf
London E14 5HQ
United Kingdom

Email:         ctla.trustee.admin@hsbc.com
Attention:     Issuer Services Trustee Administration

or, in any case, to such other address or fax number or for the attention of such other person or department as the addressee has by prior notice to the sender specified for the purpose.
Every notice or communication sent in accordance with this Clause 18 shall be effective, if sent by letter or fax, upon receipt by the addressee; provided, however, that any such notice or communication which would otherwise take effect after 4.00 p.m. on any particular day, or on a non-business day in the place of the addressee, shall not take effect until 10.00 a.m. on the immediately succeeding business day in the place of the addressee.
19.GOVERNING LAW
This Trust Deed, and any issues or disputes arising out of or in connection with it (whether such disputes are contractual or non-contractual in nature) should be governed by and construed in accordance with English law.
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20.JURISDICTION
20.1English courts
The courts of England have exclusive jurisdiction to settle any dispute (a "Dispute"), arising from or connected with this Trust Deed or the Bonds (including a dispute relating to non-contractual obligations arising from or in connection with this Trust Deed or the Bonds, or a dispute regarding the existence, validity or termination of this Trust Deed or the Bonds) or the consequences of their nullity.
20.2Appropriate forum
The parties agree that the courts of England are the most appropriate and convenient courts to settle any Dispute and, accordingly, that they will not argue to the contrary.
20.3Rights of the Trustee and Bondholders to take proceedings outside England
Clause 20.1 (English courts) is for the benefit of the Trustee and the Bondholders only. As a result, nothing in this Clause 20 prevents the Trustee or, without prejudice to Clause 12.3, any of the Bondholders from taking proceedings relating to a Dispute ("Proceedings") in any other courts with jurisdiction. To the extent allowed by law, the Trustee or any of the Bondholders may take concurrent Proceedings in any number of jurisdictions.
21.SEVERABILITY
In case any provision in or obligation under this Trust Deed shall be invalid, illegal or unenforceable in any jurisdiction, the validity, legality and enforceability of the remaining provisions or obligations, or of such provision or obligation in any other jurisdiction, shall not in any way be affected or impaired thereby.
22.SANCTIONS
22.1In connection with HSBC Group's commitment to comply with all applicable sanctions regimes, the Trustee and any affiliate or subsidiary of HSBC Holdings plc may take any action in its sole and absolute discretion that it considers appropriate to comply with any law, regulation, request of a public or regulatory authority, any agreement between any member of the HSBC Group and any government authority or any HSBC Group policy that relates to the prevention of fraud, money laundering, terrorism, tax evasion, evasion of economic or trade sanctions or other criminal activities (collectively the "Relevant Requirements").
Such action may include, but is not limited to,
22.1.1screening, intercepting and investigating any transaction, instruction or communication, including the source of, or intended recipient of, funds;
22.1.2delaying or preventing the processing of instructions or transactions or the Trustee's performance of its obligations under this Deed;
22.1.3the blocking of any payment; or
22.1.4requiring the Issuer to enter into a financial crime compliance representations letter from time to time in a form and substance reasonably acceptable to the HSBC Group.
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22.2Where possible and permitted, the Trustee will endeavour to notify the Issuer of the existence of such circumstances. To the extent permissible by law, neither the Trustee nor any member of the HSBC Group will be liable for loss (whether direct or consequential and including, without limitation, loss of profit or interest) or damage suffered by any party arising out of, or caused in whole or in part by, any actions that are taken by the Trustee or any other member of the HSBC Group to comply with any Relevant Requirement.
In this Clause 22, "HSBC Group" means HSBC Holdings plc together with its subsidiary undertakings from time to time.
23.CONTRACTS (RIGHTS OF THIRD PARTIES) ACT 1999
No person shall have any right to enforce any provision of this Trust Deed under the Contracts (Rights of Third Parties) Act 1999.
24.COUNTERPARTS
This Trust Deed may be executed in any number of counterparties and by the parties hereto on separate counterparts, each of which shall be an original, but all the counterparts shall together constitute one and the same instrument.
IN WITNESS WHEREOF this Trust Deed has been executed as a deed by the parties hereto and is intended to be and is hereby delivered the day and year first before written.
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SCHEDULE 1
FORM OF TEMPORARY GLOBAL BOND
ANY UNITED STATES PERSON WHO HOLDS THIS OBLIGATION WILL BE SUBJECT TO LIMITATIONS UNDER THE UNITED STATES INCOME TAX LAWS, INCLUDING THE LIMITATIONS PROVIDED IN SECTIONS 165(j) AND 1287(a) OF THE INTERNAL REVENUE CODE.
ISIN: XS2461236759
NORTHERN POWERGRID (NORTHEAST) PLC
(incorporated with limited liability under
the laws of England and Wales with registered number 02906593)
£350,000,000 3.250 per cent. Bonds due 2052
TEMPORARY GLOBAL BOND
1.INTRODUCTION
This Temporary Global Bond is issued in respect of the £350,000,000 3.250 per cent. Bonds due 2052 (the "Bonds") of Northern Powergrid (Northeast) plc (the "Issuer"). The Bonds are subject to, and have the benefit of, a trust deed dated 1 April 2022 (as amended or supplemented from time to time, the "Trust Deed") between the Issuer and HSBC Corporate Trustee Company (UK) Limited as trustee (the "Trustee", which expression includes all persons for the time being appointed trustee or trustees under the Trust Deed) and are the subject of a paying agency agreement dated 1 April 2022 (as amended or supplemented from time to time, the "Paying Agency Agreement") and made between the Issuer, HSBC Bank plc as principal paying agent (the "Principal Paying Agent", which expression includes any successor principal paying agent appointed from time to time in connection with the Bonds), the other paying agent named therein (together with the Principal Paying Agent, the "Paying Agents", which expression includes any successor or additional paying agents appointed from time to time in connection with the Bonds) and the Trustee.
2.REFERENCES TO CONDITIONS
Any reference herein to the "Conditions" is to the terms and conditions of the Bonds set out in Schedule 4 (Terms and Conditions of the Bonds) of the Trust Deed and any reference to a numbered "Condition" is to the correspondingly numbered provision thereof. Words and expressions defined in the Conditions shall have the same meanings when used in this Temporary Global Bond.
3.PROMISE TO PAY
The Issuer, for value received, promises to pay to the bearer of this Temporary Global Bond the principal sum of
£350,000,000
(Three Hundred Fifty Million Pounds Sterling)

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on 1 April 2052 or on such earlier date or dates as the same may become payable in accordance with the Conditions, and to pay interest on such principal sum in arrear on the dates and at the rate specified in the Conditions, together with any additional amounts payable in accordance with the Conditions, all subject to and in accordance with the Conditions; provided, however, that such interest shall be payable only:
3.1in the case of interest falling due before the Exchange Date (as defined below), to the extent that a certificate or certificates issued by Euroclear Bank SA/NV as operator of the Euroclear System ("Euroclear") and/or Clearstream Banking, S.A. ("Clearstream, Luxembourg") dated not earlier than the date on which such interest falls due and in substantially the form set out in Schedule 3 (Form of Euroclear/Clearstream, Luxembourg Certification) hereto is/are delivered to the Specified Office (as defined in the Conditions) of the Principal Paying Agent; or
3.2in the case of interest falling due at any time, to the extent that the Issuer has failed to procure the exchange for a permanent global bond of that portion of this Temporary Global Bond in respect of which such interest has accrued.
4.NEGOTIABILITY
This Temporary Global Bond is negotiable and, accordingly, title to this Temporary Global Bond shall pass by delivery.
5.EXCHANGE
On or after the day following the expiry of 40 days after the date of issue of this Temporary Global Bond (the "Exchange Date"), the Issuer shall procure (in the case of first exchange) the delivery of a permanent global bond (the "Permanent Global Bond") in substantially the form set out in Schedule 2 (Form of Permanent Global Bond) to the Trust Deed to the bearer of this Temporary Global Bond or (in the case of any subsequent exchange) an increase in the principal amount of the Permanent Global Bond in accordance with its terms against:
5.1presentation and (in the case of final exchange) surrender of this Temporary Global Bond at the specified office of the Principal Paying Agent; and
5.2receipt by the Principal Paying Agent of a certificate or certificates issued by Euroclear and/or Clearstream, Luxembourg dated not earlier than the Exchange Date and in substantially the form set out in Schedule 3 (Form of Euroclear/Clearstream, Luxembourg Certification) hereto.
The principal amount of the Permanent Global Bond shall be equal to the aggregate of the principal amounts specified in the certificates issued by Euroclear and/or Clearstream, Luxembourg and received by the Principal Paying Agent; provided, however, that in no circumstances shall the principal amount of the Permanent Global Bond exceed the initial principal amount of this Temporary Global Bond.
6.WRITING DOWN
On each occasion on which:
6.1the Permanent Global Bond is delivered or the principal amount thereof is increased in accordance with its terms in exchange for a further portion of this Temporary Global Bond; or
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6.2Bonds represented by this Temporary Global Bond are to be cancelled in accordance with Condition 7(e) (Redemption and Purchase - Cancellation),
the Issuer shall procure that (a) the principal amount of the Permanent Global Bond, the principal amount of such increase or (as the case may be) the aggregate principal amount of such Bonds and (b) the remaining principal amount of this Temporary Global Bond (which shall be the previous principal amount hereof less the aggregate of the amounts referred to in (a)) are noted in Schedule 1 (Payments, Exchange and Cancellation of Bonds) hereto, whereupon the principal amount of this Temporary Global Bond shall for all purposes be as most recently so noted.
7.PAYMENTS
All payments in respect of this Temporary Global Bond shall be made against presentation and (in the case of payment of principal in full with all interest accrued thereon) surrender of this Temporary Global Bond at the Specified Office of any Paying Agent and shall be effective to satisfy and discharge the corresponding liabilities of the Issuer in respect of the Bonds. On each occasion on which a payment of interest is made in respect of this Temporary Global Bond, the Issuer shall procure that the same is noted in Schedule 1 (Payments, Exchange and Cancellation of Bonds) hereto.
8.CONDITIONS APPLY
Until this Temporary Global Bond has been exchanged as provided herein or cancelled in accordance with the Paying Agency Agreement, the bearer of this Temporary Global Bond shall be subject to the Conditions and, subject as otherwise provided herein, shall be entitled to the same rights and benefits under the Conditions as if the bearer were the holder of Bonds in definitive form in substantially the form set out in Schedule 3 (Form of Definitive Bond) to the Trust Deed and the related interest coupons in the denomination of £100,000 and integral multiples of £1,000 in excess thereof and in an aggregate principal amount equal to the principal amount of this Global Bond.
9.NOTICES
Notwithstanding Condition 14 (Notices), while all the Bonds are represented by this Temporary Global Bond (or by this Temporary Global Bond and the Permanent Global Bond) and this Temporary Global Bond is (or this Temporary Global Bond and the Permanent Global Bond are) deposited with a common depositary for Euroclear and Clearstream, Luxembourg, notices to Bondholders may be given by delivery of the relevant notice to Euroclear and Clearstream, Luxembourg and, in any case, such notices shall be deemed to have been given to the Bondholders in accordance with the Condition 14 (Notices) on the date of delivery to Euroclear and Clearstream, Luxembourg.
10.AUTHENTICATION
This Temporary Global Bond shall not be valid for any purpose until it has been authenticated for and on behalf of HSBC Bank plc as principal paying agent.
11.GOVERNING LAW
This Temporary Global Bond and all matters arising from or connected with it are governed by, and shall be construed in accordance with, English law.

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AS WITNESS the manual or facsimile signature of a duly authorised person on behalf of the Issuer.
NORTHERN POWERGRID (NORTHEAST) PLC
By:
(duly authorised)


ISSUED on 1 April 2022
AUTHENTICATED for and on behalf of
HSBC BANK PLC
as principal paying agent
without recourse, warranty or liability
By:
(duly authorised)
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Schedule 1
PAYMENTS, EXCHANGE AND CANCELLATION OF BONDS
Date of payment, delivery or cancellationAmount of interest then paidPrincipal amount of Permanent Global Bond then delivered or by which Permanent Global Bond then increasedAggregate principal amount of Bonds then cancelledRemaining principal amount of this Temporary Global BondAuthorised Signature

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Schedule 2
FORM OF ACCOUNTHOLDER'S CERTIFICATION
NORTHERN POWERGRID (NORTHEAST) PLC
(incorporated with limited liability under
the laws of England and Wales with registered number 02906593)
£350,000,000 3.250 per cent. Bonds due 2052
This is to certify that as of the date hereof, and except as set forth below, the above-captioned Securities held by you for our account (a) are owned by persons that are not citizens or residents of the United States, domestic partnerships, domestic corporations or any estate or trust the income of which is subject to United States Federal income taxation regardless of its source ("United States persons"), (b) are owned by United States person(s) that (i) are foreign branches of a United States financial institution (as defined in U.S. Treasury Regulations Section 1.165-12(c)(1)(iv)) ("financial institutions") purchasing for their own account or for resale, or (ii) acquired the Securities through foreign branches of United States financial institutions and who hold the Securities through such United States financial institutions on the date hereof (and in either case (i) or (ii), each such United States financial institution hereby agrees, on its own behalf or through its agent, that you may advise the issuer or the issuer's agent that it will comply with the requirements of Section 165(j)(3)(A), (B) or (C) of the Internal Revenue Code of 1986, as amended, and the regulations thereunder), or (c) are owned by United States or foreign financial institution(s) for purposes of resale during the restricted period (as defined in U.S. Treasury Regulations Section 1.163-5(c)(2)(i)(D)(7)), and in addition if the owner of the Securities is a United States or foreign financial institution described in clause (c) (whether or not also described in clause (a) or (b)) this is to further certify that such financial institution has not acquired the Securities for purposes of resale directly or indirectly to a United States person or to a person within the United States or its possessions.
If the Securities are of the category contemplated in Section 903(b)(3) of Regulation S under the Securities Act of 1933, as amended (the "Act"), then this is also to certify that, except as set forth below, the Securities are beneficially owned by (1) non-U.S. person(s) or (2) U.S. person(s) who purchased the Securities in transactions which did not require registration under the Act. As used in this paragraph the term "U.S. person" has the meaning given to it by Regulation S under the Act.
As used herein, "United States" means the United States of America (including the States and the District of Columbia); and its "possessions" include Puerto Rico, the U.S. Virgin Islands, Guam, American Samoa, Wake Island and the Northern Mariana Islands.
We undertake to advise you promptly by tested telex on or prior to the date on which you intend to submit your certification relating to the Securities held by you for our account in accordance with your operating procedures if any applicable statement herein is not correct on such date, and in the absence of any such notification it may be assumed that this certification applies as of such date.
This certification excepts and does not relate to £[      ] of such interest in the above Securities in respect of which we are not able to certify and as to which we understand exchange and delivery of definitive Securities (or, if relevant, exercise of any rights or collection of any interest) cannot be made until we do so certify.

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We understand that this certification is required in connection with certain tax laws and, if applicable, certain securities laws of the United States. In connection therewith, if administrative or legal proceedings are commenced or threatened in connection with which this certification is or would be relevant, we irrevocably authorise you to produce this certification to any interested party in such proceedings.
Dated:    [                                ]
[name of account holder]
as, or as agent for,
the beneficial owner(s) of the Securities
to which this certificate relates.

By:
(Authorised signatory)

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Schedule 3
FORM OF EUROCLEAR/CLEARSTREAM, LUXEMBOURG CERTIFICATION
NORTHERN POWERGRID (NORTHEAST) PLC
(incorporated with limited liability under
the laws of England and Wales with registered number 02906593)
£350,000,000 3.250 per cent. Bonds due 2052
This is to certify that, based solely on certifications we have received in writing, by tested telex or by electronic transmission from member organisations appearing in our records as persons being entitled to a portion of the principal amount set forth below (our "Member Organisations") substantially to the effect set forth in the temporary global bond issued in respect of the securities, as of the date hereof, £[ ] principal amount of the above-captioned Securities (a) is owned by persons that are not citizens or residents of the United States, domestic partnerships, domestic corporations or any estate or trust the income of which is subject to United States Federal income taxation regardless of its source ("United States persons"), (b) is owned by United States persons that (i) are foreign branches of United States financial institutions (as defined in U.S. Treasury Regulations Section 1.165-12(c)(1)(iv)) ("financial institutions") purchasing for their own account or for resale, or (ii) acquired the Securities through foreign branches of United States financial institutions and who hold the Securities through such United States financial institutions on the date hereof (and in either case (i) or (ii), each such United States financial institution has agreed, on its own behalf or through its agent, that we may advise the Issuer or the Issuer's agent that it will comply with the requirements of Section 165(j)(3)(A), (B) or (C) of the Internal Revenue Code of 1986, as amended, and the regulations thereunder), or (c) is owned by United States or foreign financial institutions for purposes of resale during the restricted period (as defined in U.S. Treasury Regulations Section 1.163-5(c)(2)(i)(D)(7)), and to the further effect that United States or foreign financial institutions described in clause (c) (whether or not also described in clause (a) or (b)) have certified that they have not acquired the Securities for purposes of resale directly or indirectly to a United States person or to a person within the United States or its possessions.
If the Securities are of the category contemplated in Section 903(b)(3) of Regulation S under the Securities Act of 1933, as amended (the "Act"), then this is also to certify with respect to the principal amount of Securities set forth above that, except as set forth below, we have received in writing, by tested telex or by electronic transmission, from our Member Organisations entitled to a portion of such principal amount, certifications with respect to such portion substantially to the effect set forth in the temporary global bond issued in respect of the Securities.
We further certify (1) that we are not making available herewith for exchange (or, if relevant, exercise of any rights or collection of any interest) any portion of the temporary global security excepted in such certifications and (2) that as of the date hereof we have not received any notification from any of our Member Organisations to the effect that the statements made by such Member Organisations with respect to any portion of the part submitted herewith for exchange (or, if relevant, exercise of any rights or collection of any interest) are no longer true and cannot be relied upon as of the date hereof.
We understand that this certification is required in connection with certain tax laws and, if applicable, certain securities laws of the United States. In connection therewith, if administrative or legal proceedings are commenced or threatened in connection with which this certification is or would be relevant, we irrevocably authorise you to produce this certification to any interested party in such proceedings.

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Dated:    [                          ]
EUROCLEAR BANK SA/NV
as operator of the Euroclear System
or
CLEARSTREAM BANKING, S.A.


By:
(Authorised signatory)
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SCHEDULE 2
FORM OF PERMANENT GLOBAL BOND
ANY UNITED STATES PERSON WHO HOLDS THIS OBLIGATION WILL BE SUBJECT TO LIMITATIONS UNDER THE UNITED STATES INCOME TAX LAWS, INCLUDING THE LIMITATIONS PROVIDED IN SECTIONS 165(j) AND 1287(a) OF THE INTERNAL REVENUE CODE.
ISIN: XS2461236759
NORTHERN POWERGRID (NORTHEAST) PLC
(incorporated with limited liability under
the laws of England and Wales with registered number 02906593)
£350,000,000 3.250 per cent. Bonds due 2052
PERMANENT GLOBAL BOND
1.INTRODUCTION
This Permanent Global Bond is issued in respect of the £350,000,000 3.250 per cent. Bonds due 2052 (the "Bonds") of Northern Powergrid (Northeast) plc (the "Issuer"). The Bonds are subject to, and have the benefit of, a trust deed dated 1 April 2022 (as amended or supplemented from time to time, the "Trust Deed") between the Issuer and HSBC Corporate Trustee Company (UK) Limited as trustee (the "Trustee", which expression includes all persons for the time being appointed trustee or trustees under the Trust Deed) and are the subject of a paying agency agreement dated 1 April 2022 (as amended or supplemented from time to time, the "Paying Agency Agreement") and made between the Issuer, HSBC Bank plc as principal paying agent (the "Principal Paying Agent", which expression includes any successor principal paying agent appointed from time to time in connection with the Bonds), the other paying agent named therein (together with the Principal Paying Agent, the "Paying Agents", which expression includes any successor or additional paying agents appointed from time to time in connection with the Bonds) and the Trustee.
2.REFERENCES TO CONDITIONS
Any reference herein to the "Conditions" is to the terms and conditions of the Bonds set out in Schedule 2 (Terms and Conditions of the Bonds) hereto and any reference to a numbered "Condition" is to the correspondingly numbered provision thereof. Words and expressions defined in the Conditions shall have the same meanings when used in this Global Bond.
3.PROMISE TO PAY
The Issuer, for value received, promises to pay to the bearer of this Global Bond, in respect of each Bond represented by this Global Bond, its principal amount on 1 April 2052 or on such earlier date or dates as the same may become payable in accordance with the Conditions, and to pay interest on each such Bond on the dates and in the manner specified in the Conditions, together with any additional amounts payable in accordance with the Conditions, all subject to and in accordance with the Conditions. The Issuer shall procure that the initial aggregate principal amount of Bonds represented by this Global Bond is noted in Schedule 1 (Payments, Exchanges against Temporary Global Bond, Delivery of Definitive Bonds and Cancellation of Bonds) hereto, whereupon the principal amount of this Global Bond shall for all purposes be such amount, subject as provided in paragraph 7 (Writing Down) and paragraph 8 (Writing Up) below.
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4.NEGOTIABILITY
This Global Bond is negotiable and, accordingly, title to this Global Bond shall pass by delivery.
5.EXCHANGE
This Global Bond will be exchanged, in whole but not in part only, for Bonds in definitive form ("Definitive Bonds") in substantially the form set out in Schedule 3 (Form of Definitive Bond) to the Trust Deed if any of the events specified in Clause 3.3 (Exchange for Definitive Bonds) of the Trust Deed occurs.
6.DELIVERY OF DEFINITIVE BONDS
Whenever this Global Bond is to be exchanged for Definitive Bonds, the Issuer shall procure the prompt delivery of such Definitive Bonds, duly authenticated and with interest coupons ("Coupons") attached, in an aggregate principal amount equal to the principal amount of this Global Bond to the bearer of this Global Bond against the surrender of this Global Bond at the Specified Office (as defined in the Conditions) of the Principal Paying Agent within 30 days of the occurrence of the relevant Exchange Event.
7.WRITING DOWN
On each occasion on which:
7.1a payment of principal is made in respect of this Global Bond;
7.2Definitive Bonds are delivered; or
7.3Bonds represented by this Global Bond are to be cancelled in accordance with Condition 7(e) (Redemption and Purchase - Cancellation),
the Issuer shall procure that (i) the amount of such payment and the aggregate principal amount of such Bonds and (ii) the remaining principal amount of this Global Bond (which shall be the previous principal amount hereof less the aggregate of the amounts referred to in (i) above) are noted in Schedule 1 (Payments, Exchanges against Temporary Global Bond, Delivery of Definitive Bonds and Cancellation of Bonds) hereto, whereupon the principal amount of this Global Bond shall for all purposes be as most recently so noted.
8.WRITING UP
If this Global Bond was originally issued in exchange for part only of a temporary global bond representing the Bonds, then all references in this Global Bond to its principal amount shall be construed as references to the principal amount of the part of the temporary global bond in exchange for which this Global Bond was originally issued which the Issuer shall procure is noted in Schedule 1 (Payments, Exchanges against Temporary Global Bond, Delivery of Definitive Bonds and Cancellation of Bonds) hereto. If at any subsequent time any further portion of such temporary global bond is exchanged for an interest in this Global Bond, the principal amount of this Global Bond shall be increased by the amount of such further portion, and the Issuer shall procure that the principal amount of this Global Bond (which shall be the previous principal amount hereof plus the amount of such further portion) is noted in Schedule 1 (Payments, Exchanges against Temporary Global Bond, Delivery of Definitive Bonds and Cancellation of Bonds) hereto, whereupon the principal amount of this Global Bond shall for all purposes be as most recently so noted.
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9.PAYMENTS
All payments in respect of this Global Bond shall be made against presentation and (in the case of payment of principal in full with all interest accrued thereon) surrender of this Global Bond at the specified office of any Paying Agent and shall be effective to satisfy and discharge the corresponding liabilities of the Issuer in respect of the Bonds. On each occasion on which a payment of interest is made in respect of this Global Bond, the Issuer shall procure that the same is noted in Schedule 1 (Payments, Exchanges against Temporary Global Bond, Delivery of Definitive Bonds and Cancellation of Bonds) hereto.
10.CONDITIONS APPLY
Until this Global Bond has been exchanged as provided herein or cancelled in accordance with the Paying Agency Agreement, the bearer of this Global Bond shall be subject to the Conditions and, subject as otherwise provided herein, shall be entitled to the same rights and benefits under the Conditions as if it were the holder of Definitive Bonds and the related Coupons in the denomination of £100,000 and integral multiples of £1,000 in excess thereof and in an aggregate principal amount equal to the principal amount of this Global Bond.
11.EXERCISE OF PUT OPTION
In order to exercise the option contained in Condition 11 (Restructuring Event) (the "Put Option"), the bearer of this Global Bond must, within the period specified in the Conditions for the deposit of the relevant Bond and Put Event Notice (as defined in Condition 11), give written notice (or electronic notice in accordance with the rules and procedures of Euroclear and Clearstream, Luxembourg) of such exercise to the Principal Paying Agent specifying the principal amount of Bonds in respect of which the Put Option is being exercised. Any such notice shall be irrevocable and may not be withdrawn.
12.EXERCISE OF CALL OPTION
In connection with an exercise of the option contained in Condition 7(b) (Redemption at the option of the Issuer) in relation to some only of the Bonds, this Global Bond may be redeemed in part in the principal amount specified by the Issuer in accordance with the Conditions, and the Bonds to be redeemed will not be selected as provided in the Conditions but in accordance with the rules and procedures of Euroclear and Clearstream, Luxembourg and the notice of redemption will not specify the serial numbers of the Bonds called for redemption or the serial numbers of the Bonds previously called for redemption and not presented for payment. The rules and procedures of Euroclear and Clearstream, Luxembourg provide that a partial redemption will be reflected in the records of Euroclear and Clearstream Luxembourg as either a pool factor or a reduction in nominal amount, at their discretion.
13.NOTICES
Notwithstanding Condition 14 (Notices), while all the Bonds are represented by this Global Bond (or by this Global Bond and a temporary global bond) and this Global Bond is (or this Global Bond and a temporary global bond are) deposited with a common depositary for Euroclear and Clearstream, Luxembourg, notices to Bondholders may be given by delivery of the relevant notice to Euroclear and Clearstream, Luxembourg and, in any case, such notices shall be deemed to have been given to the Bondholders in accordance with the Condition 14 (Notices) on the date of delivery to Euroclear and Clearstream, Luxembourg.
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14.AUTHENTICATION
This Global Bond shall not be valid for any purpose until it has been authenticated for and on behalf of HSBC Bank plc as principal paying agent.
15.GOVERNING LAW
This Global Bond and all matters arising from or connected with it are governed by, and shall be construed in accordance with, English law.
AS WITNESS the manual or facsimile signature of a duly authorised person on behalf of the Issuer.
NORTHERN POWERGRID (NORTHEAST) PLC

By:
(duly authorised)

ISSUED as of 1 April 2022
AUTHENTICATED for and on behalf of
HSBC BANK PLC
as principal paying agent
without recourse, warranty or liability

By:
(duly authorised)
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Schedule 1
Payments, Exchanges against Temporary Global Bond, Delivery of Definitive Bonds and Cancellation of Bonds
Date of payment, exchange, delivery or cancellationAmount of interest then paidPrincipal amount of Temporary Global Bond then exchangedAggregate principal amount of Definitive Bonds then deliveredAggregate principal amount of Bonds then cancelledNew principal amount of this Global BondAuthorised signature

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Schedule 2
Terms and Conditions of the Bonds
To be included in the Permanent Global Bond as set out in Schedule 4 (Terms and Conditions of the Bonds) of the Trust Deed.

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SCHEDULE 3
FORM OF DEFINITIVE BOND
[On the face of the Bond:]
[currency][denomination]
ANY UNITED STATES PERSON WHO HOLDS THIS OBLIGATION WILL BE SUBJECT TO LIMITATIONS UNDER THE UNITED STATES INCOME TAX LAWS, INCLUDING THE LIMITATIONS PROVIDED IN SECTIONS 165(j) AND 1287(a) OF THE INTERNAL REVENUE CODE.
NORTHERN POWERGRID (NORTHEAST) PLC
(incorporated with limited liability under
the laws of England and Wales with registered number 02906593)
£350,000,000 3.250 per cent. Bonds due 2052
The Issuer, for value received, promises to pay to the bearer the principal sum of
£100,000
(ONE HUNDRED THOUSAND POUNDS)
on 1 April 2052, or on such earlier date or dates as the same may become payable in accordance with the conditions endorsed hereon (the "Conditions"), and to pay interest on such principal sum in arrear on the dates and at the rate specified in the Conditions, together with any additional amounts payable in accordance with the Conditions, all subject to and in accordance with the Conditions.
Interest is payable on the above principal sum at the rate of 3.250 per cent. per annum, payable annually in arrear on 1 April in each year, all subject to and in accordance with the Conditions.
This Bond and the interest coupons relating hereto shall not be valid for any purpose until this Bond has been authenticated for and on behalf of HSBC Bank plc as principal paying agent.
AS WITNESS the facsimile signature of a duly authorised person on behalf of the Issuer.
NORTHERN POWERGRID (NORTHEAST) PLC
By:
[facsimile signature]
(duly authorised)


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ISSUED as of [•]
AUTHENTICATED for and on behalf of
HSBC BANK PLC
as principal paying agent
without recourse, warranty or liability
By:
[manual signature]
(duly authorised)
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[On the reverse of the Bond:]
TERMS AND CONDITIONS
[As set out in Schedule 4 (Terms and Conditions of the Bonds) of the Trust Deed]
[At the foot of the Terms and Conditions:]
PRINCIPAL PAYING AGENT
HSBC Bank plc
Issuer Services, Europe,
Level 18
8 Canada Square
Canary Wharf
London E14 5HQ
United Kingdom

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Form of Coupon
[On the face of the Coupon:]
NORTHERN POWERGRID (NORTHEAST) PLC
£350,000,000 3.250 per cent. Bonds due 2052
Coupon for £[amount of interest payment] due on [interest payment date].
Such amount is payable, subject to the terms and conditions (the "Conditions") endorsed on the Bond to which this Coupon relates (which are binding on the holder of this Coupon whether or not it is for the time being attached to such Bond), against presentation and surrender of this Coupon at the specified office for the time being of any of the agents shown on the reverse of this Coupon (or any successor or additional agents appointed from time to time in accordance with the Conditions).
ANY UNITED STATES PERSON WHO HOLDS THIS OBLIGATION WILL BE SUBJECT TO LIMITATIONS UNDER THE UNITED STATES INCOME TAX LAWS, INCLUDING THE LIMITATIONS PROVIDED IN SECTIONS 165(j) AND 1287(a) OF THE INTERNAL REVENUE CODE.
[On the reverse of the Coupon:]
Principal Paying Agent: HSBC Bank plc, Issuer Services, Europe, Level 18, 8 Canada Square, Canary Wharf, London E14 5HQ, United Kingdom
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SCHEDULE 4
TERMS AND CONDITIONS OF THE BONDS
The £350,000,000 3.25 per cent Bonds due 2052 (the "Bonds", which expression shall, unless the context otherwise requires, include any Further Bonds (as defined in Condition 3 (Definitions)) of Northern Powergrid (Northeast) plc (the "Issuer") are constituted by and subject to a trust deed dated 1 April 2022 (as the same may be amended and/or supplemented from time to time, the "Trust Deed") between the Issuer and HSBC Corporate Trustee Company (UK) Limited (the "Trustee", which expression shall, wherever the context so admits, include its successors as trustee under the Trust Deed) as trustee for the holders of the Bonds (the "Bondholders"). The statements in these Terms and Conditions include summaries of and are subject to, the detailed provisions of the Trust Deed. The Issuer has entered into a paying agency agreement dated 1 April 2022 (the "Paying Agency Agreement") with HSBC Bank plc (the "Principal Paying Agent") and any paying agent appointed thereunder (each a "Paying Agent" and together with the Principal Paying Agent, the "Paying Agents") and the Trustee. Copies of the Trust Deed and the Paying Agency Agreement will be available for inspection by Bondholders and the holders of the interest coupons appertaining to the Bonds (respectively, the "Couponholders" and the "Coupons") at the specified office(s) of each of the Paying Agents. The Bondholders and the Couponholders are entitled to the benefit of, are bound by, and are deemed to have notice of, all the provisions of the Trust Deed and the provisions of the Paying Agency Agreement applicable to them.
1.Form, Denomination and Title
The Bonds are serially numbered and in bearer form in the denominations of £100,000 and integral multiples of £1,000 in excess thereof up to and including £199,000, each with Coupons attached on issue. No definitive Bonds will be issued with a denomination above £199,000. Title to the Bonds and to the Coupons will pass by delivery. Bonds of one denomination may not be exchanged for Bonds of the other denomination. The holder of any Bond or Coupon will (except as otherwise required by law) be treated as its absolute owner for all purposes (whether or not it is overdue and regardless of any notice of ownership, trust, or any interest in it, any writing on it, or its theft or loss) and no person will be liable for so treating the holder. No person shall have any right to enforce any term or condition of the Bonds or the Trust Deed under the Contracts (Rights of Third Parties) Act 1999.
2.Status of the Bonds
The Bonds and Coupons constitute direct, unconditional and (subject to the provisions of Condition 4(a) (Negative Pledge)) unsecured obligations of the Issuer and rank pari passu and without any preference among themselves. The payment obligations of the Issuer under the Bonds and the Coupons shall, subject as aforesaid and save for such obligations as may be preferred by laws that are both mandatory and of general application, at all times rank at least equally with all its present and future unsecured and unsubordinated obligations.
3.Definitions
"Business Day" means any day (other than a Saturday or Sunday) on which banks and other financial institutions are open for business in London.
"Companies Act" means the Companies Act 2006 as amended or re-enacted from time to time and all subordinate legislation made pursuant thereto.
"Electricity Act" means the Electricity Act 1989 as amended or re-enacted from time to time and all subordinate legislation made pursuant thereto.
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"Electricity Distribution Licence" means the electricity distribution licence granted or treated as granted to the Issuer under section 6(1)(c) of the Electricity Act.
"Energy Act" means the Energy Act 2004 as amended or re-enacted from time to time and all subordinate legislation made pursuant thereto.
"Energy Administrator" means an energy administrator appointed pursuant to Part 3 of the Energy Act.
"Event of Default" means any of the events set out in Condition 10 (Events of Default).
"Final Determination" means the final determination document published by Ofgem for each electricity distribution price control review.
"Fitch" means Fitch Ratings Limited.
"Further Bonds" means all further bonds created and issued by the Issuer in accordance with Condition 17 (Further Bonds) and/or for the time being outstanding or, as the context may require, a specific proportion thereof.
"Indebtedness For Borrowed Money" means any indebtedness (whether being principal, premium, interest or other amounts) for (i) money borrowed, (ii) payment obligations under or in respect of any acceptance or acceptance credit, or (iii) any notes, bonds, debentures, debenture stock, loan stock or other debt securities offered, issued or distributed whether by way of public offer, private placing, acquisition consideration or otherwise and whether issued for cash or in whole or in part for a consideration other than cash.
"Investment Grade Rating" means a credit rating assigned by a Rating Agency of BBB- (in the case of such ratings assigned by S&P and/or Fitch) or Baa3 (in the case of such ratings assigned by Moody's) or the equivalents of such ratings for the time being, or better.
"Issue Date" means 1 April 2022.
"Moody's" means Moody's Investors Service Limited.
A "Negative Rating Event" shall be deemed to have occurred if (i) the Issuer does not, either prior to or no later than 14 days after the date of a Negative Certification (as defined in Condition 11 (Restructuring Event)) in respect of the relevant Restructuring Event, seek, and thereupon use all reasonable endeavours to obtain, from a Rating Agency, a rating of the Reference Rated Securities or these Bonds or any other unsecured and unsubordinated debt of the Issuer having an initial maturity of five years or more or (ii) if it does so seek and use such endeavours, it is unable, as a result of such Restructuring Event, to obtain such a rating which is an Investment Grade Rating.
"Ofgem" means the Gas and Electricity Markets Authority and/or the Office of Gas and Electricity Markets, including their successor office or body, as appropriate.
"Potential Event of Default" means an event or circumstance which would with the giving of notice and/or lapse of time and/or the issuing of a certificate become an Event of Default.
A "Put Event" occurs on the date of the last to occur of (i) a Restructuring Event, (ii) either a Rating Downgrade or, as the case may be, a Negative Rating Event, and (iii) the relevant Negative Certification.
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"Rating Agencies" means S&P and Fitch, and "Rating Agency" means either one of them.
A "Rating Downgrade" shall be deemed to have occurred (i) if the then current rating assigned to any Reference Rated Securities by any Rating Agency (whether provided by a Rating Agency at the invitation of the Issuer or by its own volition) is withdrawn or reduced from an Investment Grade Rating to a non-Investment Grade Rating (BB+/Ba1, or their respective equivalents for the time being, or worse) or, (ii) if any Rating Agency shall then have already assigned a non-Investment Grade Rating (as described above) to the Reference Rated Securities, such rating is lowered one full rating category, provided that, in the case of (i) or (ii), if during the Restructuring Period the Reference Rated Securities have at least one Investment Grade Rating then it shall be deemed that no Rating Downgrade shall have occurred.
"Reference Gilt" means the 3.75 per cent Treasury Stock due 22 July 2052 or such other conventional (i.e. not index linked) UK Government Stock as the Issuer (with the advice of an independent financial institution of international repute appointed by the Issuer) may determine to be the most appropriate benchmark conventional UK Government Stock.
"Reference Rated Securities" means the Bonds for so long as they have a rating from a Rating Agency, and otherwise any other unsecured and unsubordinated debt securities of the Issuer having an initial maturity of five years or more which are rated by a Rating Agency.
"Regulated Asset Value" means the regulatory asset value of the Issuer as set out in the most recent Final Determination or, if any electricity distribution price control financial model has been published on Ofgem's website since the most recent Final Determination, the regulatory asset value of the Issuer as set out in such financial model, in each case, adjusted for inflation, as of the 31 March nearest to the date of determination, provided that if at any time Ofgem alters its methodology of determining Regulated Asset Value in a manner which results in a change in Regulated Asset Value, appropriate adjustments to this definition (and to other terms defined or described herein solely for the purposes of this definition) so as to preserve the original intent of Condition 10(c) (Events of Default) shall be determined by an independent accountant experienced in the regulated electricity distribution market selected by the Issuer.
"Relevant Indebtedness" means any indebtedness (whether being principal, premium, interest or other amounts) in the form of or represented by notes, bonds, debentures, debenture stock, loan stock or other securities, whether issued for cash or in whole or in part for a consideration other than cash, and which, with the agreement of the person issuing the same, are quoted, listed or ordinarily dealt in on any stock exchange or recognised over-the-counter or other securities market.

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"Restructuring Event" means the occurrence of any one or more of the following events:
(i)    (a) written notice being given to the Issuer of revocation of its Electricity Distribution Licence which is requisite to the conduct of the Issuer's business at the relevant time or (b) the Issuer agreeing in writing to any revocation or surrender of its Electricity Distribution Licence which is requisite to the conduct of the Issuer's business at the relevant time or (c) any legislation (whether primary or subordinate) being enacted terminating or revoking its Electricity Distribution Licence which is requisite to the conduct of the Issuer's business at the relevant time, except in any such case in circumstances where a licence or licences is or are granted to the Issuer or a Subsidiary of the Issuer 100 per cent of the ordinary share capital of which is owned directly or indirectly by the Issuer (the "Relevant Transferee") and provided that the terms of such licence or licences are substantially no less favourable than the Electricity Distribution Licence in which event all references in these Terms and Conditions to the Electricity Distribution Licence and the Issuer in its capacity as holder of the Electricity Distribution Licence shall hereafter be deemed to be references to the licence or licences on substantially no less favourable terms and the Relevant Transferee respectively; or
(ii)    any modification (other than a modification which is of a formal, minor or technical nature) being made to the terms and conditions of the Electricity Distribution Licence on or after the Issue Date unless two Directors of the Issuer have certified in good faith to the Trustee (and the Trustee may rely absolutely on such certification) that the modified terms and conditions are not materially less favourable to the business of the Issuer. For the purposes of this paragraph (ii) a modification which (a) results in a licence or licences being granted to the Issuer or a Subsidiary of the Issuer 100 per cent of the ordinary share capital of which is owned directly or indirectly by the Issuer (collectively, the "Applicable Transferees") and provided that the terms of such licence or licences are substantially no less favourable than the terms of the Electricity Distribution Licence or (b) results in a licence or licences being granted to an Applicable Transferee provided that the terms of such licence or licences are substantially no less favourable than the terms of the Electricity Distribution Licence, shall not be deemed to be a modification within this paragraph (ii). In the event of such a modification as is referred to in (a) or (b), all references in these Terms and Conditions to the Electricity Distribution Licence and the Issuer in its capacity as holder of the Electricity Distribution Licence shall thereafter be deemed to be references to the licence or licences granted to the Applicable Transferee and to the Applicable Transferee, respectively; or
(iii)    any legislation (whether primary or subordinate) is enacted which removes, qualifies or amends (other than an amendment which is of a formal, minor or technical nature) the duties of the Secretary of State (or any successor) and/or Ofgem under the Electricity Act as in force on the Issue Date, unless two Directors of the Issuer have certified in good faith to the Trustee (and the Trustee may rely absolutely on such certification) that such removal, qualification or amendment does not have a materially adverse effect on the financial condition of the Issuer.
"Restructuring Period" means:
(i)    if at the time a Restructuring Event occurs there are Reference Rated Securities, the period of 90 days starting from and including the day on which the Restructuring Event occurs; or
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(ii)    if at the time a Restructuring Event occurs there are not Reference Rated Securities, the period starting from and including the day on which the Restructuring Event occurs and ending on the day 90 days following the later of (a) the date on which the Issuer shall seek to obtain a rating pursuant to the definition of Negative Rating Event prior to the expiry of the 14 days referred to in the definition of Negative Rating Event and (b) the date on which a Negative Certification shall have been given to the Issuer in respect of the Restructuring Event.
"S&P" means S&P Global Ratings UK Limited, a division of S&P Global Inc.
"Security Interest" means a mortgage, charge, lien, pledge or other security interest.
"Subsidiary" means a subsidiary or subsidiary undertaking within the meaning of the Companies Act.
4.Negative Pledge
So long as any of the Bonds remain outstanding (as defined in the Trust Deed), the Issuer will ensure that none of its Relevant Indebtedness or the Relevant Indebtedness of any of its Subsidiaries nor any guarantee given by it or by any such Subsidiary of the Relevant Indebtedness of any other person will be secured by a Security Interest upon, or with respect to, any of the present or future business, undertaking, assets or revenues (including any uncalled capital) of the Issuer or any of its Subsidiaries unless the Issuer shall, before or at the same time as the creation of the Security Interest, take any and all action necessary to ensure that:
(a)    all amounts payable by the Issuer under the Bonds, the Coupons and the Trust Deed are secured to the satisfaction of the Trustee equally and rateably with the Relevant Indebtedness or guarantee of Relevant Indebtedness, as the case may be, by such Security Interest; or
(b)    such other Security Interest or guarantee or other arrangement (whether or not including the giving of a Security Interest) is provided in respect of all amounts payable by the Issuer under the Bonds, the Coupons and the Trust Deed either (i) as the Trustee shall in its absolute discretion deem not materially less beneficial to the interests of the Bondholders, or (ii) as shall be approved by an Extraordinary Resolution (as defined in the Trust Deed) of the Bondholders.
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5.Interest
The Bonds bear interest from (and including) the Issue Date at the rate of 3.25 per cent per annum payable annually in arrear on 1 April in each year (each, an "Interest Payment Date"). Each Bond will cease to bear interest from the due date for redemption thereof, unless upon due presentation, payment of principal or premium (if any) is improperly withheld or refused. In such event, each Bond shall continue to bear interest at such rate (both before and after judgment) until whichever is the earlier of (i) the day on which all sums due in respect of such Bond up to that day are received by or on behalf of the relevant holder and (ii) the day falling seven days after the Trustee or the Principal Paying Agent has notified Bondholders in accordance with Condition 14 (Notices) of receipt of all sums then due in respect of all the Bonds up to that seventh day (except to the extent that there is failure in the subsequent payment to the relevant holder under these Terms and Conditions). In these Conditions, the period beginning on and including the Issue Date and ending on but excluding the first Interest Payment Date and each successive period beginning on and including an Interest Payment Date and ending on but excluding the next succeeding Interest Payment Date is called an "Interest Period". Where interest is to be calculated in respect of a period which is equal to or shorter than an Interest Period the day-count fraction used will be the number of days in the relevant period, from and including the date from which interest begins to accrue to but excluding the date on which it falls due, divided by the number of days in the Interest Period in which the relevant period falls (including the first such day but excluding the last). Interest in respect of each £1,000 in principal amount of the Bonds (the "Calculation Amount") for any period shall be equal to the product of 3.25 per cent, the Calculation Amount and the day-count fraction for the relevant period, rounding the resulting figure to the nearest pence (half a pence being rounded upwards).
6.Payments
Payments of principal, premium (if any) or interest in respect of the Bonds will be made against surrender of Bonds or, in the case of payments of interest due on an Interest Payment Date, against surrender of Coupons, at the specified office of any Paying Agent by a sterling cheque drawn on, or at the option of the holder, by transfer to a sterling account maintained by the payee with a branch of a bank in the City of London, subject in all cases to (i) any fiscal or other laws and regulations applicable thereto in the place of payment, but without prejudice to the provisions of Condition 8 (Taxation) and (ii) any withholding or deduction required pursuant to an agreement described in Section 1471(b) of the U.S. Internal Revenue Code of 1986 (the "Code") or otherwise imposed pursuant to Sections 1471 through 1474 of the Code, any regulations or agreements thereunder, any official interpretations thereof, or (without prejudice to the provisions of Condition 8 (Taxation)) any law implementing an intergovernmental approach thereto.
Upon the due date for redemption of any Bond, all unmatured Coupons relating to such Bond (whether or not attached) shall become void and no payment shall be made in respect of them. Where any Bond is presented for redemption without all unmatured Coupons relating to it, redemption shall be made only against the provision of such indemnity as the Issuer may require.
If the due date for redemption of any Bond is not 1 April in any year, interest accrued in respect of such Bond from (and including) the last preceding 1 April will be paid only against presentation and surrender of such Bond.

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If the due date for payment of any amount in respect of any Bond or Coupon is not a business day, then the holder thereof shall not be entitled to payment of the amount due until the next following business day nor to any further interest or other payment in respect of such delay. The expression "business day" in this Condition means a day other than a Saturday or Sunday on which banks are open for business in the place where the Bond or Coupon is presented and, in the case of payment by transfer to a sterling account as referred to above, in the City of London.
The names of the initial Principal Paying Agent and the other initial Paying Agents and their initial specified offices are set out at the end of these Terms and Conditions. The Issuer reserves the right, subject to the prior written approval of the Trustee, at any time to vary or terminate the appointment of any Paying Agent and to appoint additional or other Paying Agents provided that the Issuer will at all times maintain a principal paying agent. Notice of any such termination or appointment and of any changes in the specified offices of the Paying Agents will be given to the Bondholders in accordance with Condition 14 (Notices) as soon as practicable thereafter. Under no circumstances will interest be payable in the United States of America or any possession of the United States of America.
7.Redemption and Purchase
(a)Scheduled redemption: Unless previously redeemed, or purchased and cancelled, the Issuer will redeem the Bonds on 1 April 2052 (the "Maturity Date") at their outstanding principal amount.
(b)Redemption at the option of the Issuer: The Issuer may, having given not less than 30 nor more than 45 days' notice in accordance with Condition 14 (Notices) (which notice shall be irrevocable), redeem the whole or part (in principal amount of £5,000,000 or integral multiples thereof) of the Bonds at any time prior to the Maturity Date at a price equal to the Redemption Price together with interest accrued up to and including the date of redemption.
In this Condition, "Redemption Price" means:
(i)in relation to any date fixed for redemption which falls in the period up to (but excluding) the Par Call Date, the higher of the following:
(1)    par; and
(2)    that price, expressed as a percentage (rounded to three decimal places, 0.0005 being rounded upwards), at which the Gross Real Redemption Yield (calculated as described below) on the Bonds, if they were to be purchased at such price on the third dealing day prior to the publication of the notice of redemption, would be equal to the sum of: (A) Gross Real Redemption Yield on such dealing day of the Reference Gilt, on the basis of the middle market price of the Reference Gilt prevailing at 11:00 a.m. on such dealing day, as determined by an Independent Adviser; and (B) 0.25 per cent;
(ii)in relation to any date fixed for redemption which falls in the period from (and including) the Par Call Date to (but excluding) the Maturity Date, par.

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Any reference in these Terms and Conditions to principal shall be deemed to include any sum payable as the Redemption Price.
Notices of redemption will specify the date fixed for redemption, the applicable Redemption Price and, in the case of partial redemption, the aggregate principal amount of the Bonds to be redeemed, the serial numbers of the Bonds called for redemption, the serial numbers of the Bonds previously called for redemption and not presented for payment and the aggregate principal amount of the Bonds to remain outstanding after the redemption. No such notice of redemption may be given by the Issuer unless it shall have presented to the Trustee a certificate signed by two Directors of the Issuer (upon which the Trustee may rely absolutely) that it will have the funds, not subject to the interest of any other person, required to redeem the Bonds at the Redemption Price plus accrued interest on the date specified for redemption. Upon the expiry of any notice of redemption the Issuer shall be bound to redeem the Bonds called for redemption at the applicable Redemption Price. Any partial redemption of the Bonds shall be on the basis of selection by drawings (the method of such drawings to be approved by the Trustee in its absolute discretion).
"Gross Real Redemption Yield" means a yield expressed as a percentage and calculated on a basis consistent with the basis indicated by the United Kingdom Debt Management Office publication "Formulae for calculating Gilt Prices from Yields" published on 8 June 1998 with effect from 1 November 1998, page 5 and updated on 15 January 2002 and 16 March 2005 and as further updated or amended from time to time.
"Independent Adviser" means an independent financial institution of international repute or other independent financial adviser experienced in the international capital markets, in each case appointed by the Issuer at its own expense.
"Par Call Date" means the date falling three months prior to the Maturity Date.
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(c)Redemption for tax reasons: If, as a result of any change in, or amendment to, the laws or regulations of the United Kingdom or any political sub-division of, or any authority in, or of, the United Kingdom having power to tax, or any change in the application or official interpretation of such laws or regulations, which change or amendment becomes effective after 30 March 2022, the Issuer has or will become obliged to pay additional amounts as provided or referred to in Condition 8 (Taxation) (and such amendment or change has been evidenced by the delivery by the Issuer to the Trustee (who shall accept such certificate as sufficient evidence thereof) of a certificate signed by two Directors of the Issuer stating that such amendment or change has occurred (irrespective of whether such amendment or change is then effective), describing the facts leading thereto and stating that such obligation cannot be avoided by the Issuer taking reasonable measures available to it) the Issuer may at its option, having given not less than 30 nor more than 60 days' notice to the Bondholders in accordance with Condition 14 (Notices) (which notice shall be irrevocable), redeem all the Bonds (other than Bonds in respect of which the Issuer shall have given a notice of redemption pursuant to Condition 7(b) (Redemption at the option of the Issuer) prior to any notice being given under this Condition 7(c)), but not some only, at their outstanding principal amount together with interest accrued to (but excluding) the date of redemption, provided that no notice of redemption shall be given earlier than 90 days before the earliest date on which the Issuer would be required to pay the additional amounts were a payment in respect of the Bonds then due and provided further that no notice of redemption may be given by the Issuer unless two Directors of the Issuer shall have certified to the Trustee that it will have the funds, not subject to the interest of any other person, required to redeem the Bonds at their principal amounts outstanding plus accrued interest on the date specified for redemption (the Trustee being able to rely on such certificate absolutely).
(d)Purchase: The Issuer or any of its Subsidiaries may at any time purchase or otherwise acquire Bonds (provided that all unmatured Coupons are attached thereto or are surrendered therewith) at any price in the open market or otherwise.
(e)Cancellation: All Bonds which are redeemed pursuant to this Condition by the Issuer shall be cancelled (together with all relative unmatured Coupons attached thereto or surrendered therewith) and accordingly may not be reissued or resold. Bonds purchased by or on behalf of the Issuer or any of its Subsidiaries may be held or reissued or resold or surrendered for cancellation.
8.Taxation
(a)All payments in respect of the Bonds and Coupons by or on behalf of the Issuer shall be made without withholding or deduction for, or on account of, any present or future taxes, duties, assessments or governmental charges of whatever nature ("Taxes") imposed or levied by or on behalf of the United Kingdom, or any political subdivision of, or authority in, or of, the United Kingdom having power to tax, unless the withholding or deduction of the Taxes is required by law. In that event, the Issuer will pay such additional amounts as may be necessary in order that the net amounts received by the Bondholders and Couponholders after the withholding or deduction shall equal the respective amounts which would have been receivable in respect of the Bonds or, as the case may be, Coupons in the absence of the withholding or deduction; except that no additional amounts shall be payable in relation to any payment in respect of any Bond or Coupon:
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(i)to, or to a third party on behalf of, a holder who is liable to the Taxes in respect of the Bond or Coupon by reason of such holder having some connection with the United Kingdom other than the mere holding of the Bond or Coupon; or
(ii)to, or to a third party on behalf of, a holder who would not be liable or subject to the withholding or deduction by making a declaration of non-residence or other similar claim for exemption to the relevant tax authority; or
(iii)presented for payment more than 30 days after the Relevant Date except to the extent that the holder would have been entitled to additional amounts on presenting the same for payment on the last day of the period of 30 days.
(b)In these Terms and Conditions, "Relevant Date" means the date on which the payment first becomes due, but if the full amount of the money payable has not been received in London by the Principal Paying Agent or the Trustee on or before the due date, it means the date on which, the full amount of the money having been so received, notice to that effect shall have been duly given to the Bondholders by the Issuer in accordance with Condition 14 (Notices).
(c)Any reference in these Terms and Conditions to any amounts in respect of the Bonds shall be deemed also to refer to any additional amounts which may be payable under this Condition or under any undertakings given in addition to, or in substitution for, this Condition 8 pursuant to the Trust Deed.
9.Prescription
Bonds and Coupons will become void unless presented for payment within periods of ten years and five years, respectively, from the Relevant Date for payment in respect thereof, subject to the provisions of Condition 6 (Payments).
10.Events of Default
If:
(a)default is made in the payment of any principal or premium (if any) in respect of any Bond pursuant to Condition 7 (Redemption and Purchase), or for a period of 14 days or more in the payment of any interest due in respect of the Bonds; or
(b)the Issuer fails to perform or observe any of its other obligations, covenants, conditions or provisions under the Bonds or the Trust Deed and (except where the Trustee shall have certified to the Issuer in writing that it considers such failure to be incapable of remedy in which case no such notice or continuation as is hereinafter mentioned will be required) such failure continues for the period of 60 days (or such longer period as the Trustee may permit) following the service by the Trustee on the Issuer of notice requiring the same to be remedied; or
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(c)(i) any other Indebtedness For Borrowed Money of the Issuer or any of its Subsidiaries becomes due and repayable prior to its stated maturity by reason of an event of default (however described) or (ii) any such Indebtedness For Borrowed Money is not paid when due or (iii) the Issuer or any of its Subsidiaries fails to pay when due any amount payable by it under any present or future guarantee for, or indemnity in respect of any Indebtedness For Borrowed Money of, any person or (iv) any security given by the Issuer or any of its Subsidiaries for any Indebtedness For Borrowed Money of any person or any guarantee or indemnity of Indebtedness For Borrowed Money of any person becomes enforceable by reason of default in relation thereto and steps are taken to enforce such security save in any such case referred to in (i), (ii), (iii) or (iv) where there is a bona fide dispute as to whether the relevant Indebtedness For Borrowed Money or any such guarantee or indemnity as aforesaid shall be due and payable, and provided that the aggregate amount of the relevant Indebtedness For Borrowed Money in respect of which any one or more of the events mentioned above in this sub-paragraph (c) has or have occurred equals or exceeds 5 per cent of Regulated Asset Value and such event shall continue unremedied or unwaived for more than 14 days (or such longer grace period as may have been originally provided in the applicable instrument) and the time for payment of such amount has not been expressly extended (until such time as any payment default is remedied, cured or waived); or
(d)any order shall be made by any competent court or any resolution shall be passed for the winding up or dissolution of the Issuer, save for the purposes of amalgamation, merger, consolidation, reorganisation, reconstruction or other similar arrangement on terms previously approved by an Extraordinary Resolution of the Bondholders; or
(e)the Issuer or any of its Subsidiaries shall cease to carry on the whole or substantially the whole of its business, save in each case for the purposes of amalgamation, merger, consolidation, reorganisation, reconstruction or other arrangement (i) not involving or arising out of the insolvency of the Issuer or such Subsidiary and under which all or substantially all of its assets are transferred, in the case of the Issuer, to a Subsidiary of the Issuer or, in the case of a Subsidiary, to the Issuer or another Subsidiary of the Issuer, or in either case, to a transferee which is, or immediately upon such transfer becomes a Subsidiary of the Issuer or (ii) under which all or substantially all of its assets are transferred to a third party or parties (whether a Subsidiary or Subsidiaries of the Issuer or not) for full consideration by the Issuer or any such Subsidiary on an arm's length basis or (iii) the terms of which have previously been approved by an Extraordinary Resolution of the Bondholders provided that if the Issuer shall cease to hold or shall transfer the Electricity Distribution Licence (other than where the Electricity Distribution Licence is revoked, terminated or surrendered in the circumstances envisaged by paragraph (i)(a), (b) or (c) of the definition of Restructuring Event in Condition 3 (Definitions) and such revocation, termination or surrender does not constitute a Restructuring Event pursuant to paragraph (i) of such definition) the Issuer shall be deemed to have ceased to carry on the whole or substantially the whole of its business (and neither of exceptions (i) and (ii) above shall apply) unless the transferee of the Electricity Distribution Licence is the Issuer or a Subsidiary of the Issuer, at least 51 per cent of the ordinary share capital of which is owned directly or indirectly by the Issuer (the "NE Transferee") and in such event all references in these Terms and Conditions to the Issuer in its capacity as holder of the Electricity Distribution Licence shall thereafter be deemed to be references to the NE Transferee; or
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(f)the Issuer or any of its Subsidiaries shall suspend or shall threaten to suspend payment of its debts generally or shall be declared or adjudicated by a competent court to be unable, or shall admit in writing its inability, to pay its debts (within the meaning of Section 123(1) or (2) of the Insolvency Act 1986) as they fall due, or shall be adjudicated or found insolvent by a competent court or shall enter into any composition or other similar arrangement with its creditors under Part I of the Insolvency Act 1986; or
(g)a receiver, administrative receiver, Energy Administrator, administrator or other similar official shall be appointed in relation to the Issuer or any of its Subsidiaries or in relation to the whole or a substantial part of the undertaking or assets of any of them or a distress, execution or other process shall be levied or enforced upon or sued out against, or any encumbrancer shall take possession of, the whole or a substantial part of the assets of any of them and in any of the foregoing cases it or he shall not be paid out or discharged within 120 days (or such longer period as the Trustee may in its absolute discretion permit),
and, in the case of sub-paragraphs (b), (c) and (e) to (g) (inclusive) the Trustee shall have certified in writing that the relevant event is in its opinion materially prejudicial to the interests of the Bondholders, the Trustee may at its discretion (and the Trustee shall on the request in writing of the holders of at least one quarter in principal amount of the Bonds then outstanding or upon being so directed by an Extraordinary Resolution of the Bondholders), by notice in writing to the Issuer declare that the Bonds are, and they shall accordingly thereby forthwith become, immediately due and repayable at their principal amount together with accrued interest (as provided in the Trust Deed), provided always that the giving of any notice in relation to any Event of Default shall not operate as a waiver of any of the Trustee's rights (including the right to give a further notice) or prevent the Trustee from giving a further notice in the manner referred to above in relation to that Event of Default at any time thereafter.
So long as any of the Bonds remain outstanding the Issuer will, forthwith upon becoming aware of any Event of Default or Potential Event of Default, give notice in writing thereof to the Trustee.
For the purpose of sub-paragraph (f) above, Section 123(1)(a) of the Insolvency Act 1986 shall have effect as if for "£750" there was substituted "£250,000" or such higher figure as Ofgem may from time to time determine by notice in writing to the Issuer for the purposes of Schedule 2 (Revocation) of its Electricity Distribution Licence.
Neither the Issuer nor any Subsidiary shall be deemed to be unable to pay its debts for the purposes of sub-paragraph (f) above if any such demand as is mentioned in Section 123(1)(a) of the Insolvency Act 1986 is being contested in good faith by the Issuer or the relevant Subsidiary with recourse to all appropriate measures and procedures.
11.Restructuring Event
(a)
(i)If, at any time while any of the Bonds remains outstanding, a Restructuring Event occurs and during the Restructuring Period an Independent Financial Adviser (as defined below) shall have certified in writing to the Trustee that such Restructuring Event is not, in its opinion, materially prejudicial to the interests of the Bondholders, the following provisions of this Condition shall cease to have any further effect in relation to such Restructuring Event.
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(ii)If, at any time while any of the Bonds remains outstanding, a Restructuring Event occurs and (subject to paragraph (a)(i) above):
(1)    within the Restructuring Period, either:
(A)    if at the time such Restructuring Event occurs there are Reference Rated Securities, a Rating Downgrade in respect of such Restructuring Event also occurs; or
(B)    if at such time there are not Reference Rated Securities, a Negative Rating Event in respect of such Restructuring Event also occurs; and
(2)    an Independent Financial Adviser shall have certified in writing to the Trustee that such Restructuring Event is, in its opinion, materially prejudicial to the interests of the Bondholders (a "Negative Certification"),
then, unless at any time the Issuer shall have given a notice under Condition 7(b) (Redemption at the option of the Issuer) or Condition 7(c) (Redemption for tax reasons), in each case expiring prior to the Put Date (as defined below), the holder of each Bond will, upon the giving of a Put Event Notice (as defined below), have the option (the "Put Option") to require the Issuer to redeem or, at the option of the Issuer, purchase (or procure the purchase of) that Bond on the Put Date at its principal amount together with (or, where purchased, together with an amount equal to) interest (if any) accrued to (but excluding) the Put Date.
Notwithstanding the occurrence of a Rating Downgrade or a Negative Rating Event, no Bondholder shall be entitled to exercise the Put Option and to serve a Put Notice if the rating assigned to the Reference Rated Securities or these Bonds by any Rating Agency is subsequently increased to, or, as the case may be, there is assigned to the Reference Rated Securities or these Bonds by any Rating Agency an Investment Grade Rating or, in the event that the rating assigned to the Reference Rated Securities immediately prior to the occurrence of the Rating Downgrade or Negative Rating Event was not an Investment Grade Rating, if such rating is restored, in either case prior to any Negative Certification being issued.
Any certification by an Independent Financial Adviser as aforesaid as to whether or not, in its opinion, any Restructuring Event is materially prejudicial to the interest of the Bondholders shall, in the absence of manifest error, be conclusive and binding on the Trustee, the Issuer and the Bondholders. For the purposes of this Condition, an "Independent Financial Adviser" means a financial adviser appointed by the Issuer and approved by the Trustee or, if the Issuer shall not have appointed such an adviser within 21 days after becoming aware of the occurrence of such Restructuring Event and the Trustee is indemnified and/or prefunded and/or secured to its satisfaction against the costs of such adviser, appointed by the Trustee.

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A Rating Downgrade or a Negative Rating Event or a non-Investment Grade Rating shall be deemed not to have occurred as a result of or in respect of a Restructuring Event if the Rating Agency making the relevant reduction in rating or, where applicable, declining to assign an Investment Grade Rating as provided in this Condition does not announce or publicly confirm or inform the Trustee in writing at its request that the reduction or, where applicable, declining to assign a rating of at least investment grade was the result, in whole or in part, of any event or circumstance comprised in or arising as a result of the applicable Restructuring Event.
The Trust Deed provides that the Trustee is under no obligation to ascertain whether a Restructuring Event, a Negative Rating Event, a Rating Downgrade or any event which could lead to the occurrence of or could constitute a Restructuring Event, a Negative Rating Event or a Rating Downgrade has occurred and until it shall have actual knowledge or express notice pursuant to the Trust Deed to the contrary the Trustee may assume that no Restructuring Event, Negative Rating Event, Rating Downgrade or other such event has occurred.
(b)Promptly upon the Issuer becoming aware that a Put Event (as defined in Condition 3 (Definitions)) has occurred, and in any event not later than 14 days after the occurrence of a Put Event, the Issuer shall, and at any time upon the Trustee becoming similarly so aware the Trustee may, and (subject to it being indemnified and/or prefunded and/or secured to its satisfaction) if so requested by the holders of at least one-quarter in principal amount of the Bonds then outstanding shall, give notice (a "Put Event Notice") to the Bondholders in accordance with Condition 14 (Notices) specifying the nature of the Put Event and the procedure for exercising the Put Option.
(c)To exercise the Put Option, the holder of a Bond must deliver such Bond to the specified office of any Paying Agent, on a day which is a business day (as defined in Condition 6 (Payments)) in London and in the place of such specified office falling within the period (the "Put Period") of 45 days after that on which a Put Event Notice is given, accompanied by a duly completed and signed notice of exercise in the form (for the time being current) obtainable from any specified office of any Paying Agent (a "Put Notice") and in which the holder may specify a bank account complying with the requirements of Condition 6 (Payments) to which payment is to be made under this Condition. Each Bond should be delivered together with all Coupons appertaining thereto maturing after the day (the "Put Date") being the fifteenth day after the date of expiry of the Put Period, failing which any such missing Coupon will become void and no payment shall be made in respect of it. The Paying Agent to which such Bond and Put Notices are delivered shall issue to the Bondholder concerned a non-transferable receipt in respect of the Bond so delivered. Payment in respect of any Bond so delivered shall be made, if the holder duly specifies a bank account in the Put Notice to which payment is to be made on the Put Date, by transfer to that bank account and, in every other case, on or after the Put Date, in each case against presentation and surrender or (as the case may be) endorsement of such receipt at any specified office of any Paying Agent, subject in any such case as provided in Condition 6 (Payments). A Put Notice, once given, shall be irrevocable. For the purposes of Conditions 9 (Prescription), 10 (Events of Default), 12 (Enforcement), 13 (Replacement of Bonds and Coupons) and 15 (Meetings of Bondholders, Modification and Waiver) receipts issued pursuant to this Condition shall be treated as if they were Bonds. The Issuer shall redeem or, at the option of the Issuer, purchase (or procure the purchase of) the relevant Bond on the applicable Put Date unless previously redeemed or purchased.
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12.Enforcement
(a)Limitation on Bondholders: Only the Trustee may pursue the remedies available under general law or under the Trust Deed to enforce the rights of the Bondholders and Couponholders and no such holder will be entitled to proceed against the Issuer unless the Trustee, having become bound to act in accordance with the terms of the Trust Deed, fails to do so within a reasonable amount of time and such failure is continuing.
(b)Enforcement Proceedings: At any time after amounts in respect of principal of and interest on the Bonds shall have become due and payable but are unpaid, the Trustee may, at its discretion, and without further notice but subject as mentioned below, take such proceedings against the Issuer as it may think fit to enforce the provisions of the Trust Deed in accordance with the terms thereof.
The Trustee shall only be bound to take proceedings pursuant to this Condition 12(b) if it has been indemnified and/or prefunded and/or secured to its satisfaction by the Bondholders and if it has been so requested in writing by the holders of not less than 25 per cent of the principal amount outstanding (as defined in the Trust Deed) of the Bonds or has been so directed by an Extraordinary Resolution (as defined in the Trust Deed).
13.Replacement of Bonds and Coupons
Should any Bond or Coupon be lost, stolen, mutilated, defaced or destroyed it may, subject to all applicable laws and stock exchange requirements, be replaced at the specified office of the Principal Paying Agent (or such other Paying Agent as may be approved by the Trustee for such purpose) upon payment by the claimant of the expenses, taxes and duties incurred in connection therewith and on such terms as to evidence and indemnity as the Issuer may reasonably require. Mutilated or defaced Bonds or Coupons must be surrendered before replacements will be issued.
14.Notices
All notices to Bondholders shall be valid if published in a leading English language national daily newspaper (which is expected to be the Financial Times) or, if this is not practicable, in a leading English language daily newspaper with a circulation in Europe. Such notices shall be deemed to have been given on the date of such publication or, if published more than once or on different dates, on the date of the first such publication. If publication is not practicable, notice shall be given in such other manner, and shall be deemed to have been given on such date, as the Trustee may approve.
Couponholders will be deemed for all purposes to have notice of the contents of any notice given to the Bondholders in accordance with this Condition.
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15.Meetings of Bondholders, Modification and Waiver
(a)The Trust Deed contains provisions for convening meetings of the Bondholders to consider any matter affecting their interests, including modification by Extraordinary Resolution of these Terms and Conditions or the provisions of the Trust Deed. The quorum at any such meeting for passing an Extraordinary Resolution shall be two or more persons holding or representing more than half in principal amount of the Bonds for the time being outstanding, or at any adjourned such meeting two or more persons being or representing Bondholders whatever the principal amount of the Bonds so held or represented, except that, at any meeting the business of which includes the modification of certain of these Terms and Conditions and certain of the provisions of the Trust Deed (including altering the currency of payment of the Bonds or Coupons), the necessary quorum for passing an Extraordinary Resolution will be two or more persons holding or representing not less than two-thirds, or at any adjourned such meeting not less than one-third, in principal amount of the Bonds for the time being outstanding. An Extraordinary Resolution passed at any meeting of Bondholders shall be binding on all Bondholders, whether or not they are present or represented at the meeting, and on all Couponholders.
(b)The Trustee may, without the consent of the Bondholders or Couponholders, agree (i) other than in respect of Reserved Matters (as specified and defined in Schedule 5 to the Trust Deed), to any modification to these Terms and Conditions or to any of the provisions of the Trust Deed or to any waiver or authorisation of any breach or proposed breach by the Issuer of these Terms and Conditions or of any of the provisions of the Trust Deed or determine that any event, condition or act which would otherwise be an Event of Default, Potential Event of Default or Restructuring Event shall not be so treated provided that, in the opinion of the Trustee, so to do would not be materially prejudicial to the interests of the Bondholders, and provided further that the Trustee will not do so in contravention of any express direction given by any Extraordinary Resolution or a written request made pursuant to Condition 10 (Events of Default) but no such direction or request will affect any previous waiver, authorisation or determination, or (ii) to any modification to these Terms and Conditions or to any of the provisions of the Trust Deed which is made to correct a manifest error or which is of a formal, minor or technical nature.
(c)In connection with the exercise of its trusts, powers, authorities or discretions (including, but not limited to, any modification, waiver, authorisation or substitution) the Trustee shall have regard to the interests of Bondholders as a class and, in particular, but without limitation, shall not have regard to the consequences of the exercise of its trusts, powers or discretions for individual Bondholders and Couponholders resulting from their being for any purpose domiciled or resident in, or otherwise connected with, or subject to the jurisdiction of, any particular territory and the Trustee shall not be entitled to require, nor shall any Bondholder or Couponholder be entitled to claim, from the Issuer or any other person any indemnification or payment in respect of any tax consequence of any such exercise upon individual Bondholders or Couponholders, except to the extent already provided for in Condition 8 (Taxation) and/or any undertaking given to, or in substitution for, Condition 8 (Taxation) pursuant to the Trust Deed.
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(d)Any modification to these Terms and Conditions or to any of the provisions of the Trust Deed or any waiver or authorisation of any breach or proposed breach by the Issuer of these Terms and Conditions or any of the provisions of the Trust Deed shall be binding on the Bondholders and the Couponholders and, unless the Trustee agrees otherwise, any modification shall be notified by the Issuer to the Bondholders as soon as practicable thereafter in accordance with Condition 14 (Notices).
16.Substitution
The Trustee may, without the consent of the Bondholders or Couponholders, agree with the Issuer to the substitution of any wholly-owned Subsidiary of the Issuer (the "Substituted Obligor") in place of the Issuer (or of any previous substitute under this Condition) as the principal debtor under the Bonds, the Coupons and the Trust Deed, subject to the Trustee being of the opinion that the interests of the Bondholders will not be materially prejudiced thereby and certain other conditions set out in the Trust Deed being complied with, including that (unless the Issuer's successor in business is the Substituted Obligor) the obligations of the Substituted Obligor under the Trust Deed, the Bonds and the Coupons are unconditionally and irrevocably guaranteed by the Issuer in form and manner satisfactory to the Trustee.
17.Further Bonds
(a)Subject as mentioned below, power will be reserved to the Issuer to create and issue Further Bonds forming (or so as to form after the first payment of interest thereon) a single series with the Bonds provided that:
(i)the Trustee is satisfied that the rating granted in respect of the Bonds by S&P and Fitch will not thereby be adversely affected; and
(ii)such issue shall be constituted by a deed supplemental to the Trust Deed (in such form as the Trustee may approve).
(b)The Issuer shall not be entitled to exercise the power reserved in this Condition 17 (Further Bonds) while any default exists in relation to any payment by the Issuer of any amounts due under the Trust Deed.
18.Trustee
The Trust Deed contains provisions governing the responsibility of the Trustee and providing for its indemnification and relief from responsibility in certain circumstances, (including provisions relieving it from taking proceedings against the Issuer unless indemnified and/or secured and/or prefunded to its satisfaction) and to be paid its costs and expenses in priority to the claims of the Bondholders. The Trustee may not resign its appointment unless a successor, willing to act in such capacity, has been appointed by the Issuer and the Bondholders by Extraordinary Resolution, provided that the Trustee shall not be prevented from resigning its appointment if, having given notice in writing to the Issuer of its intention to so resign its appointment, a successor is not appointed within the period of three months from the date of such notice.
19.Governing Law
The Trust Deed and the Bonds and any non-contractual obligations arising out of or in connection with the Trust Deed and the Bonds are governed by, and shall be construed in accordance with, English law.
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SCHEDULE 5
PROVISIONS FOR MEETINGS OF BONDHOLDERS
1.DEFINITIONS
In this Trust Deed and the Conditions, the following expressions have the following meanings:
"Block Voting Instruction" means, in relation to any Meeting, a document in the English language issued by a Paying Agent:
(a)certifying that certain specified Bonds (each a "Deposited Bond") have been deposited with such Paying Agent (or to its order at a bank or other depositary) or blocked in an account with a clearing system and will not be released until the earlier of:
(i)the conclusion of the Meeting; and
(ii)the surrender to such Paying Agent, not less than 48 hours before the time fixed for the Meeting (or, if the Meeting has been adjourned, the time fixed for its resumption), of the receipt for the deposited or blocked Bonds and notification thereof by such Paying Agent to the Issuer and the Trustee; and
(b)certifying that the depositor of each Deposited Bond or a duly authorised person on its behalf has instructed the relevant Paying Agent that the votes attributable to such Deposited Bond are to be cast in a particular way on each resolution to be put to the Meeting and that, during the period of 48 hours before the time fixed for the Meeting, such instructions may not be amended or revoked;
(c)listing the total number and (if in definitive form) the certificate numbers of the Deposited Bonds, distinguishing for each resolution between those in respect of which instructions have been given to vote for, or against, the resolution; and
(d)authorising a named individual or individuals to vote in respect of the Deposited Bonds in accordance with such instructions;
"Chairman" means, in relation to any Meeting, the individual who takes the chair in accordance with paragraph 7 (Chairman);
"Extraordinary Resolution" means a resolution passed at a Meeting duly convened and held in accordance with this Schedule by a majority of not less than three quarters of the votes cast;
"Meeting" means a meeting of Bondholders (whether originally convened or resumed following an adjournment);
"Proxy" means, in relation to any Meeting, a person appointed to vote under a Block Voting Instruction other than:
(a)any such person whose appointment has been revoked and in relation to whom the relevant Paying Agent has been notified in writing of such revocation by the time which is 48 hours before the time fixed for such Meeting; and
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(b)any such person appointed to vote at a Meeting which has been adjourned for want of a quorum and who has not been re-appointed to vote at the Meeting when it is resumed;
"Relevant Fraction" means:
(a)for all business other than voting on an Extraordinary Resolution, one tenth;
(b)for voting on any Extraordinary Resolution other than one relating to a Reserved Matter, more than half; and
(c)for voting on any Extraordinary Resolution relating to a Reserved Matter, two thirds;
provided, however, that, in the case of a Meeting which has resumed after adjournment for want of a quorum, it means:
(i)for all business other than voting on an Extraordinary Resolution relating to a Reserved Matter, the fraction of the aggregate principal amount of the outstanding Bonds represented or held by the Voters actually present at the Meeting; and
(ii)for voting on any Extraordinary Resolution relating to a Reserved Matter, one third;
"Reserved Matter" means any proposal:
(a)to effect the exchange or substitution of the Bonds for, or the conversion of the Bonds into, shares, bonds or other obligations or securities of the Issuer or any other person or body corporate formed or to be formed (other than as permitted under Clause 14.2 of this Trust Deed);
(b)(other than as permitted under Clause 14.2 of this Trust Deed) to approve the substitution of any person for the Issuer (or any previous substitute) as principal debtor under the Bonds;
(c)to postpone the maturity of the Bonds or the dates on which interest is payable in respect of the Bonds;
(d)to reduce or cancel the principal amount of, any premium payable on redemption of, or interest on the Bonds;
(e)to change the currency in which amounts due in respect of the Bonds are payable;
(f)to change the quorum required at any Meeting or the majority required to pass an Extraordinary Resolution; or
(g)to amend this definition;
"Voter" means, in relation to any Meeting, the bearer of a Voting Certificate, a Proxy or the bearer of a definitive Bond who produces such definitive Bond at the Meeting;
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"Voting Certificate" means, in relation to any Meeting, a certificate in the English language issued by a Paying Agent and dated in which it is stated:
(a)that the Deposited Bonds have been deposited with such Paying Agent (or to its order at a bank or other depositary) or blocked in an account with a clearing system and will not be released until the earlier of:
(i)the conclusion of the Meeting; and
(ii)the surrender of such certificate to such Paying Agent; and
(b)that the bearer of such certificate is entitled to attend and vote at the Meeting in respect of the Deposited Bonds;
"Written Resolution" means a resolution in writing signed by or on behalf of all holders of Bonds who for the time being are entitled to receive notice of a Meeting in accordance with the provisions of this Schedule, whether contained in one document or several documents in the same form, each signed by or on behalf of one or more such holders of the Bonds;
"24 hours" means a period of 24 hours including all or part of a day (disregarding for this purpose the day upon which such Meeting is to be held) upon which banks are open for business in both the place where the relevant Meeting is to be held and in each of the places where the Paying Agents have their Specified Offices and such period shall be extended by one period or, to the extent necessary, more periods of 24 hours until there is included as aforesaid all or part of a day upon which banks are open for business as aforesaid; and
"48 hours" means 2 consecutive periods of 24 hours.
2.ISSUE OF VOTING CERTIFICATES AND BLOCK VOTING INSTRUCTIONS
The holder of a Bond may obtain a Voting Certificate from any Paying Agent or require any Paying Agent to issue a Block Voting Instruction by depositing such Bond with such Paying Agent or arranging for such Bond to be (to its satisfaction) held to its order or under its control or blocked in an account with a clearing system not later than 48 hours before the time fixed for the relevant Meeting. A Voting Certificate or Block Voting Instruction shall be valid until the release of the Deposited Bonds to which it relates. So long as a Voting Certificate or Block Voting Instruction is valid, the bearer thereof (in the case of a Voting Certificate) or any Proxy named therein (in the case of a Block Voting Instruction) shall be deemed to be the holder of the Bonds to which it relates for all purposes in connection with the Meeting. A Voting Certificate and a Block Voting Instruction cannot be outstanding simultaneously in respect of the same Bond.
3.REFERENCES TO DEPOSIT/RELEASE OF BONDS
Where Bonds are within Euroclear or Clearstream, Luxembourg or any other clearing system, references to the deposit, or release, of Bonds shall be construed in accordance with the usual practices (including blocking the relevant account) of Euroclear or Clearstream, Luxembourg or such other clearing system.
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4.VALIDITY OF BLOCK VOTING INSTRUCTIONS
Block Voting Instruction shall be valid only if deposited at the Specified Office of the relevant Paying Agent or at some other place approved by the Trustee, at least 24 hours before the time fixed for the relevant Meeting unless the Chairman decides otherwise before the Meeting proceeds to business. If the Trustee requires, a notarised copy (or copy certified to the satisfaction of the Trustee) of each Block Voting Instruction and satisfactory proof of the identity of each Proxy named therein shall be produced at the Meeting, but the Trustee shall not be obliged to investigate the validity of any Block Voting Instruction or the authority of any Proxy.
5.CONVENING OF MEETING
The Issuer or the Trustee may convene a Meeting at any time, and the Trustee shall be obliged to do so subject to its being indemnified and/or secured to its satisfaction upon the request in writing of Bondholders holding not less than one tenth of the aggregate principal amount of the outstanding Bonds. Every Meeting shall be held on a date, and at a time and place, approved by the Trustee.
6.NOTICE
At least 21 days' notice (exclusive of the day on which the notice is given and of the day on which the relevant Meeting is to be held) specifying the date, time and place of the Meeting shall be given to the Bondholders and the Paying Agents (with a copy to the Issuer) where the Meeting is convened by the Trustee or, where the Meeting is convened by the Issuer, the Trustee. The notice shall set out the full text of any resolutions to be proposed unless the Trustee agrees that the notice shall instead specify the nature of the resolutions without including the full text and shall state that the Bonds may be deposited with, or to the order of, any Paying Agent for the purpose of obtaining Voting Certificates or appointing Proxies not later than 48 hours before the time fixed for the Meeting.
7.CHAIRMAN
An individual (who may, but need not, be a Bondholder) nominated in writing by the Trustee may take the chair at any Meeting but, if no such nomination is made or if the individual nominated is not present within 15 minutes after the time fixed for the Meeting, those present shall elect one of themselves to take the chair failing which, the Issuer may appoint a Chairman. The Chairman of an adjourned Meeting need not be the same person as was the Chairman of the original Meeting.
8.QUORUM
The quorum at any Meeting shall be at least two Voters representing or holding not less than the Relevant Fraction of the aggregate principal amount of the outstanding Bonds; provided, however, that, so long as at least the Relevant Fraction of the aggregate principal amount of the outstanding Bonds is represented by the Temporary Global Bond and/or the Permanent Global Bond, a single Voter appointed in relation thereto or being the holder of the Bonds represented thereby shall be deemed to be two Voters for the purpose of forming a quorum.
9.ADJOURNMENT FOR WANT OF QUORUM
If within 15 minutes after the time fixed for any Meeting a quorum is not present, then:
(a)in the case of a Meeting requested by Bondholders, it shall be dissolved; and
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(b)in the case of any other Meeting (unless the Issuer and the Trustee otherwise agree), it shall be adjourned for such period (which shall be not less than 14 days and not more than 42 days) and to such place as the Chairman determines (with the approval of the Trustee); provided, however, that:
(i)the Meeting shall be dissolved if the Issuer and the Trustee together so decide; and
(ii)no Meeting may be adjourned more than once for want of a quorum.
10.ADJOURNED MEETING
The Chairman may, with the consent of, and shall if directed by, any Meeting adjourn such Meeting from time to time and from place to place, but no business shall be transacted at any adjourned Meeting except business which might lawfully have been transacted at the Meeting from which the adjournment took place.
11.NOTICE FOLLOWING ADJOURNMENT
Paragraph 6 (Notice) shall apply to any Meeting which is to be resumed after adjournment for want of a quorum save that:
(a)10 days' notice (exclusive of the day on which the notice is given and of the day on which the Meeting is to be resumed) shall be sufficient; and
(b)the notice shall specifically set out the quorum requirements which will apply when the Meeting resumes.
It shall not be necessary to give notice of the resumption of a Meeting which has been adjourned for any other reason.
12.PARTICIPATION
The following may attend and speak at a Meeting:
(a)Voters;
(b)representatives of the Issuer and the Trustee;
(c)the financial advisers of the Issuer and the Trustee;
(d)the legal counsel to the Issuer and the Trustee and such advisers; and
(e)any other person approved by the Meeting or the Trustee.
13.SHOW OF HANDS
Every question submitted to a Meeting shall be decided in the first instance by a show of hands. Unless a poll is validly demanded before or at the time that the result is declared, the Chairman's declaration that on a show of hands a resolution has been passed, passed by a particular majority, rejected or rejected by a particular majority shall be conclusive, without proof of the number of votes cast for, or against, the resolution. Where there is only one Voter, this paragraph shall not apply and the resolution will immediately be decided by means of a poll.
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14.POLL
A demand for a poll shall be valid if it is made by the Chairman, the Issuer, the Trustee or one or more Voters representing or holding not less than one fiftieth of the aggregate principal amount of the outstanding Bonds. The poll may be taken immediately or after such adjournment as the Chairman directs, but any poll demanded on the election of the Chairman or on any question of adjournment shall be taken at the Meeting without adjournment. A valid demand for a poll shall not prevent the continuation of the relevant Meeting for any other business as the Chairman directs.
15.VOTES
Every Voter shall have:
(a)on a show of hands, one vote; and
(b)on a poll, one vote in respect of each £100,000 in aggregate face amount of the outstanding Bond(s) represented or held by him.
Unless the terms of any Block Voting Instruction state otherwise, a Voter shall not be obliged to exercise all the votes to which he is entitled or to cast all the votes which he exercises in the same way. In the case of a voting tie the Chairman shall have a casting vote.
16.VALIDITY OF VOTES BY PROXIES
Any vote by a Proxy in accordance with the relevant Block Voting Instruction shall be valid even if such Block Voting Instruction or any instruction pursuant to which it was given has been amended or revoked, provided that neither the Issuer, the Trustee nor the Chairman has been notified in writing of such amendment or revocation by the time which is 24 hours before the time fixed for the relevant Meeting. Unless revoked, any appointment of a Proxy under a Block Voting Instruction in relation to a Meeting shall remain in force in relation to any resumption of such Meeting following an adjournment; provided, however, that no such appointment of a Proxy in relation to a Meeting originally convened which has been adjourned for want of a quorum shall remain in force in relation to such Meeting when it is resumed. Any person appointed to vote at such a Meeting must be re-appointed under a Block Voting Instruction to vote at the Meeting when it is resumed.
17.POWERS
A Meeting shall have power (exercisable only by Extraordinary Resolution), without prejudice to any other powers conferred on it or any other person:
(a)to approve any Reserved Matter proposed or accepted by the Issuer;
(b)to approve any proposal by the Issuer for any modification, abrogation, variation or compromise of, or arrangement in respect of, the rights of the Bondholders and/or the Couponholders against the Issuer (whether such rights shall arise under the Trust Deed or otherwise);
(c)to waive or authorise any breach by the Issuer of its obligations under this Trust Deed;
(d)to assent to any modification of this Trust Deed, the Bonds or the Paying Agency Agreement proposed or accepted by the Issuer;
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(e)to approve a person proposed to be appointed as a new Trustee and to remove any Trustee;
(f)to authorise the Trustee (subject to its being indemnified and/or secured and/or prefunded) or any other persons to execute all documents and do all things necessary to carry out and give effect to any Extraordinary Resolution;
(g)to discharge or exonerate the Trustee from any liability in respect of any act or omission for which it may become responsible under this Trust Deed, the Bonds or the Coupons;
(h)to give any authority, direction or sanction which under this Trust Deed or the Bonds is required to be given by Extraordinary Resolution; and
(i)to appoint any persons (whether Bondholders or not) as a committee or committees to represent the interests of the Bondholders and to confer upon such committee or committees any powers which the Bondholders could themselves exercise by Extraordinary Resolution.
18.EXTRAORDINARY RESOLUTION BINDS ALL HOLDERS
An Extraordinary Resolution shall be binding upon all Bondholders and Couponholders, whether or not present at the relevant Meeting (if any), and each of the Bondholders and Couponholders shall be bound to give effect to it accordingly. Notice of the result of every vote on an Extraordinary Resolution shall be given to the Bondholders and the Paying Agents (with a copy to the Issuer and the Trustee) within 14 days of the conclusion of the Meeting.
19.MINUTES
Minutes of all resolutions and proceedings at each Meeting shall be made. The Chairman shall sign the minutes, which shall be prima facie evidence of the proceedings recorded therein. Unless and until the contrary is proved, every such Meeting in respect of the proceedings of which minutes have been summarised and signed shall be deemed to have been duly convened and held and all resolutions passed or proceedings transacted at it to have been duly passed and transacted.
20.WRITTEN RESOLUTION
A Written Resolution shall take effect as if it were an Extraordinary Resolution.
21.FURTHER REGULATIONS
Subject to all other provisions contained in this Trust Deed, the Trustee may with the consent of the Issuer (such consent not to be unreasonably withheld or delayed) but without the consent of the Bondholders prescribe such further regulations regarding the holding of Meetings of Bondholders and attendance and voting at them as the Trustee may in its sole discretion determine.
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SIGNATURES
EXECUTED as a DEED and delivered by
)
ALEX JONES as attorney for
)/s/ Alex Jones
NORTHERN POWERGRID (NORTHEAST) PLC)
in the presence of:)
/s/ Owen SutherlandSignature of witness
Owen SutherlandName of witness
Northern Powergrid
Lloyds Court
78 Grey Street
Newcastle
NEI 6AFAddress of witness



[Signature page to the Trust Deed]

     

EXECUTED and DELIVERED as a DEED
)
By HSBC CORPORATE TRUSTEE COMPANY
)/s/ Daniel Constable
(UK) LIMITED)Authorised Signatory
in the presence of:)
/s/ Rebecca William
Rebecca William
Dunster Crescent
Essex
United Kingdom

[Signature page to the Trust Deed]
EXHIBIT 10.1
DEMAND PROMISSORY NOTE

U.S. $200,000,000    Las Vegas, Nevada
April 14, 2022

FOR VALUE RECEIVED, the undersigned, Sierra Pacific Power Company, a Nevada corporation, its successors and assigns (the “Maker”), hereby promises to pay to the order of NV ENERGY INC., a Nevada corporation (the “Holder”), the principal amount of TWO HUNDRED MILLION AND NO/100 U.S. Dollars (U.S.
$200,000,000), together with compounded interest on the principal sum of this Note (the “Note”) at the “Note Rate” defined below, in lawful money of the United States of America. Both principal and interest and all other sums due hereunder shall be payable at the office of Holder at 6226 West Sahara Avenue, Las Vegas, Nevada 89146, or such other place as Holder may designate from time to time.

The principal sum of this Note and all accrued and unpaid interest thereon, if not sooner paid, shall be due and payable upon demand made by Holder in a notice sent as set forth below, on the date (the “Maturity Date”) and at the place set forth in such notice.

Accrued and unpaid interest shall be due and payable in arrears on the business day next following the last business day of each month. If unpaid, interest shall automatically be added to the principal on the day when due, and such interest shall bear interest hereunder until paid. The nonpayment of interest shall not be a default under this Note, unless such interest is due on the Maturity Date. Maker may at its option (but without any obligation to do so) prepay principal or interest on this Note prior to the Maturity Date. Interest due hereunder shall be calculated on the basis of a 360-day year and applied to the actual outstanding daily principal balance and the actual number of days elapsed. As used herein, for any month, the “Note Rate” for such month shall mean a rate per annum equal to the sum of (1) 0.75% plus (2) the rate per annum of interest (rounded upward, if not an integral multiple of 1/100 of 1%, to the nearest 1/100 of 1% per annum) at which 30-day United States dollar deposits, in an amount comparable to the amount of the Note, are offered in the London Interbank Offer Rate market at 11:00 a.m. (London time) on the first business day of such month, as displayed in the Bloomberg Financial Markets system (“Bloomberg”), or if the Bloomberg defined rate does not so appear, the component of the Note Rate specified in such clause
(2)of this definition shall be the rate per annum (rounded upward, if not an integral multiple of 1/100 of 1%, to the nearest 1/100 of 1% per annum) appearing on another authoritative source selected by Holder in its sole discretion.

1


All parties to this Note, including endorsers, sureties and guarantors, hereby jointly and severally waive presentment for payment, demand, protest, notice of protest, notice of demand and of non-payment or dishonor and of protest, notice of intent to accelerate the maturity of this Note, notice of acceleration of maturity of this Note, and any and all other notices and demands whatsoever, and agree to remain bound hereby until the principal and interest of this Note are paid in full, notwithstanding any extensions of time for payment which may be granted by Holder, even though the period of extension may be indefinite, and notwithstanding any inaction by, or failure to assert any legal rights available to, Holder.

If the obligations evidenced by this Note, or any part thereof, are placed in the hands of an attorney for collection, whether by suit or otherwise, at any time, or from time to time, Maker shall be liable to Holder, in each instance, for all costs and expenses incurred in connection therewith, including, without limitation, reasonable attorneys’ fees.

It is the intent of Maker in the execution of this Note and all other instruments now or hereafter securing this Note to contract in strict compliance with applicable usury law. In furtherance thereof, Holder and Maker stipulate and agree that none of the terms and provisions contained in this Note shall ever be construed to create a contract to pay for the use, forbearance or detention of money, at a rate of interest in excess of the maximum interest rate permitted to be charged by applicable law. Neither Maker nor any guarantors, endorsers or other parties now or hereafter becoming liable for payment of this Note shall ever be required to pay interest on this Note at a rate in excess of the maximum interest that may be lawfully charged under applicable law, and the provisions of this paragraph shall control over all provisions of this Note which may be in apparent conflict herewith. In the event that Holder shall collect monies which are deemed to constitute interest which would increase the effective interest rate on this Note to a rate in excess of that permitted to be charged by applicable law, all such sums deemed to constitute interest in excess of the lawful rate shall, upon such determination, at the option of Holder, be either immediately returned to Maker or credited against the principal balance of this Note then outstanding, in which event any and all penalties of any kind under applicable law as a result of such excess interest shall be inapplicable. The term “applicable law” or “applicable usury law” as used in this Note shall mean the laws of the state of Nevada or the laws of the United States, whichever laws allow the greater rate of interest, as such laws now exist or may be changed or amended or come into effect in the future.

The provisions of this Note shall be governed by the internal laws, and not the laws governing conflicts of laws, of the state of Nevada and the laws of the United States, and shall be binding upon Maker, its successors and assigns and shall inure to the benefit of Holder, its successors and assigns. Maker may not assign all or any part of its obligations hereunder without the prior written permission of Holder. Holder may assign or endorse this Note to any person without the permission of Maker. This Note shall be deemed to have been made and to be performable in Las Vegas, Nevada. Maker and Holder hereby consent to the jurisdiction of the state courts located in Las Vegas, Nevada, and each party agrees that venue for any action brought regarding this Note shall be proper in such courts.


2


This Note may be secured from time to time upon the request of Holder. Upon such request Maker and Holder shall negotiate in good faith a mutually acceptable security agreement and related instruments which shall grant to Holder a first priority perfected security interest in assets of Maker and/or its subsidiaries which are not subject to any prior security interest and, to the extent legally practicable, a subordinate security interest in other assets of Maker and/or its subsidiaries.
3



TO THE FULLEST EXTENT PERMITTED BYLAW, EACH OF THE PARTIES HERETO WAIVES ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS NOTE. EACH PARTY FURTHER WAIVES ANY RIGHT TO CONSOLIDATE ANY ACTION IN WHICH A JURY TRIAL HAS BEEN WAIVED WITH ANY OTHER ACTION IN WHICH A JURY TRIAL CANNOT BE OR HAS NOT BEEN WAIVED.
All notices and other communications provided to either party hereto under this Note shall be in writing and shall be delivered by hand or overnight courier service, mailed by certified or registered mail or sent by electronic mail, as follows:

(i)if to Maker:

Sierra Pacific Power Company 6226 W. Sahara Avenue
Las Vegas, Nevada 89146 Attention: Michael Cole
Email: michael.cole@nvenergy.com

(ii)if to Holder:

NV Energy, Inc.
6226 W. Sahara Avenue Las Vegas, Nevada 89146 Attention: Michael Cole
Email: michael.cole@nvenergy.com


IN WITNESS WHEREOF, the undersigned has executed this Note as of the date first written above.

SIERRA PACIFIC POWER COMPANY,
By:/s/ Michael E. Cole
Name: Michael E. Cole
Title: Senior Vice President, CFO & Treasurer
4


EXHIBIT 15.1


April 29, 2022

To the Board of Directors and Shareholders of
Berkshire Hathaway Energy Company
666 Grand Ave
Des Moines, Iowa 50309

We are aware that our report dated April 29, 2022, on our review of the interim financial information of Berkshire Hathaway Energy Company appearing in this Quarterly Report on Form 10-Q for the quarter ended March 31, 2022, is incorporated by reference in Registration Statement No. 333-228511 on Form S-8.

/s/ Deloitte & Touche LLP

Des Moines, Iowa






EXHIBIT 15.2


April 29, 2022

The Board of Directors and Shareholders of
PacifiCorp
825 N.E. Multnomah Street, Suite 1900
Portland, Oregon 97232

We are aware that our report dated April 29, 2022, on our review of the interim financial information of PacifiCorp appearing in this Quarterly Report on Form 10-Q for the quarter ended March 31, 2022, is incorporated by reference in Registration Statement No. 333-249044 on Form S-3.

/s/ Deloitte & Touche LLP

Portland, Oregon






EXHIBIT 15.3


April 29, 2022

To the Board of Directors and Shareholder of
MidAmerican Energy Company
666 Grand Avenue
Des Moines, Iowa 50309

We are aware that our report dated April 29, 2022, on our review of the interim financial information of MidAmerican Energy Company appearing in this Quarterly Report on Form 10-Q for the quarter ended March 31, 2022, is incorporated by reference in Registration Statement No. 333-257069 on Form S-3.


/s/ Deloitte & Touche LLP

Des Moines, Iowa




EXHIBIT 15.4


April 29, 2022

To the Board of Directors and Shareholder of
Nevada Power Company
6226 W Sahara Ave.
Las Vegas, Nevada 89146

We are aware that our report dated April 29, 2022 on our review of the interim financial information of Nevada Power Company and subsidiaries appearing in this Quarterly Report on Form 10-Q for the quarter ended March 31, 2022, is incorporated by reference in Registration Statement No. 333-234207 on Form S-3.


/s/ Deloitte & Touche LLP

Las Vegas, Nevada





EXHIBIT 31.1
CERTIFICATION PURSUANT TO
SECTION 302 OF THE
SARBANES-OXLEY ACT OF 2002

I, William J. Fehrman, certify that:
1.I have reviewed this Quarterly Report on Form 10-Q of Berkshire Hathaway Energy Company;
2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
(a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c)Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d)Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
5.The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
(a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
(b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
Date: April 29, 2022/s/ William J. Fehrman
William J. Fehrman
President and Chief Executive Officer
(principal executive officer)




EXHIBIT 31.2
CERTIFICATION PURSUANT TO
SECTION 302 OF THE
SARBANES-OXLEY ACT OF 2002

I, Calvin D. Haack, certify that:
1.I have reviewed this Quarterly Report on Form 10-Q of Berkshire Hathaway Energy Company;
2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
(a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c)Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d)Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
5.The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
(a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
(b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
Date: April 29, 2022/s/ Calvin D. Haack
Calvin D. Haack
Senior Vice President and Chief Financial Officer
(principal financial officer)




EXHIBIT 31.3
CERTIFICATION PURSUANT TO
SECTION 302 OF THE
SARBANES-OXLEY ACT OF 2002

I, Scott W. Thon, certify that:
1.I have reviewed this Quarterly Report on Form 10-Q of PacifiCorp;
2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
(a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c)Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d)Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
5.The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
(a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
(b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
Date: April 29, 2022/s/ Scott W. Thon
Scott W. Thon
Chair of the Board of Directors and Chief Executive Officer
(principal executive officer)




EXHIBIT 31.4
CERTIFICATION PURSUANT TO
SECTION 302 OF THE
SARBANES-OXLEY ACT OF 2002

I, Nikki L. Kobliha, certify that:
1.I have reviewed this Quarterly Report on Form 10-Q of PacifiCorp;
2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
(a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c)Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d)Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
5.The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
(a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
(b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
Date: April 29, 2022/s/ Nikki L. Kobliha
Nikki L. Kobliha
Vice President, Chief Financial Officer and Treasurer
(principal financial officer)




EXHIBIT 31.5
CERTIFICATION PURSUANT TO
SECTION 302 OF THE
SARBANES-OXLEY ACT OF 2002

I, Kelcey A. Brown, certify that:
1.I have reviewed this Quarterly Report on Form 10-Q of MidAmerican Energy Company;
2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
(a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c)Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d)Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
5.The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
(a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
(b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
Date: April 29, 2022/s/ Kelcey A. Brown
Kelcey A. Brown
President and Chief Executive Officer
(principal executive officer)




EXHIBIT 31.6
CERTIFICATION PURSUANT TO
SECTION 302 OF THE
SARBANES-OXLEY ACT OF 2002

I, Thomas B. Specketer, certify that:
1.I have reviewed this Quarterly Report on Form 10-Q of MidAmerican Energy Company;
2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
(a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c)Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d)Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
5.The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
(a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
(b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
Date: April 29, 2022/s/ Thomas B. Specketer
Thomas B. Specketer
Vice President and Chief Financial Officer
(principal financial officer)




EXHIBIT 31.7
CERTIFICATION PURSUANT TO
SECTION 302 OF THE
SARBANES-OXLEY ACT OF 2002

I, Kelcey A. Brown, certify that:
1.I have reviewed this Quarterly Report on Form 10-Q of MidAmerican Funding, LLC;
2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
(a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c)Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d)Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
5.The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
(a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
(b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
Date: April 29, 2022/s/ Kelcey A. Brown
Kelcey A. Brown
President
(principal executive officer)




EXHIBIT 31.8
CERTIFICATION PURSUANT TO
SECTION 302 OF THE
SARBANES-OXLEY ACT OF 2002

I, Thomas B. Specketer, certify that:
1.I have reviewed this Quarterly Report on Form 10-Q of MidAmerican Funding, LLC;
2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
(a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c)Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d)Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
5.The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
(a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
(b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
Date: April 29, 2022/s/ Thomas B. Specketer
Thomas B. Specketer
Vice President and Controller
(principal financial officer)




EXHIBIT 31.9
 CERTIFICATION PURSUANT TO
SECTION 302 OF THE
SARBANES-OXLEY ACT OF 2002

I, Douglas A. Cannon, certify that: 
1.I have reviewed this Quarterly Report on Form 10-Q of Nevada Power Company (dba NV Energy);
2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
(a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c)Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d)Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
5.The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
(a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
(b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
Date: April 29, 2022/s/ Douglas A. Cannon
Douglas A. Cannon
President and Chief Executive Officer
(principal executive officer)




EXHIBIT 31.10
 CERTIFICATION PURSUANT TO
SECTION 302 OF THE
SARBANES-OXLEY ACT OF 2002

I, Michael E. Cole, certify that: 
1.I have reviewed this Quarterly Report on Form 10-Q of Nevada Power Company (dba NV Energy);
2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
(a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c)Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d)Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
5.The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
(a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
(b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
Date: April 29, 2022/s/ Michael E. Cole
Michael E. Cole
Senior Vice President, Chief Financial Officer and Treasurer
(principal financial officer)
 



EXHIBIT 31.11
CERTIFICATION PURSUANT TO
SECTION 302 OF THE
SARBANES-OXLEY ACT OF 2002
 
I, Douglas A. Cannon, certify that: 
1.I have reviewed this Quarterly Report on Form 10-Q of Sierra Pacific Power Company (dba NV Energy);
2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
(a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c)Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d)Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
5.The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
(a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
(b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
Date: April 29, 2022/s/ Douglas A. Cannon
Douglas A. Cannon
President and Chief Executive Officer
(principal executive officer)
 




EXHIBIT 31.12
CERTIFICATION PURSUANT TO
SECTION 302 OF THE
SARBANES-OXLEY ACT OF 2002
 
I, Michael E. Cole, certify that: 
1.I have reviewed this Quarterly Report on Form 10-Q of Sierra Pacific Power Company (dba NV Energy);
2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
(a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c)Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d)Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
5.The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
(a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
(b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
Date: April 29, 2022/s/ Michael E. Cole
Michael E. Cole
Senior Vice President, Chief Financial Officer and Treasurer
(principal financial officer)
 




EXHIBIT 31.13
CERTIFICATION PURSUANT TO
SECTION 302 OF THE
SARBANES-OXLEY ACT OF 2002

I, Paul E. Ruppert, certify that:
1.I have reviewed this Quarterly Report on Form 10-Q of Eastern Energy Gas Holdings, LLC;
2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
(a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c)Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d)Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
5.The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
(a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
(b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
Date: April 29, 2022/s/ Paul E. Ruppert
Paul E. Ruppert
President and Chief Executive Officer
(principal executive officer)




EXHIBIT 31.14
CERTIFICATION PURSUANT TO
SECTION 302 OF THE
SARBANES-OXLEY ACT OF 2002

I, Scott C. Miller, certify that:
1.I have reviewed this Quarterly Report on Form 10-Q of Eastern Energy Gas Holdings, LLC;
2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
(a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c)Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d)Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
5.The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
(a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
(b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
Date: April 29, 2022/s/ Scott C. Miller
Scott C. Miller
Vice President, Chief Financial Officer and Treasurer
(principal financial officer)




EXHIBIT 32.1
CERTIFICATION PURSUANT TO
SECTION 906 OF THE
SARBANES-OXLEY ACT OF 2002

I, William J. Fehrman, President and Chief Executive Officer of Berkshire Hathaway Energy Company (the "Company"), certify, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350, that to the best of my knowledge:
(1)the Quarterly Report on Form 10-Q of the Company for the quarterly period ended March 31, 2022 (the "Report") fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m or 78o(d)); and
(2)the information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company.
Date: April 29, 2022/s/ William J. Fehrman
William J. Fehrman
President and Chief Executive Officer
(principal executive officer)




EXHIBIT 32.2
CERTIFICATION PURSUANT TO
SECTION 906 OF THE
SARBANES-OXLEY ACT OF 2002

I, Calvin D. Haack, Senior Vice President and Chief Financial Officer of Berkshire Hathaway Energy Company (the "Company"), certify, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350, that to the best of my knowledge:
(1)the Quarterly Report on Form 10-Q of the Company for the quarterly period ended March 31, 2022 (the "Report") fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m or 78o(d)); and
(2)the information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company.
Date: April 29, 2022/s/ Calvin D. Haack
Calvin D. Haack
Senior Vice President and Chief Financial Officer
(principal financial officer)






EXHIBIT 32.3
CERTIFICATION PURSUANT TO
SECTION 906 OF THE
SARBANES-OXLEY ACT OF 2002

I, Scott W. Thon, Chair of the Board of Directors and Chief Executive Officer of PacifiCorp, certify, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350, that to the best of my knowledge:
(1)the Quarterly Report on Form 10-Q of PacifiCorp for the quarterly period ended March 31, 2022 (the "Report") fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m or 78o(d)); and
(2)the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of PacifiCorp.
Date: April 29, 2022/s/ Scott W. Thon
Scott W. Thon
Chair of the Board of Directors and Chief Executive Officer
(principal executive officer)




EXHIBIT 32.4
CERTIFICATION PURSUANT TO
SECTION 906 OF THE
SARBANES-OXLEY ACT OF 2002

I, Nikki L. Kobliha, Vice President, Chief Financial Officer and Treasurer of PacifiCorp, certify, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350, that to the best of my knowledge:
(1)the Quarterly Report on Form 10-Q of PacifiCorp for the quarterly period ended March 31, 2022 (the "Report") fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m or 78o(d)); and
(2)the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of PacifiCorp.
Date: April 29, 2022/s/ Nikki L. Kobliha
Nikki L. Kobliha
Vice President, Chief Financial Officer and Treasurer
(principal financial officer)




EXHIBIT 32.5
CERTIFICATION PURSUANT TO
SECTION 906 OF THE
SARBANES-OXLEY ACT OF 2002

I, Kelcey A. Brown, President and Chief Executive Officer of MidAmerican Energy Company, certify, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350, that to the best of my knowledge:
(1)the Quarterly Report on Form 10-Q of MidAmerican Energy Company for the quarterly period ended March 31, 2022 (the "Report") fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m or 78o(d)); and
(2)the information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of MidAmerican Energy Company.
Date: April 29, 2022/s/ Kelcey A. Brown
Kelcey A. Brown
President and Chief Executive Officer
(principal executive officer)




EXHIBIT 32.6
CERTIFICATION PURSUANT TO
SECTION 906 OF THE
SARBANES-OXLEY ACT OF 2002

I, Thomas B. Specketer, Vice President and Chief Financial Officer of MidAmerican Energy Company, certify, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350, that to the best of my knowledge:
(1)the Quarterly Report on Form 10-Q of MidAmerican Energy Company for the quarterly period ended March 31, 2022 (the "Report") fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m or 78o(d)); and
(2)the information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of MidAmerican Energy Company.
Date: April 29, 2022/s/ Thomas B. Specketer
Thomas B. Specketer
Vice President and Chief Financial Officer
(principal financial officer)







EXHIBIT 32.7
CERTIFICATION PURSUANT TO
SECTION 906 OF THE
SARBANES-OXLEY ACT OF 2002

I, Kelcey A. Brown, President of MidAmerican Funding, LLC, certify, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350, that to the best of my knowledge:
(1)the Quarterly Report on Form 10-Q of MidAmerican Funding, LLC for the quarterly period ended March 31, 2022 (the "Report") fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m or 78o(d)); and
(2)the information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of MidAmerican Funding, LLC.
Date: April 29, 2022/s/ Kelcey A. Brown
Kelcey A. Brown
President
(principal executive officer)





EXHIBIT 32.8
CERTIFICATION PURSUANT TO
SECTION 906 OF THE
SARBANES-OXLEY ACT OF 2002

I, Thomas B. Specketer, Vice President and Controller of MidAmerican Funding, LLC, certify, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350, that to the best of my knowledge:
(1)the Quarterly Report on Form 10-Q of MidAmerican Funding, LLC for the quarterly period ended March 31, 2022 (the "Report") fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m or 78o(d)); and
(2)the information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of MidAmerican Funding, LLC.
Date: April 29, 2022/s/ Thomas B. Specketer
Thomas B. Specketer
Vice President and Controller
(principal financial officer)




EXHIBIT 32.9
CERTIFICATION PURSUANT TO
SECTION 906 OF THE
SARBANES-OXLEY ACT OF 2002

I, Douglas A. Cannon, President and Chief Executive Officer of Nevada Power Company (dba NV Energy), certify, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350, that to the best of my knowledge:
(1)the Quarterly Report on Form 10-Q of Nevada Power Company for the quarterly period ended March 31, 2022 (the "Report") fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m or 78o(d)); and
(2)the information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of Nevada Power Company.
Date: April 29, 2022/s/ Douglas A. Cannon
Douglas A. Cannon
President and Chief Executive Officer
(principal executive officer)





EXHIBIT 32.10
CERTIFICATION PURSUANT TO
SECTION 906 OF THE
SARBANES-OXLEY ACT OF 2002

I, Michael E. Cole, Senior Vice President, Chief Financial Officer and Treasurer of Nevada Power Company (dba NV Energy), certify, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350, that to the best of my knowledge:
(1)the Quarterly Report on Form 10-Q of Nevada Power Company for the quarterly period ended March 31, 2022 (the "Report") fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m or 78o(d)); and
(2)the information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of Nevada Power Company.
Date: April 29, 2022/s/ Michael E. Cole
Michael E. Cole
Senior Vice President, Chief Financial Officer and Treasurer
(principal financial officer)




EXHIBIT 32.11
CERTIFICATION PURSUANT TO
SECTION 906 OF THE
SARBANES-OXLEY ACT OF 2002

I, Douglas A. Cannon, President and Chief Executive Officer of Sierra Pacific Power Company (dba NV Energy), certify, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350, that to the best of my knowledge:
(1)the Quarterly Report on Form 10-Q of Sierra Pacific Power Company for the quarterly period ended March 31, 2022 (the "Report") fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m or 78o(d)); and
(2)the information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of Sierra Pacific Power Company.
Date: April 29, 2022/s/ Douglas A. Cannon
Douglas A. Cannon
President and Chief Executive Officer
(principal executive officer)




EXHIBIT 32.12
CERTIFICATION PURSUANT TO
SECTION 906 OF THE
SARBANES-OXLEY ACT OF 2002

I, Michael E. Cole, Senior Vice President, Chief Financial Officer and Treasurer of Sierra Pacific Power Company (dba NV Energy), certify, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350, that to the best of my knowledge:
(1)the Quarterly Report on Form 10-Q of Sierra Pacific Power Company for the quarterly period ended March 31, 2022 (the "Report") fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m or 78o(d)); and
(2)the information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of Sierra Pacific Power Company.
Date: April 29, 2022/s/ Michael E. Cole
Michael E. Cole
Senior Vice President, Chief Financial Officer and Treasurer
(principal financial officer)




EXHIBIT 32.13
CERTIFICATION PURSUANT TO
SECTION 906 OF THE
SARBANES-OXLEY ACT OF 2002

I, Paul E. Ruppert, President and Chief Executive Officer of Eastern Energy Gas Holdings, LLC, certify, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350, that to the best of my knowledge:
(1)the Quarterly Report on Form 10-Q of Eastern Energy Gas Holdings, LLC for the quarterly period ended March 31, 2022 (the "Report") fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m(a) or 78o(d)); and
(2)the information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of Eastern Energy Gas Holdings, LLC.
Date: April 29, 2022/s/ Paul E. Ruppert
Paul E. Ruppert
President and Chief Executive Officer
(principal executive officer)





EXHIBIT 32.14
CERTIFICATION PURSUANT TO
SECTION 906 OF THE
SARBANES-OXLEY ACT OF 2002

I, Scott C. Miller, Vice President, Chief Financial Officer and Treasurer of Eastern Energy Gas Holdings, LLC, certify, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350, that to the best of my knowledge:
(1)the Quarterly Report on Form 10-Q of Eastern Energy Gas Holdings, LLC for the quarterly period ended March 31, 2022 (the "Report") fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m(a) or 78o(d)); and
(2)the information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of Eastern Energy Gas Holdings, LLC.
Date: April 29, 2022/s/ Scott C. Miller
Scott C. Miller
Vice President, Chief Financial Officer and Treasurer
(principal financial officer)





EXHIBIT 95
MINE SAFETY VIOLATIONS AND OTHER LEGAL MATTER DISCLOSURES
PURSUANT TO SECTION 1503(a) OF THE DODD-FRANK WALL STREET
REFORM AND CONSUMER PROTECTION ACT

PacifiCorp and its subsidiaries operate certain coal mines and coal processing facilities (collectively, the "mining facilities") that are regulated by the Federal Mine Safety and Health Administration ("MSHA") under the Federal Mine Safety and Health Act of 1977 (the "Mine Safety Act"). MSHA inspects PacifiCorp's mining facilities on a regular basis. The total number of reportable Mine Safety Act citations, orders, assessments and legal actions for the three-month period ended March 31, 2022 are summarized in the table below and are subject to contest and appeal. The severity and assessment of penalties may be reduced or, in some cases, dismissed through the contest and appeal process. Amounts are reported regardless of whether PacifiCorp has challenged or appealed the matter. Mines that are closed or idled that had no reportable events occurring at those locations during the three-month period ended March 31, 2022 are not included in the information below. There were no mining-related fatalities during the three-month period ended March 31, 2022. PacifiCorp has not received any notice of a pattern, or notice of the potential to have a pattern, of violations of mandatory health or safety standards that are of such nature as could have significantly and substantially contributed to the cause and effect of coal or other mine health or safety hazards under Section 104(e) of the Mine Safety Act during the three-month period ended March 31, 2022.
Mine Safety ActLegal Actions
Total
Section 104SectionValue of
SignificantSection107(a)ProposedPending
andSection104(d)SectionImminentMSHAas of LastInstitutedResolved
Substantial104(b)Citations/110(b)(2)DangerAssessmentsDay ofDuringDuring
Mining Facilities
Citations(1)
Orders(2)
Orders(3)
Violations(4)
Orders(5)
(in thousands)
Period(6)
PeriodPeriod
Bridger (surface)— — — — — $— — — 
Bridger (underground)
— — — — — — 
Wyodak Coal Crushing Facility
— — — — — — — — — 

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

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

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

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

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

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