FALSE2022Q1000108131612/31000007559412/31000109829612/31000092857612/31000007118012/31000009014412/31000160329112/311111200 million0 million0 million1200001081316bhe:MidamericanEnergyCompanyAndSubsidiariesMemberbhe:RegulatedwholesaleMemberus-gaap:RegulatedOperationMember2022-01-012022-03-310001081316us-gaap:PensionPlansDefinedBenefitMembercountry:USbhe:PacificorpMember2021-04-012021-06-300001081316us-gaap:EquityFundsMemberus-gaap:FairValueMeasurementsRecurringMemberbhe:SierraPacificPowerCompanyMemberus-gaap:FairValueInputsLevel1Member2021-12-31

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,~~June 30, 2022

☐ 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

Commission

Address of principal executive offices

IRS Employer

File Number

Registrant's telephone number, including area code

Identification 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

333-90553

MIDAMERICAN FUNDING, LLC

47-0819200

(An Iowa Limited Liability Company)

666 Grand Avenue

Des Moines, Iowa 50309-2580

515-242-4300

333-15387

MIDAMERICAN ENERGY COMPANY

42-1425214

(An Iowa Corporation)

666 Grand Avenue

Des Moines, Iowa 50309-2580

515-242-4300

000-52378

NEVADA POWER COMPANY

88-0420104

(A Nevada Corporation)

6226 West Sahara Avenue

Las Vegas, Nevada 89146

702-402-5000

000-00508

SIERRA PACIFIC POWER COMPANY

88-0044418

(A Nevada Corporation)

6100 Neil Road

Reno, Nevada 89511

775-834-4011

001-37591

EASTERN ENERGY GAS HOLDINGS, LLC

46-3639580

(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)


Registrant			Securities registered pursuant to Section 12(b) of the Act:
BERKSHIRE HATHAWAY ENERGY COMPANY			None
PACIFICORP			None
MIDAMERICAN FUNDING, LLC			None
MIDAMERICAN ENERGY COMPANY			None
NEVADA POWER COMPANY			None
SIERRA PACIFIC POWER COMPANY			None
EASTERN ENERGY GAS HOLDINGS, LLC			None


Registrant			Name of exchange on which registered:
BERKSHIRE HATHAWAY ENERGY COMPANY			None
PACIFICORP			None
MIDAMERICAN FUNDING, LLC			None
MIDAMERICAN ENERGY COMPANY			None
NEVADA POWER COMPANY			None
SIERRA PACIFIC POWER COMPANY			None
EASTERN ENERGY GAS HOLDINGS, LLC			None

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.


Registrant	Yes	No
BERKSHIRE HATHAWAY ENERGY COMPANY	☒
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.

Registrant

Large accelerated filer

Accelerated filer

Non-accelerated filer

Smaller reporting company

Emerging 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,~~August 4, 2022, ~~76,368,874~~75,627,913 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,~~August 4, 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,~~August 4, 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,~~August 4, 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,~~August 4, 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,~~August 4, 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,~~August 4, 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


Item 1.	Financial Statements	1
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	2
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	~~159~~173
Item 4.	Controls and Procedures	~~159~~173

PART II

Definition of Abbreviations and Industry Terms

When used in Forward-Looking Statements, Part I - Items 2 through 3, and Part II - Items 1 through 6, the following terms have the definitions indicated.


Berkshire Hathaway Energy Company and Related Entities
BHE						Berkshire Hathaway Energy Company
Berkshire Hathaway						Berkshire Hathaway Inc.
Berkshire Hathaway Energy or the Company						Berkshire Hathaway Energy Company and its subsidiaries
PacifiCorp						PacifiCorp and its subsidiaries
MidAmerican Funding						MidAmerican Funding, LLC and its subsidiaries
MidAmerican Energy						MidAmerican Energy Company
NV Energy						NV Energy, Inc. and its subsidiaries
Nevada Power						Nevada Power Company and its subsidiaries
Sierra Pacific						Sierra Pacific Power Company and its subsidiaries
Nevada Utilities						Nevada Power Company and its subsidiaries and Sierra Pacific Power Company and its subsidiaries
Eastern Energy Gas						Eastern Energy Gas Holdings, LLC and its subsidiaries
Registrants						Berkshire 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 Powergrid						Northern Powergrid Holdings Company and its subsidiaries
BHE Pipeline Group						BHE GT&S, LLC, Northern Natural Gas Company and Kern River Gas Transmission Company
BHE GT&S						BHE GT&S, LLC and its subsidiaries
Northern Natural Gas						Northern Natural Gas Company
Kern River						Kern River Gas Transmission Company
BHE Transmission						BHE Canada Holdings Corporation and BHE U.S. Transmission, LLC
BHE Canada						BHE Canada Holdings Corporation and its subsidiaries
AltaLink						AltaLink, L.P.
BHE U.S. Transmission						BHE U.S. Transmission, LLC and its subsidiaries
BHE Renewables						BHE Renewables, LLC and its subsidiaries
HomeServices						HomeServices of America, Inc. and its subsidiaries
Utilities						PacifiCorp and its subsidiaries, MidAmerican Energy Company, Nevada Power Company and its subsidiaries and Sierra Pacific Power Company and its subsidiaries

EGTS						Eastern Gas Transmission and Storage, Inc.


Certain Industry Terms
2017 Tax Reform						The Tax Cuts and Jobs Act enacted on December 22, 2017, effective January 1, 2018


AFUDC						Allowance for Funds Used During Construction
AUC						Alberta Utilities Commission
BART						Best Available Retrofit Technology

~~COVID-19~~						~~Coronavirus Disease 2019~~


CSAPR						Cross-State Air Pollution Rule
D.C. Circuit						United States Court of Appeals for the District of Columbia Circuit

Dth						Decatherm


EPA						United States Environmental Protection Agency
FERC						Federal Energy Regulatory Commission
FIP						Federal Implementation Plan

GAAP						Accounting principles generally accepted in the United States of America

~~GHG~~GEMA						~~Greenhouse Gases~~Gas and Electricity Markets Authority

GTA						General Tariff Application
GWh						Gigawatt Hour


IRP						Integrated Resource Plan
IUB						Iowa Utilities Board
kV						Kilovolt


MW						Megawatt
MWh						Megawatt Hour
NAAQS						National Ambient Air Quality Standards
NOx						Nitrogen Oxides

Ofgem						Office of Gas and Electric Markets
OPUC						Oregon Public Utility Commission
PTC						Production Tax Credit
PUCN						Public Utilities Commission of Nevada


RFP						Request for Proposals
RPS						Renewable Portfolio Standards

SCR						Selective Catalytic Reduction
SEC						United States Securities and Exchange Commission
SIP						State Implementation Plan
SO2						Sulfur Dioxide

UPSC						Utah Public Service Commission

WUTC						Washington 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;

•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.

Item 1.Financial Statements


Berkshire Hathaway Energy Company and its subsidiaries
Report of Independent Registered Public Accounting Firm						4
Consolidated Balance Sheets						5
Consolidated Statements of Operations						7
Consolidated Statements of Comprehensive (~~Los~~s )Income						8
Consolidated Statements of Changes in Equity						9
Consolidated Statements of Cash Flows						10
Notes to Consolidated Financial Statements						11
PacifiCorp and its subsidiaries
Report of Independent Registered Public Accounting Firm						4651
Consolidated Balance Sheets						4752
Consolidated Statements of Operations						4954
Consolidated Statements of Changes in Shareholders' Equity						5055
Consolidated Statements of Cash Flows						5156
Notes to Consolidated Financial Statements						5257
MidAmerican Energy Company
Report of Independent Registered Public Accounting Firm						6876
Balance Sheets						6977
Statements of Operations						7179
Statements of Changes in Shareholder's Equity						7280
Statements of Cash Flows						7381
Notes to Financial Statements						7482
MidAmerican Funding, LLC and its subsidiaries
Report of Independent Registered Public Accounting Firm						8190
Consolidated Balance Sheets						8291
Consolidated Statements of Operations						8493
Consolidated Statements of Changes in Member's Equity						8594
Consolidated Statements of Cash Flows						8695
Notes to Consolidated Financial Statements						8796
Nevada Power Company and its subsidiaries
Report of Independent Registered Public Accounting Firm						~~101~~111
Consolidated Balance Sheets						~~102~~112
Consolidated Statements of Operations						~~103~~113
Consolidated Statements of Changes in Shareholder's Equity						~~104~~114
Consolidated Statements of Cash Flows						~~105~~115
Notes to Consolidated Financial Statements						~~106~~116
Sierra Pacific Power Company and its subsidiaries
Report of Independent Registered Public Accounting Firm						~~120~~132
Consolidated Balance Sheets						~~121~~133
Consolidated Statements of Operations						~~122~~134
Consolidated Statements of Changes in Shareholder's Equity						~~123~~135
Consolidated Statements of Cash Flows						~~124~~136
Notes to Consolidated Financial Statements						~~125~~137
Eastern Energy Gas Holdings, LLC and its subsidiaries
Report of Independent Registered Public Accounting Firm						~~141~~155
Consolidated Balance Sheets						~~142~~156
Consolidated Statements of Operations						~~144~~158
Consolidated Statements of Comprehensive Income						~~145~~159
Consolidated Statements of Changes in Equity						~~146~~160
Consolidated Statements of Cash Flows						~~147~~161
Notes to Consolidated Financial Statements						~~148~~162

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


Berkshire Hathaway Energy Company and its subsidiaries						2728
PacifiCorp and its subsidiaries						6166
MidAmerican Funding, LLC and its subsidiaries and MidAmerican Energy Company						91100
Nevada Power Company and its subsidiaries						~~113~~124
Sierra Pacific Power Company and its subsidiaries						~~133~~146
Eastern Energy Gas Holdings, LLC and its subsidiaries						~~156~~169

Berkshire Hathaway Energy Company and its subsidiaries

Consolidated Financial Section

PART I

Item 1.Financial Statements

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Shareholders of

Berkshire Hathaway Energy Company

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,~~June 30, 2022, the related consolidated statements of operations, comprehensive ~~(loss)~~ income, and changes in equity for the three-month and six-month periods ended June 30, 2022 and 2021, and of cash flows for the ~~three-month~~six-month periods ended ~~March 31,~~June 30, 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,~~August 5, 2022

BERKSHIRE HATHAWAY ENERGY COMPANY AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS (Unaudited)

(Amounts in millions)


		As of					As of
		March 31,		December 31,			June 30,		December 31,
		2022		2021			2022		2021
ASSETS	ASSETS					ASSETS
Current assets:	Current assets:					Current assets:
Cash and cash equivalents	Cash and cash equivalents	$	1,432	$	1,096	Cash and cash equivalents	$	2,081	$	1,096
Restricted cash and cash equivalents	Restricted cash and cash equivalents	129		127		Restricted cash and cash equivalents	201		127
Trade receivables, net	Trade receivables, net	2,342		2,468		Trade receivables, net	2,734		2,468
Income tax receivable	Income tax receivable	656		344		Income tax receivable	25		344
Inventories	Inventories	1,091		1,122		Inventories	1,163		1,122
Mortgage loans held for sale	Mortgage loans held for sale	975		1,263		Mortgage loans held for sale	1,084		1,263

Derivative contracts		437		188

Regulatory assets	Regulatory assets	627		544		Regulatory assets	778		544
Other current assets	Other current assets	815		1,096		Other current assets	1,294		1,284
Total current assets	Total current assets	8,504		8,248		Total current assets	9,360		8,248

Property, plant and equipment, net	Property, plant and equipment, net	90,283		89,816		Property, plant and equipment, net	90,795		89,816
Goodwill	Goodwill	11,649		11,650		Goodwill	11,559		11,650
Regulatory assets	Regulatory assets	3,458		3,419		Regulatory assets	3,481		3,419
Investments and restricted cash, cash equivalents and investments	Investments and restricted cash, cash equivalents and investments	14,394		15,788		Investments and restricted cash, cash equivalents and investments	16,728		15,788
Other assets	Other assets	3,181		3,144		Other assets	3,372		3,144

Total assets	Total assets	$	131,469	$	132,065	Total assets	$	135,295	$	132,065

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

BERKSHIRE HATHAWAY ENERGY COMPANY AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS (Unaudited) (continued)

(Amounts in millions)


		As of					As of
		March 31,		December 31,			June 30,		December 31,
		2022		2021			2022		2021
LIABILITIES AND EQUITY	LIABILITIES AND EQUITY					LIABILITIES AND EQUITY
Current liabilities:	Current liabilities:					Current liabilities:
Accounts payable	Accounts payable	$	1,820	$	2,136	Accounts payable	$	2,290	$	2,136
Accrued interest	Accrued interest	644		537		Accrued interest	557		537
Accrued property, income and other taxes	Accrued property, income and other taxes	606		606		Accrued property, income and other taxes	789		606
Accrued employee expenses	Accrued employee expenses	398		372		Accrued employee expenses	457		372
Short-term debt	Short-term debt	1,849		2,009		Short-term debt	1,948		2,009
Current portion of long-term debt	Current portion of long-term debt	1,494		1,265		Current portion of long-term debt	2,069		1,265
Other current liabilities	Other current liabilities	1,647		1,837		Other current liabilities	1,802		1,837
Total current liabilities	Total current liabilities	8,458		8,762		Total current liabilities	9,912		8,762

BHE senior debt	BHE senior debt	12,605		13,003		BHE senior debt	13,594		13,003
BHE junior subordinated debentures	BHE junior subordinated debentures	100		100		BHE junior subordinated debentures	100		100
Subsidiary debt	Subsidiary debt	35,706		35,394		Subsidiary debt	35,354		35,394
Regulatory liabilities	Regulatory liabilities	7,063		6,960		Regulatory liabilities	7,028		6,960
Deferred income taxes	Deferred income taxes	12,786		12,938		Deferred income taxes	13,394		12,938
Other long-term liabilities	Other long-term liabilities	4,327		4,319		Other long-term liabilities	4,722		4,319
Total liabilities	Total liabilities	81,045		81,476		Total liabilities	84,104		81,476

Commitments and contingencies (Note 8)	Commitments and contingencies (Note 8)	0		0		Commitments and contingencies (Note 8)	0		0

Equity:	Equity:					Equity:
BHE shareholders' equity:	BHE shareholders' equity:					BHE shareholders' equity:
Preferred stock - 100 shares authorized, $0.01 par value, 2 shares issued and outstanding		1,650		1,650
Preferred stock - 100 shares authorized, $0.01 par value, 1 and 2 shares issued and outstanding						Preferred stock - 100 shares authorized, $0.01 par value, 1 and 2 shares issued and outstanding	850		1,650
Common stock - 115 shares authorized, no par value, 76 shares issued and outstanding	Common stock - 115 shares authorized, no par value, 76 shares issued and outstanding	—		—		Common stock - 115 shares authorized, no par value, 76 shares issued and outstanding	—		—
Additional paid-in capital	Additional paid-in capital	6,374		6,374		Additional paid-in capital	6,298		6,374
Long-term income tax receivable	Long-term income tax receivable	(744)		(744)		Long-term income tax receivable	(744)		(744)
Retained earnings	Retained earnings	40,608		40,754		Retained earnings	42,688		40,754
Accumulated other comprehensive loss, net	Accumulated other comprehensive loss, net	(1,358)		(1,340)		Accumulated other comprehensive loss, net	(1,788)		(1,340)
Total BHE shareholders' equity	Total BHE shareholders' equity	46,530		46,694		Total BHE shareholders' equity	47,304		46,694
Noncontrolling interests	Noncontrolling interests	3,894		3,895		Noncontrolling interests	3,887		3,895
Total equity	Total equity	50,424		50,589		Total equity	51,191		50,589

Total liabilities and equity	Total liabilities and equity	$	131,469	$	132,065	Total liabilities and equity	$	135,295	$	132,065

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

BERKSHIRE HATHAWAY ENERGY COMPANY AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)

(Amounts in millions)


		Three-Month Periods			Three-Month Periods						Six-Month Periods
		Ended March 31,			Ended June 30,						Ended June 30,
			2022			2021			2022		2021		2022		2021
Operating revenue:	Operating revenue:							Operating revenue:
Energy	Energy		$	4,823		$	4,849	Energy	$	4,940	$	4,301	$	9,763	$	9,150
Real estate	Real estate		1,207			1,232		Real estate	1,672		1,763		2,879		2,995
Total operating revenue	Total operating revenue		6,030			6,081		Total operating revenue	6,612		6,064		12,642		12,145

Operating expenses:	Operating expenses:							Operating expenses:
Energy:	Energy:							Energy:
Cost of sales	Cost of sales		1,460			1,569		Cost of sales	1,525		1,110		2,985		2,679
Operations and maintenance	Operations and maintenance		943			934		Operations and maintenance	1,081		1,037		2,024		1,971
Depreciation and amortization	Depreciation and amortization		1,007			915		Depreciation and amortization	1,045		936		2,052		1,851
Property and other taxes	Property and other taxes		205			210		Property and other taxes	199		189		404		399
Real estate	Real estate		1,179			1,120		Real estate	1,555		1,584		2,734		2,704
Total operating expenses	Total operating expenses		4,794			4,748		Total operating expenses	5,405		4,856		10,199		9,604

Operating income	Operating income		1,236			1,333		Operating income	1,207		1,208		2,443		2,541

Other income (expense):	Other income (expense):							Other income (expense):
Interest expense	Interest expense		(532)			(530)		Interest expense	(550)		(532)		(1,082)		(1,062)
Capitalized interest	Capitalized interest		17			14		Capitalized interest	18		14		35		28
Allowance for equity funds	Allowance for equity funds		38			26		Allowance for equity funds	42		30		80		56
Interest and dividend income	Interest and dividend income		23			21		Interest and dividend income	30		26		53		47
Losses on marketable securities, net			(1,257)			(1,118)
Gains on marketable securities, net								Gains on marketable securities, net	2,528		1,966		1,271		848
Other, net	Other, net		5			8		Other, net	(26)		48		(21)		56
Total other income (expense)	Total other income (expense)		(1,706)			(1,579)		Total other income (expense)	2,042		1,552		336		(27)

Loss before income tax benefit and equity loss			(470)			(246)
Income tax benefit			(507)			(535)
Income before income tax expense (benefit) and equity loss								Income before income tax expense (benefit) and equity loss	3,249		2,760		2,779		2,514
Income tax expense (benefit)								Income tax expense (benefit)	149		327		(358)		(208)
Equity loss	Equity loss		(57)			(179)		Equity loss	(83)		(50)		(140)		(229)
Net (loss) income			(20)			110
Net income								Net income	3,017		2,383		2,997		2,493
Net income attributable to noncontrolling interests	Net income attributable to noncontrolling interests		109			106		Net income attributable to noncontrolling interests	120		102		229		208
Net (loss) income attributable to BHE shareholders			(129)			4
Net income attributable to BHE shareholders								Net income attributable to BHE shareholders	2,897		2,281		2,768		2,285
Preferred dividends	Preferred dividends		16			38		Preferred dividends	13		37		29		75
Loss on common shares			$	(145)		$	(34)
Earnings on common shares								Earnings on common shares	$	2,884	$	2,244	$	2,739	$	2,210

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

BERKSHIRE HATHAWAY ENERGY COMPANY AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE ~~(LOSS)~~ INCOME (Unaudited)

(Amounts in millions)

Three-Month Periods
Ended March 31,
2022 2021

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 7
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 interests 109 106
Comprehensive (loss) income attributable to BHE shareholders $ (147) $ 116


	Three-Month Periods				Six-Month Periods
	Ended June 30,				Ended June 30,
	2022		2021		2022		2021

Net income	$	3,017	$	2,383	$	2,997	$	2,493

Other comprehensive (loss) income, net of tax:
Unrecognized amounts on retirement benefits, net of tax of $9, $1, $12 and $5	25		15		40		22
Foreign currency translation adjustment	(481)		68		(591)		159
Unrealized gains on cash flow hedges, net of tax of $8, $(1), $36 and $4	26		1		103		15
Total other comprehensive (loss) income, net of tax	(430)		84		(448)		196

Comprehensive income	2,587		2,467		2,549		2,689
Comprehensive income attributable to noncontrolling interests	120		106		229		212
Comprehensive income attributable to BHE shareholders	$	2,467	$	2,361	$	2,320	$	2,477

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

BERKSHIRE HATHAWAY ENERGY COMPANY AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY (Unaudited)

(Amounts in millions)


		BHE Shareholders' Equity																	BHE Shareholders' Equity
								Long-term				Accumulated													Long-term				Accumulated
						Additional		Income				Other											Additional		Income				Other
		Preferred		Common		Paid-in		Tax		Retained		Comprehensive		Noncontrolling		Total			Preferred		Common		Paid-in		Tax		Retained		Comprehensive		Noncontrolling		Total
		Stock		Stock		Capital		Receivable		Earnings		Loss, Net		Interests		Equity			Stock		Stock		Capital		Receivable		Earnings		Loss, Net		Interests		Equity
Balance, March 31, 2021																		Balance, March 31, 2021	$	3,750	$	—	$	6,377	$	(658)	$	35,060	$	(1,440)	$	3,962	$	47,051
Net income																		Net income	—		—		—		—		2,281		—		102		2,383
Other comprehensive income																		Other comprehensive income	—		—		—		—		—		80		4		84
Preferred stock dividend																		Preferred stock dividend	—		—		—		—		(37)		—		—		(37)

Distributions																		Distributions	—		—		—		—		—		—		(121)		(121)
Contributions																		Contributions	—		—		—		—		—		—		9		9

Other equity transactions																		Other equity transactions	—		—		—		—		(1)		—		(3)		(4)
Balance, June 30, 2021																		Balance, June 30, 2021	$	3,750	$	—	$	6,377	$	(658)	$	37,303	$	(1,360)	$	3,953	$	49,365

Balance, December 31, 2020	Balance, December 31, 2020	$	3,750	$	—	$	6,377	$	(658)	$	35,093	$	(1,552)	$	3,967	$	46,977	Balance, December 31, 2020	$	3,750	$	—	$	6,377	$	(658)	$	35,093	$	(1,552)	$	3,967	$	46,977
Net income	Net income	—		—		—		—		4		—		106		110		Net income	—		—		—		—		2,285		—		208		2,493
Other comprehensive income	Other comprehensive income	—		—		—		—		—		112		—		112		Other comprehensive income	—		—		—		—		—		192		4		196
Preferred stock dividend	Preferred stock dividend	—		—		—		—		(38)		—		—		(38)		Preferred stock dividend	—		—		—		—		(75)		—		—		(75)

Distributions	Distributions	—		—		—		—		—		—		(113)		(113)		Distributions	—		—		—		—		—		—		(234)		(234)
Contributions																		Contributions	—		—		—		—		—		—		9		9

Other equity transactions	Other equity transactions	—		—		—		—		1		—		2		3		Other equity transactions	—		—		—		—		—		—		(1)		(1)
Balance, March 31, 2021		$	3,750	$	—	$	6,377	$	(658)	$	35,060	$	(1,440)	$	3,962	$	47,051
Balance, June 30, 2021																		Balance, June 30, 2021	$	3,750	$	—	$	6,377	$	(658)	$	37,303	$	(1,360)	$	3,953	$	49,365

Balance, March 31, 2022																		Balance, March 31, 2022	$	1,650	$	—	$	6,374	$	(744)	$	40,608	$	(1,358)	$	3,894	$	50,424
Net income																		Net income	—		—		—		—		2,897		—		120		3,017
Other comprehensive loss																		Other comprehensive loss	—		—		—		—		—		(430)		—		(430)
Preferred stock redemptions																		Preferred stock redemptions	(800)		—		—		—		—		—		—		(800)
Preferred stock dividend																		Preferred stock dividend	—		—		—		—		(13)		—		—		(13)
Common stock purchases																		Common stock purchases	—		—		(77)		—		(793)		—		—		(870)
Distributions																		Distributions	—		—		—		—		—		—		(129)		(129)
Contributions																		Contributions	—		—		—		—		—		—		2		2

Other equity transactions																		Other equity transactions	—		—		1		—		(11)		—		—		(10)
Balance, June 30, 2022																		Balance, June 30, 2022	$	850	$	—	$	6,298	$	(744)	$	42,688	$	(1,788)	$	3,887	$	51,191

Balance, December 31, 2021	Balance, December 31, 2021	$	1,650	$	—	$	6,374	$	(744)	$	40,754	$	(1,340)	$	3,895	$	50,589	Balance, December 31, 2021	$	1,650	$	—	$	6,374	$	(744)	$	40,754	$	(1,340)	$	3,895	$	50,589
Net (loss) income		—		—		—		—		(129)		—		109		(20)
Net income																		Net income	—		—		—		—		2,768		—		229		2,997
Other comprehensive loss	Other comprehensive loss	—		—		—		—		—		(18)		—		(18)		Other comprehensive loss	—		—		—		—		—		(448)		—		(448)

Preferred stock redemptions																		Preferred stock redemptions	(800)		—		—		—		—		—		—		(800)
Preferred stock dividend	Preferred stock dividend	—		—		—		—		(16)		—		—		(16)		Preferred stock dividend	—		—		—		—		(29)		—		—		(29)

Common stock purchases																		Common stock purchases	—		—		(77)		—		(793)		—		—		(870)
Distributions	Distributions	—		—		—		—		—		—		(116)		(116)		Distributions	—		—		—		—		—		—		(245)		(245)

Contributions																		Contributions	—		—		—		—		—		—		2		2

Other equity transactions	Other equity transactions	—		—		—		—		(1)		—		6		5		Other equity transactions	—		—		1		—		(12)		—		6		(5)
Balance, March 31, 2022		$	1,650	$	—	$	6,374	$	(744)	$	40,608	$	(1,358)	$	3,894	$	50,424
Balance, June 30, 2022																		Balance, June 30, 2022	$	850	$	—	$	6,298	$	(744)	$	42,688	$	(1,788)	$	3,887	$	51,191

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

BERKSHIRE HATHAWAY ENERGY COMPANY AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)

(Amounts in millions)


		Three-Month Periods					Six-Month Periods
		Ended March 31,					Ended June 30,
		2022		2021			2022		2021
Cash flows from operating activities:	Cash flows from operating activities:					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, net		1,257		1,118
Net income						Net income	$	2,997	$	2,493
Adjustments to reconcile net income to net cash flows from operating activities:						Adjustments to reconcile net income to net cash flows from operating activities:
Gains on marketable securities, net						Gains on marketable securities, net	(1,271)		(848)
Depreciation and amortization	Depreciation and amortization	1,022		927		Depreciation and amortization	2,081		1,874
Allowance for equity funds	Allowance for equity funds	(38)		(26)		Allowance for equity funds	(80)		(56)
Equity loss, net of distributions	Equity loss, net of distributions	88		221		Equity loss, net of distributions	202		313
Changes in regulatory assets and liabilities	Changes in regulatory assets and liabilities	(42)		(9)		Changes in regulatory assets and liabilities	(226)		(199)
Deferred income taxes and investment tax credits, net	Deferred income taxes and investment tax credits, net	(203)		(135)		Deferred income taxes and investment tax credits, net	385		613
Other, net	Other, net	6		9		Other, net	37		(26)
Changes in other operating assets and liabilities, net of effects from acquisitions:	Changes in other operating assets and liabilities, net of effects from acquisitions:					Changes in other operating assets and liabilities, net of effects from acquisitions:
Trade receivables and other assets	Trade receivables and other assets	333		(249)		Trade receivables and other assets	(317)		(254)
Derivative collateral, net	Derivative collateral, net	85		14		Derivative collateral, net	189		92
Pension and other postretirement benefit plans	Pension and other postretirement benefit plans	(11)		(21)		Pension and other postretirement benefit plans	(21)		(33)
Accrued property, income and other taxes, net	Accrued property, income and other taxes, net	(347)		(453)		Accrued property, income and other taxes, net	489		76
Accounts payable and other liabilities	Accounts payable and other liabilities	91		19		Accounts payable and other liabilities	682		187
Net cash flows from operating activities	Net cash flows from operating activities	2,221		1,525		Net cash flows from operating activities	5,147		4,232

Cash flows from investing activities:	Cash flows from investing activities:					Cash flows from investing activities:
Capital expenditures	Capital expenditures	(1,553)		(1,295)		Capital expenditures	(3,382)		(2,848)

Purchases of marketable securities	Purchases of marketable securities	(170)		(128)		Purchases of marketable securities	(281)		(185)
Proceeds from sales of marketable securities	Proceeds from sales of marketable securities	149		104		Proceeds from sales of marketable securities	257		163

Equity method investments	Equity method investments	(17)		(26)		Equity method investments	(28)		(52)
Other, net	Other, net	19		(29)		Other, net	(18)		(53)
Net cash flows from investing activities	Net cash flows from investing activities	(1,572)		(1,374)		Net cash flows from investing activities	(3,452)		(2,975)

Cash flows from financing activities:	Cash flows from financing activities:					Cash flows from financing activities:

Preferred stock redemptions						Preferred stock redemptions	(800)		—
Common stock purchases						Common stock purchases	(870)		—
Proceeds from BHE senior debt						Proceeds from BHE senior debt	987		—
Repayments of BHE senior debt	Repayments of BHE senior debt	—		(450)		Repayments of BHE senior debt	—		(450)
Preferred dividends						Preferred dividends	(33)		(75)
Proceeds from subsidiary debt	Proceeds from subsidiary debt	405		—		Proceeds from subsidiary debt	1,201		539
Repayments of subsidiary debt	Repayments of subsidiary debt	(193)		(26)		Repayments of subsidiary debt	(542)		(1,210)
Net (repayments of) proceeds from short-term debt	Net (repayments of) proceeds from short-term debt	(165)		409		Net (repayments of) proceeds from short-term debt	(54)		245

Distributions to noncontrolling interests	Distributions to noncontrolling interests	(117)		(115)		Distributions to noncontrolling interests	(246)		(234)

Other, net	Other, net	(240)		(9)		Other, net	(248)		(19)
Net cash flows from financing activities	Net cash flows from financing activities	(310)		(191)		Net cash flows from financing activities	(605)		(1,204)

Effect of exchange rate changes	Effect of exchange rate changes	(1)		1		Effect of exchange rate changes	(33)		2

Net change in cash and cash equivalents and restricted cash and cash equivalents	Net change in cash and cash equivalents and restricted cash and cash equivalents	338		(39)		Net change in cash and cash equivalents and restricted cash and cash equivalents	1,057		55
Cash and cash equivalents and restricted cash and cash equivalents at beginning of period	Cash and cash equivalents and restricted cash and cash equivalents at beginning of period	1,244		1,445		Cash and cash equivalents and restricted cash and cash equivalents at beginning of period	1,244		1,445
Cash and cash equivalents and restricted cash and cash equivalents at end of period	Cash and cash equivalents and restricted cash and cash equivalents at end of period	$	1,582	$	1,406	Cash and cash equivalents and restricted cash and cash equivalents at end of period	$	2,301	$	1,500

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

BERKSHIRE HATHAWAY ENERGY COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

(1) General

Berkshire Hathaway Energy Company ("BHE") is a holding company that owns a highly diversified portfolio of locally managed 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 8 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 4 utility companies in the U.S. serving customers in 11 states, ~~two~~2 electricity distribution companies in Great Britain, 5 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 1 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,~~June 30, 2022 and for the ~~three-month~~three- and six-month periods ended ~~March 31,~~June 30, 2022 and 2021. The results of operations for the ~~three-month period~~three- and six-month periods ended ~~March 31,~~June 30, 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~~six-month period ended ~~March 31, 2022.~~June 30, 2022, other than the updates associated with the Company's estimates of loss contingencies related to the Oregon and California 2020 wildfires (the "2020 Wildfires") as discussed in Note 8.

(2) Property, Plant and Equipment, Net

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


			As of						As of
		Depreciable	March 31,		December 31,			Depreciable	June 30,		December 31,
		Life	2022		2021			Life	2022		2021
Regulated assets:	Regulated assets:						Regulated assets:
Utility generation, transmission and distribution systems	Utility generation, transmission and distribution systems	5-80 years	$	90,560	$	90,223	Utility generation, transmission and distribution systems	5-80 years	$	90,810	$	90,223
Interstate natural gas pipeline assets	Interstate natural gas pipeline assets	3-80 years	17,526		17,423		Interstate natural gas pipeline assets	3-80 years	17,547		17,423
			108,086		107,646				108,357		107,646
Accumulated depreciation and amortization	Accumulated depreciation and amortization		(33,248)		(32,680)		Accumulated depreciation and amortization		(33,618)		(32,680)
Regulated assets, net	Regulated assets, net		74,838		74,966		Regulated assets, net		74,739		74,966

Nonregulated assets:	Nonregulated assets:						Nonregulated assets:
Independent power plants	Independent power plants	2-50 years	7,932		7,665		Independent power plants	2-50 years	8,073		7,665
Cove Point LNG facility	Cove Point LNG facility	40 years	3,366		3,364		Cove Point LNG facility	40 years	3,373		3,364
Other assets	Other assets	2-30 years	2,688		2,666		Other assets	2-30 years	3,042		2,666
			13,986		13,695				14,488		13,695
Accumulated depreciation and amortization	Accumulated depreciation and amortization		(3,146)		(3,041)		Accumulated depreciation and amortization		(3,206)		(3,041)
Nonregulated assets, net	Nonregulated assets, net		10,840		10,654		Nonregulated assets, net		11,282		10,654

Net operating assets	Net operating assets		85,678		85,620		Net operating assets		86,021		85,620
Construction work-in-progress	Construction work-in-progress		4,605		4,196		Construction work-in-progress		4,774		4,196
Property, plant and equipment, net	Property, plant and equipment, net		$	90,283	$	89,816	Property, plant and equipment, net		$	90,795	$	89,816

Construction work-in-progress includes ~~$4.3~~$4.4 billion as of ~~March 31,~~June 30, 2022 and $3.8 billion as of December 31, 2021, related to the construction of regulated assets.

(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					As of
		March 31,		December 31,			June 30,		December 31,
		2022		2021			2022		2021
Investments:	Investments:					Investments:
BYD Company Limited common stock	BYD Company Limited common stock	$	6,446	$	7,693	BYD Company Limited common stock	$	9,003	$	7,693
Rabbi trusts	Rabbi trusts	475		492		Rabbi trusts	429		492
Other	Other	315		305		Other	328		305
Total investments	Total investments	7,236		8,490		Total investments	9,760		8,490

Equity method investments:	Equity method investments:					Equity method investments:
BHE Renewables tax equity investments	BHE Renewables tax equity investments	4,812		4,931		BHE Renewables tax equity investments	4,680		4,931
Iroquois Gas Transmission System, L.P.	Iroquois Gas Transmission System, L.P.	744		735		Iroquois Gas Transmission System, L.P.	742		735
Electric Transmission Texas, LLC	Electric Transmission Texas, LLC	598		595		Electric Transmission Texas, LLC	606		595
JAX LNG, LLC		93		92
Bridger Coal Company		44		45

Other	Other	152		156		Other	302		293
Total equity method investments	Total equity method investments	6,443		6,554		Total equity method investments	6,330		6,554

Restricted cash, cash equivalents and investments:	Restricted cash, cash equivalents and investments:					Restricted cash, cash equivalents and investments:
Quad Cities Station nuclear decommissioning trust funds	Quad Cities Station nuclear decommissioning trust funds	733		768		Quad Cities Station nuclear decommissioning trust funds	658		768
Other restricted cash and cash equivalents	Other restricted cash and cash equivalents	150		148		Other restricted cash and cash equivalents	220		148
Total restricted cash, cash equivalents and investments	Total restricted cash, cash equivalents and investments	883		916		Total restricted cash, cash equivalents and investments	878		916

Total investments and restricted cash, cash equivalents and investments	Total investments and restricted cash, cash equivalents and investments	$	14,562	$	15,960	Total investments and restricted cash, cash equivalents and investments	$	16,968	$	15,960

Reflected as:	Reflected as:					Reflected as:
Current assets	Current assets	$	168	$	172	Current assets	$	240	$	172
Noncurrent assets	Noncurrent assets	14,394		15,788		Noncurrent assets	16,728		15,788
Total investments and restricted cash, cash equivalents and investments	Total investments and restricted cash, cash equivalents and investments	$	14,562	$	15,960	Total investments and restricted cash, cash equivalents and investments	$	16,968	$	15,960

Investments

~~Losses~~Gains on marketable securities, net recognized during the period consists of the following (in millions):

Three-Month Periods
Ended March 31,
2022 2021
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 — 1
Losses on marketable securities, net $ (1,257) $ (1,118)


	Three-Month Periods				Six-Month Periods
	Ended June 30,				Ended June 30,
	2022		2021		2022		2021
Unrealized gains recognized on marketable securities still held at the reporting date	$	2,527	$	1,966	$	1,270	$	847
Net gains recognized on marketable securities sold during the period	1		—		1		1
Gains on marketable securities, net	$	2,528	$	1,966	$	1,271	$	848

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					As of
		March 31,		December 31,			June 30,		December 31,
		2022		2021			2022		2021
Cash and cash equivalents	Cash and cash equivalents	$	1,432	$	1,096	Cash and cash equivalents	$	2,081	$	1,096
Restricted cash and cash equivalents	Restricted cash and cash equivalents	129		127		Restricted cash and cash equivalents	201		127
Investments and restricted cash, cash equivalents and investments	Investments and restricted cash, cash equivalents and investments	21		21		Investments and restricted cash, cash equivalents and investments	19		21
Total cash and cash equivalents and restricted cash and cash equivalents	Total cash and cash equivalents and restricted cash and cash equivalents	$	1,582	$	1,244	Total cash and cash equivalents and restricted cash and cash equivalents	$	2,301	$	1,244

(4) Recent Financing Transactions

Long-Term Debt

In June 2022, Sierra Pacific purchased $60 million of its variable-rate tax-exempt Gas & Water Facilities Refunding Revenue Bonds, Series 2016B, due 2036, as required by the bond indenture. Sierra Pacific is holding this bond and can re-offer it at a future date.

In May 2022, Sierra Pacific issued $250 million of 4.71% General and Refunding Mortgage bonds, Series W, due 2052. The net proceeds were used to repay the outstanding $200 million unsecured loan with NV Energy, Inc., repay amounts outstanding under its existing revolving credit facility and for general corporate purposes.

In April 2022, BHE issued $1 billion of its 4.6% Senior Notes due 2053 and ~~intends to use~~used the net proceeds for general corporate purposes, which ~~may include~~included 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~~used 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 ("SOFR") 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%. In May 2022, Nevada Power ~~may draw all or none of~~drew the remaining ~~unused commitment through June 2022.~~$100 million available under the facility at an initial interest rate of 1.24%. Nevada Power used the proceeds to repay amounts outstanding under its existing secured credit facility and for general corporate purposes.

Credit Facilities

In June 2022, BHE amended and restated its existing $3.5 billion unsecured credit facility expiring in June 2024. The amendment extended the expiration date to June 2025 and amended pricing from the London Interbank Offered Rate ("LIBOR") to SOFR.

In June 2022, PacifiCorp amended and restated its existing $1.2 billion unsecured credit facility expiring in June 2024. The amendment extended the expiration date to June 2025 and amended pricing from LIBOR to SOFR.

In June 2022, MidAmerican Energy amended and restated its existing $1.5 billion unsecured credit facility expiring in June 2024. The amendment extended the expiration date to June 2025 and amended pricing from LIBOR to SOFR.

In June 2022, Nevada Power and Sierra Pacific each amended and restated its existing $400 million and $250 million secured credit facilities expiring in June 2024. The amendments extended the expiration date to June 2025 and amended pricing from LIBOR to SOFR.

(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			Three-Month Periods						Six-Month Periods
		Ended March 31,			Ended June 30,						Ended June 30,
			2022			2021			2022		2021		2022		2021

Federal statutory income tax rate	Federal statutory income tax rate		21	%		21	%	Federal statutory income tax rate	21	%	21	%	21	%	21	%
Income tax credits	Income tax credits		72			136		Income tax credits	(13)		(13)		(28)		(27)
State income tax, net of federal income tax impacts	State income tax, net of federal income tax impacts		(3)			21		State income tax, net of federal income tax impacts	(1)		4		—		2
Income tax effect of foreign income	Income tax effect of foreign income		3			6		Income tax effect of foreign income	—		3		(1)		3
Effects of ratemaking	Effects of ratemaking		8			10		Effects of ratemaking	(1)		(2)		(2)		(4)
Equity income	Equity income		3			15		Equity income	(1)		—		(1)		(2)
Noncontrolling interest	Noncontrolling interest		5			9		Noncontrolling interest	(1)		(1)		(2)		(2)
Other, net	Other, net		(1)			(1)		Other, net	1		—		—		1
Effective income tax rate	Effective income tax rate		108	%		217	%	Effective income tax rate	5	%	12	%	(13)	%	(8)	%

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~~six-month periods ended ~~March 31,~~June 30, 2022 and 2021 totaled ~~$338~~$734 million and ~~$315~~$678 million, respectively.

Income tax effect on foreign income includes, among other items, a deferred income tax charge of $109 million recognized in June 2021 upon the enactment of an increase in the United Kingdom's corporate income tax rate from 19% to 25% effective April 1, 2023.

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~~received net cash payments for federal income taxes tofrom Berkshire Hathaway for the ~~three-month~~six-month periods ended ~~March 31,~~June 30, 2022 and ~~2021.~~

2021 totaling $1,249 million and $943 million, respectively.

(6) Employee Benefit Plans

Domestic Operations

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


		Three-Month Periods			Three-Month Periods						Six-Month Periods
		Ended March 31,			Ended June 30,						Ended June 30,
			2022			2021			2022		2021		2022		2021
Pension:	Pension:							Pension:
Service cost	Service cost		$	7		$	7	Service cost	$	6	$	8	$	13	$	15
Interest cost	Interest cost		19			20		Interest cost	19		18		38		38
Expected return on plan assets	Expected return on plan assets		(27)			(33)		Expected return on plan assets	(27)		(36)		(54)		(69)
Settlement	Settlement		2			—		Settlement	—		—		2		—
Net amortization	Net amortization		4			6		Net amortization	5		7		9		13
Net periodic benefit cost			$	5		$	—
Net periodic benefit cost (credit)								Net periodic benefit cost (credit)	$	3	$	(3)	$	8	$	(3)

Other postretirement:	Other postretirement:							Other postretirement:
Service cost	Service cost		$	2		$	2	Service cost	$	4	$	4	$	6	$	6
Interest cost	Interest cost		5			5		Interest cost	5		5		10		10
Expected return on plan assets	Expected return on plan assets		(7)			(5)		Expected return on plan assets	(7)		(6)		(14)		(11)
Net amortization	Net amortization		—			(1)		Net amortization	(1)		(1)		(1)		(2)
Net periodic benefit cost	Net periodic benefit cost		$	—		$	1	Net periodic benefit cost	$	1	$	2	$	1	$	3

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$5 million, respectively, during 2022. As of ~~March 31,~~June 30, 2022, $4$7 million and $3$5 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			Three-Month Periods						Six-Month Periods
		Ended March 31,			Ended June 30,						Ended June 30,
			2022			2021			2022		2021		2022		2021

Service cost	Service cost		$	4		$	4	Service cost	$	3	$	4	$	7	$	8
Interest cost	Interest cost		10			8		Interest cost	9		7		19		15
Expected return on plan assets	Expected return on plan assets		(25)			(28)		Expected return on plan assets	(23)		(28)		(48)		(56)

Net amortization	Net amortization		6			14		Net amortization	6		14		12		28
Net periodic benefit credit	Net periodic benefit credit		$	(5)		$	(2)	Net periodic benefit credit	$	(5)	$	(3)	$	(10)	$	(5)

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,~~June 30, 2022, £3£6 million, or $4$8 million, of contributions had been made to the United Kingdom pension plan.

(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											Input Levels for Fair Value Measurements
		Level 1		Level 2		Level 3		Other(1)		Total			Level 1		Level 2		Level 3		Other(1)		Total
As of March 31, 2022:
As of June 30, 2022:												As of June 30, 2022:
Assets:	Assets:											Assets:
Commodity derivatives	Commodity derivatives	$	13	$	534	$	59	$	(64)	$	542	Commodity derivatives	$	11	$	660	$	77	$	(164)	$	584

Interest rate derivatives	Interest rate derivatives	11		58		25		—		94		Interest rate derivatives	16		45		24		—		85
Mortgage loans held for sale	Mortgage loans held for sale	—		975		—		—		975		Mortgage loans held for sale	—		1,084		—		—		1,084
Money market mutual funds	Money market mutual funds	715		—		—		—		715		Money market mutual funds	1,492		—		—		—		1,492
Debt securities:	Debt securities:											Debt securities:
U.S. government obligations	U.S. government obligations	225		—		—		—		225		U.S. government obligations	220		—		—		—		220
International government obligations	International government obligations	—		1		—		—		1		International government obligations	—		1		—		—		1
Corporate obligations	Corporate obligations	—		79		—		—		79		Corporate obligations	—		75		—		—		75
Municipal obligations	Municipal obligations	—		3		—		—		3		Municipal obligations	—		3		—		—		3
Agency, asset and mortgage-backed obligations	Agency, asset and mortgage-backed obligations	—		1		—		—		1		Agency, asset and mortgage-backed obligations	—		1		—		—		1
Equity securities:	Equity securities:											Equity securities:
U.S. companies	U.S. companies	415		—		—		—		415		U.S. companies	348		—		—		—		348
International companies	International companies	6,455		—		—		—		6,455		International companies	9,011		—		—		—		9,011
Investment funds	Investment funds	285		—		—		—		285		Investment funds	258		—		—		—		258
		$	8,119	$	1,651	$	84	$	(64)	$	9,790		$	11,356	$	1,869	$	101	$	(164)	$	13,162
Liabilities:	Liabilities:											Liabilities:
Commodity derivatives	Commodity derivatives	$	(1)	$	(88)	$	(298)	$	69	$	(318)	Commodity derivatives	$	(14)	$	(211)	$	(255)	$	77	$	(403)
Foreign currency exchange rate derivatives	Foreign currency exchange rate derivatives	—		(3)		—		—		(3)		Foreign currency exchange rate derivatives	—		(19)		—		—		(19)
Interest rate derivatives	Interest rate derivatives	—		—		(12)		—		(12)		Interest rate derivatives	—		(6)		(3)		—		(9)
		$	(1)	$	(91)	$	(310)	$	69	$	(333)		$	(14)	$	(236)	$	(258)	$	77	$	(431)


	Input Levels for Fair Value Measurements
	Level 1		Level 2		Level 3		Other(1)		Total
As of December 31, 2021:
Assets:
Commodity derivatives	$	5	$	271	$	73	$	(47)	$	302
Foreign currency exchange rate derivatives	—		3		—		—		3
Interest rate derivatives	1		3		20		—		24
Mortgage loans held for sale	—		1,263		—		—		1,263
Money market mutual funds	554		—		—		—		554
Debt securities:
U.S. government obligations	232		—		—		—		232
International government obligations	—		2		—		—		2
Corporate obligations	—		90		—		—		90
Municipal obligations	—		3		—		—		3
Agency, asset and mortgage-backed obligations	—		2		—		—		2
Equity securities:
U.S. companies	428		—		—		—		428
International companies	7,703		—		—		—		7,703
Investment funds	237		—		—		—		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 payable of $87 million and receivable of ~~$5 million and~~ $26 million as of ~~March 31,~~June 30, 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.

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):. Transfers out of Level 3 occur primarily due to increased price observability.


		Three-Month Periods			Three-Month Periods						Six-Month Periods
		Ended March 31,			Ended June 30,						Ended June 30,
						Interest					Interest				Interest
			Commodity			Rate			Commodity		Rate		Commodity		Rate
			Derivatives			Derivatives			Derivatives		Derivatives		Derivatives		Derivatives
2022:	2022:							2022:
Beginning balance	Beginning balance		$	(151)		$	19	Beginning balance	$	(239)	$	13	$	(151)	$	19
Changes included in earnings(1)	Changes included in earnings(1)		(56)			(6)		Changes included in earnings(1)	(26)		8		(82)		2
Changes in fair value recognized in OCI	Changes in fair value recognized in OCI		5			—		Changes in fair value recognized in OCI	5		—		10		—
Changes in fair value recognized in net regulatory assets	Changes in fair value recognized in net regulatory assets		(60)			—		Changes in fair value recognized in net regulatory assets	1		—		(59)		—

Purchases								Purchases	1		—		1		—

Settlements	Settlements		23			—		Settlements	11		—		34		—
Transfers out of Level 3 into Level 2								Transfers out of Level 3 into Level 2	69		—		69		—

Ending balance	Ending balance		$	(239)		$	13	Ending balance	$	(178)	$	21	$	(178)	$	21


2021:	2021:					2021:
Beginning balance	Beginning balance	$	116	$	62	Beginning balance	$	124	$	41	$	116	$	62
Changes included in earnings(1)	Changes included in earnings(1)	(6)		(21)		Changes included in earnings(1)	(10)		—		(16)		(21)
Changes in fair value recognized in OCI	Changes in fair value recognized in OCI	(1)		—		Changes in fair value recognized in OCI	(6)		—		(7)		—
Changes in fair value recognized in net regulatory assets	Changes in fair value recognized in net regulatory assets	16		—		Changes in fair value recognized in net regulatory assets	(7)		—		9		—

Purchases						Purchases	1		—		1		—

Settlements	Settlements	(1)		—		Settlements	3		—		2		—

Ending balance	Ending balance	$	124	$	41	Ending balance	$	105	$	41	$	105	$	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, 2022 As of December 31, 2021
Carrying Fair Carrying Fair
Value Value Value Value

Long-term debt $ 49,905 $ 52,246 $ 49,762 $ 57,189


	As of June 30, 2022				As of December 31, 2021
	Carrying		Fair		Carrying		Fair
	Value		Value		Value		Value

Long-term debt	$	51,117	$	48,636	$	49,762	$	57,189

(8) Commitments and Contingencies

Construction Commitments

During the six-month period ended June 30, 2022, PacifiCorp entered into a procurement and construction services agreement for $849 million through 2024 for the construction of a key Energy Gateway Transmission segment extending between the Aeolus substation near Medicine Bow, Wyoming and the Clover substation near Mona, Utah.

Fuel Contracts

During the six-month period ended June 30, 2022, PacifiCorp entered into certain coal supply and transportation agreements totaling approximately $200 million through 2024.

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").~~California. 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.

During the three-month period ended June 30, 2022, PacifiCorp ~~has~~ accrued ~~$136~~$64 million ~~as its best estimate~~ of ~~the potential~~ losses net of expected insurance recoveries associated with the 2020 Wildfires ~~that are considered probable~~resulting in an overall loss accrual net of ~~being incurred.~~expected insurance recoveries of $200 million as of June 30, 2022 compared to $136 million as of December 31, 2021. These accruals include ~~estimated~~PacifiCorp's estimate of losses for fire suppression costs, real and personal property ~~damage,~~damages, natural resource damages and noneconomic damages such as personal injury damages and loss of life damages ~~but exclude estimated potential losses~~that are considered probable of being incurred and that it is reasonably able to estimate at this time. For certain aspects of the 2020 Wildfires for ~~natural resource damage as PacifiCorp~~which loss is ~~unable~~considered probable, information necessary to reasonably estimate the potential losses, such ~~losses at this time.~~as those related to natural resource damages, is not currently available. 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. PacifiCorp's receivable for expected insurance recoveries was $277 million as of June 30, 2022.

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~~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.

(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 1112 (in millions):

For the Three-Month Period Ended March 31, 2022
PacifiCorp MidAmerican Funding NV Energy Northern Powergrid BHE Pipeline Group BHE Transmission BHE Renewables
BHE and
Other(1)
Total
Customer Revenue:
Regulated:
Retail electric $ 1,185 $ 472 $ 599 $ — $ — $ — $ — $ — $ 2,256
Retail gas — 337 51 — — — — — 388
Wholesale 55 161 20 — — — — — 236
Transmission and
distribution 32 15 17 269 — 176 — — 509
Interstate pipeline — — — — 745 — — (41) 704
Other 20 — 1 — 1 — — — 22
Total Regulated 1,292 985 688 269 746 176 — (41) 4,115
Nonregulated — 2 — 15 278 7 169 133 604
Total Customer Revenue 1,292 987 688 284 1,024 183 169 92 4,719
Other revenue 5 18 5 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																			For the Three-Month Period Ended June 30, 2022
		PacifiCorp		MidAmerican Funding		NV Energy		Northern Powergrid		BHE Pipeline Group		BHE Transmission		BHE Renewables		BHE and Other(1)		Total			PacifiCorp		MidAmerican Funding		NV Energy		Northern Powergrid		BHE Pipeline Group		BHE Transmission		BHE Renewables		BHE and Other(1)		Total
Customer Revenue:	Customer Revenue:																			Customer Revenue:
Regulated:	Regulated:																			Regulated:
Retail electric	Retail electric	$	1,145	$	452	$	511	$	—	$	—	$	—	$	—	$	—	$	2,108	Retail electric	$	1,167	$	594	$	831	$	—	$	—	$	—	$	—	$	(1)	$	2,591
Retail gas	Retail gas	—		460		38		—		—		—		—		—		498		Retail gas	—		136		28		—		—		—		—		—		164
Wholesale	Wholesale	36		125		15		—		17		—		—		—		193		Wholesale	55		119		15		—		—		—		—		(2)		187
Transmission and distribution	Transmission and distribution	25		15		21		263		—		172		—		—		496		Transmission and distribution	45		13		18		274		—		172		—		—		522
Interstate pipeline	Interstate pipeline	—		—		—		—		815		—		—		(41)		774		Interstate pipeline	—		—		—		—		524		—		—		(27)		497
Other	Other	23		—		—		—		2		—		—		—		25		Other	28		—		—		—		—		—		—		—		28
Total Regulated	Total Regulated	1,229		1,052		585		263		834		172		—		(41)		4,094		Total Regulated	1,295		862		892		274		524		172		—		(30)		3,989
Nonregulated	Nonregulated	—		10		—		10		237		8		166		187		618		Nonregulated	—		—		1		42		285		15		262		151		756
Total Customer Revenue	Total Customer Revenue	1,229		1,062		585		273		1,071		180		166		146		4,712		Total Customer Revenue	1,295		862		893		316		809		187		262		121		4,745
Other revenue	Other revenue	13		5		6		27		22		—		24		40		137		Other revenue	19		35		6		29		47		(4)		32		31		195
Total	Total	$	1,242	$	1,067	$	591	$	300	$	1,093	$	180	$	190	$	186	$	4,849	Total	$	1,314	$	897	$	899	$	345	$	856	$	183	$	294	$	152	$	4,940


	For the Six-Month Period Ended June 30, 2022
	PacifiCorp		MidAmerican Funding		NV Energy		Northern Powergrid		BHE Pipeline Group		BHE Transmission		BHE Renewables		BHE and Other(1)		Total
Customer Revenue:
Regulated:
Retail electric	$	2,352	$	1,066	$	1,430	$	—	$	—	$	—	$	—	$	(1)	$	4,847
Retail gas	—		473		79		—		—		—		—		—		552
Wholesale	110		280		35		—		—		—		—		(2)		423
Transmission and distribution	77		28		35		543		—		348		—		—		1,031
Interstate pipeline	—		—		—		—		1,269		—		—		(68)		1,201
Other	48		—		1		—		1		—		—		—		50
Total Regulated	2,587		1,847		1,580		543		1,270		348		—		(71)		8,104
Nonregulated	—		2		1		57		563		22		431		284		1,360
Total Customer Revenue	2,587		1,849		1,581		600		1,833		370		431		213		9,464
Other revenue	24		53		11		60		58		(4)		30		67		299
Total	$	2,611	$	1,902	$	1,592	$	660	$	1,891	$	366	$	461	$	280	$	9,763


	For the Three-Month Period Ended June 30, 2021
	PacifiCorp		MidAmerican Funding		NV Energy		Northern Powergrid		BHE Pipeline Group		BHE Transmission		BHE Renewables		BHE and Other(1)		Total
Customer Revenue:
Regulated:
Retail electric	$	1,188	$	516	$	708	$	—	$	—	$	—	$	—	$	(1)	$	2,411
Retail gas	—		89		20		—		—		—		—		—		109
Wholesale	30		69		10		—		—		—		—		(1)		108
Transmission and distribution	37		15		22		243		—		178		—		—		495
Interstate pipeline	—		—		—		—		458		—		—		(25)		433
Other	31		—		1		—		(1)		—		—		—		31
Total Regulated	1,286		689		761		243		457		178		—		(27)		3,587
Nonregulated	—		1		1		8		232		7		239		124		612
Total Customer Revenue	1,286		690		762		251		689		185		239		97		4,199
Other revenue	12		3		5		29		17		(3)		28		11		102
Total	$	1,298	$	693	$	767	$	280	$	706	$	182	$	267	$	108	$	4,301


	For the Six-Month Period Ended June 30, 2021
	PacifiCorp		MidAmerican Funding		NV Energy		Northern Powergrid		BHE Pipeline Group		BHE Transmission		BHE Renewables		BHE and Other(1)		Total
Customer Revenue:
Regulated:
Retail electric	$	2,333	$	968	$	1,219	$	—	$	—	$	—	$	—	$	(1)	$	4,519
Retail gas	—		549		58		—		—		—		—		—		607
Wholesale	66		194		25		—		17		—		—		(1)		301
Transmission and distribution	62		30		43		506		—		350		—		—		991
Interstate pipeline	—		—		—		—		1,273		—		—		(66)		1,207
Other	54		—		1		—		1		—		—		—		56
Total Regulated	2,515		1,741		1,346		506		1,291		350		—		(68)		7,681
Nonregulated	—		11		1		18		469		15		405		311		1,230
Total Customer Revenue	2,515		1,752		1,347		524		1,760		365		405		243		8,911
Other revenue	25		8		11		56		39		(3)		52		51		239
Total	$	2,540	$	1,760	$	1,358	$	580	$	1,799	$	362	$	457	$	294	$	9,150

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

Real Estate Services

The following table summarizes the Company's real estate services Customer Revenue by line of business (in millions):


			HomeServices						HomeServices
		Three-Month Periods			Three-Month Periods						Six-Month Periods
		Ended March 31,			Ended June 30,						Ended June 30,
			2022			2021			2022		2021		2022		2021
Customer Revenue:	Customer Revenue:							Customer Revenue:
Brokerage	Brokerage		$	1,092		$	1,022	Brokerage	$	1,544	$	1,569	$	2,636	$	2,591
Franchise	Franchise		20			18		Franchise	17		24		37		42
Total Customer Revenue	Total Customer Revenue		1,112			1,040		Total Customer Revenue	1,561		1,593		2,673		2,633
Mortgage and other revenue	Mortgage and other revenue		95			192		Mortgage and other revenue	111		170		206		362
Total	Total		$	1,207		$	1,232	Total	$	1,672	$	1,763	$	2,879	$	2,995

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,~~June 30, 2022, by reportable segment (in millions):

Performance obligations expected to be satisfied:
Less than 12 months More than 12 months Total
BHE Pipeline Group $ 2,878 $ 22,103 $ 24,981


	Performance obligations expected to be satisfied:
	Less than 12 months		More than 12 months		Total
BHE Pipeline Group	$	3,324	$	21,878	$	25,202
BHE Transmission	695		348		1,043
Total	$	4,019	$	22,226	$	26,245

(10) BHE Shareholders' Equity

In May 2022, BHE redeemed at par 800,006 shares of its 4.00% Perpetual Preferred Stock from certain subsidiaries of Berkshire Hathaway Inc. for $800 million, plus an additional amount equal to the accrued dividends on the pro rata shares redeemed.

In June 2022, BHE purchased 740,961 shares of its common stock held by Mr. Gregory E. Abel, BHE's Chair, for $870 million. The purchase was pursuant to the terms of BHE's Shareholders Agreement.

(11) Components of Accumulated Other Comprehensive ~~Income (Loss),~~Loss, Net

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


		Unrecognized		Foreign		Unrealized				AOCI			Unrecognized		Foreign		Unrealized				AOCI
		Amounts on		Currency		(Losses) Gains				Attributable			Amounts on		Currency		(Losses) Gains				Attributable
		Retirement		Translation		on Cash		Noncontrolling		To BHE			Retirement		Translation		on Cash		Noncontrolling		To BHE
		Benefits		Adjustment		Flow Hedges		Interests		Shareholders, Net			Benefits		Adjustment		Flow Hedges		Interests		Shareholders, Net

Balance, December 31, 2020	Balance, December 31, 2020	$	(492)	$	(1,062)	$	(8)	$	10	$	(1,552)	Balance, December 31, 2020	$	(492)	$	(1,062)	$	(8)	$	10	$	(1,552)
Other comprehensive income		7		91		14		—		112
Balance, March 31, 2021		$	(485)	$	(971)	$	6	$	10	$	(1,440)
Other comprehensive income (loss)												Other comprehensive income (loss)	22		159		15		(4)		192
Balance, June 30, 2021												Balance, June 30, 2021	$	(470)	$	(903)	$	7	$	6	$	(1,360)

Balance, December 31, 2021	Balance, December 31, 2021	$	(318)	$	(1,086)	$	59	$	5	$	(1,340)	Balance, December 31, 2021	$	(318)	$	(1,086)	$	59	$	5	$	(1,340)
Other comprehensive income (loss)	Other comprehensive income (loss)	15		(110)		77		—		(18)		Other comprehensive income (loss)	40		(591)		103		—		(448)
Balance, March 31, 2022		$	(303)	$	(1,196)	$	136	$	5	$	(1,358)
Balance, June 30, 2022												Balance, June 30, 2022	$	(278)	$	(1,677)	$	162	$	5	$	(1,788)

2324

(1112) 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			Three-Month Periods						Six-Month Periods
		Ended March 31,			Ended June 30,						Ended June 30,
			2022			2021			2022		2021		2022		2021
Operating revenue:	Operating revenue:							Operating revenue:
PacifiCorp	PacifiCorp		$	1,297		$	1,242	PacifiCorp	$	1,314	$	1,298	$	2,611	$	2,540
MidAmerican Funding	MidAmerican Funding		1,005			1,067		MidAmerican Funding	897		693		1,902		1,760
NV Energy	NV Energy		693			591		NV Energy	899		767		1,592		1,358
Northern Powergrid	Northern Powergrid		315			300		Northern Powergrid	345		280		660		580
BHE Pipeline Group	BHE Pipeline Group		1,035			1,093		BHE Pipeline Group	856		706		1,891		1,799
BHE Transmission	BHE Transmission		183			180		BHE Transmission	183		182		366		362
BHE Renewables	BHE Renewables		167			190		BHE Renewables	294		267		461		457
HomeServices	HomeServices		1,207			1,232		HomeServices	1,672		1,763		2,879		2,995
BHE and Other(1)	BHE and Other(1)		128			186		BHE and Other(1)	152		108		280		294
Total operating revenue	Total operating revenue		$	6,030		$	6,081	Total operating revenue	$	6,612	$	6,064	$	12,642	$	12,145

Depreciation and amortization:
PacifiCorp $ 280 $ 264
MidAmerican Funding 250 207
NV Energy 140 136
Northern Powergrid 80 71
BHE Pipeline Group 131 118
BHE Transmission 58 58
BHE Renewables 65 60
HomeServices 15 11
BHE and Other(1)
3 2
Total depreciation and amortization $ 1,022 $ 927

Three-Month Periods
Ended March 31,
2022 2021
Operating income:
PacifiCorp $ 216 $ 234
MidAmerican Funding 100 48
NV Energy 62 70
Northern Powergrid 159 151
BHE Pipeline Group 538 618
BHE Transmission 83 81
BHE Renewables (2) 33
HomeServices 28 112
BHE and Other(1)
52 (14)
Total operating income 1,236 1,333
Interest expense (532) (530)
Capitalized interest 17 14
Allowance for equity funds 38 26
Interest and dividend income 23 21
Losses on marketable securities, net (1,257) (1,118)
Other, net 5 8
Total loss before income tax benefit and equity loss $ (470) $ (246)

Interest expense:
PacifiCorp $ 106 $ 107
MidAmerican Funding 82 78
NV Energy 51 52
Northern Powergrid 32 33
BHE Pipeline Group 37 38
BHE Transmission 38 38
BHE Renewables 41 40
HomeServices 1 1
BHE and Other(1)
144 143
Total interest expense $ 532 $ 530
Loss on common shares:
PacifiCorp $ 130 $ 169
MidAmerican Funding 241 144
NV Energy 29 34
Northern Powergrid 111 104
BHE Pipeline Group 322 383
BHE Transmission 62 59
BHE Renewables 104 16
HomeServices 21 84
BHE and Other(1)
(1,165) (1,027)
Total loss on common shares $ (145) $ (34)





Depreciation and amortization:
PacifiCorp	$	279	$	275	$	559	$	539
MidAmerican Funding	277		209		527		416
NV Energy	139		137		279		273
Northern Powergrid	100		73		180		144
BHE Pipeline Group	125		121		256		239
BHE Transmission	60		60		118		118
BHE Renewables	66		61		131		121
HomeServices	14		12		29		23
BHE and Other(1)	(1)		(1)		2		1
Total depreciation and amortization	$	1,059	$	947	$	2,081	$	1,874


		As of					Three-Month Periods				Six-Month Periods
		March 31,		December 31,			Ended June 30,				Ended June 30,
		2022		2021			2022		2021		2022		2021
Assets:
Operating income:						Operating income:
PacifiCorp	PacifiCorp	$	27,999	$	27,615	PacifiCorp	$	158	$	283	$	374	$	517
MidAmerican Funding	MidAmerican Funding	25,451		25,352		MidAmerican Funding	90		103		190		151
NV Energy	NV Energy	15,430		15,239		NV Energy	140		145		202		215
Northern Powergrid	Northern Powergrid	9,175		9,326		Northern Powergrid	110		126		269		277
BHE Pipeline Group	BHE Pipeline Group	20,486		20,434		BHE Pipeline Group	352		245		890		863
BHE Transmission	BHE Transmission	9,618		9,476		BHE Transmission	84		85		167		166
BHE Renewables	BHE Renewables	12,138		11,829		BHE Renewables	134		97		132		130
HomeServices	HomeServices	4,036		4,574		HomeServices	117		179		145		291
BHE and Other(1)	BHE and Other(1)	7,136		8,220		BHE and Other(1)	22		(55)		74		(69)
Total assets		$	131,469	$	132,065
Total operating income						Total operating income	1,207		1,208		2,443		2,541
Interest expense						Interest expense	(550)		(532)		(1,082)		(1,062)
Capitalized interest						Capitalized interest	18		14		35		28
Allowance for equity funds						Allowance for equity funds	42		30		80		56
Interest and dividend income						Interest and dividend income	30		26		53		47
Gains on marketable securities, net						Gains on marketable securities, net	2,528		1,966		1,271		848
Other, net						Other, net	(26)		48		(21)		56
Total income before income tax expense (benefit) and equity loss						Total income before income tax expense (benefit) and equity loss	$	3,249	$	2,760	$	2,779	$	2,514





Interest expense:
PacifiCorp	$	107	$	105	$	213	$	212
MidAmerican Funding	83		78		165		156
NV Energy	52		51		103		103
Northern Powergrid	34		32		66		65
BHE Pipeline Group	36		40		73		78
BHE Transmission	38		40		76		78
BHE Renewables	45		40		86		80
HomeServices	2		1		3		2
BHE and Other(1)	153		145		297		288
Total interest expense	$	550	$	532	$	1,082	$	1,062


Earnings on common shares:
PacifiCorp	$	83	$	226	$	213	$	395
MidAmerican Funding	204		211		445		355
NV Energy	93		100		122		134
Northern Powergrid	71		(25)		182		79
BHE Pipeline Group	199		100		521		483
BHE Transmission	62		60		124		119
BHE Renewables	249		181		353		197
HomeServices	84		135		105		219
BHE and Other(1)	1,839		1,256		674		229
Total earnings on common shares	$	2,884	$	2,244	$	2,739	$	2,210


	As of
	June 30,		December 31,
	2022		2021
Assets:
PacifiCorp	$	28,596	$	27,615
MidAmerican Funding	25,733		25,352
NV Energy	15,905		15,239
Northern Powergrid	9,343		9,326
BHE Pipeline Group	20,691		20,434
BHE Transmission	9,441		9,476
BHE Renewables	11,853		11,829
HomeServices	4,115		4,574
BHE and Other(1)	9,618		8,220
Total assets	$	135,295	$	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			Three-Month Periods						Six-Month Periods
		Ended March 31,			Ended June 30,						Ended June 30,
			2022			2021			2022		2021		2022		2021
Operating revenue by country:	Operating revenue by country:							Operating revenue by country:
U.S.	U.S.		$	5,534		$	5,597	U.S.	$	6,087	$	5,604	$	11,621	$	11,201
United Kingdom	United Kingdom		315			300		United Kingdom	345		280		660		580
Canada	Canada		181			177		Canada	180		180		361		357
Other	Other		—			7		Other	—		—		—		7
Total operating revenue by country	Total operating revenue by country		$	6,030		$	6,081	Total operating revenue by country	$	6,612	$	6,064	$	12,642	$	12,145


Loss before income tax benefit and equity loss by country:
Income before income tax expense (benefit) and equity loss by country:						Income before income tax expense (benefit) and equity loss by country:
U.S.	U.S.	$	(654)	$	(423)	U.S.	$	3,117	$	2,611	$	2,463	$	2,188
United Kingdom	United Kingdom	139		132		United Kingdom	87		104		226		236
Canada	Canada	46		39		Canada	46		46		92		85
Other	Other	(1)		6		Other	(1)		(1)		(2)		5
Total loss before income tax benefit and equity loss by country		$	(470)	$	(246)
Total income before income tax expense (benefit) and equity loss by country						Total income before income tax expense (benefit) and equity loss by country	$	3,249	$	2,760	$	2,779	$	2,514

The following table shows the change in the carrying amount of goodwill by reportable segment for the ~~three-month~~six-month period ended ~~March 31,~~June 30, 2022 (in millions):


											BHE Pipeline Group																																					BHE Pipeline Group
		PacifiCorp		MidAmerican Funding		NV Energy		Northern Powergrid					BHE Transmission				BHE Renewables				HomeServices								PacifiCorp						MidAmerican Funding			NV Energy				Northern Powergrid								BHE Transmission				BHE Renewables				HomeServices
										BHE Pipeline Group									Total																	BHE Pipeline Group								Total

December 31, 2021	December 31, 2021	$	1,129	$	2,102	$	2,369	$	992				$	1,814			$	1,563			$	95			$	1,586	$	11,650			December 31, 2021		$	1,129				$	2,102			$	2,369			$	992			$	1,814			$	1,563			$	95			$	1,586	$	11,650
Acquisitions	Acquisitions	—		—		—		—			—				—				—				3				3			Acquisitions		—					—				—				—				—				—				—				8				8
Foreign currency translation	Foreign currency translation	—		—		—		(20)			—				16				—				—				(4)			Foreign currency translation		—				—				—				(70)				—				(29)				—				—				(99)

March 31, 2022		$	1,129	$	2,102	$	2,369	$	972		$	1,814			$	1,579			$	95			$	1,589			$	11,649
June 30, 2022																														June 30, 2022		$	1,129			$	2,102			$	2,369			$	922			$	1,814			$	1,534			$	95			$	1,594			$	11,559

2627

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.

BHE is a holding company that owns a highly diversified portfolio of locally managed businesses principally engaged in the energy industry and is a consolidated subsidiary of Berkshire Hathaway. As of August 4, 2022, Berkshire Hathaway and family members and related or affiliated entities of the late Mr. Walter Scott, Jr., a former member of BHE's Board of Directors, beneficially owned 92% and 8%, respectively, of BHE's common stock.

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.

2728

Results of Operations for the Second Quarter and First ~~Quarter~~Six Months 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								Second Quarter					First Six Months
		2022		2021		Change					2022		2021		Change				2022		2021		Change
Operating revenue:	Operating revenue:											Operating revenue:
PacifiCorp	PacifiCorp	$	1,297	$	1,242	$	55	4	%			PacifiCorp	$	1,314	$	1,298	$	16	1	%	$	2,611	$	2,540	$	71	3	%
MidAmerican Funding	MidAmerican Funding	1,005		1,067		(62)		(6)				MidAmerican Funding	897		693		204		29		1,902		1,760		142		8
NV Energy	NV Energy	693		591		102		17				NV Energy	899		767		132		17		1,592		1,358		234		17
Northern Powergrid	Northern Powergrid	315		300		15		5				Northern Powergrid	345		280		65		23		660		580		80		14
BHE Pipeline Group	BHE Pipeline Group	1,035		1,093		(58)		(5)				BHE Pipeline Group	856		706		150		21		1,891		1,799		92		5
BHE Transmission	BHE Transmission	183		180		3		2				BHE Transmission	183		182		1		1		366		362		4		1
BHE Renewables	BHE Renewables	167		190		(23)		(12)				BHE Renewables	294		267		27		10		461		457		4		1
HomeServices	HomeServices	1,207		1,232		(25)		(2)				HomeServices	1,672		1,763		(91)		(5)		2,879		2,995		(116)		(4)
BHE and Other	BHE and Other	128		186		(58)		(31)				BHE and Other	152		108		44		41		280		294		(14)		(5)
Total operating revenue	Total operating revenue	$	6,030	$	6,081	$	(51)	(1)	%			Total operating revenue	$	6,612	$	6,064	$	548	9	%	$	12,642	$	12,145	$	497	4	%

Loss on common shares:
Earnings on common shares:												Earnings on common shares:
PacifiCorp	PacifiCorp	$	130	$	169	$	(39)	(23)	%			PacifiCorp	$	83	$	226	$	(143)	(63)	%	$	213	$	395	$	(182)	(46)	%
MidAmerican Funding	MidAmerican Funding	241		144		97		67				MidAmerican Funding	204		211		(7)		(3)		445		355		90		25
NV Energy	NV Energy	29		34		(5)		(15)				NV Energy	93		100		(7)		(7)		122		134		(12)		(9)
Northern Powergrid	Northern Powergrid	111		104		7		7				Northern Powergrid	71		(25)		96		*		182		79		103		*
BHE Pipeline Group	BHE Pipeline Group	322		383		(61)		(16)				BHE Pipeline Group	199		100		99		99		521		483		38		8
BHE Transmission	BHE Transmission	62		59		3		5				BHE Transmission	62		60		2		3		124		119		5		4
BHE Renewables(1)	BHE Renewables(1)	104		16		88		*				BHE Renewables(1)	249		181		68		38		353		197		156		79
HomeServices	HomeServices	21		84		(63)		(75)				HomeServices	84		135		(51)		(38)		105		219		(114)		(52)
BHE and Other	BHE and Other	(1,165)		(1,027)		(138)		(13)				BHE and Other	1,839		1,256		583		46		674		229		445		*
Total loss on common shares		$	(145)	$	(34)	$	(111)	*
Total earnings on common shares												Total earnings on common shares	$	2,884	$	2,244	$	640	29	%	$	2,739	$	2,210	$	529	24	%

(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~~increased $640 million for the ~~first~~second quarter of 2022 compared to 2021. The ~~first~~second quarter of 2022 included a pre-tax unrealized ~~loss~~gain of ~~$1,247~~$2,557 million ($~~985~~2,020 million after-tax) compared to a pre-tax unrealized ~~loss~~gain in the ~~first~~second quarter of 2021 of ~~$1,124~~$1,954 million ($~~818~~1,420 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 second quarter of 2022 was $864 million, an increase of $40 million, or 5%, compared to adjusted earnings on common shares in the second quarter of 2021 of $824 million.

Earnings on common shares increased $529 million for the first six months of 2022 compared to 2021. The first six months of 2022 included a pre-tax unrealized gain of $1,310 million ($1,035 million after-tax) compared to a pre-tax unrealized gain in the first six months of 2021 of $830 million ($602 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~~six months of 2022 was ~~$840~~$1,704 million, an increase of ~~$56~~$96 million, or 7%6%, compared to adjusted earnings on ~~common~~commons shares in the first ~~quarter~~six months of 2021 of ~~$784~~$1,608 million.

2829

The ~~decrease~~increases in earnings on common shares for the second quarter and for the first ~~quarter~~six months of 2022 compared to 2021 ~~was~~were primarily due to the following:

•The Utilities' earnings ~~increased $53~~decreased $157 million for the second quarter and $104 million for the first ~~quarter~~six months of 2022 compared to 2021, reflecting higher ~~electric utility margin~~operations and ~~favorable income tax~~maintenance expense, ~~from higher PTCs recognized, partially offset by~~ higher depreciation and amortization expense and unfavorable investment earnings, partially offset by higher ~~operations~~electric utility margin and ~~maintenance expense.~~a favorable income tax benefit from higher PTCs recognized. Electric retail customer volumes increased ~~3.4%~~1.3% for the first ~~quarter~~six months of 2022 compared to 2021, primarily due to higher customer usage and an increase in the average number of ~~customers and the favorable impact of weather;~~customers;

•~~BHE Pipeline Group's~~Northern Powergrid's earnings ~~decreased $61~~increased $96 million for the second quarter and $103 million for the first ~~quarter~~six months of 2022 compared to 2021, primarily due to a deferred income tax charge of $109 million related to a June 2021 enacted increase in the United Kingdom corporate income tax rate from 19% to 25% effective April 1, 2023;

•BHE Pipeline Group's earnings increased $99 million for the second quarter and $38 million for the first six months of 2022 compared to 2021, largely due to higher earnings at BHE GT&S from favorable state unitary income tax adjustments, the impacts of the EGTS general rate case and lower operations and maintenance expense. In addition, earnings for the first six months decreased from the effects of ~~$70 million at Northern Natural Gas from~~ higher ~~gross margin~~margins on natural gas sales and higher transportation revenue ~~recognized~~ in the first quarter of 2021 at Northern Natural Gas from the February 2021 polar vortex weather ~~event, partially offset by favorable recurring transportation revenue due to higher volumes and rates;~~event;

•BHE Renewables' earnings increased ~~$88~~$68 million for the second quarter and $156 million for the first ~~quarter~~six months of 2022 compared to 2021, primarily due to higher operating revenue from owned renewable energy projects and higher earnings onfrom tax equity investments, ~~of $96 million as a result of~~with the first six months being positively impacted by the unfavorable impacts ~~recognized~~ in the first quarter of 2021 from the February 2021 polar vortex weather event;

•HomeServices' earnings decreased ~~$63~~$51 million for the second quarter and $114 million for the first ~~quarter~~six months of 2022 compared to 2021, ~~primarily due to~~reflecting lower earnings from mortgage services ~~of $48 million,~~mainly from a decrease in funded ~~volume,~~volumes 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~~increased $583 million for the second quarter and $445 million for the first ~~quarter~~six months of 2022 compared to 2021, mainly due to ~~the $167~~$600 million ~~unfavorable comparative change~~and $433 million, respectively, of favorable changes in the after-tax unrealized position of the Company's investment in BYD Company Limited ~~partially offset by $21 million of~~and lower dividends on BHE's 4.00% Perpetual Preferred Stock issued to certain subsidiaries of Berkshire ~~Hathaway.~~Hathaway, partially offset by lower federal income tax credits recognized on a consolidated basis.

Reportable Segment Results

PacifiCorp

Operating revenue increased ~~$55~~$16 million for the ~~first~~second quarter of 2022 compared to 2021, primarily due to higher ~~retail revenue of $40 million and higher~~ wholesale and other revenue of ~~$15~~$30 million, partially offset by lower retail revenue of $14 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. Retail revenue decreased primarily due to lower retail volumes of $42 million, partially offset by price impacts of $28 million from higher average retail rates primarily due to tariff changes. Retail customer volumes decreased 3.3%, primarily due to the unfavorable impact of weather and lower customer usage, partially offset by an increase in the average number of customers.

Earnings decreased ~~$39~~$143 million for the ~~first~~second quarter of 2022 compared to 2021, primarily due to higher operations and maintenance expense of ~~$18~~$120 million, ~~higher depreciation and amortization expense of $16 million, from additional assets placed in-service, and increased~~an unfavorable income tax ~~expense,~~benefit and unfavorable changes in the cash surrender value of corporate-owned life insurance policies, partially offset by higher utility margin of ~~$14~~$6 million. Operations and maintenance expense increased mainly due to an increase in the loss accruals associated with the September 2020 wildfires, net of estimated insurance recoveries, and higher general and plant maintenance costs. Utility margin increased primarily due to lower purchased power costs and the higher wholesale and other revenue, partially offset by higher thermal generation costs, the lower retail revenue and lower deferred net power costs in accordance with established adjustment mechanisms. The unfavorable income tax benefit was largely due to lower PTCs recognized of $22 million and the effects of ratemaking of $18 million.

Operating revenue increased $71 million for the first six months of 2022 compared to 2021, primarily due to higher wholesale and other revenue of $45 million and higher retail revenue of $26 million. Wholesale and other revenue increased primarily due to higher average wholesale prices and higher wheeling revenue. Retail revenue increased primarily due to price impacts of $43 million from higher average retail rates largely due to tariff changes, partially offset by lower retail volumes of $17 million. Retail customer volumes decreased 0.7%, primarily due to the unfavorable impact of weather and lower customer usage, partially offset by an increase in the average number of customers.

Earnings decreased $182 million for the first six months of 2022 compared to 2021, primarily due to higher operations and maintenance expense of $138 million, an unfavorable income tax benefit, higher depreciation and amortization expense of $20 million, mainly from additional assets placed in-service, and unfavorable changes in the cash surrender value of corporate-owned life insurance policies, partially offset by higher utility margin of $20 million. Operations and maintenance expense increased mainly due to an increase in loss accruals related to the September 2020 wildfires, net of estimated insurance recoveries, and higher general and plant maintenance ~~and higher costs associated with additional wind-powered generating facilities placed in-service.~~costs. 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. The unfavorable income tax benefit was largely due to lower PTCs recognized of $27 million and the effects of ratemaking of $27 million.

MidAmerican Funding

Operating revenue ~~decreased $62~~increased $204 million for the ~~first~~second quarter of 2022 compared to 2021, primarily due to ~~lower~~higher electric operating revenue of $139 million and higher 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$65 million. Electric operating revenue increased due to higher retail revenue of $77 million and higher wholesale and other revenue of ~~$43~~$62 million. Electric retail revenue increased primarily due to higher recoveries through adjustment clauses of $59 million (fully offset in expense, primarily cost of sales) and higher ~~retail revenue~~customer volumes of ~~$20~~$11 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$59 million. Electric retail customer volumes increased ~~5.6%~~3.3% due to higher customer usage and the favorable impact of weather. Natural gas operating revenue increased due to higher purchased gas adjustment recoveries of $63 million (fully offset in cost of sales), primarily from a higher average per-unit cost of natural gas sold.

Earnings ~~increased $97~~decreased $7 million for the ~~first~~second quarter of 2022 compared to 2021, primarily due to higher depreciation and amortization expense of $68 million, unfavorable changes in the cash surrender value of corporate-owned life insurance policies, higher operations and maintenance expense of $16 million and higher interest expense of $5 million, partially offset by higher electric utility margin of ~~$89~~$68 million, a favorable income tax benefit and higher ~~natural gas utility margin~~allowances for equity and borrowed funds used during construction of ~~$18 million, partially offset by higher depreciation~~$9 million. Depreciation and amortization expense increased primarily from the impacts of ~~$43 million~~certain regulatory mechanisms and ~~lower nonregulated utility margin of $9 million.~~additional assets placed in-service. Electric utility margin increased primarily due to the higher retail and wholesale revenues, ~~as well as lower~~partially offset by higher purchased power costs. The favorable income tax benefit was largely due to higher PTCs recognized of ~~$52~~$39 million from ~~new~~higher wind-powered ~~generating facilities placed in-service,~~generation, partially offset by the effects of ratemaking.

Operating revenue increased $142 million for the first six months of 2022 compared to 2021, primarily due to higher electric operating revenue of $202 million, partially offset by lower natural gas operating revenue of $51 million. Electric operating revenue increased due to higher wholesale and other revenue of $105 million and higher retail revenue of $97 million. Electric wholesale and other revenue increased mainly due to higher average wholesale per-unit prices of $78 million and higher wholesale volumes of $28 million. Electric retail revenue increased primarily due to higher recoveries through adjustment clauses of $63 million (fully offset in expense, primarily cost of sales) and higher customer volumes of $28 million. Electric retail customer volumes increased 4.4% due to higher customer usage and the favorable impact of weather. Natural gas operating revenue decreased due to lower purchased gas adjustment recoveries of $71 million (fully offset in cost of sales), primarily from a lower average per-unit cost of natural gas sold driven largely by the February 2021 polar vortex weather event, partially offset by the impacts of certain regulatory recovery mechanisms of $5 million, the impacts of tax reform of $5 million and the favorable impact of weather of $5 million.

Earnings increased $90 million for the first six months of 2022 compared to 2021, primarily due to higher electric utility margin of $157 million, a favorable income tax benefit, higher natural gas utility margin of $20 million and higher allowances for equity and borrowed funds used during construction of $20 million, partially offset by higher depreciation and amortization expense of $111 million, unfavorable changes in the cash surrender value of corporate-owned life insurance policies, higher operations and maintenance expense of $15 million, higher interest expense of $9 million and lower nonregulated utility margin of $8 million. Electric utility margin increased primarily due to the higher wholesale and retail revenues, partially offset by higher purchased power costs. The favorable income tax benefit was mainly due to higher PTCs recognized of $91 million from higher wind-powered generation, partially offset by 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~~$132 million for the ~~first~~second quarter of 2022 compared to 2021, primarily due to higher electric operating revenue of ~~$90~~$123 million and higher natural gas operating revenue of ~~$13~~$8 million. Electric operating revenue increased primarily due to higher fully-bundled energy rates (fully offset in cost of sales) of ~~$88~~$121 million and higher regulatory-related revenue deferrals of $11 million, partially offset by unfavorable price impacts from changes in sales mix of $12 million. Electric retail customer volumes increased 0.4%, primarily due to an increase in the average number of $4customers, partially offset by the unfavorable impact of weather. Natural gas operating revenue increased primarily due to a higher average per-unit cost of natural gas sold (fully offset in cost of sales).

Earnings decreased $7 million for the second quarter of 2022 compared to 2021, mainly due to unfavorable changes in the cash surrender value of corporate-owned life insurance policies, higher depreciation and amortization expense of $3 million, primarily from additional plant placed in-service, and higher operations and maintenance expense of $2 million, primarily from an unfavorable change in earnings sharing at the Nevada Utilities, partially offset by higher interest and dividend income of $9 million, primarily from carrying charges on regulatory balances.

Operating revenue increased $234 million for the first six months of 2022 compared to 2021, primarily due to higher electric operating revenue of $213 million and higher natural gas operating revenue of $21 million. Electric operating revenue increased primarily due to higher fully-bundled energy rates (fully offset in cost of sales) of $209 million, higher regulatory-related revenue deferrals of $8 million and higher transmission and wholesale revenue of $4$5 million, partially offset by ~~lower regulatory-related revenue deferrals.~~unfavorable price impacts from changes in sales mix of $7 million. Electric retail customer volumes increased ~~4.0%~~2.0%, 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 primarily due to a higher average per-unit cost of natural gas sold (fully offset in cost of sales).

Earnings decreased $5$12 million for the first ~~quarter~~six months of 2022 compared to 2021, mainly due to unfavorable changes in the cash surrender value of corporate-owned life insurance policies, higher operations and maintenance expense of $6$8 million, ~~largely~~primarily from ~~increased plant operations and maintenance expenses and~~ an unfavorable change in earnings sharing at the Nevada ~~Utilities.~~Utilities and increased plant operations and maintenance expenses, and higher depreciation and amortization expense of $6 million, primarily from additional plant placed in-service, partially offset by higher interest and dividend income of $14 million, primarily from carrying charges on regulatory balances.

Northern Powergrid

Operating revenue increased ~~$15~~$65 million for the ~~first~~second quarter of 2022 compared to 2021, primarily due to higher distribution revenue of ~~$10~~$60 million and revenue from a gas project ~~reaching~~that commenced commercial operation in March 2022 totaling ~~$10 million and higher smart metering revenue of $6~~$40 million, partially offset by $9$40 million from the stronger U.S. dollar. Distribution revenue increased ~~from~~due to the recovery of Supplier of Last Resort payments totaling $45 million (fully offset in cost of sales) and higher tariff rates of ~~$14~~$25 million, partially offset by a ~~2.6%~~4.0% decline in units distributed of $3$9 million.

Earnings increased $7$96 million for the ~~first~~second quarter of 2022 compared to 2021, primarily due to a deferred income tax charge of $109 million related to a June 2021 enacted increase in the United Kingdom corporate income tax rate from 19% to 25% effective April 1, 2023 and the higher distribution ~~revenue,~~tariff rates, partially offset by $3higher distribution-related operating and depreciation expenses of $27 million, including higher storm-related costs, $9 million from the stronger U.S. dollar and the decline in units distributed.

Operating revenue increased $80 million for the first six months of 2022 compared to 2021, primarily due to higher distribution revenue of $70 million and revenue from a gas project that commenced commercial operation in March 2022 totaling $50 million, partially offset by $45 million from the stronger U.S. dollar. Distribution revenue increased due to the recovery of Supplier of Last Resort payments totaling $45 million (fully offset in cost of sales) and higher tariff rates of $39 million, partially offset by a 3.3% decline in units distributed of $12 million.

Earnings increased $103 million for the first six months of 2022 compared to 2021, primarily due to a deferred income tax charge of $109 million related to a June 2021 enacted increase in the United Kingdom corporate income tax rate from 19% to 25% effective April 1, 2023 and the higher distribution tariff rates, partially offset by higher distribution-related operating and depreciation expenses of $27 million, including higher storm-related costs, the decline in units distributed and $8 million from the stronger U.S. dollar.

BHE Pipeline Group

Operating revenue ~~decreased $58~~increased $150 million for the ~~first~~second quarter of 2022 compared to 2021, primarily due to higher non-regulated revenue of $58 million (largely offset in cost of sales) at BHE GT&S from favorable pricing, an increase in regulated gas transportation and storage services rates due to an agreement in principle for EGTS' general rate case of $25 million, higher LNG variable revenue of $25 million at Cove Point, higher transportation revenue of $17 million at Northern Natural Gas due to higher volumes and rates and higher gas sales of $9 million (largely offset in cost of sales) related to system balancing activities at Northern Natural Gas.

Earnings increased $99 million for the second quarter of 2022 compared to 2021, primarily due to higher earnings of $90 million at BHE GT&S largely due to favorable state unitary income tax adjustments, the impacts of the EGTS general rate case, lower operations and maintenance expense, favorable valuations of system gas and higher margin from non-regulated activities.

Operating revenue increased $92 million for the first six months of 2022 compared to 2021, primarily due to higher non-regulated revenue of $69 million (largely offset in cost of sales) at BHE GT&S from favorable pricing, higher LNG variable revenue of $38 million at Cove Point and an increase in regulated gas transportation and storage services rates due to an agreement in principle for EGTS' general rate case of $25 million, partially offset by lower gas sales of ~~$41~~$32 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~~and lower transportation revenue of ~~$13~~$3 million at ~~BHE GT&S and higher non-regulated revenue of $11 million at BHE GT&S.~~Northern Natural Gas. 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~~$45 million (largely offset in cost of sales) and transportation revenue increased ~~$29~~$46 million due to higher volumes and rates.

Earnings ~~decreased $61~~increased $38 million for the first ~~quarter~~six months of 2022 compared to 2021, primarily due to higher earnings of $99 million at BHE GT&S, partially offset by lower earnings of ~~$70~~$60 million at Northern Natural Gas. Earnings at BHE GT&S increased mainly due to favorable state unitary income tax adjustments, the impacts of the EGTS general rate case, lower operations and maintenance expense, favorable property tax assessments, increased earnings at Cove Point and higher margin from non-regulated activities. Earnings at Northern Natural Gas decreased 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$1 million for the second quarter and $4 million for the first ~~quarter~~six months of 2022 compared to 2021, ~~mainly~~primarily due to higher non-regulated revenue and higher revenue at AltaLink from recovery of higher costs, ~~and~~partially offset by $7 million from ~~additional assets placed in-service.~~the weaker U.S. dollar.

Earnings increased $3$2 million for the second quarter and $5 million for the first ~~quarter~~six months of 2022 compared to 2021, ~~mainly~~primarily due to the ~~additional assets placed in-service at AltaLink~~higher non-regulated revenue and improved equity earnings at Electric Transmission Texas, ~~LLC.~~LLC, partially offset by $2 million from the weaker U.S. dollar.

BHE Renewables

Operating revenue ~~decreased $23~~increased $27 million for the ~~first~~second quarter of 2022 compared to 2021, primarily due to higher wind, geothermal and solar revenues of $51 million from higher generation and pricing, partially offset by unfavorable changes in the valuation of certain derivative contracts totaling ~~$43~~$14 million and lower natural gas revenues of $13 million from lower generation.

Earnings increased $68 million for the second quarter of 2022 compared to 2021, primarily due to higher wind earnings of $58 million and higher geothermal earnings of $11 million, largely due to the higher operating revenue and lower maintenance costs. Wind earnings increased primarily due to higher earnings from owned projects of $31 million, largely from the higher operating revenue and favorable production tax credits offset by the unfavorable derivative contract valuations, and higher earnings from tax equity investments of $27 million, mainly from higher production tax credits offset by unfavorable performance.

Operating revenue increased $4 million for the first six months of 2022 compared to 2021, primarily due to higher wind, geothermal and solar revenues of $77 million from higher generation and pricing, partially offset by unfavorable changes in the valuation of certain derivative contracts totaling $57 million, lower natural gas revenues of $10 million from lower generation and lower hydro revenues of $8$6 million due to the transfer of the Casecnan generating facility to the Philippine National Irrigation Administration in December ~~2021, partially offset by higher wind, solar and geothermal revenues of $27 million from higher generation and pricing.~~2021.

Earnings increased ~~$88~~$156 million for the first ~~quarter~~six months of 2022 compared to 2021, primarily due to higher wind earnings of ~~$92~~$150 million, ~~and~~ higher solar earnings of $6$10 million, mainly due to the higher operating revenue, and higher geothermal earnings of $9 million, largely due to the higher operating revenue and lower maintenance costs, partially offset by lower hydro earnings of $10 million due to the Casecnan generating facility transfer. Wind earnings increased primarily due to higher earnings onfrom tax equity investments of ~~$96~~$123 million, mainly as a result of the unfavorable impacts ~~recognized~~ in the first quarter of 2021 from the February 2021 polar vortex weather ~~event.~~event and higher production tax credits offset by unfavorable performance, and higher earnings from owned projects of $27 million, largely from the higher operating revenue and favorable production tax credits offset by the unfavorable derivative contract valuations.

HomeServices

Operating revenue decreased ~~$25~~$91 million for the ~~first~~second quarter of 2022 compared to 2021, primarily due to lower mortgage revenue of ~~$97~~$63 million from a ~~41%~~29% decrease in funded volume due to a decline in refinance activity and lower brokerage and settlement services revenue of $26 million from a decrease in closed transaction volumes.

Earnings decreased $51 million for the second quarter of 2022 compared to 2021, primarily due to lower earnings from brokerage and settlement services of $33 million, largely attributable to the decrease in closed units at existing companies, and lower earnings from mortgage services of $22 million from the decrease in funded volume.

Operating revenue decreased $116 million for the first six months of 2022 compared to 2021, primarily due to lower mortgage revenue of $160 million from a 34% decrease in funded volume due to a decline in refinance activity, partially offset by higher brokerage revenue of ~~$78~~$67 million from a 9%3% increase in closed transaction volume. The increase in brokerage volume was due to acquisitions and ~~an 11%~~a 10% increase in average sales price at existing companies offset by ~~12%~~15% fewer closed units at existing companies.

Earnings decreased ~~$63~~$114 million for the first ~~quarter~~six months of 2022 compared to 2021, primarily due to lower earnings from mortgage services of ~~$48~~$71 million ~~from the decrease in funded volume,~~ and lower earnings from brokerage and settlement services of ~~$16~~$49 million ~~largely attributable~~due to the decrease in closed units at existing companies. Earnings from mortgage services were lower primarily due to the decrease in funded volumes, partially offset by favorable operating expense variances.

BHE and Other

Operating revenue increased $44 million for the second quarter of 2022 compared to 2021, primarily due to higher electricity and natural gas sales revenue at MidAmerican Energy Services, LLC, from favorable pricing and higher electricity volumes offset by lower natural gas volumes.

Earnings increased $583 million for the second quarter of 2022 compared to 2021, primarily due to the $600 million favorable comparative change in the after-tax unrealized position of the Company's investment in BYD Company Limited, lower corporate costs and $25 million of lower dividends on BHE's 4.00% Perpetual Preferred Stock issued to certain subsidiaries of Berkshire Hathaway, partially offset by $41 million of lower federal income tax credits recognized on a consolidated basis, unfavorable changes in the cash surrender value of corporate-owned life insurance policies and higher BHE corporate interest expense from an April 2022 debt issuance.

Operating revenue decreased ~~$58~~$14 million for the first ~~quarter~~six months of 2022 compared to 2021, primarily due to lower electricity sales revenue at MidAmerican Energy Services, LLC, from unfavorable ~~pricing.~~pricing offset by higher volumes, partially offset by higher natural gas sales revenue at MidAmerican Energy Services, LLC, from favorable pricing offset by lower volumes.

Earnings ~~decreased $138~~increased $445 million for the first ~~quarter~~six months of 2022 compared to 2021, primarily due to the ~~$167~~$433 million ~~unfavorable~~favorable comparative change in the after-tax unrealized position of the Company's investment in BYD Company Limited, ~~and $54~~lower corporate costs, $46 million of lower ~~federal income tax credits recognized~~dividends on ~~a consolidated basis, partially offset by~~BHE's 4.00% Perpetual Preferred Stock issued to certain subsidiaries of Berkshire Hathaway and higher earnings of ~~$41~~$45 million at MidAmerican Energy Services, LLC, mainly due to favorable changes in unrealized positions on derivative contracts, ~~lower corporate costs and $21~~partially offset by $95 million of lower ~~dividends~~federal income tax credits recognized on ~~BHE's 4.00% Perpetual Preferred Stock issued to certain subsidiaries~~a consolidated basis, unfavorable changes in the cash surrender value of ~~Berkshire Hathaway.~~corporate-owned life insurance policies and higher BHE corporate interest expense from an April 2022 debt issuance.

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,~~June 30, 2022, the Company's total net liquidity was as follows (in millions):


																BHE Pipeline																			BHE Pipeline
						MidAmerican		NV		Northern		BHE				Group and									MidAmerican		NV		Northern		BHE				Group and
		BHE		PacifiCorp		Funding		Energy		Powergrid		Canada		HomeServices		Other		Total			BHE		PacifiCorp		Funding		Energy		Powergrid		Canada		HomeServices		Other		Total

Cash and cash equivalents	Cash and cash equivalents	$	163	$	335	$	132	$	40	$	75	$	60	$	363	$	264	$	1,432	Cash and cash equivalents	$	61	$	390	$	497	$	83	$	327	$	60	$	294	$	369	$	2,081

Credit facilities(1)	Credit facilities(1)	3,500		1,200		1,509		650		263		860		3,300		—		11,282		Credit facilities(1)	3,500		1,200		1,509		650		259		835		3,400		—		11,353
Less:	Less:																			Less:
Short-term debt	Short-term debt	(110)		—		—		(161)		—		(375)		(1,203)		—		(1,849)		Short-term debt	(385)		—		—		—		(15)		(378)		(1,170)		—		(1,948)
Tax-exempt bond support and letters of credit	Tax-exempt bond support and letters of credit	—		(218)		(370)		—		—		(1)		—		—		(589)		Tax-exempt bond support and letters of credit	—		(218)		(370)		—		—		(1)		—		—		(589)
Net credit facilities	Net credit facilities	3,390		982		1,139		489		263		484		2,097		—		8,844		Net credit facilities	3,115		982		1,139		650		244		456		2,230		—		8,816

Total net liquidity~~(1)~~	Total net liquidity~~(1)~~	$	3,553	$	1,317	$	1,271	$	529	$	338	$	544	$	2,460	$	264	$	10,276	Total net liquidity~~(1)~~	$	3,176	$	1,372	$	1,636	$	733	$	571	$	516	$	2,524	$	369	$	10,897
Credit facilities:	Credit facilities:																			Credit facilities:
Maturity dates	Maturity dates	2024		2024		2022, 2024		2024		2024		2022, 2026		2022, 2023, 2026						Maturity dates	2025		2025		2023, 2025		2025		2024, 2026		2023, 2026		2022, 2023, 2026

(1) ~~Excludes $100~~Includes $15 million ~~of available liquidity under~~drawn on a ~~delayed draw term loan~~capital expenditure credit facility at ~~Nevada Power.~~Northern Powergrid Holdings.

Operating Activities

Net cash flows from operating activities for the ~~three-month~~six-month periods ended ~~March 31,~~June 30, 2022 and 2021 were ~~$2.2~~$5.1 billion and ~~$1.5~~$4.2 billion, respectively. The increase was primarily due to changes in working ~~capital.~~capital and favorable income tax cash flows.

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~~six-month periods ended ~~March 31,~~June 30, 2022 and 2021 were ~~$(1.6)~~$(3.5) billion and ~~$(1.4)~~$(3.0) billion, respectively. The change was primarily due to higher capital expenditures of ~~$258~~$534 million. Refer to "Future Uses of Cash" for a discussion of capital expenditures.

Financing Activities

Net cash flows from financing activities for the ~~three-month~~six-month period ended ~~March 31,~~June 30, 2022 was ~~$(310)~~$(605) million. Sources of cash totaled ~~$405~~$2,188 million and consisted of proceeds from subsidiary debt ~~issuances.~~issuances totaling $1.2 billion and proceeds from BHE senior debt issuances totaling $987 million. Uses of cash totaled ~~$715~~$2,793 million and consisted mainly of purchases of common stock totaling $870 million, preferred stock redemptions of $800 million, repayments of subsidiary debt totaling ~~$193~~$542 million, distributions to noncontrolling interests of $246 million and net repayments of short-term debt totaling ~~$165 million and distributions to noncontrolling interests of $117~~$54 million.

For ~~a discussion~~discussions of recent financing and BHE shareholders' equity transactions, refer to ~~Note~~Notes 4 and 10 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~~six-month period ended ~~March 31,~~June 30, 2021 was ~~$(191) million.~~$(1.2) billion. Sources of cash totaled ~~$409~~$784 million and consisted of proceeds from subsidiary debt issuances totaling $539 million and net proceeds from short-term ~~debt.~~debt of $245 million. Uses of cash totaled ~~$600 million~~$2.0 billion and consisted mainly of repayments of subsidiary debt totaling $1.2 billion, repayments of BHE senior debt totaling $450 million and distributions to noncontrolling interests of ~~$115 million and repayments of subsidiary debt totaling $26~~$234 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.

3336

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 Periods				Annual			Six-Month Periods				Annual
		Ended March 31,				Forecast			Ended June 30,				Forecast
		2021		2022		2022			2021		2022		2022
Capital expenditures by business:	Capital expenditures by business:							Capital expenditures by business:
PacifiCorp	PacifiCorp	$	439	$	374	$	2,359	PacifiCorp	$	819	$	894	$	2,279
MidAmerican Funding	MidAmerican Funding	298		459		2,013		MidAmerican Funding	720		862		1,913
NV Energy	NV Energy	167		272		1,282		NV Energy	365		541		1,228
Northern Powergrid	Northern Powergrid	179		169		652		Northern Powergrid	369		450		776
BHE Pipeline Group	BHE Pipeline Group	102		205		1,243		BHE Pipeline Group	308		457		1,252
BHE Transmission	BHE Transmission	77		47		191		BHE Transmission	156		95		210
BHE Renewables	BHE Renewables	18		19		184		BHE Renewables	80		60		185
HomeServices	HomeServices	8		12		60		HomeServices	18		20		55
BHE and Other(1)	BHE and Other(1)	7		(4)		13		BHE and Other(1)	13		3		16
Total	Total	$	1,295	$	1,553	$	7,997	Total	$	2,848	$	3,382	$	7,914


Capital expenditures by type:	Capital expenditures by type:							Capital expenditures by type:
Wind generation	Wind generation	$	97	$	155	$	990	Wind generation	$	483	$	300	$	886
Electric distribution	Electric distribution	427		392		1,737		Electric distribution	817		815		1,763
Electric transmission	Electric transmission	157		258		1,820		Electric transmission	339		620		1,773
Natural gas transmission and storage	Natural gas transmission and storage	85		103		982		Natural gas transmission and storage	308		336		976
Solar generation	Solar generation	4		51		220		Solar generation	67		100		230
Other	Other	525		594		2,248		Other	834		1,211		2,286
Total	Total	$	1,295	$	1,553	$	7,997	Total	$	2,848	$	3,382	$	7,914

(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$5 million and $172 million for the ~~three-month period~~six-month periods ended ~~March 31, 2022.~~June 30, 2022 and 2021, respectively. Planned spending for the construction of additional wind-powered generating facilities totals ~~$142~~$106 million for the remainder of 2022.

◦Repowering of wind-powered generating facilities at MidAmerican Energy totaling ~~$120~~$214 million and ~~$24~~$82 million for the ~~three-month~~six-month periods ended ~~March 31,~~June 30, 2022 and 2021, respectively. Planned spending for the repowering of wind-powered generating facilities totals ~~$386~~$314 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~~593 MWs of current repowering projects not in-service as of ~~March 31,~~June 30, 2022, ~~511~~292 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$4 million and ~~$27~~$79 million for the ~~three-month~~six-month periods ended ~~March 31,~~June 30, 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~~$24 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.

3437

◦Planned acquisition and repowering of two wind-powered generating facilities by PacifiCorp totaling $3$7 million and $1$2 million (excluding the 2021 sale of wind turbines) for the ~~three-month~~six-month periods ended ~~March 31,~~June 30, 2022 and 2021, respectively. In 2021, PacifiCorp sold wind turbines previously acquired from a third party to BHE Wind, LLC, an indirect wholly owned subsidiary of BHE, for $6 million. The repowered facilities are expected to be placed in-service in 2023 and 2024. Planned spending for acquiring and repowering generating facilities totals ~~$18~~$14 million for the remainder of 2022.

◦Repowering of wind-powered generating facilities at BHE Renewables totaling ~~$25~~$45 million for the ~~three-month~~six-month period ended ~~March 31,~~June 30, 2022. Planned spending for repowering generating facilities totals ~~$64~~$43 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~~$296 million and ~~$16~~$35 million for the ~~three-month~~six-month periods ended ~~March 31,~~June 30, 2022 and 2021, respectively. Planned spending for these Energy Gateway Transmission segments to be placed in-service in 2024-2026 totals ~~$814~~$614 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~~$60 million and ~~$19~~$41 million for the ~~three-month~~six-month periods ended ~~March 31,~~June 30, 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~~$109 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~~$77 million and $3$63 million for the ~~three-month~~six-month periods ended ~~March 31,~~June 30, 2022 and 2021, respectively and planned spending of ~~$96~~$63 million for the remainder of 2022.

◦Construction of a solar-powered generating facility at Nevada Power totaling $7$23 million and $5 million for the ~~three-month period~~six-month periods ended ~~March 31,~~June 30, 2022 and 2021, respectively and planned spending of ~~$74~~$67 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.

~~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,~~June 30, 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 those disclosed in Notes 4 and 8 of the ~~recent financing transactions previously discussed.~~Notes to Consolidated Financial Statements in Part I, Item 1 of this Form 10-Q.

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.

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.~~2023, that includes cost increases associated with the implementation of PacifiCorp's wildfire mitigation and vegetation management plans. Parties to the case filed testimony in June 2022. PacifiCorp filed reply testimony in July 2022 supporting an overall rate increase of $94 million but proposing that the request be capped at PacifiCorp's original request. A hearing in the rate case will be held in September 2022 with an order expected in December 2022.

In May 2022, PacifiCorp filed its 2021 power cost adjustment mechanism ("PCAM"), which is the first time since the mechanism has been in place that a rate change has been warranted. After consideration of the mechanism's deadband, sharing band and earnings test, PacifiCorp is requesting recovery of $52 million, or a 4.2% increase, to become effective January 1, 2023. This request is incremental to the rate change sought in the general rate case.

In July 2022, PacifiCorp filed an application requesting approval of an automatic adjustment clause with a balancing account to recover costs associated with implementing PacifiCorp's wildfire protection plan in Oregon. Oregon Senate Bill 762 provides for utilities to timely recover these costs through an automatic adjustment clause. The filing requests a rate increase of $20 million, or 1.6%, to recover incremental costs in 2022. While PacifiCorp requested an effective date of August 24, 2022, the OPUC has suspended the filing for further review.

Washington

In June 2021, PacifiCorp filed a power cost only rate case to update baseline net power costs for 2022. ~~The proposed~~PacifiCorp requested a $13 million, or 3.7%, rate increase ~~has a requested~~with an 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.

In June 2022, PacifiCorp filed its 2021 PCAM and the new tracking mechanism for PTCs approved in the 2021 general rate case. For the 2021 PCAM, PacifiCorp is requesting recovery of $26 million, or a 6.5% increase. PacifiCorp proposed that the 2021 PCAM be amortized over two years, rather than the one-year period required under the current terms of the PCAM. For the new 2021 PTC tracker, PacifiCorp is seeking recovery of $3 million, or an 0.8% increase. Should the WUTC approve the proposal to extend the amortization period of the 2021 PCAM from one to two years, the combined annual increase would be $16 million, or 4.0%, effective January 1, 2023.

California

In May 2022, PacifiCorp filed a general rate case requesting an overall rate change of $28 million, or 25.7%, to become effective January 1, 2023. In June 2022, a proposed procedural schedule was developed that would result in a decision in August 2023.

MidAmerican Energy

South Dakota

In May 2022, MidAmerican Energy filed a request with the South Dakota Public Utilities Commission ("SDPUC") for an increase in its South Dakota retail natural gas rates, which would increase revenue by $7 million annually. If approved, the requested rates would increase retail customers' bills by an average of 6.4%.

Wind PRIME

In January 2022, MidAmerican Energy filed an application with the IUB for advance ratemaking principles for Wind PRIME. If approved, MidAmerican Energy expects to proceed with Wind PRIME, which consists of up to 2,042 MWs of new wind generation and up to 50 MWs of solar generation. If all of Wind PRIME generation is constructed, MidAmerican Energy will own over 9,300 MWs of wind generation and nearly 200 MWs of solar generation. Wind PRIME is projected to allow MidAmerican Energy to generate renewable energy greater than or equal to all of its Iowa retail customers' annual energy needs. MidAmerican Energy secured sufficient safe harbor equipment necessary to remain eligible for 60% PTCs under current tax law. Procedural hearings with the IUB are scheduled to begin in October 2022.

NV Energy (Nevada Power and Sierra Pacific)

Regulatory Rate Review

In June 2022, Sierra Pacific filed a regulatory rate review with the PUCN that requested an annual revenue increase of $88 million, or 9.7%. In addition, a filing was made to revise depreciation rates based on a study, the results of which are reflected in the proposed revenue requirement. An order is expected by the end of 2022 and, if approved, would be effective January 1, 2023.

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.

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.

Northern Powergrid Distribution Companies

GEMA, through Ofgem, is undertaking its scheduled review of the electricity distribution price control to put in place a new price control at the end of the current period that ends March 2023. The new price control ("ED2") will run for five years from April 2023 to March 2028. In December 2020 and March 2021, GEMA published its decision on the methodology it will use to set ED2. This confirmed that Ofgem will maintain many aspects of the current price control and that the changes being made will generally follow the template that was set by the price controls implemented in April 2021 for transmission and gas distribution in Great Britain. Specific changes include new service standard incentives and mechanisms to adjust cost allowances in specific circumstances, while others will be discontinued, and partially updating the allowed return on equity within the period for changes in the interest rate on government bonds.

In December 2021, Northern Powergrid published and filed its business plan with Ofgem, setting out its detailed approach for 2023-2028 including the cost allowances this approach would require. In June 2022, Ofgem published its draft determinations, which included an allowed cost of equity of 4.75% plus inflation (calculated using the United Kingdom's consumer price index including owner occupiers' housing costs). When placed on a comparable footing, by adjusting for differences in the assumed equity ratio and the measure of inflation used, this working assumption is approximately two percentage points lower than the current cost of equity for electricity distribution. Ofgem's proposals also set out cost allowances and associated expectations. Final values from Ofgem are expected in late 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~~In June 2022, the parties reached an agreement in principle and the litigation procedural schedule was ordered held in abeyance for 90 days to enable the parties to finalize a settlement. The settlement is ~~pending.~~expected to be filed by September 30, 2022. As of June 30, 2022, EGTS' provision for rate refund for April 2022 through June 2022 totaled $35 million and was included in other current liabilities on the Consolidated Balance Sheet.

Northern Natural Gas

In July 2022, Northern Natural Gas filed a general rate case that proposed an overall annual cost-of-service of $1.3 billion. This is an increase of $323 million above the cost of service filed in its 2019 rate case of $1.0 billion. Depreciation on increased rate base and an increase in depreciation and negative salvage rates account for $115 million of the $323 million increase in the filed cost of service. Northern Natural Gas has requested increases in various rates, including transportation reservation rates ranging from approximately 45% in the Field Area to 120% in the Market Area to be implemented, subject to refund, on August 1, 2022. In July 2022, the FERC issued an order that suspended the rates proposed for five months following the proposed effective date, until January 1, 2023, subject to refund and the outcome of hearing procedures.

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.

In March 2022, AltaLink filed a review and variance application ~~with the AUC. The application requested~~requesting 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. In May 2022, the AUC issued a decision with respect to AltaLink's application to review and vary its proposed $120 million refund of accumulated depreciation surplus. The ~~existing pressures~~AUC found that a material decline in Alberta's economic circumstances is not sufficient evidence to warrant the refund. In May 2022, the AUC approved AltaLink's revised total 2022 and 2023 revenue requirementof C$879 million and C$883 million, respectively, allowing AltaLink to fully deliver on ~~Albertans and Alberta businesses that resulted from the COVID-19 pandemic have been compounded by cost increases due~~its flat-for-five commitment to ~~higher inflation and global supply chain disruptions.~~customers.

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~~In June 2022, the AUC initiated the second stage ~~the AUC plans~~ to ~~commence the 2024 GCOC proceeding to establish~~explore a formula-based approach into determine the ~~third quarter of 2022~~return on equity for 2024 and ~~to conclude in the second quarter of 2023.~~future test periods.

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.

Climate Change

Affordable Clean Energy Rule

In June 2014, the EPA released proposed regulations to address greenhouse gas emissions from existing fossil-fueled generating facilities, referred to as the Clean Power Plan, under Section 111(d) of the Clean Air Act. The EPA's proposal calculated state-specific emission rate targets to be achieved based on the "best system of emission reduction." In August 2015, the final Clean Power Plan was released, which established the best system of emission reduction as including: (a) heat rate improvements; (b) increased utilization of existing combined-cycle natural gas-fueled generating facilities; and (c) increased deployment of new and incremental non-carbon generation placed in-service after 2012. The Clean Power Plan was stayed by the United States Supreme Court in February 2016 while litigation proceeded. On June 19, 2019, the EPA repealed the Clean Power Plan and issued the Affordable Clean Energy rule. In the Affordable Clean Energy rule, the EPA determined that the best system of emission reduction for existing coal-fueled generating facilities is limited to actions that can be taken at a point source facility, specifically heat rate improvements, and identified a set of candidate technologies and measures that could improve heat rates. Measures taken to meet the standards of performance must be achieved at the source itself. The Affordable Clean Energy rule was challenged by environmental and health groups in the D.C. Circuit. On January 19, 2021, the D.C. Circuit vacated and remanded the Affordable Clean Energy rule to the EPA, finding that the rule "rested critically on a mistaken reading of the Clean Air Act" that limited the best system of emission reduction to actions taken at a facility. In October 2021, the United States Supreme Court agreed to hear an appeal of that decision. Arguments in the case were held February 28, 2022, and on June 30, 2022, the United States Supreme Court issued its decision regarding the scope of the EPA's authority to regulate greenhouse gas emissions under the Clean Air Act. The United States Supreme Court held that the "generation shifting" approach in the Clean Power Plan exceeded the powers granted to the EPA by Congress, although the court did not address whether the EPA may only adopt measures applied at the individual source as it did in the Affordable Clean Energy rule. A key area where the EPA went astray was using the Clean Power Plan to give states the option to promulgate regulations that would encourage "generation shifting," or moving away from higher-polluting power sources like coal to lower-polluting sources like natural gas or renewables. The United States Supreme Court found that type of regulation, which would impact larger economic forces beyond the fence lines of individual generating facilities, is not permitted under Section 111(d) of the Clean Air Act. The United States Supreme Court reversed the D.C. Circuit's vacatur of the Affordable Clean Energy rule and remanded the case for further proceedings. The ruling has no immediate impact on the Registrants, as there is no Section 111(d) rule currently in effect. The Biden administration plans to propose by March 2023 its own rule to replace the Clean Power Plan and Affordable Clean Energy rule.

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,~~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.

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. On May 24, 2022, the EPA disapproved the Utah and Wyoming interstate ozone SIPs. 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.~~NAAQS. 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~~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~~accepted comments on the proposal through June 6,21, 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.

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~~in August 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. The EPA and PacifiCorp executed an administrative order on consent June 9, 2022, covering compliance for Jim Bridger Units 1 and 2 under the regional haze rule. The federal order contains the same emission and operating limits as the Wyoming consent decree and adds federal approval of the compliance pathway outlined in the state consent decree, including revision of the SIP to include conversion of Jim Bridger Units 1 and 2 to natural gas. The order includes a one-year deadline to complete the SIP revision. The proposed SIP revision reflecting these agreements is currently being evaluated under parallel processes by the state of Wyoming and the EPA. The Wyoming Department of Environmental Quality submitted the Jim Bridger Units 1 and 2 proposed SIP revision to federal land managers for a 60-day consultation on June 7, 2022. The federal land managers must complete review and provide comments by August 8, 2022. For the second round of regional haze planning, Wyoming determined that no controls will be necessary on any Wyoming resources to make reasonable ~~progress for the second round of regional haze planning.~~progress. It is estimated that the state will submit a final state-approved implementation plan to the EPA in ~~May~~August 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~~The Nevada Division of Environmental Protection ~~will begin the~~accepted public comment ~~period for~~on its SIP ~~by May~~through July 25, 2022, and is on track to submit the final SIP to the EPA ~~by June~~in August 2022.

4348

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.

4449

PacifiCorp and its subsidiaries

Consolidated Financial Section

4550

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,~~June 30, 2022, the related consolidated statements of operations and changes in shareholders' equity ~~and cash flows~~ for the three-month and six-month periods ended ~~March 31,~~June 30, 2022 and 2021, and of cash flows for the six-month periods ended June 30, 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.

/s/ Deloitte & Touche LLP

Portland, Oregon

~~April 29,~~August 5, 2022

4651

PACIFICORP AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS (Unaudited)

(Amounts in millions)


		As of					As of
		March 31,		December 31,			June 30,		December 31,
		2022		2021			2022		2021
ASSETS	ASSETS					ASSETS
Current assets:	Current assets:					Current assets:
Cash and cash equivalents	Cash and cash equivalents	$	335	$	179	Cash and cash equivalents	$	390	$	179
Trade receivables, net	Trade receivables, net	674		725		Trade receivables, net	730		725
Other receivables, net	Other receivables, net	49		52		Other receivables, net	49		52
Inventories	Inventories	479		474		Inventories	490		474
Derivative contracts	Derivative contracts	145		76		Derivative contracts	127		76

Regulatory assets	Regulatory assets	125		65		Regulatory assets	150		65

Other current assets	Other current assets	163		150		Other current assets	83		150
Total current assets	Total current assets	1,970		1,721		Total current assets	2,019		1,721

Property, plant and equipment, net	Property, plant and equipment, net	23,081		22,914		Property, plant and equipment, net	23,414		22,914
Regulatory assets	Regulatory assets	1,231		1,287		Regulatory assets	1,257		1,287
Other assets	Other assets	562		534		Other assets	750		534

Total assets	Total assets	$	26,844	$	26,456	Total assets	$	27,440	$	26,456

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

4752

PACIFICORP AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS (Unaudited) (continued)

(Amounts in millions)


		As of					As of
		March 31,		December 31,			June 30,		December 31,
		2022		2021			2022		2021
LIABILITIES AND SHAREHOLDERS' EQUITY	LIABILITIES AND SHAREHOLDERS' EQUITY					LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:	Current liabilities:					Current liabilities:
Accounts payable	Accounts payable	$	724	$	680	Accounts payable	$	848	$	680
Accrued interest	Accrued interest	115		121		Accrued interest	122		121
Accrued property, income and other taxes	Accrued property, income and other taxes	113		78		Accrued property, income and other taxes	189		78

Accrued employee expenses	Accrued employee expenses	109		89		Accrued employee expenses	117		89

Current portion of long-term debt	Current portion of long-term debt	155		155		Current portion of long-term debt	455		155
Regulatory liabilities	Regulatory liabilities	114		118		Regulatory liabilities	115		118
Other current liabilities	Other current liabilities	196		219		Other current liabilities	195		219
Total current liabilities	Total current liabilities	1,526		1,460		Total current liabilities	2,041		1,460

Long-term debt	Long-term debt	8,567		8,575		Long-term debt	8,268		8,575
Regulatory liabilities	Regulatory liabilities	2,807		2,650		Regulatory liabilities	2,833		2,650
Deferred income taxes	Deferred income taxes	2,886		2,847		Deferred income taxes	2,908		2,847
Other long-term liabilities	Other long-term liabilities	1,014		1,011		Other long-term liabilities	1,364		1,011
Total liabilities	Total liabilities	16,800		16,543		Total liabilities	17,414		16,543

Commitments and contingencies (Note 8)		0		0
Commitments and contingencies (Note 9)						Commitments and contingencies (Note 9)	0		0

Shareholders' equity:	Shareholders' equity:					Shareholders' equity:
Preferred stock	Preferred stock	2		2		Preferred stock	2		2
Common stock - 750 shares authorized, no par value, 357 shares issued and outstanding	Common stock - 750 shares authorized, no par value, 357 shares issued and outstanding	—		—		Common stock - 750 shares authorized, no par value, 357 shares issued and outstanding	—		—
Additional paid-in capital	Additional paid-in capital	4,479		4,479		Additional paid-in capital	4,479		4,479
Retained earnings	Retained earnings	5,579		5,449		Retained earnings	5,561		5,449
Accumulated other comprehensive loss, net	Accumulated other comprehensive loss, net	(16)		(17)		Accumulated other comprehensive loss, net	(16)		(17)
Total shareholders' equity	Total shareholders' equity	10,044		9,913		Total shareholders' equity	10,026		9,913

Total liabilities and shareholders' equity	Total liabilities and shareholders' equity	$	26,844	$	26,456	Total liabilities and shareholders' equity	$	27,440	$	26,456

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

4853

PACIFICORP AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)

(Amounts in millions)


		Three-Month Periods			Three-Month Periods						Six-Month Periods
		Ended March 31,			Ended June 30,						Ended June 30,
			2022			2021			2022		2021		2022		2021

Operating revenue	Operating revenue		$	1,297		$	1,242	Operating revenue	$	1,314	$	1,298	$	2,611	$	2,540

Operating expenses:	Operating expenses:							Operating expenses:
Cost of fuel and energy	Cost of fuel and energy		465			424		Cost of fuel and energy	451		441		916		865
Operations and maintenance	Operations and maintenance		277			259		Operations and maintenance	375		255		652		514
Depreciation and amortization	Depreciation and amortization		280			264		Depreciation and amortization	279		275		559		539
Property and other taxes	Property and other taxes		59			61		Property and other taxes	51		43		110		104
Total operating expenses	Total operating expenses		1,081			1,008		Total operating expenses	1,156		1,014		2,237		2,022

Operating income	Operating income		216			234		Operating income	158		284		374		518

Other income (expense):	Other income (expense):							Other income (expense):
Interest expense	Interest expense		(106)			(107)		Interest expense	(107)		(105)		(213)		(212)
Allowance for borrowed funds	Allowance for borrowed funds		6			6		Allowance for borrowed funds	6		6		12		12
Allowance for equity funds	Allowance for equity funds		13			13		Allowance for equity funds	15		12		28		25
Interest and dividend income	Interest and dividend income		7			6		Interest and dividend income	7		5		14		11
Other, net	Other, net		(4)			6		Other, net	(5)		4		(9)		10
Total other income (expense)	Total other income (expense)		(84)			(76)		Total other income (expense)	(84)		(78)		(168)		(154)

Income before income tax expense (benefit)			132			158
Income tax expense (benefit)			2			(11)
Income before income tax benefit								Income before income tax benefit	74		206		206		364
Income tax benefit								Income tax benefit	(8)		(19)		(6)		(30)
Net income	Net income		$	130		$	169	Net income	$	82	$	225	$	212	$	394

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

4954

PACIFICORP AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY (Unaudited)

(Amounts in millions)


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

Balance, March 31, 2021														Balance, March 31, 2021	$	2	$	—	$	4,479	$	4,880	$	(19)	$	9,342
Net income														Net income	—		—		—		225		—		225

Balance, June 30, 2021														Balance, June 30, 2021	$	2	$	—	$	4,479	$	5,105	$	(19)	$	9,567

Balance, December 31, 2020	Balance, December 31, 2020	$	2	$	—	$	4,479	$	4,711	$	(19)	$	9,173	Balance, December 31, 2020	$	2	$	—	$	4,479	$	4,711	$	(19)	$	9,173
Net income	Net income	—		—		—		169		—		169		Net income	—		—		—		394		—		394

Balance, March 31, 2021		$	2	$	—	$	4,479	$	4,880	$	(19)	$	9,342
Balance, June 30, 2021														Balance, June 30, 2021	$	2	$	—	$	4,479	$	5,105	$	(19)	$	9,567

Balance, March 31, 2022														Balance, March 31, 2022	$	2	$	—	$	4,479	$	5,579	$	(16)	$	10,044
Net income														Net income	—		—		—		82		—		82

Common stock dividends declared														Common stock dividends declared	—		—		—		(100)		—		(100)
Balance, June 30, 2022														Balance, June 30, 2022	$	2	$	—	$	4,479	$	5,561	$	(16)	$	10,026

Balance, December 31, 2021	Balance, December 31, 2021	$	2	$	—	$	4,479	$	5,449	$	(17)	$	9,913	Balance, December 31, 2021	$	2	$	—	$	4,479	$	5,449	$	(17)	$	9,913
Net income	Net income	—		—		—		130		—		130		Net income	—		—		—		212		—		212
Other comprehensive income	Other comprehensive income	—		—		—		—		1		1		Other comprehensive income	—		—		—		—		1		1

Balance, March 31, 2022		$	2	$	—	$	4,479	$	5,579	$	(16)	$	10,044
Common stock dividends declared														Common stock dividends declared	—		—		—		(100)		—		(100)
Balance, June 30, 2022														Balance, June 30, 2022	$	2	$	—	$	4,479	$	5,561	$	(16)	$	10,026

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

5055

PACIFICORP AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)

(Amounts in millions)


		Three-Month Periods					Six-Month Periods
		Ended March 31,					Ended June 30,
		2022		2021			2022		2021
Cash flows from operating activities:	Cash flows from operating activities:					Cash flows from operating activities:
Net income	Net income	$	130	$	169	Net income	$	212	$	394
Adjustments to reconcile net income to net cash flows from operating activities:	Adjustments to reconcile net income to net cash flows from operating activities:					Adjustments to reconcile net income to net cash flows from operating activities:
Depreciation and amortization	Depreciation and amortization	280		264		Depreciation and amortization	559		539
Allowance for equity funds	Allowance for equity funds	(13)		(13)		Allowance for equity funds	(28)		(25)
Changes in regulatory assets and liabilities	Changes in regulatory assets and liabilities	(9)		(4)		Changes in regulatory assets and liabilities	(76)		(98)
Deferred income taxes and amortization of investment tax credits	Deferred income taxes and amortization of investment tax credits	19		13		Deferred income taxes and amortization of investment tax credits	29		22
Other, net	Other, net	4		(2)		Other, net	12		(1)
Changes in other operating assets and liabilities:	Changes in other operating assets and liabilities:					Changes in other operating assets and liabilities:
Trade receivables, other receivables and other assets	Trade receivables, other receivables and other assets	59		61		Trade receivables, other receivables and other assets	(142)		(10)
Inventories	Inventories	(5)		7		Inventories	(16)		8
Derivative collateral, net	Derivative collateral, net	22		7		Derivative collateral, net	69		35
Prepaid expenses		—		6

Accrued property, income and other taxes, net	Accrued property, income and other taxes, net	15		12		Accrued property, income and other taxes, net	152		79
Accounts payable and other liabilities	Accounts payable and other liabilities	35		(51)		Accounts payable and other liabilities	442		103
Net cash flows from operating activities	Net cash flows from operating activities	537		469		Net cash flows from operating activities	1,213		1,046

Cash flows from investing activities:	Cash flows from investing activities:					Cash flows from investing activities:
Capital expenditures	Capital expenditures	(374)		(439)		Capital expenditures	(894)		(819)
Other, net	Other, net	3		(1)		Other, net	6		—
Net cash flows from investing activities	Net cash flows from investing activities	(371)		(440)		Net cash flows from investing activities	(888)		(819)

Cash flows from financing activities:	Cash flows from financing activities:					Cash flows from financing activities:

Repayments of long-term debt	Repayments of long-term debt	(9)		—		Repayments of long-term debt	(9)		(400)
Net proceeds from short-term debt	Net proceeds from short-term debt	—		2		Net proceeds from short-term debt	—		208

Dividends paid						Dividends paid	(100)		—
Other, net	Other, net	(2)		(1)		Other, net	(2)		(4)
Net cash flows from financing activities	Net cash flows from financing activities	(11)		1		Net cash flows from financing activities	(111)		(196)

Net change in cash and cash equivalents and restricted cash and cash equivalents	Net change in cash and cash equivalents and restricted cash and cash equivalents	155		30		Net change in cash and cash equivalents and restricted cash and cash equivalents	214		31
Cash and cash equivalents and restricted cash and cash equivalents at beginning of period	Cash and cash equivalents and restricted cash and cash equivalents at beginning of period	186		19		Cash and cash equivalents and restricted cash and cash equivalents at beginning of period	186		19
Cash and cash equivalents and restricted cash and cash equivalents at end of period	Cash and cash equivalents and restricted cash and cash equivalents at end of period	$	341	$	49	Cash and cash equivalents and restricted cash and cash equivalents at end of period	$	400	$	50

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

5156

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,~~June 30, 2022 and for the ~~three-month~~three- and six-month periods ended ~~March 31,~~June 30, 2022 and 2021. The Consolidated Statements of Comprehensive Income have been omitted as net income materially equals comprehensive income for the ~~three-month~~three- and six-month periods ended ~~March 31,~~June 30, 2022 and 2021. The results of operations for the ~~three-month~~three- and six-month periods ended ~~March 31,~~June 30, 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~~six-month period ended ~~March 31, 2022.~~June 30, 2022, other than the updates associated with PacifiCorp's estimates of loss contingencies related to the Oregon and California 2020 wildfires (the "2020 Wildfires") as discussed in Note 9.

(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~~nuclear decommissioning and ~~nuclear decommissioning~~custodial 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					As of
		March 31,		December 31,			June 30,		December 31,
		2022		2021			2022		2021
Cash and cash equivalents	Cash and cash equivalents	$	335	$	179	Cash and cash equivalents	$	390	$	179
Restricted cash and cash equivalents included in other current assets	Restricted cash and cash equivalents included in other current assets	4		4		Restricted cash and cash equivalents included in other current assets	7		4
Restricted cash included in other assets	Restricted cash included in other assets	2		3		Restricted cash included in other assets	3		3
Total cash and cash equivalents and restricted cash and cash equivalents	Total cash and cash equivalents and restricted cash and cash equivalents	$	341	$	186	Total cash and cash equivalents and restricted cash and cash equivalents	$	400	$	186

5257

(3) Property, Plant and Equipment, Net

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

As of
March 31, December 31,
Depreciable Life 2022 2021
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-service 32,402 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, net 21,716 21,773
Construction work-in-progress 1,365 1,141
Property, plant and equipment, net $ 23,081 $ 22,914


		As of
		June 30,		December 31,
	Depreciable Life	2022		2021
Utility Plant:
Generation	15 - 59 years	$	13,770	$	13,679
Transmission	60 - 90 years	7,952		7,894
Distribution	20 - 75 years	8,211		8,044
Intangible plant(1)	5 - 75 years	1,114		1,106
Other	5 - 60 years	1,584		1,539
Utility plant in-service		32,631		32,262
Accumulated depreciation and amortization		(10,874)		(10,507)
Utility plant in-service, net		21,757		21,755
Other non-regulated, net of accumulated depreciation and amortization	14 - 95 years	18		18
Plant, net		21,775		21,773
Construction work-in-progress		1,639		1,141
Property, plant and equipment, net		$	23,414	$	22,914

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

~~(4)~~(4) Recent Financing Transactions

Credit Facilities

Common Shareholders' Equity

In May 2022, PacifiCorp declared a common stock dividend of $100 million, paid in June 2022, to PPW Holdings LLC.

(5) 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~~benefit is as follows:


		Three-Month Periods			Three-Month Periods						Six-Month Periods
		Ended March 31,			Ended June 30,						Ended June 30,
			2022			2021			2022		2021		2022		2021

Federal statutory income tax rate	Federal statutory income tax rate		21	%		21	%	Federal statutory income tax rate	21	%	21	%	21	%	21	%
State income tax, net of federal income tax benefit	State income tax, net of federal income tax benefit		3			3		State income tax, net of federal income tax benefit	4		4		3		4
Federal income tax credits	Federal income tax credits		(20)			(20)		Federal income tax credits	(25)		(19)		(21)		(19)
Effects of ratemaking(1)	Effects of ratemaking(1)		(11)			(13)		Effects of ratemaking(1)	(13)		(15)		(11)		(14)

Valuation allowance	Valuation allowance		6			—		Valuation allowance	—		—		4		—
Other	Other		3			2		Other	2		—		1		—
Effective income tax rate	Effective income tax rate		2	%		(7)	%	Effective income tax rate	(11)	%	(9)	%	(3)	%	(8)	%

(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,~~June 30, 2022 and 2021 totaled ~~$26~~$18 million and ~~$31~~$40 million, respectively. PTCs for the six-month periods ended June 30, 2022 and 2021 totaled $44 million and $71 million, respectively.

For the ~~three-month~~six-month period ended~~March 31,~~June 30, 2022 PacifiCorp recorded a valuation allowance related to state net operating loss carryforwards.

53Berkshire Hathaway includes BHE and its subsidiaries in its U.S. federal income tax return. Consistent with established regulatory practice, PacifiCorp's provision for federal and state 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.For the six-month periods ended June 30, 2022 and 2021, PacifiCorp received net cash payments for federal and state income tax from BHE totaling $150 million and $93 million, respectively.

~~(5)~~(6) 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			Three-Month Periods						Six-Month Periods
		Ended March 31,			Ended June 30,						Ended June 30,
			2022			2021			2022		2021		2022		2021
Pension:	Pension:							Pension:
Service cost	Service cost		$	—		$	—	Service cost	$	—	$	—	$	—	$	—
Interest cost	Interest cost		7			7		Interest cost	7		7		14		14
Expected return on plan assets	Expected return on plan assets		(10)			(13)		Expected return on plan assets	(11)		(14)		(21)		(27)

Net amortization	Net amortization		4			5		Net amortization	4		5		8		10
Net periodic benefit cost (credit)	Net periodic benefit cost (credit)		$	1		$	(1)	Net periodic benefit cost (credit)	$	—	$	(2)	$	1	$	(3)

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

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,~~June 30, 2022, $1$2 million of contributions had been made to the pension plans.

~~(6)~~(7) 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 78 for additional information on derivative contracts.

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

Derivative
Contracts - Other Other
Current Other Current Long-term
Assets Assets Liabilities Liabilities Total
As of March 31, 2022
Not designated as hedging contracts(1):
Commodity assets $ 165 $ 37 $ 6 $ (1) $ 207
Commodity liabilities (3) — (9) — (12)
Total 162 37 (3) (1) 195

Total derivatives 162 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 $ 2 $ — $ 104
Commodity liabilities (5) (1) (38) (7) (51)
Total 76 20 (36) (7) 53

Total derivatives 76 20 (36) (7) 53
Cash collateral receivable — — 5 — 5
Total derivatives - net basis $ 76 $ 20 $ (31) $ (7) $ 58


	Derivative
	Contracts -				Other		Other
	Current		Other		Current		Long-term
	Assets		Assets		Liabilities		Liabilities		Total
As of June 30, 2022
Not designated as hedging contracts(1):
Commodity assets	$	183	$	80	$	9	$	—	$	272
Commodity liabilities	(1)		—		(44)		(4)		(49)
Total	182		80		(35)		(4)		223

Total derivatives	182		80		(35)		(4)		223
Cash collateral payable	(55)		(9)		—		—		(64)
Total derivatives - net basis	$	127	$	71	$	(35)	$	(4)	$	159

As of December 31, 2021
Not designated as hedging contracts(1):
Commodity assets	$	81	$	21	$	2	$	—	$	104
Commodity liabilities	(5)		(1)		(38)		(7)		(51)
Total	76		20		(36)		(7)		53

Total derivatives	76		20		(36)		(7)		53
Cash collateral receivable	—		—		5		—		5
Total derivatives - net basis	$	76	$	20	$	(31)	$	(7)	$	58

(1)PacifiCorp's commodity derivatives are generally included in rates. As of ~~March 31,~~June 30, 2022 a regulatory liability of ~~$195~~$223 million was recorded related to the net derivative asset of ~~$195~~$223 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			Three-Month Periods						Six-Month Periods
		Ended March 31,			Ended June 30,						Ended June 30,
			2022			2021			2022		2021		2022		2021

Beginning balance	Beginning balance		$	(53)		$	17	Beginning balance	$	(195)	$	—	$	(53)	$	17
Changes in fair value recognized in regulatory assets	Changes in fair value recognized in regulatory assets		(168)			(17)		Changes in fair value recognized in regulatory assets	(49)		(102)		(217)		(119)
Net losses reclassified to operating revenue	Net losses reclassified to operating revenue		(3)			—		Net losses reclassified to operating revenue	(8)		(5)		(11)		(5)
Net gains reclassified to energy costs	Net gains reclassified to energy costs		29			—		Net gains reclassified to energy costs	29		5		58		5
Ending balance	Ending balance		$	(195)		$	—	Ending balance	$	(223)	$	(102)	$	(223)	$	(102)

Derivative Contract Volumes

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


		Unit of	March 31,	December 31,		Unit of	June 30,	December 31,
		Measure	2022	2021		Measure	2022	2021

Electricity purchases, net	Electricity purchases, net	Megawatt hours	1	2	Electricity purchases, net	Megawatt hours	2	2
Natural gas purchases	Natural gas purchases	Decatherms	105	106	Natural gas purchases	Decatherms	105	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,~~June 30, 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~~$47 million and $37 million as of ~~March 31,~~June 30, 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,~~June 30, 2022 and December 31, 2021, PacifiCorp would have been required to post $2$33 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.

5661

~~(7)~~(8) 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 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 funds 319 — — — 319
Investment funds 28 — — — 28
$ 347 $ 207 $ — $ (25) $ 529
Liabilities - Commodity derivatives $ — $ (12) $ — $ 8 $ (4)
As of December 31, 2021:
Assets:
Commodity derivatives $ — $ 104 $ — $ (8) $ 96
Money market mutual funds 181 — — — 181
Investment funds 27 — — — 27
$ 208 $ 104 $ — $ (8) $ 304
Liabilities - Commodity derivatives $ — $ (51) $ — $ 13 $ (38)


	Input Levels for Fair Value Measurements
	Level 1		Level 2		Level 3		Other(1)		Total
As of June 30, 2022:
Assets:
Commodity derivatives	$	—	$	272	$	—	$	(74)	$	198
Money market mutual funds	374		—		—		—		374
Investment funds	26		—		—		—		26
	$	400	$	272	$	—	$	(74)	$	598

Liabilities - Commodity derivatives	$	—	$	(49)	$	—	$	10	$	(39)

As of December 31, 2021:
Assets:
Commodity derivatives	$	—	$	104	$	—	$	(8)	$	96
Money market mutual funds	181		—		—		—		181
Investment funds	27		—		—		—		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~~$64 million and a net cash collateral receivable of $5 million as of ~~March 31,~~June 30, 2022 and December 31, 2021, respectively.

5762

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 67 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, 2022 As of December 31, 2021
Carrying Fair Carrying Fair
Value Value Value Value

Long-term debt $ 8,722 $ 9,423 $ 8,730 $ 10,374


	As of June 30, 2022				As of December 31, 2021
	Carrying		Fair		Carrying		Fair
	Value		Value		Value		Value

Long-term debt	$	8,723	$	8,555	$	8,730	$	10,374

~~(8)~~(9) Commitments and Contingencies

Construction Commitments

Fuel Contracts

During the six-month period ended June 30, 2022, PacifiCorp entered into certain coal supply and transportation agreements totaling approximately $200 million through 2024.

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.

5863

~~California and Oregon~~ 2020 Wildfires

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.

5964

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)~~(10) 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			Three-Month Periods						Six-Month Periods
		Ended March 31,			Ended June 30,						Ended June 30,
			2022			2021			2022		2021		2022		2021
Customer Revenue:	Customer Revenue:							Customer Revenue:
Retail:	Retail:							Retail:
Residential	Residential		$	505		$	483	Residential	$	417	$	429	$	922	$	912
Commercial	Commercial		370			359		Commercial	393		393		763		752
Industrial	Industrial		273			271		Industrial	277		282		550		553
Other retail	Other retail		37			32		Other retail	80		84		117		116
Total retail	Total retail		1,185			1,145		Total retail	1,167		1,188		2,352		2,333
Wholesale	Wholesale		55			36		Wholesale	55		30		110		66
Transmission	Transmission		32			25		Transmission	45		37		77		62
Other Customer Revenue	Other Customer Revenue		20			23		Other Customer Revenue	28		31		48		54
Total Customer Revenue	Total Customer Revenue		1,292			1,229		Total Customer Revenue	1,295		1,286		2,587		2,515
Other revenue	Other revenue		5			13		Other revenue	19		12		24		25
Total operating revenue	Total operating revenue		$	1,297		$	1,242	Total operating revenue	$	1,314	$	1,298	$	2,611	$	2,540

6065

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 Second Quarter and First ~~Quarter~~Six Months of 2022 and 2021

Overview

Net income for the ~~first~~second quarter of 2022 was ~~$130~~$82 million, a decrease of ~~$39~~$143 million, or ~~23%~~64%, compared to 2021. Net income decreased primarily due to higher operations and maintenance expense ~~higher depreciation and amortization expense, higher~~of $120 million, lower income tax ~~expense~~benefit of $11 million, higher property and other taxes of $8 million and higher other expense of $6 million, partially offset by higher utility ~~margin. Utility~~ margin ~~increased primarily due to higher retail revenue from higher volumes~~of $6 million. Operations 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 volumesmaintenance expense increased ~~1.9%,~~ primarily due to an increase in the loss accruals associated with the September 2020 wildfires, net of estimated insurance recoveries, and higher general and plant maintenance costs. Utility margin increased primarily due to lower purchased electricity prices, higher retail rates, higher average wholesale market prices and lower thermal generation volumes, partially offset by higher natural gas-fueled generation prices, lower retail volumes, higher purchased electricity volumes and lower deferred net power costs in accordance with established adjustment mechanisms. Retail customer volumes decreased 3.3%, primarily due to the unfavorable impact of weather and lower customer usage, partially offset by an increase in the average number of ~~customers, favorable impacts of weather and an increase in customer usage.~~customers. Energy generated ~~was essentially flat~~decreased 7% for the ~~first~~second quarter of 2022 compared to ~~2021.~~2021 primarily due to lower coal-fueled and natural gas-fueled generation, partially offset by higher wind-powered and hydroelectric generation. Wholesale electricity sales volumes were essentially flat and purchased electricity volumes increased 12%.

Net income for the first six months of 2022 was $212 million, a decrease of $182 million, or 46%, compared to 2021 primarily due to higher operations and maintenance expense of $138 million, lower income tax benefit of $24 million, higher depreciation and amortization expense of $20 million and higher other expense of $14 million, partially offset by higher utility margin of $20 million. Operations and maintenance expense increased mainly due to an increase in loss accruals related to the September 2020 wildfires, net of estimated insurance recoveries, and higher general and plant maintenance costs. Utility margin increased primarily due to lower purchased electricity prices, higher retail rates, higher average wholesale market prices, lower thermal generation volumes, and higher wheeling revenue, partially offset by higher natural gas-fueled generation prices, higher purchased electricity volumes and lower retail volumes. Retail customer volumes decreased 0.7%, primarily due to the unfavorable impact of weather and lower customer usage, partially offset by an increase in the average number of customers. Energy generated decreased 4% for the first six months of 2022 compared to 2021 primarily due to lower coal-fueled and natural gas-fueled generation, partially offset by higher wind-powered and hydroelectric generation. Wholesale electricity sales volumes decreased 2%1% and purchased electricity volumes increased 6%9%.

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								Second Quarter					First Six Months
		2022		2021		Change					2022		2021		Change				2022		2021		Change
Utility margin:	Utility margin:											Utility margin:
Operating revenue	Operating revenue	$	1,297	$	1,242	$	55	4	%			Operating revenue	$	1,314	$	1,298	$	16	1	%	$	2,611	$	2,540	$	71	3	%
Cost of fuel and energy	Cost of fuel and energy	465		424		41		10				Cost of fuel and energy	451		441		10		2		916		865		51		6
Utility margin	Utility margin	832		818		14		2				Utility margin	863		857		6		1		1,695		1,675		20		1
Operations and maintenance	Operations and maintenance	277		259		18		7				Operations and maintenance	375		255		120		47		652		514		138		27
Depreciation and amortization	Depreciation and amortization	280		264		16		6				Depreciation and amortization	279		275		4		1		559		539		20		4
Property and other taxes	Property and other taxes	59		61		(2)		(3)				Property and other taxes	51		43		8		19		110		104		6		6
Operating income	Operating income	$	216	$	234	$	(18)	(8)	%			Operating income	$	158	$	284	$	(126)	(44)	%	$	374	$	518	$	(144)	(28)	%

6167

Utility Margin

A comparison of key operating results related to utility margin is as follows:

First Quarter
2022 2021 Change
Utility margin (in millions):
Operating revenue $ 1,297 $ 1,242 $ 55 4 %
Cost of fuel and energy 465 424 41 10
Utility margin $ 832 $ 818 $ 14 2 %
Sales (GWhs):
Residential 4,764 4,632 132 3 %
Commercial 4,550 4,470 80 2
Industrial, irrigation and other 4,523 4,474 49 1
Total retail 13,837 13,576 261 2
Wholesale 1,553 1,591 (38) (2)
Total sales 15,390 15,167 223 1 %
Average number of retail customers
(in thousands) 2,025 1,989 36 2 %
Average revenue per MWh:
Retail $ 85.46 $ 84.15 $ 1.31 2 %
Wholesale $ 39.12 $ 30.89 $ 8.23 27 %
Heating degree days 4,745 4,687 58 1 %
Cooling degree days 5 — 5 N/A
Sources of energy (GWhs)(1):
Coal 6,911 7,644 (733) (10) %
Natural gas 3,115 3,065 50 2
Wind(2)
2,392 1,738 654 38
Hydroelectric and other(2)
984 988 (4) —
Total energy generated 13,402 13,435 (33) —
Energy purchased 3,223 3,028 195 6
Total 16,625 16,463 162 1 %
Average cost of energy per MWh:
Energy generated(3)
$ 18.83 $ 17.66 $ 1.17 7 %
Energy purchased $ 55.49 $ 47.13 $ 8.36 18 %


	Second Quarter								First Six Months
	2022		2021		Change				2022		2021		Change
Utility margin (in millions):
Operating revenue	$	1,314	$	1,298	$	16	1	%	$	2,611	$	2,540	$	71	3	%
Cost of fuel and energy	451		441		10		2		916		865		51		6
Utility margin	$	863	$	857	$	6	1	%	$	1,695	$	1,675	$	20	1	%

Sales (GWhs):
Residential	3,854		4,032		(178)		(4)	%	8,618		8,664		(46)		(1)	%
Commercial	4,633		4,633		—		—		9,183		9,103		80		1
Industrial, irrigation and other	4,849		5,127		(278)		(5)		9,372		9,601		(229)		(2)
Total retail	13,336		13,792		(456)		(3)		27,173		27,368		(195)		(1)
Wholesale	1,245		1,244		1		—		2,798		2,835		(37)		(1)
Total sales	14,581		15,036		(455)		(3)	%	29,971		30,203		(232)		(1)	%


Average number of retail customers (in thousands)	2,033		1,998		35		2	%	2,029		1,994		35		2	%

Average revenue per MWh:
Retail	$	88.14	$	86.26	$	1.88	2	%	$	86.77	$	85.21	$	1.56	2	%
Wholesale	$	51.53	$	31.08	$	20.45	66	%	$	44.64	$	30.97	$	13.67	44	%

Heating degree days	1,736		1,228		508		41	%	6,481		5,915		566		10	%

Cooling degree days	406		746		(340)		(46)	%	411		746		(335)		(45)	%

Sources of energy (GWhs)(1):
Coal	6,260		7,502		(1,242)		(17)	%	13,171		15,146		(1,975)		(13)	%
Natural gas	2,747		3,223		(476)		(15)		5,862		6,288		(426)		(7)
Wind(2)	1,817		1,383		434		31		4,209		3,121		1,088		35
Hydroelectric and other(2)	1,033		703		330		47		2,017		1,691		326		19
Total energy generated	11,857		12,811		(954)		(7)		25,259		26,246		(987)		(4)
Energy purchased	3,717		3,321		396		12		6,940		6,349		591		9
Total	15,574		16,132		(558)		(3)	%	32,199		32,595		(396)		(1)	%

Average cost of energy per MWh:
Energy generated(3)	$	21.90	$	17.84	$	4.06	23	%	$	20.27	$	17.75	$	2.52	14	%
Energy purchased	$	48.92	$	65.62	$	(16.70)	(25)	%	$	51.97	$	56.80	$	(4.83)	(9)	%

(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.

6268

Quarter Ended ~~March 31,~~June 30, 2022 compared to Quarter Ended ~~March 31,~~June 30, 2021

Utility margin increased ~~$14~~$6 million, or 2%1%, for the ~~first~~second quarter of 2022 compared to 2021 primarily due to:

•$4036 million of lower purchased electricity costs from lower average market prices, partially offset by higher purchased volumes;

•$25 million increase in wholesale revenue primarily due to higher average market prices;

•$22 million of lower coal-fueled generation costs primarily due to lower volumes; and

•$7 million of favorable wheeling activities.

The increases above were partially offset by:

•$54 million of higher natural gas-fueled generation costs due to higher average prices, partially offset by lower volumes;

•$14 million decrease in retail revenue due to ~~higher~~lower volumes, ~~and~~partially offset by higher average prices. Retail customer volumes ~~increased 1.9%~~decreased 3.3%, primarily due to the unfavorable impacts of weather, mainly in Utah, Idaho and Oregon and a decrease in customer usage, mainly in Utah and Oregon, partially offset by an increase in the average number of customers ~~favorable impacts of weather~~across the service territory, mainly in Utah and ~~an increase in customer usage;~~Oregon; and

•$1213 million of lower deferred net power costs in accordance with established adjustment mechanisms.

Operations and maintenance increased $120 million, or 47%, for the second quarter of 2022 compared to 2021 primarily due to a $64 million increase in the loss accruals associated with the September 2020 wildfires net of estimated insurance recoveries, $27 million of higher general and plant maintenance costs, higher insurance premiums due to cost increases related to wildfire coverage and higher labor and employee expenses.

Depreciation and amortization increased $4 million, or 1%, for the second quarter of 2022 compared to 2021 primarily due to prior year deferrals in Idaho associated with the increase in depreciation expense resulting from the implementation of the 2018 depreciation study compounded by amortization of those deferrals in the current quarter and higher plant in-service balances in the current quarter, partially offset by lower depreciation associated with Oregon's accelerated depreciation of coal units due to an update to the Oregon allocation factor applied in computing the incremental depreciation.

Property and other taxes increased $8 million, or 19%, for the second quarter of 2022 compared to 2021 primarily due to higher assessed property values in Utah and Wyoming.

Other, net decreased $9 million for the second quarter of 2022 compared to 2021 primarily due to lower cash surrender value of corporate-owned life insurance policies associated with PacifiCorp's supplemental executive retirement plan.

Income tax benefit decreased $11 million, or 58% for the second quarter of 2022 compared to 2021. The effective tax rate was (11)% for the second quarter of 2022 and (9)% for the second quarter of 2021. The effective tax rate decreased primarily due to the relative impact on a percentage basis of PTCs on the lower pre-tax book income in the second quarter of 2022 compared to that of 2021, which results in a higher benefit related to PTCs in the second quarter of 2022.

First Six Months of 2022 compared to First Six Months Ended 2021

Utility margin increased $20 million, or 1%, for the first six months of 2022 compared to 2021 primarily due to:

•$37 million increase in wholesale revenue due to higher average market prices, partially offset by lower volumes;

•$1234 million of lower coal-fueled generation costs due to lower volumes, partially offset by higher average prices;

•$826 million increase in retail revenue due to higher average prices, partially offset by lower volumes. Retail customer volumes decreased 0.7%, primarily due to the unfavorable impacts of weather, mainly in Utah, Oregon and Idaho and a decrease in customer usage primarily in Utah, partially offset by an increase in the average number of customers across the service territory, mainly in Utah and Oregon;

•$24 million of ~~higher deferred net power~~lower purchased electricity costs ~~in accordance with established adjustment mechanisms;~~due to lower average market prices; and

•$815 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~~80 million of higher natural gas-fueled generation costs due to higher average prices, ~~and~~partially offset by lower volumes;

•$24 million of higher ~~volumes.~~purchased electricity costs due to higher volumes;

•$5 million of lower deferred net power costs in accordance with established adjustment mechanisms; and

•$5 million of lower wind-based ancillary revenue.

Operations and maintenance increased ~~$18~~$138 million, or 7%27%, for the first ~~quarter~~six months of 2022 compared to 2021 primarily due to a $64 million increase in the loss accruals associated with the September 2020 wildfires net of estimated insurance recoveries, $37 million of higher general and plant 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.~~higher bad debt expense.

Depreciation and amortization increased ~~$16~~$20 million, or ~~6%,~~4% for the first ~~quarter~~six months of 2022 compared to 2021 primarily due to prior year deferrals in Idaho associated with the increase in depreciation expense resulting from the implementation of the 2018 depreciation study compounded by amortization of those deferrals in the current year and higher plant in-service balances in the current year, partially offset by lower depreciation associated with Oregon's accelerated depreciation of coal units due to an update to the Oregon allocation factor applied in computing the incremental depreciation.

Property and other taxes increased $6 million, or 6% for the first six months of 2022 compared to 2021 primarily due to higher ~~plant in-service balances.~~assessed property values in Utah and Wyoming.

Other, net decreased ~~$10~~$19 million for the first ~~quarter~~six months of 2022 compared to 2021 primarily due to ~~market movements related to~~lower cash surrender value of corporate-owned life insurance policies ~~and higher pension and postretirement costs.~~associated with PacifiCorp's supplemental executive retirement plan.

Income tax ~~expense (benefit)~~benefit ~~increased $13~~decreased $24 million, ~~to an expense of $2 million~~or 80% for the first ~~quarter~~six months of 2022 compared to ~~a benefit of $11 million for~~ the first ~~quarter~~six months of 2021. The effective tax rate was ~~2% for the first quarter of 2022 and (7)~~(3)% for the first ~~quarter~~six months of 2022 and (8)% for the first six months 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,~~June 30, 2022, PacifiCorp's total net liquidity was as follows (in millions):


Cash and cash equivalents	$	~~335~~390

Credit facilities	1,200
Less:

Tax-exempt bond support	(218)
Net credit facilities	982

Total net liquidity	$	~~1,317~~1,372

Credit facilities:
Maturity dates	~~2024~~2025

Operating Activities

Net cash flows from operating activities for the ~~three-month~~six-month periods ended ~~March 31,~~June 30, 2022 and 2021 were ~~$537~~$1,213 million and ~~$469~~$1,046 million, respectively. The change was primarily due to timing of operating payables, higher transmission deposits, cash received for income taxes and ~~higher collections~~collateral received from ~~retail customers,~~counterparties, partially offset by higher fuel and 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.

Investing Activities

Net cash flows from investing activities for the ~~three-month~~six-month periods ended ~~March 31,~~June 30, 2022 and 2021 were ~~$(371)~~$(888) million and ~~$(440)~~$(819) million, respectively. The change is primarily due to ~~a decrease~~an increase in capital expenditures of ~~$65~~$75 million. Refer to "Future Uses of Cash" for discussion of capital expenditures.

Financing Activities

Net cash flows from financing activities for the ~~three-month~~six-month period ended ~~March 31,~~June 30, 2022 were ~~$(11)~~$(111) million. Uses of cash consisted ~~substantially~~primarily of $100 million for common stock dividends paid to PPW Holdings LLC and $9 million for the repayment of long-term debt.

Net cash flows from financing activities for the ~~three-month~~six-month period ended ~~March 31,~~June 30, 2021 were $1$(196) million. Sources of cash consisted of $2$208 million from the borrowing of short-term debt. Uses of cash consisted substantially of $400 million for the repayment of long-term debt.

Short-term Debt

Regulatory authorities limit PacifiCorp to $1.5 billion of short-term debt. As of ~~March 31,~~June 30, 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. PacifiCorp must make a notice filing with the WUTC prior to any future issuance.

Common Shareholders' Equity

In May 2022, PacifiCorp declared a common stock dividend of $100 million, paid in June 2022, to PPW Holdings LLC.

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 Periods				Annual			Six-Month Periods				Annual
		Ended March 31,				Forecast			Ended June 30,				Forecast
		2021		2022		2022			2021		2022		2022

Wind generation	Wind generation	$	33	$	8	$	154	Wind generation	$	82	$	14	$	66
Electric distribution	Electric distribution	195		142		660		Electric distribution	326		303		682
Electric transmission	Electric transmission	60		153		1,185		Electric transmission	136		405		1,185
Other	Other	151		71		360		Other	275		172		346
Total	Total	$	439	$	374	$	2,359	Total	$	819	$	894	$	2,279

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:

•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~~$59 million and ~~$83~~$117 million for the ~~three-month~~six-month periods ended ~~March 31,~~June 30, 2022 and 2021, respectively. Planned spending for wildfire mitigation and wildfire and storm damage restoration totals ~~$118~~$97 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~~$296 million and ~~$16~~$35 million for the ~~three-month~~six-month periods ended ~~March 31,~~June 30, 2022 and 2021, respectively. Planned spending for these Energy Gateway Transmission segments to be placed in-service in 2024-2026 totals ~~$814~~$614 million for the remainder of 2022.

•Other includes both growth projects and operating expenditures. Expenditures for information technology totaled ~~$45~~$77 million and ~~$13~~$47 million for the ~~three-month~~six-month periods ended ~~March 31,~~June 30, 2022 and 2021, respectively. Planned information technology spending totals ~~$127~~$87 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. PacifiCorp files its IRP biennially with the state commissions in each of the six states where PacifiCorp operates. Five states indicate whether the IRP meets the state commission's IRP standards and guidelines, a process referred to as "acknowledgment" in some states. Acknowledgement by a state commission does not address cost recovery or prudency of resources ultimately selected.

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. In June 2022, the UPSC issued an order declining to acknowledge the 2021 IRP due to its determination that PacifiCorp did not meet the commission's IRP guidelines by excluding new natural gas-fueled resources in its modeling of the 2021 IRP's preferred portfolio, as well as the commission's view that PacifiCorp did not provide ample time for public input and information exchange during the development of the IRP. The UPSC did approve the 2022 All Source RFP ("2022AS RFP") to procure resources identified in the 2021 IRP. 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.

A draft of PacifiCorp's ~~2022 All Source~~2022AS 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~~The 2022AS RFP was issued to market in ~~the second quarter of~~April 2022. PacifiCorp-owned bids are due late November 2022 and market bids are due February 2023.

Material Cash Requirements

As of ~~March 31,~~June 30, 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.~~2021, other than those disclosed in Note 9 of the Notes to Consolidated Financial Statements in Part I, Item 1 of this Form 10-Q.

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.

6674

MidAmerican Funding, LLC and its subsidiaries and MidAmerican Energy Company

Consolidated Financial Section

6775

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,~~June 30, 2022, the related statements of operations and changes in shareholder's equity for the three-month and six-month periods ended June 30, 2022 and 2021, and of cash flows for the ~~three-month~~six-month periods ended ~~March 31,~~June 30, 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.

/s/ Deloitte & Touche LLP

Des Moines, Iowa

~~April 29,~~August 5, 2022

6876

MIDAMERICAN ENERGY COMPANY

BALANCE SHEETS (Unaudited)

(Amounts in millions)


		As of					As of
		March 31,		December 31,			June 30,		December 31,
		2022		2021			2022		2021
ASSETS	ASSETS					ASSETS
Current assets:	Current assets:					Current assets:
Cash and cash equivalents	Cash and cash equivalents	$	131	$	232	Cash and cash equivalents	$	495	$	232
Trade receivables, net	Trade receivables, net	468		526		Trade receivables, net	525		526
Income tax receivable	Income tax receivable	297		79		Income tax receivable	19		79
Inventories	Inventories	185		234		Inventories	226		234
Other current assets	Other current assets	187		123		Other current assets	186		123
Total current assets	Total current assets	1,268		1,194		Total current assets	1,451		1,194

Property, plant and equipment, net	Property, plant and equipment, net	20,344		20,301		Property, plant and equipment, net	20,504		20,301
Regulatory assets	Regulatory assets	492		473		Regulatory assets	509		473
Investments and restricted investments	Investments and restricted investments	985		1,026		Investments and restricted investments	893		1,026
Other assets	Other assets	262		263		Other assets	278		263

Total assets	Total assets	$	23,351	$	23,257	Total assets	$	23,635	$	23,257

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

6977

MIDAMERICAN ENERGY COMPANY

BALANCE SHEETS (Unaudited) (continued)

(Amounts in millions)


		As of					As of
		March 31,		December 31,			June 30,		December 31,
		2022		2021			2022		2021
LIABILITIES AND SHAREHOLDER'S EQUITY	LIABILITIES AND SHAREHOLDER'S EQUITY					LIABILITIES AND SHAREHOLDER'S EQUITY
Current liabilities:	Current liabilities:					Current liabilities:
Accounts payable	Accounts payable	$	429	$	531	Accounts payable	$	415	$	531
Accrued interest	Accrued interest	88		84		Accrued interest	84		84
Accrued property, income and other taxes	Accrued property, income and other taxes	144		158		Accrued property, income and other taxes	206		158

Current portion of long-term debt	Current portion of long-term debt	7		—		Current portion of long-term debt	64		—
Other current liabilities	Other current liabilities	144		145		Other current liabilities	181		145
Total current liabilities	Total current liabilities	812		918		Total current liabilities	950		918

Long-term debt	Long-term debt	7,719		7,721		Long-term debt	7,661		7,721
Regulatory liabilities	Regulatory liabilities	1,057		1,080		Regulatory liabilities	1,026		1,080
Deferred income taxes	Deferred income taxes	3,373		3,389		Deferred income taxes	3,413		3,389
Asset retirement obligations	Asset retirement obligations	723		714		Asset retirement obligations	698		714
Other long-term liabilities	Other long-term liabilities	463		475		Other long-term liabilities	476		475
Total liabilities	Total liabilities	14,147		14,297		Total liabilities	14,224		14,297

Commitments and contingencies (Note 7)		0		0
Commitments and contingencies (Note 8)						Commitments and contingencies (Note 8)	0		0

Shareholder's equity:	Shareholder's equity:					Shareholder's equity:
Common stock - 350 shares authorized, no par value, 71 shares issued and outstanding	Common stock - 350 shares authorized, no par value, 71 shares issued and outstanding	—		—		Common stock - 350 shares authorized, no par value, 71 shares issued and outstanding	—		—
Additional paid-in capital	Additional paid-in capital	561		561		Additional paid-in capital	561		561
Retained earnings	Retained earnings	8,643		8,399		Retained earnings	8,850		8,399

Total shareholder's equity	Total shareholder's equity	9,204		8,960		Total shareholder's equity	9,411		8,960

Total liabilities and shareholder's equity	Total liabilities and shareholder's equity	$	23,351	$	23,257	Total liabilities and shareholder's equity	$	23,635	$	23,257

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

7078

MIDAMERICAN ENERGY COMPANY

STATEMENTS OF OPERATIONS (Unaudited)

(Amounts in millions)

Three-Month Periods
Ended March 31,
2022 2021
Operating revenue:
Regulated electric $ 608 $ 545
Regulated natural gas and other 397 522
Total operating revenue 1,005 1,067
Operating expenses:
Cost of fuel and energy 125 151
Cost of natural gas purchased for resale and other 298 432
Operations and maintenance 192 193
Depreciation and amortization 250 207
Property and other taxes 40 36
Total operating expenses 905 1,019
Operating income 100 48
Other income (expense):
Interest expense (78) (74)
Allowance for borrowed funds 4 2
Allowance for equity funds 15 6
Other, net (3) 11
Total other income (expense) (62) (55)
Income (loss) before income tax benefit 38 (7)
Income tax benefit (206) (154)
Net income $ 244 $ 147


	Three-Month Periods				Six-Month Periods
	Ended June 30,				Ended June 30,
	2022		2021		2022		2021
Operating revenue:
Regulated electric	$	725	$	586	$	1,333	$	1,131
Regulated natural gas and other	172		107		569		629
Total operating revenue	897		693		1,902		1,760

Operating expenses:
Cost of fuel and energy	174		103		299		254
Cost of natural gas purchased for resale and other	120		57		418		489
Operations and maintenance	200		184		392		377
Depreciation and amortization	277		209		527		416
Property and other taxes	36		37		76		73
Total operating expenses	807		590		1,712		1,609

Operating income	90		103		190		151

Other income (expense):
Interest expense	(78)		(74)		(156)		(148)
Allowance for borrowed funds	5		2		9		4
Allowance for equity funds	14		8		29		14
Other, net	(12)		15		(15)		26
Total other income (expense)	(71)		(49)		(133)		(104)

Income before income tax benefit	19		54		57		47
Income tax benefit	(188)		(159)		(394)		(313)

Net income	$	207	$	213	$	451	$	360

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

7179

MIDAMERICAN ENERGY COMPANY

STATEMENTS OF CHANGES IN SHAREHOLDER'S EQUITY (Unaudited)

(Amounts in millions)


		Common Stock		Additional Paid-in Capital		Retained Earnings		Total Shareholder's Equity			Common Stock		Additional Paid-in Capital		Retained Earnings		Total Shareholder's Equity

Balance, March 31, 2021										Balance, March 31, 2021	$	—	$	561	$	7,651	$	8,212
Net income										Net income	—		—		213		213
Other equity transactions										Other equity transactions	—		—		1		1
Balance, June 30, 2021										Balance, June 30, 2021	$	—	$	561	$	7,865	$	8,426

Balance, December 31, 2020	Balance, December 31, 2020	$	—	$	561	$	7,504	$	8,065	Balance, December 31, 2020	$	—	$	561	$	7,504	$	8,065
Net income	Net income	—		—		147		147		Net income	—		—		360		360
Other equity transactions										Other equity transactions	—		—		1		1
Balance, June 30, 2021										Balance, June 30, 2021	$	—	$	561	$	7,865	$	8,426

Balance, March 31, 2021		$	—	$	561	$	7,651	$	8,212
Balance, March 31, 2022										Balance, March 31, 2022	$	—	$	561	$	8,643	$	9,204
Net income										Net income	—		—		207		207

Balance, June 30, 2022										Balance, June 30, 2022	$	—	$	561	$	8,850	$	9,411

Balance, December 31, 2021	Balance, December 31, 2021	$	—	$	561	$	8,399	$	8,960	Balance, December 31, 2021	$	—	$	561	$	8,399	$	8,960
Net income	Net income	—		—		244		244		Net income	—		—		451		451

Balance, March 31, 2022		$	—	$	561	$	8,643	$	9,204
Balance, June 30, 2022										Balance, June 30, 2022	$	—	$	561	$	8,850	$	9,411

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

7280

MIDAMERICAN ENERGY COMPANY

STATEMENTS OF CASH FLOWS (Unaudited)

(Amounts in millions)


		Three-Month Periods					Six-Month Periods
		Ended March 31,					Ended June 30,
		2022		2021			2022		2021
Cash flows from operating activities:	Cash flows from operating activities:					Cash flows from operating activities:
Net income	Net income	$	244	$	147	Net income	$	451	$	360
Adjustments to reconcile net income to net cash flows from operating activities:	Adjustments to reconcile net income to net cash flows from operating activities:					Adjustments to reconcile net income to net cash flows from operating activities:
Depreciation and amortization	Depreciation and amortization	250		207		Depreciation and amortization	527		416
Amortization of utility plant to other operating expenses	Amortization of utility plant to other operating expenses	9		8		Amortization of utility plant to other operating expenses	19		17��
Allowance for equity funds	Allowance for equity funds	(15)		(6)		Allowance for equity funds	(29)		(14)
Deferred income taxes and investment tax credits, net	Deferred income taxes and investment tax credits, net	16		154		Deferred income taxes and investment tax credits, net	58		196
Settlements of asset retirement obligations	Settlements of asset retirement obligations	(7)		(4)		Settlements of asset retirement obligations	(28)		(19)
Other, net	Other, net	10		(18)		Other, net	33		11
Changes in other operating assets and liabilities:	Changes in other operating assets and liabilities:					Changes in other operating assets and liabilities:
Trade receivables and other assets	Trade receivables and other assets	42		(299)		Trade receivables and other assets	2		(275)
Inventories	Inventories	49		46		Inventories	8		41

Pension and other postretirement benefit plans		3		1

Accrued property, income and other taxes, net	Accrued property, income and other taxes, net	(244)		(331)		Accrued property, income and other taxes, net	94		56
Accounts payable and other liabilities	Accounts payable and other liabilities	3		10		Accounts payable and other liabilities	(10)		(68)
Net cash flows from operating activities	Net cash flows from operating activities	360		(85)		Net cash flows from operating activities	1,125		721

Cash flows from investing activities:	Cash flows from investing activities:					Cash flows from investing activities:
Capital expenditures	Capital expenditures	(459)		(298)		Capital expenditures	(862)		(720)
Purchases of marketable securities	Purchases of marketable securities	(105)		(52)		Purchases of marketable securities	(214)		(109)
Proceeds from sales of marketable securities	Proceeds from sales of marketable securities	102		47		Proceeds from sales of marketable securities	210		105
Other, net	Other, net	1		—		Other, net	6		(2)
Net cash flows from investing activities	Net cash flows from investing activities	(461)		(303)		Net cash flows from investing activities	(860)		(726)

Cash flows from financing activities:	Cash flows from financing activities:					Cash flows from financing activities:

Repayments of long-term debt		(1)		—
Net proceeds from short-term debt		—		387

Other, net	Other, net	1		—		Other, net	(1)		(2)
Net cash flows from financing activities	Net cash flows from financing activities	—		387		Net cash flows from financing activities	(1)		(2)

Net change in cash and cash equivalents and restricted cash and cash equivalents	Net change in cash and cash equivalents and restricted cash and cash equivalents	(101)		(1)		Net change in cash and cash equivalents and restricted cash and cash equivalents	264		(7)
Cash and cash equivalents and restricted cash and cash equivalents at beginning of period	Cash and cash equivalents and restricted cash and cash equivalents at beginning of period	239		45		Cash and cash equivalents and restricted cash and cash equivalents at beginning of period	239		45
Cash and cash equivalents and restricted cash and cash equivalents at end of period	Cash and cash equivalents and restricted cash and cash equivalents at end of period	$	138	$	44	Cash and cash equivalents and restricted cash and cash equivalents at end of period	$	503	$	38

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

7381

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,~~June 30, 2022, and for the ~~three-month~~three- and six-month periods ended ~~March 31,~~June 30, 2022 and 2021. The results of operations for the ~~three-month~~three- and six-month periods ended ~~March 31,~~June 30, 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~~six-month period ended ~~March 31,~~June 30, 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					As of
		March 31,		December 31,			June 30,		December 31,
		2022		2021			2022		2021

Cash and cash equivalents	Cash and cash equivalents	$	131	$	232	Cash and cash equivalents	$	495	$	232
Restricted cash and cash equivalents in other current assets	Restricted cash and cash equivalents in other current assets	7		7		Restricted cash and cash equivalents in other current assets	8		7
Total cash and cash equivalents and restricted cash and cash equivalents	Total cash and cash equivalents and restricted cash and cash equivalents	$	138	$	239	Total cash and cash equivalents and restricted cash and cash equivalents	$	503	$	239

7482

(3) Property, Plant and Equipment, Net

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


			As of						As of
			March 31,		December 31,				June 30,		December 31,
		Depreciable Life	2022		2021			Depreciable Life	2022		2021
Utility plant in-service, net:	Utility plant in-service, net:						Utility plant in-service, net:
Generation	Generation	20-70 years	$	17,466	$	17,397	Generation	20-70 years	$	17,737	$	17,397
Transmission	Transmission	52-75 years	2,488		2,474		Transmission	52-75 years	2,583		2,474
Electric distribution	Electric distribution	20-75 years	4,713		4,661		Electric distribution	20-75 years	4,725		4,661
Natural gas distribution	Natural gas distribution	29-75 years	2,055		2,039		Natural gas distribution	29-75 years	2,049		2,039
Utility plant in-service	Utility plant in-service		26,722		26,571		Utility plant in-service		27,094		26,571
Accumulated depreciation and amortization	Accumulated depreciation and amortization		(7,555)		(7,376)		Accumulated depreciation and amortization		(7,658)		(7,376)
Utility plant in-service, net	Utility plant in-service, net		19,167		19,195		Utility plant in-service, net		19,436		19,195
Nonregulated property, net:	Nonregulated property, net:						Nonregulated property, net:
Nonregulated property gross		20-50 years	7		7
Nonregulated property, gross							Nonregulated property, gross	20-50 years	7		7
Accumulated depreciation and amortization	Accumulated depreciation and amortization		(1)		(1)		Accumulated depreciation and amortization		(1)		(1)
Nonregulated property, net	Nonregulated property, net		6		6		Nonregulated property, net		6		6
			19,173		19,201				19,442		19,201
Construction work-in-progress	Construction work-in-progress		1,171		1,100		Construction work-in-progress		1,062		1,100
Property, plant and equipment, net	Property, plant and equipment, net		$	20,344	$	20,301	Property, plant and equipment, net		$	20,504	$	20,301

(4) ~~Income Taxes~~Recent Financing Transactions

Credit Facilities

In June 2022, MidAmerican Energy amended and restated its existing $1.5 billion unsecured credit facility expiring in June 2024. The ~~effective income tax rate for~~amendment extended the ~~three-month period ended March 31, 2021, is 2,200%~~expiration date to June 2025 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%)~~amended pricing from the ~~application of the statutory income tax rate~~London Interbank Offered 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.~~Secured Overnight Financing Rate.

(5) Income Taxes

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


		Three-Month Periods			Three-Month Periods						Six-Month Periods
		Ended March 31,			Ended June 30,						Ended June 30,
			2022			2021			2022		2021		2022		2021

Federal statutory income tax rate	Federal statutory income tax rate		21	%		21	%	Federal statutory income tax rate	21	%	21	%	21	%	21	%
Income tax credits	Income tax credits		(534)			2,400		Income tax credits	(973)		(271)		(682)		(634)
State income tax, net of federal income tax impacts	State income tax, net of federal income tax impacts		(21)			(29)		State income tax, net of federal income tax impacts	(26)		(31)		(23)		(32)
Effects of ratemaking	Effects of ratemaking		(8)			(186)		Effects of ratemaking	(11)		(15)		(9)		(21)
Other, net	Other, net		—			(6)		Other, net	—		2		2		—
Effective income tax rate	Effective income tax rate		(542)	%		2,200	%	Effective income tax rate	(989)	%	(294)	%	(691)	%	(666)	%

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~~six-month periods ended ~~March 31,~~June 30, 2022 and 2021 totaled ~~$203~~$388 million and ~~$151~~$297 million, respectively.

7583

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~~received net cash payments for income tax tofrom BHE totaling $541 million and $558 million for ~~each of~~ the ~~three-month~~six-month periods ended ~~March 31,~~June 30, 2022 and ~~2021.~~2021, respectively.

~~(5)~~(6) Employee Benefit Plans

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

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


		Three-Month Periods			Three-Month Periods						Six-Month Periods
		Ended March 31,			Ended June 30,						Ended June 30,
			2022			2021			2022		2021		2022		2021
Pension:	Pension:							Pension:
Service cost	Service cost		$	5		$	5	Service cost	$	4	$	5	$	9	$	10
Interest cost	Interest cost		5			6		Interest cost	5		5		10		11
Expected return on plan assets	Expected return on plan assets		(7)			(9)		Expected return on plan assets	(7)		(10)		(14)		(19)
Settlement	Settlement		2			—		Settlement	—		—		2		—

Net amortization								Net amortization	1		1		1		1
Net periodic benefit cost	Net periodic benefit cost		$	5		$	2	Net periodic benefit cost	$	3	$	1	$	8	$	3

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

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,~~June 30, 2022, $2$4 million and $1$2 million of contributions had been made to the pension and other postretirement benefit plans, respectively.

~~(6)~~

(7) Fair Value Measurements

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

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

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

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

Input Levels for Fair Value Measurements
Level 1 Level 2 Level 3
Other(1)
Total
As of March 31, 2022:
Assets:
Commodity derivatives $ — $ 66 $ 4 $ — $ 70
Money market mutual funds 132 — — — 132
Debt securities:
U.S. government obligations 225 — — — 225
International government obligations — 1 — — 1
Corporate obligations — 79 — — 79
Municipal obligations — 3 — — 3
Agency, asset and mortgage-backed obligations — 1 — — 1
Equity securities:
U.S. companies 415 — — — 415
International companies 9 — — — 9
Investment funds 23 — — — 23
$ 804 $ 150 $ 4 $ — $ 958
Liabilities - commodity derivatives $ (1) $ — $ — $ — $ (1)


	Input Levels for Fair Value Measurements
	Level 1		Level 2		Level 3		Other(1)		Total
As of June 30, 2022:
Assets:
Commodity derivatives	$	1	$	66	$	28	$	(22)	$	73
Money market mutual funds	498		—		—		—		498
Debt securities:
U.S. government obligations	220		—		—		—		220
International government obligations	—		1		—		—		1
Corporate obligations	—		75		—		—		75
Municipal obligations	—		3		—		—		3
Agency, asset and mortgage-backed obligations	—		1		—		—		1
Equity securities:
U.S. companies	348		—		—		—		348
International companies	8		—		—		—		8
Investment funds	21		—		—		—		21
	$	1,096	$	146	$	28	$	(22)	$	1,248

Liabilities - commodity derivatives	$	(1)	$	(10)	$	(2)	$	7	$	(6)


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

Liabilities - commodity derivatives	$	—	$	(6)	$	(8)	$	12	$	(2)

(1)Represents netting under master netting arrangements and a net cash collateral payable of $15 million as of June 30, 2022 and a net cash collateral receivable of ~~$— million and~~ $5 million as of ~~March 31, 2022 and~~ December 31, ~~2021, respectively.~~2021.

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.

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


	Three-Month Periods				Six-Month Periods
	Ended June 30,				Ended June 30,
	2022		2021		2022		2021

Beginning balance	$	4	$	1	$	(5)	$	2
Changes in fair value recognized in regulatory assets	31		—		44		—
Settlements	(9)		(2)		(13)		(3)
Ending balance	$	26	$	(1)	$	26	$	(1)

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


	As of June 30, 2022				As of December 31, 2021
	Carrying Value		Fair Value		Carrying Value		Fair Value

Long-term debt	$	7,725	$	7,376	$	7,721	$	9,037

~~(7)~~(8) 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,~~June 30, 2022, has accrued an $8 million liability for refunds of amounts collected under the higher ROE during the periods covered by both complaints.

7887

~~(8)~~(9) 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 910 (in millions):


		For the Three-Month Period Ended March 31, 2022			For the Three-Month Period Ended June 30, 2022										For the Six-Month Period Ended June 30, 2022
			Electric			Natural Gas		Other		Total			Electric		Natural Gas		Other		Total		Electric		Natural Gas		Other		Total
Customer Revenue:	Customer Revenue:											Customer Revenue:
Retail:	Retail:											Retail:
Residential	Residential		$	168		$	225	$	—	$	393	Residential	$	185	$	87	$	—	$	272	$	353	$	312	$	—	$	665
Commercial	Commercial		74			88		—		162		Commercial	91		31		—		122		165		119		—		284
Industrial	Industrial		198			9		—		207		Industrial	277		9		—		286		475		18		—		493
Natural gas transportation services	Natural gas transportation services		—			14		—		14		Natural gas transportation services	—		9		—		9		—		23		—		23
Other retail(1)	Other retail(1)		32			1		—		33		Other retail(1)	41		—		—		41		73		1		—		74
Total retail	Total retail		472			337		—		809		Total retail	594		136		—		730		1,066		473		—		1,539
Wholesale	Wholesale		104			58		—		162		Wholesale	84		34		—		118		188		92		—		280
Multi-value transmission projects	Multi-value transmission projects		15			—		—		15		Multi-value transmission projects	13		—		—		13		28		—		—		28
Other Customer Revenue	Other Customer Revenue		—			—		1		1		Other Customer Revenue	—		—		1		1		—		—		2		2
Total Customer Revenue	Total Customer Revenue		591			395		1		987		Total Customer Revenue	691		170		1		862		1,282		565		2		1,849
Other revenue	Other revenue		17			1		—		18		Other revenue	34		1		—		35		51		2		—		53
Total operating revenue	Total operating revenue		$	608		$	396	$	1	$	1,005	Total operating revenue	$	725	$	171	$	1	$	897	$	1,333	$	567	$	2	$	1,902


		For the Three-Month Period Ended March 31, 2021			For the Three-Month Period Ended June 30, 2021										For the Six-Month Period Ended June 30, 2021
			Electric			Natural Gas		Other		Total			Electric		Natural Gas		Other		Total		Electric		Natural Gas		Other		Total
Customer Revenue:	Customer Revenue:											Customer Revenue:
Retail:	Retail:											Retail:
Residential	Residential		$	161		$	308	$	—	$	469	Residential	$	170	$	59	$	—	$	229	$	331	$	367	$	—	$	698
Commercial	Commercial		71			129		—		200		Commercial	80		18		—		98		151		147		—		298
Industrial	Industrial		190			12		—		202		Industrial	230		3		—		233		420		15		—		435
Natural gas transportation services	Natural gas transportation services		—			10		—		10		Natural gas transportation services	—		9		—		9		—		19		—		19
Other retail(1)	Other retail(1)		30			1		—		31		Other retail(1)	36		—		—		36		66		1		—		67
Total retail	Total retail		452			460		—		912		Total retail	516		89		—		605		968		549		—		1,517
Wholesale	Wholesale		74			51		—		125		Wholesale	52		17		—		69		126		68		—		194
Multi-value transmission projects	Multi-value transmission projects		15			—		—		15		Multi-value transmission projects	15		—		—		15		30		—		—		30
Other Customer Revenue	Other Customer Revenue		—			—		10		10		Other Customer Revenue	—		—		1		1		—		—		11		11
Total Customer Revenue	Total Customer Revenue		541			511		10		1,062		Total Customer Revenue	583		106		1		690		1,124		617		11		1,752
Other revenue	Other revenue		4			1		—		5		Other revenue	3		—		—		3		7		1		—		8
Total operating revenue	Total operating revenue		$	545		$	512	$	10	$	1,067	Total operating revenue	$	586	$	106	$	1	$	693	$	1,131	$	618	$	11	$	1,760

(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.

7988

~~(9)~~(10) Segment Information

MidAmerican Energy has identified 2 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			Three-Month Periods						Six-Month Periods
		Ended March 31,			Ended June 30,						Ended June 30,
			2022			2021			2022		2021		2022		2021
Operating revenue:	Operating revenue:							Operating revenue:
Regulated electric	Regulated electric		$	608		$	545	Regulated electric	$	725	$	586	$	1,333	$	1,131
Regulated natural gas	Regulated natural gas		396			512		Regulated natural gas	171		106		567		618
Other	Other		1			10		Other	1		1		2		11
Total operating revenue	Total operating revenue		$	1,005		$	1,067	Total operating revenue	$	897	$	693	$	1,902	$	1,760

Operating income:	Operating income:							Operating income:
Regulated electric	Regulated electric		$	51		$	9	Regulated electric	$	87	$	103	$	138	$	112
Regulated natural gas	Regulated natural gas		49			39		Regulated natural gas	3		—		52		39

Total operating income	Total operating income		100			48		Total operating income	90		103		190		151
Interest expense	Interest expense		(78)			(74)		Interest expense	(78)		(74)		(156)		(148)
Allowance for borrowed funds	Allowance for borrowed funds		4			2		Allowance for borrowed funds	5		2		9		4
Allowance for equity funds	Allowance for equity funds		15			6		Allowance for equity funds	14		8		29		14
Other, net	Other, net		(3)			11		Other, net	(12)		15		(15)		26
Income (loss) before income tax benefit			$	38		$	(7)
Income before income tax benefit								Income before income tax benefit	$	19	$	54	$	57	$	47


		As of					As of
		March 31, 2022		December 31, 2021			June 30, 2022		December 31, 2021
Assets:	Assets:					Assets:
Regulated electric	Regulated electric	$	21,613	$	21,385	Regulated electric	$	21,967	$	21,385
Regulated natural gas	Regulated natural gas	1,737		1,871		Regulated natural gas	1,667		1,871
Other	Other	1		1		Other	1		1
Total assets	Total assets	$	23,351	$	23,257	Total assets	$	23,635	$	23,257

8089

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,~~June 30, 2022, the related consolidated statements of operations and changes in member's equity for the three-month and six-month periods ended June 30, 2022 and 2021, and of cash flows for the ~~three-month~~six-month periods ended ~~March 31,~~June 30, 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,~~August 5, 2022

8190

MIDAMERICAN FUNDING, LLC AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS (Unaudited)

(Amounts in millions)


		As of					As of
		March 31,		December 31,			June 30,		December 31,
		2022		2021			2022		2021
ASSETS	ASSETS					ASSETS
Current assets:	Current assets:					Current assets:
Cash and cash equivalents	Cash and cash equivalents	$	132	$	233	Cash and cash equivalents	$	497	$	233
Trade receivables, net	Trade receivables, net	468		526		Trade receivables, net	525		526
Income tax receivable	Income tax receivable	299		80		Income tax receivable	20		80
Inventories	Inventories	185		234		Inventories	226		234
Other current assets	Other current assets	187		123		Other current assets	187		123
Total current assets	Total current assets	1,271		1,196		Total current assets	1,455		1,196

Property, plant and equipment, net	Property, plant and equipment, net	20,345		20,302		Property, plant and equipment, net	20,505		20,302
Goodwill	Goodwill	1,270		1,270		Goodwill	1,270		1,270
Regulatory assets	Regulatory assets	492		473		Regulatory assets	509		473
Investments and restricted investments	Investments and restricted investments	987		1,028		Investments and restricted investments	895		1,028
Other assets	Other assets	261		262		Other assets	277		262

Total assets	Total assets	$	24,626	$	24,531	Total assets	$	24,911	$	24,531

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

8291

MIDAMERICAN FUNDING, LLC AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS (Unaudited) (continued)

(Amounts in millions)


		As of					As of
		March 31,		December 31,			June 30,		December 31,
		2022		2021			2022		2021
LIABILITIES AND MEMBER'S EQUITY	LIABILITIES AND MEMBER'S EQUITY					LIABILITIES AND MEMBER'S EQUITY
Current liabilities:	Current liabilities:					Current liabilities:
Accounts payable	Accounts payable	$	429	$	531	Accounts payable	$	415	$	531
Accrued interest	Accrued interest	89		89		Accrued interest	89		89
Accrued property, income and other taxes	Accrued property, income and other taxes	144		158		Accrued property, income and other taxes	206		158
Note payable to affiliate	Note payable to affiliate	197		189		Note payable to affiliate	197		189

Current portion of long-term debt	Current portion of long-term debt	7		—		Current portion of long-term debt	64		—
Other current liabilities	Other current liabilities	145		146		Other current liabilities	181		146
Total current liabilities	Total current liabilities	1,011		1,113		Total current liabilities	1,152		1,113

Long-term debt	Long-term debt	7,959		7,961		Long-term debt	7,901		7,961
Regulatory liabilities	Regulatory liabilities	1,057		1,080		Regulatory liabilities	1,026		1,080
Deferred income taxes	Deferred income taxes	3,371		3,387		Deferred income taxes	3,411		3,387
Asset retirement obligations	Asset retirement obligations	723		714		Asset retirement obligations	698		714
Other long-term liabilities	Other long-term liabilities	463		475		Other long-term liabilities	477		475
Total liabilities	Total liabilities	14,584		14,730		Total liabilities	14,665		14,730

Commitments and contingencies (Note 7)		0		0
Commitments and contingencies (Note 8)						Commitments and contingencies (Note 8)	0		0

Member's equity:	Member's equity:					Member's equity:
Paid-in capital	Paid-in capital	1,679		1,679		Paid-in capital	1,679		1,679
Retained earnings	Retained earnings	8,363		8,122		Retained earnings	8,567		8,122

Total member's equity	Total member's equity	10,042		9,801		Total member's equity	10,246		9,801

Total liabilities and member's equity	Total liabilities and member's equity	$	24,626	$	24,531	Total liabilities and member's equity	$	24,911	$	24,531

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

8392

MIDAMERICAN FUNDING, LLC AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)

(Amounts in millions)


		Three-Month Periods			Three-Month Periods						Six-Month Periods
		Ended March 31,			Ended June 30,						Ended June 30,
			2022			2021			2022		2021		2022		2021
Operating revenue:	Operating revenue:							Operating revenue:
Regulated electric	Regulated electric		$	608		$	545	Regulated electric	$	725	$	586	$	1,333	$	1,131
Regulated natural gas and other	Regulated natural gas and other		397			522		Regulated natural gas and other	172		107		569		629
Total operating revenue	Total operating revenue		1,005			1,067		Total operating revenue	897		693		1,902		1,760

Operating expenses:	Operating expenses:							Operating expenses:
Cost of fuel and energy	Cost of fuel and energy		125			151		Cost of fuel and energy	174		103		299		254
Cost of natural gas purchased for resale and other	Cost of natural gas purchased for resale and other		298			432		Cost of natural gas purchased for resale and other	120		57		418		489
Operations and maintenance	Operations and maintenance		192			193		Operations and maintenance	200		184		392		377
Depreciation and amortization	Depreciation and amortization		250			207		Depreciation and amortization	277		209		527		416
Property and other taxes	Property and other taxes		40			36		Property and other taxes	36		37		76		73
Total operating expenses	Total operating expenses		905			1,019		Total operating expenses	807		590		1,712		1,609

Operating income	Operating income		100			48		Operating income	90		103		190		151

Other income (expense):	Other income (expense):							Other income (expense):
Interest expense	Interest expense		(82)			(78)		Interest expense	(83)		(78)		(165)		(156)
Allowance for borrowed funds	Allowance for borrowed funds		4			2		Allowance for borrowed funds	5		2		9		4
Allowance for equity funds	Allowance for equity funds		15			6		Allowance for equity funds	14		8		29		14
Other, net	Other, net		(4)			10		Other, net	(10)		16		(14)		26
Total other income (expense)	Total other income (expense)		(67)			(60)		Total other income (expense)	(74)		(52)		(141)		(112)

Income (loss) before income tax benefit			33			(12)
Income before income tax benefit								Income before income tax benefit	16		51		49		39
Income tax benefit	Income tax benefit		(208)			(156)		Income tax benefit	(188)		(160)		(396)		(316)

Net income	Net income		$	241		$	144	Net income	$	204	$	211	$	445	$	355

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

8493

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			Paid-in Capital		Retained Earnings		Total Member's Equity

Balance, March 31, 2021								Balance, March 31, 2021	$	1,679	$	7,384	$	9,063
Net income								Net income	—		211		211
Other equity transactions								Other equity transactions	—		(1)		(1)
Balance, June 30, 2021								Balance, June 30, 2021	$	1,679	$	7,594	$	9,273

Balance, December 31, 2020	Balance, December 31, 2020	$	1,679	$	7,240	$	8,919	Balance, December 31, 2020	$	1,679	$	7,240	$	8,919
Net income	Net income	—		144		144		Net income	—		355		355
Other equity transactions								Other equity transactions	—		(1)		(1)
Balance, June 30, 2021								Balance, June 30, 2021	$	1,679	$	7,594	$	9,273

Balance, March 31, 2021		$	1,679	$	7,384	$	9,063
Balance, March 31, 2022								Balance, March 31, 2022	$	1,679	$	8,363	$	10,042
Net income								Net income	—		204		204

Balance, June 30, 2022								Balance, June 30, 2022	$	1,679	$	8,567	$	10,246

Balance, December 31, 2021	Balance, December 31, 2021	$	1,679	$	8,122	$	9,801	Balance, December 31, 2021	$	1,679	$	8,122	$	9,801
Net income	Net income	—		241		241		Net income	—		445		445

Balance, March 31, 2022		$	1,679	$	8,363	$	10,042
Balance, June 30, 2022								Balance, June 30, 2022	$	1,679	$	8,567	$	10,246

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

8594

MIDAMERICAN FUNDING, LLC AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)

(Amounts in millions)


		Three-Month Periods					Six-Month Periods
		Ended March 31,					Ended June 30,
		2022		2021			2022		2021
Cash flows from operating activities:	Cash flows from operating activities:					Cash flows from operating activities:
Net income	Net income	$	241	$	144	Net income	$	445	$	355
Adjustments to reconcile net income to net cash flows from operating activities:	Adjustments to reconcile net income to net cash flows from operating activities:					Adjustments to reconcile net income to net cash flows from operating activities:
Depreciation and amortization	Depreciation and amortization	250		207		Depreciation and amortization	527		416
Amortization of utility plant to other operating expenses	Amortization of utility plant to other operating expenses	9		8		Amortization of utility plant to other operating expenses	19		17
Allowance for equity funds	Allowance for equity funds	(15)		(6)		Allowance for equity funds	(29)		(14)
Deferred income taxes and investment tax credits, net	Deferred income taxes and investment tax credits, net	16		153		Deferred income taxes and investment tax credits, net	58		195

Settlements of asset retirement obligations	Settlements of asset retirement obligations	(7)		(4)		Settlements of asset retirement obligations	(28)		(19)
Other, net	Other, net	10		(17)		Other, net	32		11
Changes in other operating assets and liabilities:	Changes in other operating assets and liabilities:					Changes in other operating assets and liabilities:
Trade receivables and other assets	Trade receivables and other assets	43		(298)		Trade receivables and other assets	1		(275)
Inventories	Inventories	49		46		Inventories	8		41

Pension and other postretirement benefit plans		3		1

Accrued property, income and other taxes, net	Accrued property, income and other taxes, net	(245)		(332)		Accrued property, income and other taxes, net	95		56
Accounts payable and other liabilities	Accounts payable and other liabilities	(1)		6		Accounts payable and other liabilities	(10)		(68)
Net cash flows from operating activities	Net cash flows from operating activities	353		(92)		Net cash flows from operating activities	1,118		715

Cash flows from investing activities:	Cash flows from investing activities:					Cash flows from investing activities:
Capital expenditures	Capital expenditures	(459)		(298)		Capital expenditures	(862)		(721)
Purchases of marketable securities	Purchases of marketable securities	(105)		(52)		Purchases of marketable securities	(214)		(109)
Proceeds from sales of marketable securities	Proceeds from sales of marketable securities	102		47		Proceeds from sales of marketable securities	210		105

Other, net	Other, net	1		—		Other, net	6		(1)
Net cash flows from investing activities	Net cash flows from investing activities	(461)		(303)		Net cash flows from investing activities	(860)		(726)

Cash flows from financing activities:	Cash flows from financing activities:					Cash flows from financing activities:

Repayments of long-term debt		(1)		—

Net change in note payable to affiliate	Net change in note payable to affiliate	8		7		Net change in note payable to affiliate	8		6
Net proceeds from short-term debt		—		387

Other, net						Other, net	(1)		(2)
Net cash flows from financing activities	Net cash flows from financing activities	7		394		Net cash flows from financing activities	7		4

Net change in cash and cash equivalents and restricted cash and cash equivalents	Net change in cash and cash equivalents and restricted cash and cash equivalents	(101)		(1)		Net change in cash and cash equivalents and restricted cash and cash equivalents	265		(7)
Cash and cash equivalents and restricted cash and cash equivalents at beginning of period	Cash and cash equivalents and restricted cash and cash equivalents at beginning of period	240		46		Cash and cash equivalents and restricted cash and cash equivalents at beginning of period	240		46
Cash and cash equivalents and restricted cash and cash equivalents at end of period	Cash and cash equivalents and restricted cash and cash equivalents at end of period	$	139	$	45	Cash and cash equivalents and restricted cash and cash equivalents at end of period	$	505	$	39

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

8695

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,~~June 30, 2022, and for the ~~three-month~~three- and six-month periods ended ~~March 31,~~June 30, 2022 and 2021. The results of operations for the ~~three-month~~three- and six-month periods ended ~~March 31,~~June 30, 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~~six-month period ended ~~March 31,~~June 30, 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					As of
		March 31,		December 31,			June 30,		December 31,
		2022		2021			2022		2021

Cash and cash equivalents	Cash and cash equivalents	$	132	$	233	Cash and cash equivalents	$	497	$	233
Restricted cash and cash equivalents in other current assets	Restricted cash and cash equivalents in other current assets	7		7		Restricted cash and cash equivalents in other current assets	8		7
Total cash and cash equivalents and restricted cash and cash equivalents	Total cash and cash equivalents and restricted cash and cash equivalents	$	139	$	240	Total cash and cash equivalents and restricted cash and cash equivalents	$	505	$	240

8796

(3) Property, Plant and Equipment, Net

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

(4) ~~Income Taxes~~Recent Financing Transactions

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 comprisedRefer to Note 4 of ~~a $3 million benefit (21%) from the application of the statutory income tax rate~~MidAmerican Energy's Notes 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.~~Financial Statements.

(5) Income Taxes

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


		Three-Month Periods			Three-Month Periods						Six-Month Periods
		Ended March 31,			Ended June 30,						Ended June 30,
			2022			2021			2022		2021		2022		2021

Federal statutory income tax rate	Federal statutory income tax rate		21	%		21	%	Federal statutory income tax rate	21	%	21	%	21	%	21	%
Income tax credits	Income tax credits		(618)			1,400		Income tax credits	(1,150)		(286)		(793)		(764)
State income tax, net of federal income tax impacts	State income tax, net of federal income tax impacts		(24)			(8)		State income tax, net of federal income tax impacts	(38)		(33)		(29)		(41)
Effects of ratemaking	Effects of ratemaking		(9)			(108)		Effects of ratemaking	(12)		(16)		(10)		(26)
Other, net	Other, net		—			(5)		Other, net	4		—		3		—
Effective income tax rate	Effective income tax rate		(630)	%		1,300	%	Effective income tax rate	(1,175)	%	(314)	%	(808)	%	(810)	%

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~~six-month periods ended ~~March 31,~~June 30, 2022 and 2021 totaled ~~$203~~$388 million and ~~$151~~$297 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~~received net cash payments for income tax tofrom BHE totaling $544 million and $560 million for ~~each of~~ the ~~three-month~~six-month periods ended ~~March 31,~~June 30, 2022 and 2021. respectively.

~~(5)~~(6) Employee Benefit Plans

Refer to Note 56 of MidAmerican Energy's Notes to Financial Statements.

8897

~~(6)~~(7) Fair Value Measurements

Refer to Note 67 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, 2022 As of December 31, 2021
Carrying
Value Fair
Value Carrying
Value Fair
Value
Long-term debt $ 7,966 $ 8,480 $ 7,961 $ 9,350


	As of June 30, 2022				As of December 31, 2021
	Carrying Value		Fair Value		Carrying Value		Fair Value

Long-term debt	$	7,965	$	7,646	$	7,961	$	9,350

~~(7)~~(8) Commitments and Contingencies

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

Refer to Note 78 of MidAmerican Energy's Notes to Financial Statements.

~~(8)~~(9) Revenue from Contracts with Customers

Refer to Note 89 of MidAmerican Energy's Notes to Financial Statements.

8998

~~(9)~~(10) Segment Information

MidAmerican Funding has identified 2 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			Three-Month Periods						Six-Month Periods
		Ended March 31,			Ended June 30,						Ended June 30,
			2022			2021			2022		2021		2022		2021
Operating revenue:	Operating revenue:							Operating revenue:
Regulated electric	Regulated electric		$	608		$	545	Regulated electric	$	725	$	586	$	1,333	$	1,131
Regulated natural gas	Regulated natural gas		396			512		Regulated natural gas	171		106		567		618
Other	Other		1			10		Other	1		1		2		11
Total operating revenue	Total operating revenue		$	1,005		$	1,067	Total operating revenue	$	897	$	693	$	1,902	$	1,760

Operating income:	Operating income:							Operating income:
Regulated electric	Regulated electric		$	51		$	9	Regulated electric	$	87	$	103	$	138	$	112
Regulated natural gas	Regulated natural gas		49			39		Regulated natural gas	3		—		52		39

Total operating income	Total operating income		100			48		Total operating income	90		103		190		151
Interest expense	Interest expense		(82)			(78)		Interest expense	(83)		(78)		(165)		(156)
Allowance for borrowed funds	Allowance for borrowed funds		4			2		Allowance for borrowed funds	5		2		9		4
Allowance for equity funds	Allowance for equity funds		15			6		Allowance for equity funds	14		8		29		14
Other, net	Other, net		(4)			10		Other, net	(10)		16		(14)		26
Income (loss) before income tax benefit			$	33		$	(12)
Income before income tax benefit								Income before income tax benefit	$	16	$	51	$	49	$	39


		As of					As of
		March 31, 2022		December 31, 2021			June 30, 2022		December 31, 2021
Assets(1):	Assets(1):					Assets(1):
Regulated electric	Regulated electric	$	22,804	$	22,576	Regulated electric	$	23,158	$	22,576
Regulated natural gas	Regulated natural gas	1,816		1,950		Regulated natural gas	1,746		1,950
Other	Other	6		5		Other	7		5
Total assets	Total assets	$	24,626	$	24,531	Total assets	$	24,911	$	24,531


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

9099

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 Second Quarter and First ~~Quarter~~Six Months of 2022 and 2021

Overview

MidAmerican Energy -

MidAmerican Energy's net income for the ~~first~~second quarter of 2022 was ~~$244~~$207 million, a decrease of $6 million, or 3%, compared to 2021, primarily due to higher depreciation and amortization expense of $68 million, unfavorable other, net of $27 million, higher operations and maintenance expense of $16 million and higher interest expense of $4 million, offset by higher electric utility margin of $68 million, higher income tax benefit of $29 million, higher allowances for equity and borrowed funds of $9 million and higher natural gas utility margin of $2 million. Electric retail customer volumes increased 3% primarily due to higher customer usage and the favorable impact of weather. Wholesale electricity sales volumes increased 7% due to favorable market conditions. Natural gas retail customer volumes increased 21% due to the favorable impact of weather.

MidAmerican Energy's net income for the first six months of 2022 was $451 million, an increase of ~~$97~~$91 million, or ~~66%~~25%, compared to 2021, primarily due to higher electric utility margin of ~~$89~~$157 million, higher income tax benefit of $81 million, higher natural gas utility margin of ~~$18 million, higher income tax benefit of $52~~$20 million and higher allowances for equity and borrowed funds of ~~$11~~$20 million, offset by higher depreciation and amortization expense of ~~$43~~$111 million, unfavorable other, net of ~~$14~~$41 million, higher operations and maintenance expense of $15 million, higher interest expense of $8 million, lower nonregulated utility margins of $9$8 million and higher property and other taxes of ~~$4 million and higher interest expense of $4~~$3 million. Electric retail customer volumes increased 6%4% primarily due to higher customer usage ~~for certain industrial customers~~ and the favorable impact of weather. Wholesale electricity sales volumes increased ~~31%~~20% 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%11% due to the favorable impact of weather.

MidAmerican Funding -

MidAmerican Funding's net income for the ~~first~~second quarter of 2022 was ~~$241~~$204 million, a decrease of $7 million, or 3%, compared to 2021. MidAmerican Funding's net income for the first six months of 2022 was $445 million, an increase of ~~$97~~$90 million, or ~~67%~~25%, 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.

100

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							Second Quarter											First Six Months
			2022			2021				Change						2022			2021			Change					2022			2021			Change
Electric utility margin:	Electric utility margin:														Electric utility margin:
Operating revenue	Operating revenue			$	608		$	545			$	63	12	%	Operating revenue		$	725		$	586		$	139	24	%		$	1,333		$	1,131		$	202	18	%
Cost of fuel and energy	Cost of fuel and energy			125			151				(26)		(17)		Cost of fuel and energy		174			103			71		69			299			254			45		18
Electric utility margin	Electric utility margin			483			394				89		23	%	Electric utility margin		551			483			68		14	%		1,034			877			157		18	%

Natural gas utility margin:	Natural gas utility margin:														Natural gas utility margin:
Operating revenue	Operating revenue			396			512				(116)		(23)	%	Operating revenue		171			106			65		61	%		567			618			(51)		(8)	%
Natural gas purchased for resale	Natural gas purchased for resale			298			432				(134)		(31)		Natural gas purchased for resale		120			57			63		*			418			489			(71)		(15)
Natural gas utility margin	Natural gas utility margin			98			80				18		23	%	Natural gas utility margin		51			49			2		4	%		149			129			20		16	%

Utility margin	Utility margin			581			474				107		23	%	Utility margin		602			532			70		13	%		1,183			1,006			177		18	%

Other operating revenue	Other operating revenue			1			10				(9)		(90)	%	Other operating revenue		1			1			—		—	%		2			11			(9)		(82)	%

Operations and maintenance	Operations and maintenance			192			193				(1)		(1)		Operations and maintenance		200			184			16		9			392			377			15		4
Depreciation and amortization	Depreciation and amortization			250			207				43		21		Depreciation and amortization		277			209			68		33			527			416			111		27
Property and other taxes	Property and other taxes			40			36				4		11		Property and other taxes		36			37			(1)		(3)			76			73			3		4

Operating income	Operating income			$	100		$	48			$	52	*		Operating income		$	90		$	103		$	(13)	(13)	%		$	190		$	151		$	39	26	%

* Not meaningful.

92101

Electric Utility Margin

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


		First Quarter				Second Quarter											First Six Months
			2022	2021			Change				2022				2021		Change				2022		2021		Change
Utility margin (in millions):	Utility margin (in millions):													Utility margin (in millions):
Operating revenue	Operating revenue			$	608		$	545	$	63		12	%	Operating revenue	$	725	$	586	$	139	24	%	$	1,333	$	1,131	$	202	18	%
Cost of fuel and energy	Cost of fuel and energy			125			151		(26)			(17)		Cost of fuel and energy	174		103		71		69		299		254		45		18
Utility margin	Utility margin			$	483		$	394	$	89		23	%	Utility margin	$	551	$	483	$	68	14	%	$	1,034	$	877	$	157	18	%

Sales (GWhs):	Sales (GWhs):													Sales (GWhs):
Residential	Residential			1,853			1,738		115			7	%	Residential	1,552		1,486		66		4	%	3,405		3,224		181		6	%
Commercial	Commercial			1,013			938		75			8		Commercial	953		894		59		7		1,966		1,832		134		7
Industrial	Industrial			3,979			3,819		160			4		Industrial	4,149		4,056		93		2		8,128		7,875		253		3
Other	Other			403			370		33			9		Other	406		401		5		1		809		771		38		5
Total retail	Total retail			7,248			6,865		383			6		Total retail	7,060		6,837		223		3		14,308		13,702		606		4
Wholesale	Wholesale			5,325			4,051		1,274			31		Wholesale	4,146		3,872		274		7		9,471		7,923		1,548		20
Total sales	Total sales			12,573			10,916		1,657			15	%	Total sales	11,206		10,709		497		5	%	23,779		21,625		2,154		10	%

Average number of retail customers (in thousands)	Average number of retail customers (in thousands)			810			801		9			1	%	Average number of retail customers (in thousands)	812		803		9		1	%	811		802		9		1	%

Average revenue per MWh:	Average revenue per MWh:													Average revenue per MWh:
Retail	Retail			$	65.10		$	65.82	$	(0.72)		(1)	%	Retail	$	84.18	$	75.62	$	8.56	11	%	$	74.52	$	70.71	$	3.81	5	%
Wholesale	Wholesale			$	20.65		$	16.64	$	4.01		24	%	Wholesale	$	25.23	$	12.06	$	13.17	*		$	22.65	$	14.40	$	8.25	57	%

Heating degree days	Heating degree days			3,315			3,211		104			3	%	Heating degree days	677		588		89		15	%	3,992		3,799		193		5	%

Cooling degree days														Cooling degree days	421		426		(5)		(1)	%	421		426		(5)		(1)	%

Sources of energy (GWhs)(1):	Sources of energy (GWhs)(1):													Sources of energy (GWhs)(1):
Wind and other(2)	Wind and other(2)			8,290			6,122		2,168			35	%	Wind and other(2)	7,364		5,877		1,487		25	%	15,654		11,999		3,655		30	%
Coal	Coal			2,359			2,902		(543)			(19)		Coal	1,481		2,791		(1,310)		(47)		3,840		5,693		(1,853)		(33)
Nuclear	Nuclear			920			895		25			3		Nuclear	863		1,009		(146)		(14)		1,783		1,904		(121)		(6)
Natural gas	Natural gas			234			143		91			64		Natural gas	397		336		61		18		631		479		152		32
Total energy generated	Total energy generated			11,803			10,062		1,741			17		Total energy generated	10,105		10,013		92		1		21,908		20,075		1,833		9
Energy purchased	Energy purchased			962			1,018		(56)			(6)		Energy purchased	1,315		842		473		56		2,277		1,860		417		22
Total	Total			12,765			11,080		1,685			15	%	Total	11,420		10,855		565		5	%	24,185		21,935		2,250		10	%

Average cost of energy per MWh:	Average cost of energy per MWh:													Average cost of energy per MWh:
Energy generated(3)	Energy generated(3)			$	5.56		$	6.15	$	(0.59)		(10)	%	Energy generated(3)	$	6.34	$	6.43	$	(0.09)	(1)	%	$	5.92	$	6.29	$	(0.37)	(6)	%
Energy purchased	Energy purchased			$	62.04		$	87.45	$	(25.41)		(29)	%	Energy purchased	$	83.45	$	45.70	$	37.75	83	%	$	74.41	$	68.55	$	5.86	9	%

* Not meaningful.

(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.

93102

Natural Gas Utility Margin

A comparison of key operating results related to natural gas utility margin is as follows:


		First Quarter				Second Quarter											First Six Months
			2022	2021			Change				2022				2021		Change				2022		2021		Change
Utility margin (in millions):	Utility margin (in millions):													Utility margin (in millions):
Operating revenue	Operating revenue			$	396		$	512	$	(116)		(23)	%	Operating revenue	$	171	$	106	$	65	61	%	$	567	$	618	$	(51)	(8)	%
Natural gas purchased for resale	Natural gas purchased for resale			298			432		(134)			(31)		Natural gas purchased for resale	120		57		63		*		418		489		(71)		(15)
Utility margin	Utility margin			$	98		$	80	$	18		23	%	Utility margin	$	51	$	49	$	2	4	%	$	149	$	129	$	20	16	%

Throughput (000's Dths):	Throughput (000's Dths):													Throughput (000's Dths):
Residential	Residential			27,099			25,282		1,817			7	%	Residential	7,500		6,272		1,228		20	%	34,599		31,554		3,045		10	%
Commercial	Commercial			12,460			11,733		727			6		Commercial	3,599		3,011		588		20		16,059		14,744		1,315		9
Industrial	Industrial			1,844			1,437		407			28		Industrial	1,465		1,069		396		37		3,309		2,506		803		32
Other	Other			35			37		(2)			(5)		Other	16		11		5		45		51		48		3		6
Total retail sales	Total retail sales			41,438			38,489		2,949			8		Total retail sales	12,580		10,363		2,217		21		54,018		48,852		5,166		11
Wholesale sales	Wholesale sales			12,232			10,773		1,459			14		Wholesale sales	4,912		5,817		(905)		(16)		17,144		16,590		554		3
Total sales	Total sales			53,670			49,262		4,408			9		Total sales	17,492		16,180		1,312		8		71,162		65,442		5,720		9
Natural gas transportation service	Natural gas transportation service			31,313			29,640		1,673			6		Natural gas transportation service	22,491		26,853		(4,362)		(16)		53,804		56,493		(2,689)		(5)
Total throughput	Total throughput			84,983			78,902		6,081			8	%	Total throughput	39,983		43,033		(3,050)		(7)	%	124,966		121,935		3,031		2	%

Average number of retail customers (in thousands)	Average number of retail customers (in thousands)			785			777		8			1	%	Average number of retail customers (in thousands)	781		776		5		1	%	784		777		7		1	%

Average revenue per retail Dth sold	Average revenue per retail Dth sold			$	7.84		$	11.70	$	(3.86)		(33)	%	Average revenue per retail Dth sold	$	10.08	$	7.81	$	2.27	29	%	$	8.36	$	10.88	$	(2.52)	(23)	%

Heating degree days	Heating degree days			3,485			3,301		184			6	%	Heating degree days	734		625		109		17	%	4,219		3,926		293		7	%

Average cost of natural gas per retail Dth sold	Average cost of natural gas per retail Dth sold			$	5.80		$	9.87	$	(4.07)		(41)	%	Average cost of natural gas per retail Dth sold	$	6.78	$	3.99	$	2.79	70	%	$	6.03	$	8.62	$	(2.59)	(30)	%

Combined retail and wholesale average cost of natural gas per Dth sold	Combined retail and wholesale average cost of natural gas per Dth sold			$	5.55		$	8.76	$	(3.21)		(37)	%	Combined retail and wholesale average cost of natural gas per Dth sold	$	6.86	$	3.54	$	3.32	94	%	$	5.87	$	7.47	$	(1.60)	(21)	%

* Not meaningful.

Quarter Ended ~~March 31,~~June 30, 2022 Compared to Quarter Ended ~~March 31,~~June 30, 2021

MidAmerican Energy -

Electric utility margin increased ~~$89~~$68 million, or ~~23%~~14%, for the ~~first~~second quarter of 2022 compared to 2021, primarily due to:

•a ~~$64~~$63 million increase in wholesale utility margin due to higher margins per unit of ~~$58~~$61 million, reflecting higher market prices and lower energy costs, and higher ~~market prices, and higher~~ volumes of ~~31.4%~~7.1%; and

•a ~~$25~~$6 million increase in retail utility margin primarily due to ~~$17~~$11 million from higher customer usage; $9$6 million due to price impacts from changes in sales mix; and $1 million from the favorable impact of weather; partially offset by $12 million, net of energy costs, from ~~higher~~lower 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%~~3.3%.

Natural gas utility margin increased ~~$18~~$2 million, or ~~23%~~4%, for the ~~first~~second quarter of 2022 compared to 2021 primarily due to:

•~~an $8~~a $5 million increase from ~~lower~~higher average prices; partially offset by

•a $3 million decrease from higher 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.~~.

94103

~~Depreciation~~Operations and ~~amortization~~maintenance increased $16 million, or 9%, for the ~~first~~second quarter of 2022 ~~increased $43 million, or 21%,~~ compared to 2021 primarily due to ~~$42~~higher steam generation maintenance costs of $9 million and higher electric distribution and transmission costs of $10 million, partially offset by lower gas distribution costs of $3 million.

Depreciation and amortization increased $68 million, or 33%, for the second quarter of 2022 compared to 2021 primarily due to $54 million from higher Iowa revenue sharing accruals, ~~$7 million from wind-powered generating facilities and other plant placed in-service and $6~~$18 million from a regulatory mechanism that provides customers the retail energy benefits of certain wind-powered generation projects and $8 million from wind-powered generating facilities and other plant placed in-service, partially offset by $12 million from a regulatory mechanism deferring certain depreciation expense in 2022.

Interest expense increased $4 million, or 5%, for the second quarter of 2022 compared to 2021 due to higher interest expense from a July 2021 long-term debt issuance and higher interest rates on variable rate long-term debt.

Allowance for borrowed and equity funds increased ~~$11~~$9 million, or ~~138%~~90%, for the ~~first~~second 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~~$27 million, or ~~127%~~180%, for the ~~first~~second 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~~$29 million, or ~~34%~~18%, for the ~~first~~second 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~~and lower pretax income, partially offset by state income tax ~~benefits~~impacts and the effects of ~~ratemaking, partially offset by higher pretax income.~~ratemaking. PTCs for the ~~first~~second quarter of 2022 and 2021 totaled ~~$203~~$185 million and ~~$151~~$146 million, respectively.

MidAmerican Funding -

Income tax benefit increased ~~$52~~$28 million, or ~~33%~~18%, for the ~~first~~second quarter of 2022 compared to 2021 principally due to the factors discussed for MidAmerican Energy.

First Six Months of 2022 Compared to First Six Months of 2021

MidAmerican Energy -

Electric utility margin increased $157 million, or 18%, for the first six months of 2022 compared to 2021, due to:

•a $127 million increase in wholesale utility margin due to higher margins per unit of $119 million, reflecting higher market prices and lower energy costs, and higher volumes of 19.5%; and

•a $31 million increase in retail utility margin primarily due to $28 million from higher customer usage; $4 million due to price impacts from changes in sales mix; and $2 million from the ~~effective~~favorable impact of weather; partially offset by $3 million, net of energy costs, from lower recoveries through bill riders (offset in operations and maintenance expense and income tax benefit). Retail customer volumes increased 4.4%.

Natural gas utility margin increased $20 million, or 16%, for the first six months of 2022 compared to 2021 primarily due to:

•a $10 million increase from higher average prices primarily due to the timing of recoveries through a capital tracker mechanism;

•a $5 million increase from lower refunds related to amortization of excess accumulated deferred income taxes arising from 2017 Tax Reform (offset in income tax benefit); and

•a $5 million increase from the favorable impact of weather.

Operations and maintenance increased $15 million, or 4%, for the first six months of 2022 compared to 2021 primarily due to higher steam generation maintenance costs of $11 million and higher electric distribution and transmission costs of $10 million, partially offset by lower energy efficiency program expense of $4 million (offset in operating revenue) and lower gas distribution costs of $3 million.

104

Depreciation and amortization increased $111 million, or 27%, for the first six months of 2022 compared to 2021 primarily due to $96 million from higher Iowa revenue sharing accruals, $24 million from a regulatory mechanism that provides customers the retail energy benefits of certain wind-powered generation projects and $15 million from wind-powered generating facilities and other plant placed in-service, partially offset by $25 million from a regulatory mechanism deferring certain depreciation expense in 2022.

Interest expense increased $8 million, or 5%, for the first six months of 2022 compared to 2021 due to higher interest expense from a July 2021 long-term debt issuance and higher interest rates on variable rate ~~was (630)%~~long-term debt.

Allowance for borrowed and equity funds increased $20 million, or 111%, for the first six months of 2022 compared to 2021 primarily due to higher construction work-in-progress balances related to wind- and solar-powered generation.

Other, net decreased $41 million, or 158%, for the first six months 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 employee benefit plans.

Income tax benefit increased $81 million, or 26%, for the first six months of 2022 compared to 2021 primarily due to higher PTCs, partially offset by the effects of ratemaking, state income tax impacts and higher pretax income. PTCs for the first six months of 2022 and ~~1,300%~~2021 totaled $388 million and $297 million, respectively.

MidAmerican Funding -

Income tax benefit increased $80 million, or 25%, for ~~2021. The changes in~~ the ~~effective tax rates were~~first six months of 2022 compared to 2021 principally due to the factors discussed for MidAmerican Energy.

Liquidity and Capital Resources

As of ~~March 31,~~June 30, 2022, the total net liquidity for MidAmerican Energy and MidAmerican Funding was as follows (in millions):


MidAmerican Energy:
Cash and cash equivalents	$	~~131~~495

Credit facilities, maturing ~~2022~~2023 and ~~2024~~2025	1,505
Less:

Tax-exempt bond support	(370)
Net credit facilities	1,135

MidAmerican Energy total net liquidity	$	~~1,266~~1,630

MidAmerican Funding:
MidAmerican Energy total net liquidity	$	~~1,266~~1,630
Cash and cash equivalents	12
MHC, Inc. credit facility, maturing ~~2022~~2023	4
MidAmerican Funding total net liquidity	$	~~1,271~~1,636

105

Operating Activities

MidAmerican Energy's net cash flows from operating activities for the ~~three-month~~six-month periods ended ~~March 31,~~June 30, 2022 and 2021, were ~~$360~~$1,125 million and ~~$(85)~~$721 million, respectively. MidAmerican Funding's net cash flows from operating activities for the ~~three-month~~six-month periods ended ~~March 31,~~June 30, 2022 and 2021, were ~~$353~~$1,118 million and ~~$(92)~~$715 million, respectively. Cash flows from operating activities reflect higher utility margins for MidAmerican Energy's regulated electric and natural gas businesses and lower payments to vendors, ~~and lower derivative collateral posted,~~ partially offset by lower income tax receipts and higher ~~interest expense.~~asset retirement obligation settlements. 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.

Investing Activities

MidAmerican Energy's net cash flows from investing activities for the ~~three-month~~six-month periods ended ~~March 31,~~June 30, 2022 and 2021, were ~~$(461)~~$(860) million and ~~$(303)~~$(726) million, respectively. MidAmerican Funding's net cash flows from investing activities for the ~~three-month~~six-month periods ended ~~March 31,~~June 30, 2022 and 2021, were ~~$(461)~~$(860) million and ~~$(303)~~$(726) 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~~six-month periods ended ~~March 31,~~June 30, 2022 and 2021 were $—$(1) million and ~~$387~~$(2) million, respectively. MidAmerican Funding's net cash flows from financing activities for the ~~three-month~~six-month periods ended ~~March 31,~~June 30, 2022 and 2021, were $7 million and ~~$394~~$4 million, respectively. ~~Through its commercial paper program, MidAmerican Energy received $387 million in 2021.~~ MidAmerican Funding received $8 million and $7$6 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.~~billion. MidAmerican Energy has a $1.5 billion unsecured credit facility expiring in June ~~2024.~~2025. 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,~~Secured Overnight Financing Rate, 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, through May 25, 2025, long-term debt securities up to an aggregate of ~~$350 million through August 20, 2022.~~$2.2 billion and preferred stock up to an aggregate of $500 million. 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.

96106

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 Periods				Annual			Six-Month Periods				Annual
		Ended March 31,				Forecast			Ended June 30,				Forecast
		2021		2022		2022			2021		2022		2022

Wind generation	Wind generation	$	32	$	133	$	762	Wind generation	$	286	$	244	$	734
Electric distribution	Electric distribution	46		54		260		Electric distribution	96		125		274
Electric transmission	Electric transmission	23		21		171		Electric transmission	54		46		158
Solar generation	Solar generation	3		44		139		Solar generation	63		77		140
Other	Other	194		207		681		Other	221		370		607
Total	Total	$	298	$	459	$	2,013	Total	$	720	$	862	$	1,913

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$5 million and $172 million for the ~~three-month period~~six-month periods ended ~~March 31, 2022.~~June 30, 2022 and 2021, respectively. Planned spending for the construction of additional wind-powered generating facilities totals ~~$142~~$106 million for the remainder of 2022.

◦Repowering of wind-powered generating facilities totaling ~~$120~~$214 million and ~~$24~~$82 million for the ~~three-month~~six-month periods ended ~~March 31,~~June 30, 2022 and 2021, respectively. Planned spending for the repowering of wind-powered generating facilities totals ~~$386~~$314 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~~593 MWs of current repowering projects not in-service as of ~~March 31,~~June 30, 2022, ~~511~~292 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~~$77 million and $3$63 million for the ~~three-month~~six-month periods ended ~~March 31,~~June 30, 2022 and 2021, respectively and planned spending of ~~$96~~$63 million for the remainder of 2022.

97107

•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,~~June 30, 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

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.

98108

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.

99109

Nevada Power Company and its subsidiaries

Consolidated Financial Section

~~100~~110

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,~~June 30, 2022, the related consolidated statements of operations and changes in shareholder's equity for the three-month and six-month periods ended June 30, 2022 and 2021, and of cash flows for the ~~three-month~~six-month periods ended ~~March 31,~~June 30, 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.

/s/ Deloitte & Touche LLP

Las Vegas, Nevada

~~April 29,~~August 5, 2022

~~101~~111

NEVADA POWER COMPANY AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS (Unaudited)

(Amounts in millions, except share data)


		As of					As of
		March 31,		December 31,			June 30,		December 31,
		2022		2021			2022		2021
ASSETS	ASSETS					ASSETS
Current assets:	Current assets:					Current assets:
Cash and cash equivalents	Cash and cash equivalents	$	47	$	33	Cash and cash equivalents	$	42	$	33
Trade receivables, net	Trade receivables, net	187		227		Trade receivables, net	369		227
Inventories	Inventories	61		64		Inventories	68		64

Regulatory assets	Regulatory assets	327		291		Regulatory assets	401		291
Prepayments		48		33

Other current assets	Other current assets	59		53		Other current assets	62		86
Total current assets	Total current assets	729		701		Total current assets	942		701

Property, plant and equipment, net	Property, plant and equipment, net	6,992		6,891		Property, plant and equipment, net	7,115		6,891

Regulatory assets	Regulatory assets	759		728		Regulatory assets	748		728
Other assets	Other assets	431		432		Other assets	414		432

Total assets	Total assets	$	8,911	$	8,752	Total assets	$	9,219	$	8,752

LIABILITIES AND SHAREHOLDER'S EQUITY	LIABILITIES AND SHAREHOLDER'S EQUITY					LIABILITIES AND SHAREHOLDER'S EQUITY
Current liabilities:	Current liabilities:					Current liabilities:
Accounts payable	Accounts payable	$	224	$	242	Accounts payable	$	433	$	242
Accrued interest	Accrued interest	38		32		Accrued interest	33		32
Accrued property, income and other taxes		30		29

Short-term debt	Short-term debt	104		180		Short-term debt	—		180
Regulatory liabilities	Regulatory liabilities	49		49		Regulatory liabilities	46		49
Customer deposits	Customer deposits	45		44		Customer deposits	44		44

Derivative contracts	Derivative contracts	88		55		Derivative contracts	122		55
Other current liabilities	Other current liabilities	59		62		Other current liabilities	91		91
Total current liabilities	Total current liabilities	637		693		Total current liabilities	769		693

Long-term debt	Long-term debt	2,700		2,499		Long-term debt	2,800		2,499
Finance lease obligations	Finance lease obligations	306		310		Finance lease obligations	302		310
Regulatory liabilities	Regulatory liabilities	1,083		1,100		Regulatory liabilities	1,075		1,100
Deferred income taxes	Deferred income taxes	799		782		Deferred income taxes	816		782
Other long-term liabilities	Other long-term liabilities	358		338		Other long-term liabilities	328		338
Total liabilities	Total liabilities	5,883		5,722		Total liabilities	6,090		5,722

Commitments and contingencies (Note 8)		0		0
Commitments and contingencies (Note 9)						Commitments and contingencies (Note 9)	0		0

Shareholder's equity:	Shareholder's equity:					Shareholder's equity:
Common stock - $1.00 stated value; 1,000 shares authorized, issued and outstanding	Common stock - $1.00 stated value; 1,000 shares authorized, issued and outstanding	—		—		Common stock - $1.00 stated value; 1,000 shares authorized, issued and outstanding	—		—
Additional paid-in capital	Additional paid-in capital	2,308		2,308		Additional paid-in capital	2,333		2,308
Retained earnings	Retained earnings	722		724		Retained earnings	798		724
Accumulated other comprehensive loss, net	Accumulated other comprehensive loss, net	(2)		(2)		Accumulated other comprehensive loss, net	(2)		(2)
Total shareholder's equity	Total shareholder's equity	3,028		3,030		Total shareholder's equity	3,129		3,030

Total liabilities and shareholder's equity	Total liabilities and shareholder's equity	$	8,911	$	8,752	Total liabilities and shareholder's equity	$	9,219	$	8,752

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

~~102~~112

NEVADA POWER COMPANY AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)

(Amounts in millions)


		Three-Month Periods					Three-Month Periods				Six-Month Periods
		Ended March 31,					Ended June 30,				Ended June 30,
		2022		2021					2022		2021		2022		2021

Operating revenue	Operating revenue	$	415	$	370			Operating revenue	$	639	$	559	$	1,054	$	929

Operating expenses:	Operating expenses:							Operating expenses:
Cost of fuel and energy	Cost of fuel and energy	212		165				Cost of fuel and energy	336		252		548		417
Operations and maintenance	Operations and maintenance	65		63				Operations and maintenance	75		77		140		140
Depreciation and amortization	Depreciation and amortization	103		101				Depreciation and amortization	103		100		206		201
Property and other taxes	Property and other taxes	13		12				Property and other taxes	12		12		25		24
Total operating expenses	Total operating expenses	393		341				Total operating expenses	526		441		919		782

Operating income	Operating income	22		29				Operating income	113		118		135		147

Other income (expense):	Other income (expense):							Other income (expense):
Interest expense	Interest expense	(38)		(38)				Interest expense	(39)		(39)		(77)		(77)
Allowance for borrowed funds	Allowance for borrowed funds	1		1				Allowance for borrowed funds	2		1		3		2
Allowance for equity funds	Allowance for equity funds	3		1				Allowance for equity funds	2		2		5		3
Interest and dividend income	Interest and dividend income	9		5				Interest and dividend income	9		3		18		8
Other, net	Other, net	1		4				Other, net	(1)		6		—		10
Total other income (expense)	Total other income (expense)	(24)		(27)				Total other income (expense)	(27)		(27)		(51)		(54)

Net (loss) income		$	(2)	$	2
Income before income tax expense								Income before income tax expense	86		91		84		93
Income tax expense								Income tax expense	10		9		10		9
Net income								Net income	$	76	$	82	$	74	$	84

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

~~103~~113

NEVADA POWER COMPANY AND SUBSIDIARIES

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

(Amounts in millions, except shares)


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

Balance, March 31, 2021													Balance, March 31, 2021	1,000	$	—	$	2,308	$	636	$	(3)	$	2,941
Net income													Net income	—	—		—		82		—		82
Dividends declared													Dividends declared	—	—		—		(13)		—		(13)

Balance, June 30, 2021													Balance, June 30, 2021	1,000	$	—	$	2,308	$	705	$	(3)	$	3,010

Balance, December 31, 2020	Balance, December 31, 2020	1,000	$	—	$	2,308	$	634	$	(3)	$	2,939	Balance, December 31, 2020	1,000	$	—	$	2,308	$	634	$	(3)	$	2,939
Net income	Net income	—	—		—		2		—		2		Net income	—	—		—		84		—		84
Dividends declared													Dividends declared	—	—		—		(13)		—		(13)

Balance, June 30, 2021													Balance, June 30, 2021	1,000	$	—	$	2,308	$	705	$	(3)	$	3,010

Balance, March 31, 2021		1,000	$	—	$	2,308	$	636	$	(3)	$	2,941
Balance, March 31, 2022													Balance, March 31, 2022	1,000	$	—	$	2,308	$	722	$	(2)	$	3,028
Net income													Net income	—	—		—		76		—		76

Contributions													Contributions	—	—		25		—		—		25

Balance, June 30, 2022													Balance, June 30, 2022	1,000	$	—	$	2,333	$	798	$	(2)	$	3,129

Balance, December 31, 2021	Balance, December 31, 2021	1,000	$	—	$	2,308	$	724	$	(2)	$	3,030	Balance, December 31, 2021	1,000	$	—	$	2,308	$	724	$	(2)	$	3,030
Net loss		—	—		—		(2)		—		(2)
Net income													Net income	—	—		—		74		—		74

Contributions													Contributions	—	—		25		—		—		25

Balance, March 31, 2022		1,000	$	—	$	2,308	$	722	$	(2)	$	3,028
Balance, June 30, 2022													Balance, June 30, 2022	1,000	$	—	$	2,333	$	798	$	(2)	$	3,129

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

~~104~~114

NEVADA POWER COMPANY AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)

(Amounts in millions)


		Three-Month Periods					Six-Month Periods
		Ended March 31,					Ended June 30,
		2022		2021			2022		2021
Cash flows from operating activities:	Cash flows from operating activities:					Cash flows from operating activities:
Net (loss) income		$	(2)	$	2
Net income						Net income	$	74	$	84
Adjustments to reconcile net income to net cash flows from operating activities:	Adjustments to reconcile net income to net cash flows from operating activities:					Adjustments to reconcile net income to net cash flows from operating activities:

Depreciation and amortization	Depreciation and amortization	103		101		Depreciation and amortization	206		201
Allowance for equity funds	Allowance for equity funds	(3)		(1)		Allowance for equity funds	(5)		(3)
Changes in regulatory assets and liabilities	Changes in regulatory assets and liabilities	(8)		(15)		Changes in regulatory assets and liabilities	(14)		(17)
Deferred income taxes and amortization of investment tax credits	Deferred income taxes and amortization of investment tax credits	5		(10)		Deferred income taxes and amortization of investment tax credits	12		(20)
Deferred energy	Deferred energy	(51)		41		Deferred energy	(159)		(1)
Amortization of deferred energy	Amortization of deferred energy	13		—		Amortization of deferred energy	46		7
Other, net	Other, net	4		(1)		Other, net	10		—
Changes in other operating assets and liabilities:	Changes in other operating assets and liabilities:					Changes in other operating assets and liabilities:
Trade receivables and other assets	Trade receivables and other assets	33		41		Trade receivables and other assets	(154)		(83)
Inventories	Inventories	3		4		Inventories	(4)		5
Accrued property, income and other taxes	Accrued property, income and other taxes	(15)		3		Accrued property, income and other taxes	18		21
Accounts payable and other liabilities	Accounts payable and other liabilities	3		14		Accounts payable and other liabilities	194		116
Net cash flows from operating activities	Net cash flows from operating activities	85		179		Net cash flows from operating activities	224		310

Cash flows from investing activities:	Cash flows from investing activities:					Cash flows from investing activities:
Capital expenditures	Capital expenditures	(189)		(106)		Capital expenditures	(350)		(237)

Net cash flows from investing activities	Net cash flows from investing activities	(189)		(106)		Net cash flows from investing activities	(350)		(237)

Cash flows from financing activities:	Cash flows from financing activities:					Cash flows from financing activities:
Proceeds from long-term debt	Proceeds from long-term debt	200		—		Proceeds from long-term debt	300		—

Net repayment of short-term debt	Net repayment of short-term debt	(76)		—		Net repayment of short-term debt	(180)		—

Contributions from parent						Contributions from parent	25		—
Dividends paid						Dividends paid	—		(13)
Other, net	Other, net	(4)		(5)		Other, net	(9)		(8)
Net cash flows from financing activities	Net cash flows from financing activities	120		(5)		Net cash flows from financing activities	136		(21)

Net change in cash and cash equivalents and restricted cash and cash equivalents	Net change in cash and cash equivalents and restricted cash and cash equivalents	16		68		Net change in cash and cash equivalents and restricted cash and cash equivalents	10		52
Cash and cash equivalents and restricted cash and cash equivalents at beginning of period	Cash and cash equivalents and restricted cash and cash equivalents at beginning of period	45		36		Cash and cash equivalents and restricted cash and cash equivalents at beginning of period	45		36
Cash and cash equivalents and restricted cash and cash equivalents at end of period	Cash and cash equivalents and restricted cash and cash equivalents at end of period	$	61	$	104	Cash and cash equivalents and restricted cash and cash equivalents at end of period	$	55	$	88

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

~~105~~115

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,~~June 30, 2022 and for the ~~three-month~~three- and six-month periods ended ~~March 31,~~June 30, 2022 and 2021. The Consolidated Statements of Comprehensive Income have been omitted as net income equals comprehensive income for the ~~three-month~~three- and six-month periods ended ~~March 31,~~June 30, 2022 and 2021. The results of operations for the ~~three-month period~~three- and six-month periods ended ~~March 31,~~June 30, 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~~six-month period ended ~~March 31,~~June 30, 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					As of
		March 31,		December 31,			June 30,		December 31,
		2022		2021			2022		2021
Cash and cash equivalents	Cash and cash equivalents	$	47	$	33	Cash and cash equivalents	$	42	$	33
Restricted cash and cash equivalents included in other current assets	Restricted cash and cash equivalents included in other current assets	14		12		Restricted cash and cash equivalents included in other current assets	13		12
Total cash and cash equivalents and restricted cash and cash equivalents	Total cash and cash equivalents and restricted cash and cash equivalents	$	61	$	45	Total cash and cash equivalents and restricted cash and cash equivalents	$	55	$	45

~~106~~116

(3) Property, Plant and Equipment, Net

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


				As of									As of
		Depreciable Life		March 31,			December 31,			Depreciable Life			June 30,			December 31,
			2022			2021						2022			2021
Utility plant:	Utility plant:										Utility plant:
Generation	Generation	30 - 55 years		$	3,810		$	3,793	Generation	30 - 55 years			$	3,879		$	3,793
Transmission	Transmission	45 - 70 years		1,508			1,503		Transmission	45 - 70 years			1,527			1,503
Distribution	Distribution	20 - 65 years		3,979			3,920		Distribution	20 - 65 years			4,021			3,920
General and intangible plant	General and intangible plant	5 - 65 years		831			836		General and intangible plant	5 - 65 years			834			836
Utility plant	Utility plant			10,128			10,052		Utility plant				10,261			10,052
Accumulated depreciation and amortization	Accumulated depreciation and amortization			(3,478)			(3,406)		Accumulated depreciation and amortization				(3,517)			(3,406)
Utility plant, net	Utility plant, net			6,650			6,646		Utility plant, net				6,744			6,646
Other non-regulated, net of accumulated depreciation and amortization	Other non-regulated, net of accumulated depreciation and amortization	45 years		1			1		Other non-regulated, net of accumulated depreciation and amortization	45 years			1			1
Plant, net	Plant, net			6,651			6,647		Plant, net				6,745			6,647
Construction work-in-progress	Construction work-in-progress			341			244		Construction work-in-progress				370			244
Property, plant and equipment, net	Property, plant and equipment, net			$	6,992		$	6,891	Property, plant and equipment, net				$	7,115		$	6,891

(4) Recent Financing Transactions

Long-Term Debt

Credit Facilities

~~(5)~~

In June 2022, Nevada Power amended and restated its existing $400 million secured credit facility expiring in June 2024. The amendment extended the expiration date to June 2025 and amended pricing from the London Interbank Offered Rate to SOFR.

(5) Income Taxes

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				Six-Month Periods
	Ended June 30,				Ended June 30,
	2022		2021		2022		2021

Federal statutory income tax rate	21	%	21	%	21	%	21	%
Effects of ratemaking	(10)		(11)		(10)		(11)



Other	1		—		1		—
Effective income tax rate	12	%	10	%	12	%	10	%

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, 2021.

117

Berkshire Hathaway includes BHE and its subsidiaries in its U.S. federal income tax return. Consistent with established regulatory practice, Nevada Power's provision for federal income tax has been computed on a separate return basis, and substantially all of its currently payable or receivable income tax is remitted to or received from BHE.For the six-month period ended June 30, 2022, Nevada Power received net cash payments for federal income tax from BHE totaling $21 million. For the six-month period ended June 30, 2021, Nevada Power made net cash payments for federal income tax to BHE totaling $15 million.

(6) Employee Benefit Plans

Nevada Power is a participant in benefit plans sponsored by NV Energy. The NV Energy Retirement Plan includes a qualified pension plan ("Qualified Pension Plan") and a supplemental executive retirement plan and a restoration plan (collectively, "Non‑Qualified Pension Plans") that provide pension benefits for eligible employees. The NV Energy Comprehensive Welfare Benefit and Cafeteria Plan provides certain postretirement health care and life insurance benefits for eligible retirees ("Other Postretirement Plans") on behalf of Nevada Power. 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.

~~107~~

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


		As of					As of
		March 31,		December 31,			June 30,		December 31,
		2022		2021			2022		2021
Qualified Pension Plan:	Qualified Pension Plan:					Qualified Pension Plan:
Other non-current assets	Other non-current assets	$	42	$	42	Other non-current assets	$	42	$	42

Non-Qualified Pension Plans:	Non-Qualified Pension Plans:					Non-Qualified Pension Plans:

Other current liabilities	Other current liabilities	(1)		(1)		Other current liabilities	(1)		(1)
Other long-term liabilities	Other long-term liabilities	(8)		(8)		Other long-term liabilities	(8)		(8)

Other Postretirement Plans:	Other Postretirement Plans:					Other Postretirement Plans:
Other non-current assets	Other non-current assets	8		8		Other non-current assets	8		8

~~(6)~~(7) Risk Management and Hedging Activities

Nevada Power is exposed to the impact of market fluctuations in commodity prices and interest rates. Nevada Power is principally exposed to electricity, natural gas and coal market fluctuations primarily through Nevada Power's obligation to serve retail customer load in its regulated service territory. Nevada Power's load and generating facilities represent substantial underlying commodity positions. Exposures to commodity prices consist mainly of variations in the price of fuel required to generate electricity and wholesale electricity that is purchased and sold. Commodity prices are subject to wide price swings as supply and demand are impacted by, among many other unpredictable items, weather, market liquidity, generating facility availability, customer usage, storage, and transmission and transportation constraints. The actual cost of fuel and purchased power is recoverable through the deferred energy mechanism. Interest rate risk exists on variable-rate debt and future debt issuances. Nevada Power does not engage in proprietary trading activities.

Nevada Power has established a risk management process that is designed to identify, assess, manage 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.

118

There have been no significant changes in Nevada Power's accounting policies related to derivatives. Refer to Note 78 for additional information on derivative contracts.

~~108~~

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											Derivative
		Other		Contracts -		Other					Other				Contracts -		Other
		Current		Current		Long-term					Current		Other		Current		Long-term
		Assets		Liabilities		Liabilities		Total			Assets		Assets		Liabilities		Liabilities		Total

As of March 31, 2022
As of June 30, 2022										As of June 30, 2022
Not designated as hedging contracts (1):	Not designated as hedging contracts (1):									Not designated as hedging contracts(1):

Commodity assets										Commodity assets	$	—	$	1	$	—	$	—	$	1
Commodity liabilities	Commodity liabilities	$	—	$	(88)	$	(80)	$	(168)	Commodity liabilities	—		—		(122)		(54)		(176)

Total derivative - net basis	Total derivative - net basis	$	—	$	(88)	$	(80)	$	(168)	Total derivative - net basis	$	—	$	1	$	(122)	$	(54)	$	(175)

As of December 31, 2021	As of December 31, 2021									As of December 31, 2021
Not designated as hedging contracts(1):	Not designated as hedging contracts(1):									Not designated as hedging contracts(1):
Commodity assets	Commodity assets	$	4	$	—	$	—	$	4	Commodity assets	$	4	$	—	$	—	$	—	$	4
Commodity liabilities	Commodity liabilities	—		(55)		(62)		(117)		Commodity liabilities	—		—		(55)		(62)		(117)

Total derivative - net basis	Total derivative - net basis	$	4	$	(55)	$	(62)	$	(113)	Total derivative - net basis	$	4	$	—	$	(55)	$	(62)	$	(113)

(1)Nevada Power's commodity derivatives not designated as hedging contracts are included in regulated rates. As of ~~March 31,~~June 30, 2022 a regulatory asset of ~~$168~~$175 million was recorded related to the net derivative liability of ~~$168~~$175 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 of	March 31,	December 31,		Unit of	June 30,	December 31,
		Measure	2022	2021		Measure	2022	2021

Electricity purchases	Electricity purchases	Megawatt hours	3	1	Electricity purchases	Megawatt hours	3	1
Natural gas purchases	Natural gas purchases	Decatherms	138	119	Natural gas purchases	Decatherms	113	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.

119

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,~~June 30, 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.

~~109~~

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,~~June 30, 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)~~(8) Fair Value Measurements

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

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

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

120

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									Input Levels for Fair Value Measurements
		Level 1		Level 2		Level 3		Total			Level 1		Level 2		Level 3		Total
As of March 31, 2022:
As of June 30, 2022:										As of June 30, 2022:
Assets:	Assets:									Assets:

Commodity derivatives										Commodity derivatives	$	—	$	—	$	1	$	1
Money market mutual funds	Money market mutual funds	$	43	$	—	$	—	$	43	Money market mutual funds	34		—		—		34
Investment funds	Investment funds	3		—		—		3		Investment funds	3		—		—		3
		$	46	$	—	$	—	$	46		$	37	$	—	$	1	$	38

Liabilities - commodity derivatives	Liabilities - commodity derivatives	$	—	$	—	$	(168)	$	(168)	Liabilities - commodity derivatives	$	—	$	—	$	(176)	$	(176)

As of December 31, 2021:	As of December 31, 2021:									As of December 31, 2021:
Assets:	Assets:									Assets:
Commodity derivatives	Commodity derivatives	$	—	$	—	$	4	$	4	Commodity derivatives	$	—	$	—	$	4	$	4
Money market mutual funds	Money market mutual funds	34		—		—		34		Money market mutual funds	34		—		—		34
Investment funds	Investment funds	3		—		—		3		Investment funds	3		—		—		3
		$	37	$	—	$	4	$	41		$	37	$	—	$	4	$	41

Liabilities - commodity derivatives	Liabilities - commodity derivatives	$	—	$	—	$	(117)	$	(117)	Liabilities - commodity derivatives	$	—	$	—	$	(117)	$	(117)

~~110~~

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,~~June 30, 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.

121

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					Three-Month Periods				Six-Month Periods
		Ended March 31,					Ended June 30,				Ended June 30,
		2022		2021			2022		2021		2022		2021

Beginning balance	Beginning balance	$	(113)	$	15	Beginning balance	$	(168)	$	27	$	(113)	$	15
Changes in fair value recognized in regulatory assets	Changes in fair value recognized in regulatory assets	(56)		11		Changes in fair value recognized in regulatory assets	(21)		(6)		(77)		5

Settlements	Settlements	1		1		Settlements	14		4		15		5
Ending balance	Ending balance	$	(168)	$	27	Ending balance	$	(175)	$	25	$	(175)	$	25

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, 2022 As of December 31, 2021
Carrying Fair Carrying Fair
Value Value Value Value
Long-term debt $ 2,700 $ 2,985 $ 2,499 $ 3,067


	As of June 30, 2022				As of December 31, 2021
	Carrying		Fair		Carrying		Fair
	Value		Value		Value		Value

Long-term debt	$	2,800	$	2,807	$	2,499	$	3,067

~~111~~

~~(8)~~(9) 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.

122

~~(9)~~

(10) 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				Three-Month Periods				Six-Month Periods
		Ended March 31,				Ended June 30,				Ended June 30,
		2022		2021				2022		2021		2022		2021
Customer Revenue:	Customer Revenue:						Customer Revenue:
Retail:	Retail:						Retail:
Residential	Residential	$	214	$	196		Residential	$	353	$	326	$	566	$	521
Commercial	Commercial	96		84			Commercial	131		110		226		194
Industrial	Industrial	78		63			Industrial	124		95		203		158
Other	Other	1		3			Other	3		3		4		6
Total fully bundled	Total fully bundled	389		346			Total fully bundled	611		534		999		879
Distribution only service	Distribution only service	5		5			Distribution only service	5		5		10		10
Total retail	Total retail	394		351			Total retail	616		539		1,009		889
Wholesale, transmission and other	Wholesale, transmission and other	16		14			Wholesale, transmission and other	18		15		34		29
Total Customer Revenue	Total Customer Revenue	410		365			Total Customer Revenue	634		554		1,043		918
Other revenue	Other revenue	5		5			Other revenue	5		5		11		11
Total revenue	Total revenue	$	415	$	370		Total revenue	$	639	$	559	$	1,054	$	929

~~112~~123

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 Second Quarter and First ~~Quarter~~Six Months of 2022 and 2021

Overview

Net ~~loss~~income for the ~~first~~second quarter of 2022 was $2$76 million, a decrease of $4$6 million, or 7%, compared to 2021 primarily due to $3$7 million of ~~lower~~unfavorable other, net, mainly due to lower cash surrender value of corporate-owned life insurance policies, $2$4 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~~$3 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~~unfavorable price impacts from changes in sales mix, the unfavorable impact of weather and lower other retail revenue, partially offset by higher regulatory-related revenue deferrals, an increase in the average number of customers and favorable changes in customer usage patterns. These decreases are offset by $4$6 million of higher interest and dividend income, mainly from carrying charges on regulatory balances, and $2 million of lower operations and maintenance expenses, mainly due to lower plant operations and maintenance expenses, partially offset by higher earning sharing. Energy generated decreased 17% for the second quarter of 2022 compared to 2021 due to lower natural gas-fueled generation. Wholesale electricity sales volumes increased 136% and purchased electricity volumes increased 17%.

Net income for the first six months of 2022 was $74 million, a decrease of $10 million, or 12%, compared to 2021 primarily due to $10 million of unfavorable other, net, mainly due to lower cash surrender value of corporate-owned life insurance policies, $6 million of lower utility margin and $5 million of higher depreciation and amortization, mainly due to higher plant placed in-service. Utility margin decreased primarily due to unfavorable price impacts from changes in sales mix, the unfavorable impact of weather and lower other retail revenue, partially offset by higher regulatory-related revenue deferrals, an increase in the average number of customers and favorable changes in customer usage patterns. These decreases are offset by $10 million of higher interest and dividend income, mainly from carrying charges on regulatory balances. Energy generated decreased 6%13% for the first ~~quarter~~six months of 2022 compared to 2021 primarily due to lower natural gas-fueled generation. Wholesale electricity sales volumes increased ~~49%~~94% and purchased electricity volumes increased ~~30%~~22%.

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.

124

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								Second Quarter						First Six Months
		2022		2021		Change						2022			2021			Change					2022			2021			Change
Utility margin:	Utility margin:										Utility margin:
Operating revenue	Operating revenue	$	415	$	370	$	45	12	%		Operating revenue		$	639		$	559		$	80	14	%		$	1,054		$	929		$	125	13	%
Cost of fuel and energy	Cost of fuel and energy	212		165		47		28			Cost of fuel and energy		336			252			84		33			548			417			131		31
Utility margin	Utility margin	203		205		(2)		(1)			Utility margin		303			307			(4)		(1)			506			512			(6)		(1)
Operations and maintenance	Operations and maintenance	65		63		2		3			Operations and maintenance		75			77			(2)		(3)			140			140			—		—
Depreciation and amortization	Depreciation and amortization	103		101		2		2			Depreciation and amortization		103			100			3		3			206			201			5		2
Property and other taxes	Property and other taxes	13		12		1		8			Property and other taxes		12			12			—		—			25			24			1		4
Operating income	Operating income	$	22	$	29	$	(7)	(24)	%		Operating income		$	113		$	118		$	(5)	(4)	%		$	135		$	147		$	(12)	(8)	%

~~113~~125

Utility Margin

A comparison of key operating results related to utility margin is as follows:


		First Quarter								Second Quarter						First Six Months
		2022		2021		Change						2022			2021			Change					2022			2021			Change
Utility margin (in millions):	Utility margin (in millions):										Utility margin (in millions):
Operating revenue	Operating revenue	$	415	$	370	$	45	12	%		Operating revenue		$	639		$	559		$	80	14	%		$	1,054		$	929		$	125	13	%
Cost of fuel and energy	Cost of fuel and energy	212		165		47		28			Cost of fuel and energy		336			252			84		33			548			417			131		31
Utility margin	Utility margin	$	203	$	205	$	(2)	(1)	%		Utility margin		$	303		$	307		$	(4)	(1)	%		$	506		$	512		$	(6)	(1)	%

Sales (GWhs):	Sales (GWhs):										Sales (GWhs):
Residential	Residential	1,585		1,587		(2)		—	%		Residential		2,612			2,807			(195)		(7)	%		4,197			4,394			(197)		(4)	%
Commercial	Commercial	998		954		44		5			Commercial		1,272			1,271			1		—			2,270			2,225			45		2
Industrial	Industrial	1,175		1,057		118		11			Industrial		1,409			1,310			99		8			2,584			2,367			217		9
Other	Other	46		47		(1)		(2)			Other		46			45			1		2			92			92			—		—
Total fully bundled(1)	Total fully bundled(1)	3,804		3,645		159		4			Total fully bundled(1)		5,339			5,433			(94)		(2)			9,143			9,078			65		1
Distribution only service	Distribution only service	569		516		53		10			Distribution only service		661			620			41		7			1,230			1,136			94		8
Total retail	Total retail	4,373		4,161		212		5			Total retail		6,000			6,053			(53)		(1)			10,373			10,214			159		2
Wholesale	Wholesale	125		84		41		49			Wholesale		210			89			121		*			335			173			162		94
Total GWhs sold	Total GWhs sold	4,498		4,245		253		6	%		Total GWhs sold		6,210			6,142			68		1	%		10,708			10,387			321		3	%

Average number of retail customers (in thousands)	Average number of retail customers (in thousands)	995		978		17		2	%		Average number of retail customers (in thousands)		1,000			982			18		2	%		997			980			17		2	%

Average revenue per MWh:	Average revenue per MWh:										Average revenue per MWh:
Retail - fully bundled(1)	Retail - fully bundled(1)	$	102.11	$	95.01	$	7.10	7	%		Retail - fully bundled(1)		$	114.36		$	98.10		$	16.26	17	%		$	109.26		$	96.86		$	12.40	13	%

Wholesale	Wholesale	$	42.91	$	49.42	$	(6.51)	(13)	%		Wholesale		$	34.36		$	42.94		$	(8.58)	(20)	%		$	37.55		$	46.09		$	(8.54)	(19)	%

Heating degree days	Heating degree days	954		994		(40)		(4)	%		Heating degree days		31			14			17		*			985			1,008			(23)		(2)	%
Cooling degree days	Cooling degree days	49		6		43		*			Cooling degree days		1,322			1,477			(155)		(10)	%		1,371			1,483			(112)		(8)	%

Sources of energy (GWhs)(2)(3):	Sources of energy (GWhs)(2)(3):										Sources of energy (GWhs)(2)(3):
Natural gas	Natural gas	2,378		2,534		(156)		(6)	%		Natural gas		2,935			3,547			(612)		(17)	%		5,313			6,081			(768)		(13)	%

Renewables	Renewables	14		16		(2)		(13)			Renewables		20			20			—		—			34			36			(2)		(6)
Total energy generated	Total energy generated	2,392		2,550		(158)		(6)			Total energy generated		2,955			3,567			(612)		(17)			5,347			6,117			(770)		(13)
Energy purchased	Energy purchased	1,761		1,355		406		30			Energy purchased		2,472			2,104			368		17			4,233			3,459			774		22
Total	Total	4,153		3,905		248		6	%		Total		5,427			5,671			(244)		(4)	%		9,580			9,576			4		—	%

Average cost of energy per MWh(4):	Average cost of energy per MWh(4):										Average cost of energy per MWh(4):
Energy generated	Energy generated	$	41.92	$	14.96	$	26.96	*			Energy generated		$	49.65		$	21.82		$	27.83	*			$	46.19		$	18.96		$	27.23	*
Energy purchased	Energy purchased	$	63.27	$	93.84	$	(30.57)	(33)	%		Energy purchased		$	76.63		$	82.70		$	(6.07)	(7)	%		$	71.07		$	87.07		$	(16.00)	(18)	%

* 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~~360 GWhs and ~~683~~249 GWhs of gas generated energy that is purchased at cost by related parties for the second quarter of 2022 and 2021, respectively. The average cost of energy per MWh and sources of energy excludes 784 GWhs and 932 GWhs of gas generated energy that is purchased at cost by related parties for the first ~~quarter~~six months 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.

~~114~~126

Quarter Ended ~~March 31,~~June 30, 2022 Compared to Quarter Ended ~~March 31,~~June 30, 2021

Utility margin decreased $2$4 million, or 1%, for the ~~first~~second quarter of 2022 compared to 2021 primarily due to:

•$27 million of lower electric retail utility margin due to unfavorable price impacts from changes in sales mix and lower retail customer volumes. Retail customer volumes, including distribution only service customers, decreased 0.9% primarily due to the unfavorable impact of weather, offset by an increase in the average number of customers and favorable changes in customer usage patterns;

•$3 million of lower energy efficiency program rates (offset in operations and maintenance expense);

•~~$2 million of lower regulatory-related revenue deferrals;~~ and

•$21 million of lower other retail revenue.

The decrease in utility margin was offset by:

•$37 million of higher regulatory-related revenue deferrals.

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

Depreciation and amortization increased $3 million, or 3%, for the second quarter of 2022 compared to 2021 primarily due to higher plant placed in-service.

Interest and dividend income increased $6 million for the second quarter of 2022 compared to 2021 primarily due to higher interest income, mainly from carrying charges on regulatory balances.

Other, net is unfavorable $7 million for the second quarter of 2022 compared to 2021 primarily due to lower cash surrender value of corporate-owned life insurance policies.

First Six Months Ended June 30, 2022 Compared to First Six Months Ended June 30, 2021

Utility margin decreased $6 million, or 1%, for the first six months of 2022 compared to 2021 primarily due to:

•$5 million of lower energy efficiency program rates (offset in operations and maintenance expense);

•$4 million of lower electric retail utility margin ~~primarily~~ due to unfavorable price impacts from changes in sales mix, offset by higher retail customer volumes. Retail customer volumes, including distribution only service customers, increased ~~5.1%~~1.6% 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

•$3 million of lower other retail revenue.

The decrease in utility margin was offset by:

•$5 million of higher regulatory-related revenue deferrals; and

•$1 million of higher transmission and wholesale revenue.

Operations and maintenance ~~increased $2 million, or 3%,~~was consistent for the first ~~quarter~~six months of 2022 compared to 2021 primarily due to higher earnings sharing and 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$5 million, or 2%, for the first ~~quarter~~six months of 2022 compared to 2021 primarily due to higher plant placed in-service.

Interest and dividend income increased $4$10 million ~~or 80%,~~ for the first ~~quarter~~six months of 2022 compared to 2021 primarily due to higher interest income, mainly from carrying charges on regulatory balances.

Other, net ~~decreased $3~~is unfavorable $10 million ~~or 75%,~~ for the first ~~quarter~~six months of 2022 compared to 2021 primarily due to lower cash surrender value of corporate-owned life insurance policies.

127

Liquidity and Capital Resources

As of ~~March 31,~~June 30, 2022, Nevada Power's total net liquidity was as follows (in millions):


Cash and cash equivalents	$	4742
Credit facility	400
~~Less -~~
~~Short-term debt~~	~~(104)~~
~~Net credit facility~~	~~296~~

~~Delayed draw term loan facility~~	$	~~300~~
~~Less -~~
~~Long-term debt~~	~~(200)~~
~~Net delayed draw term loan facility~~	~~100~~

Total net liquidity	$		~~443~~442


Credit ~~facility and delayed draw term loan~~ facility:
Maturity date	~~2024~~2025

~~115~~

Operating Activities

Net cash flows from operating activities for the ~~three-month~~six-month periods ended ~~March 31,~~June 30, 2022 and 2021 were ~~$85~~$224 million and ~~$179~~$310 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.~~customers and lower payments for income taxes.

Investing Activities

Net cash flows from investing activities for the ~~three-month~~six-month periods ended ~~March 31,~~June 30, 2022 and 2021 were ~~$(189)~~$(350) million and ~~$(106)~~$(237) 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~~six-month periods ended ~~March 31,~~June 30, 2022 and 2021 were ~~$120~~$136 million and ~~$(5)~~$(21) million, respectively. The change was primarily due to higher proceeds from the issuance of long-term debt and contributions from NV Energy, Inc., 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%. In May 2022, Nevada Power ~~may draw all or none of~~drew the remaining ~~unused commitment through June 2022.~~$100 million available under the facility at an initial interest rate of 1.24%. 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.

~~116~~

128

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 Periods				Annual			Six-Month Periods				Annual
		Ended March 31,				Forecast			Ended June 30,				Forecast
		2021		2022		2022			2021		2022		2022

Electric distribution	Electric distribution	$	41	$	51	$	223	Electric distribution	$	87	$	108	$	234
Electric transmission	Electric transmission	13		21		168		Electric transmission	25		39		141
Solar generation	Solar generation	1		7		80		Solar generation	5		23		90
Other	Other	51		110		386		Other	120		180		359
Total	Total	$	106	$	189	$	857	Total	$	237	$	350	$	824

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,~~June 30, 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.~~2021, other than those disclosed in Note 4 of the Notes to Consolidated Financial Statements in Part I, Item 1 of this Form 10-Q.

~~117~~129

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~~130

Sierra Pacific Power Company and its subsidiaries

Consolidated Financial Section

~~119~~131

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,~~June 30, 2022, the related consolidated statements of operations and changes in shareholder's equity for the three-month and six-month periods ended June 30, 2022 and 2021, and of cash flows for the ~~three-month~~six-month periods ended ~~March 31,~~June 30, 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.

/s/ Deloitte & Touche LLP

Las Vegas, Nevada

~~April 29,~~August 5, 2022

~~120~~132

SIERRA PACIFIC POWER COMPANY AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS (Unaudited)

(Amounts in millions, except share data)


		As of					As of
		March 31,		December 31,			June 30,		December 31,
		2022		2021			2022		2021
ASSETS	ASSETS					ASSETS
Current assets:	Current assets:					Current assets:
Cash and cash equivalents	Cash and cash equivalents	$	15	$	10	Cash and cash equivalents	$	17	$	10
Trade receivables, net	Trade receivables, net	120		128		Trade receivables, net	127		128

Inventories	Inventories	71		65		Inventories	75		65

Regulatory assets	Regulatory assets	164		177		Regulatory assets	207		177

Other current assets	Other current assets	36		35		Other current assets	25		35
Total current assets	Total current assets	406		415		Total current assets	451		415

Property, plant and equipment, net	Property, plant and equipment, net	3,386		3,340		Property, plant and equipment, net	3,476		3,340

Regulatory assets	Regulatory assets	282		263		Regulatory assets	282		263
Other assets	Other assets	205		205		Other assets	206		205

Total assets	Total assets	$	4,279	$	4,223	Total assets	$	4,415	$	4,223

LIABILITIES AND SHAREHOLDER'S EQUITY	LIABILITIES AND SHAREHOLDER'S EQUITY					LIABILITIES AND SHAREHOLDER'S EQUITY
Current liabilities:	Current liabilities:					Current liabilities:
Accounts payable	Accounts payable	$	125	$	147	Accounts payable	$	177	$	147

Accrued property, income and other taxes	Accrued property, income and other taxes	28		16		Accrued property, income and other taxes	18		16
Short-term debt	Short-term debt	57		159		Short-term debt	—		159

Regulatory liabilities	Regulatory liabilities	20		19		Regulatory liabilities	18		19
Customer deposits	Customer deposits	16		15		Customer deposits	16		15
Derivative contracts	Derivative contracts	28		16		Derivative contracts	38		16
Other current liabilities	Other current liabilities	39		42		Other current liabilities	48		42
Total current liabilities	Total current liabilities	313		414		Total current liabilities	315		414

Long-term debt	Long-term debt	1,164		1,164		Long-term debt	1,148		1,164

Regulatory liabilities	Regulatory liabilities	440		444		Regulatory liabilities	435		444
Deferred income taxes	Deferred income taxes	401		402		Deferred income taxes	413		402
Other long-term liabilities	Other long-term liabilities	268		264		Other long-term liabilities	258		264
Total liabilities	Total liabilities	2,586		2,688		Total liabilities	2,569		2,688

Commitments and contingencies (Note 9)	Commitments and contingencies (Note 9)	0		0		Commitments and contingencies (Note 9)	0		0

Shareholder's equity:	Shareholder's equity:					Shareholder's equity:
Common stock - $3.75 stated value, 20,000,000 shares authorized and 1,000 issued and outstanding	Common stock - $3.75 stated value, 20,000,000 shares authorized and 1,000 issued and outstanding	—		—		Common stock - $3.75 stated value, 20,000,000 shares authorized and 1,000 issued and outstanding	—		—
Additional paid-in capital	Additional paid-in capital	1,241		1,111		Additional paid-in capital	1,451		1,111
Retained earnings	Retained earnings	453		425		Retained earnings	396		425
Accumulated other comprehensive loss, net	Accumulated other comprehensive loss, net	(1)		(1)		Accumulated other comprehensive loss, net	(1)		(1)
Total shareholder's equity	Total shareholder's equity	1,693		1,535		Total shareholder's equity	1,846		1,535

Total liabilities and shareholder's equity	Total liabilities and shareholder's equity	$	4,279	$	4,223	Total liabilities and shareholder's equity	$	4,415	$	4,223

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

~~121~~133

SIERRA PACIFIC POWER COMPANY AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)

(Amounts in millions)


		Three-Month Periods				Three-Month Periods						Six-Month Periods
		Ended March 31,				Ended June 30,						Ended June 30,
				2022			2021			2022		2021		2022		2021
Operating revenue:	Operating revenue:								Operating revenue:
Regulated electric	Regulated electric			$	227		$	181	Regulated electric	$	230	$	189	$	457	$	370
Regulated natural gas	Regulated natural gas			52			39		Regulated natural gas	28		20		80		59
Total operating revenue	Total operating revenue			279			220		Total operating revenue	258		209		537		429

Operating expenses:	Operating expenses:								Operating expenses:
Cost of fuel and energy	Cost of fuel and energy			124			82		Cost of fuel and energy	129		93		253		175
Cost of natural gas purchased for resale	Cost of natural gas purchased for resale			34			21		Cost of natural gas purchased for resale	16		8		50		29
Operations and maintenance	Operations and maintenance			41			36		Operations and maintenance	47		41		88		77
Depreciation and amortization	Depreciation and amortization			36			36		Depreciation and amortization	37		36		73		72
Property and other taxes	Property and other taxes			6			6		Property and other taxes	6		6		12		12
Total operating expenses	Total operating expenses			241			181		Total operating expenses	235		184		476		365

Operating income	Operating income			38			39		Operating income	23		25		61		64

Other income (expense):	Other income (expense):								Other income (expense):
Interest expense	Interest expense			(13)			(14)		Interest expense	(14)		(13)		(27)		(27)
Allowance for borrowed funds	Allowance for borrowed funds			1			—		Allowance for borrowed funds	—		1		1		1
Allowance for equity funds	Allowance for equity funds			2			1		Allowance for equity funds	2		2		4		3
Interest and dividend income	Interest and dividend income			3			2		Interest and dividend income	4		1		7		3
Other, net	Other, net			2			4		Other, net	—		2		2		6
Total other income (expense)	Total other income (expense)			(5)			(7)		Total other income (expense)	(8)		(7)		(13)		(14)

Income before income tax expense	Income before income tax expense			33			32		Income before income tax expense	15		18		48		50
Income tax expense	Income tax expense			5			4		Income tax expense	2		1		7		5
Net income	Net income			$	28		$	28	Net income	$	13	$	17	$	41	$	45

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

~~122~~134

SIERRA PACIFIC POWER COMPANY AND SUBSIDIARIES

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

(Amounts in millions, except shares)


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

Balance, March 31, 2021													Balance, March 31, 2021	1,000	$	—	$	1,111	$	329	$	(1)	$	1,439
Net income													Net income	—	—		—		17		—		17

Balance, June 30, 2021													Balance, June 30, 2021	1,000	$	—	$	1,111	$	346	$	(1)	$	1,456

Balance, December 31, 2020	Balance, December 31, 2020	1,000	$	—	$	1,111	$	301	$	(1)	$	1,411	Balance, December 31, 2020	1,000	$	—	$	1,111	$	301	$	(1)	$	1,411
Net income	Net income	—	—		—		28		—		28		Net income	—	—		—		45		—		45

Balance, March 31, 2021		1,000	$	—	$	1,111	$	329	$	(1)	$	1,439
Balance, June 30, 2021													Balance, June 30, 2021	1,000	$	—	$	1,111	$	346	$	(1)	$	1,456

Balance, March 31, 2022													Balance, March 31, 2022	1,000	$	—	$	1,241	$	453	$	(1)	$	1,693
Net income													Net income	—	—		—		13		—		13
Dividends declared													Dividends declared	—	—		—		(70)		—		(70)
Contributions													Contributions	—	—		210		—		—		210

Balance, June 30, 2022													Balance, June 30, 2022	1,000	$	—	$	1,451	$	396	$	(1)	$	1,846

Balance, December 31, 2021	Balance, December 31, 2021	1,000	$	—	$	1,111	$	425	$	(1)	$	1,535	Balance, December 31, 2021	1,000	$	—	$	1,111	$	425	$	(1)	$	1,535
Net income	Net income	—	—		—		28		—		28		Net income	—	—		—		41		—		41

Dividends declared													Dividends declared	—	—		—		(70)		—		(70)
Contributions	Contributions	—	—		130		—		—		130		Contributions	—	—		340		—		—		340

Balance, March 31, 2022		1,000	$	—	$	1,241	$	453	$	(1)	$	1,693
Balance, June 30, 2022													Balance, June 30, 2022	1,000	$	—	$	1,451	$	396	$	(1)	$	1,846

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

~~123~~135

SIERRA PACIFIC POWER COMPANY AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)

(Amounts in millions)


		Three-Month Periods					Six-Month Periods
		Ended March 31,					Ended June 30,
		2022		2021			2022		2021
Cash flows from operating activities:	Cash flows from operating activities:					Cash flows from operating activities:
Net income	Net income	$	28	$	28	Net income	$	41	$	45
Adjustments to reconcile net income to net cash flows from operating activities:	Adjustments to reconcile net income to net cash flows from operating activities:					Adjustments to reconcile net income to net cash flows from operating activities:

Depreciation and amortization	Depreciation and amortization	36		36		Depreciation and amortization	73		72
Allowance for equity funds	Allowance for equity funds	(2)		(1)		Allowance for equity funds	(4)		(3)
Changes in regulatory assets and liabilities	Changes in regulatory assets and liabilities	(4)		(13)		Changes in regulatory assets and liabilities	(8)		(20)
Deferred income taxes and amortization of investment tax credits	Deferred income taxes and amortization of investment tax credits	(3)		4		Deferred income taxes and amortization of investment tax credits	5		8
Deferred energy	Deferred energy	(7)		(18)		Deferred energy	(67)		(47)
Amortization of deferred energy	Amortization of deferred energy	23		(3)		Amortization of deferred energy	46		2

Other, net						Other, net	2		(2)
Changes in other operating assets and liabilities:	Changes in other operating assets and liabilities:					Changes in other operating assets and liabilities:
Trade receivables and other assets	Trade receivables and other assets	12		8		Trade receivables and other assets	(1)		(1)
Inventories	Inventories	(6)		3		Inventories	(10)		10
Accrued property, income and other taxes	Accrued property, income and other taxes	7		(3)		Accrued property, income and other taxes	3		(1)
Accounts payable and other liabilities	Accounts payable and other liabilities	(21)		1		Accounts payable and other liabilities	28		29
Net cash flows from operating activities	Net cash flows from operating activities	63		42		Net cash flows from operating activities	108		92

Cash flows from investing activities:	Cash flows from investing activities:					Cash flows from investing activities:
Capital expenditures	Capital expenditures	(83)		(61)		Capital expenditures	(191)		(128)

Net cash flows from investing activities	Net cash flows from investing activities	(83)		(61)		Net cash flows from investing activities	(191)		(128)

Cash flows from financing activities:	Cash flows from financing activities:					Cash flows from financing activities:
Proceeds from long-term debt						Proceeds from long-term debt	249		—

Long-term debt reacquired						Long-term debt reacquired	(265)		—
Net (repayment of) proceeds from short-term debt	Net (repayment of) proceeds from short-term debt	(102)		10		Net (repayment of) proceeds from short-term debt	(159)		29

Dividends paid						Dividends paid	(70)		—
Contributions from parent	Contributions from parent	130		—		Contributions from parent	340		—
Other, net	Other, net	(2)		(2)		Other, net	(4)		(4)
Net cash flows from financing activities	Net cash flows from financing activities	26		8		Net cash flows from financing activities	91		25

Net change in cash and cash equivalents and restricted cash and cash equivalents	Net change in cash and cash equivalents and restricted cash and cash equivalents	6		(11)		Net change in cash and cash equivalents and restricted cash and cash equivalents	8		(11)
Cash and cash equivalents and restricted cash and cash equivalents at beginning of period	Cash and cash equivalents and restricted cash and cash equivalents at beginning of period	16		26		Cash and cash equivalents and restricted cash and cash equivalents at beginning of period	16		26
Cash and cash equivalents and restricted cash and cash equivalents at end of period	Cash and cash equivalents and restricted cash and cash equivalents at end of period	$	22	$	15	Cash and cash equivalents and restricted cash and cash equivalents at end of period	$	24	$	15

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

~~124~~136

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,~~June 30, 2022 and for the ~~three-month~~three- and six-month periods ended ~~March 31,~~June 30, 2022 and 2021. The Consolidated Statements of Comprehensive Income have been omitted as net income equals comprehensive income for the ~~three-month~~three- and six-month periods ended ~~March 31,~~June 30, 2022 and 2021. The results of operations for the ~~three-month period~~three- and six-month periods ended ~~March 31,~~June 30, 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~~six-month period ended ~~March 31,~~June 30, 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					As of
		March 31,		December 31,			June 30,		December 31,
		2022		2021			2022		2021
Cash and cash equivalents	Cash and cash equivalents	$	15	$	10	Cash and cash equivalents	$	17	$	10
Restricted cash and cash equivalents included in other current assets	Restricted cash and cash equivalents included in other current assets	7		6		Restricted cash and cash equivalents included in other current assets	7		6
Total cash and cash equivalents and restricted cash and cash equivalents	Total cash and cash equivalents and restricted cash and cash equivalents	$	22	$	16	Total cash and cash equivalents and restricted cash and cash equivalents	$	24	$	16

~~125~~137

(3) Property, Plant and Equipment, Net

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


				As of									As of
		Depreciable Life		March 31,			December 31,			Depreciable Life			June 30,			December 31,
			2022			2021						2022			2021
Utility plant:	Utility plant:										Utility plant:
Electric generation	Electric generation	25 - 60 years		$	1,169		$	1,163	Electric generation	25 - 60 years			$	1,297		$	1,163
Electric transmission	Electric transmission	50 - 100 years		937			940		Electric transmission	50 - 100 years			976			940
Electric distribution	Electric distribution	20 - 100 years		1,885			1,846		Electric distribution	20 - 100 years			1,905			1,846
Electric general and intangible plant	Electric general and intangible plant	5 - 70 years		206			204		Electric general and intangible plant	5 - 70 years			213			204
Natural gas distribution	Natural gas distribution	35 - 70 years		445			438		Natural gas distribution	35 - 70 years			447			438
Natural gas general and intangible plant	Natural gas general and intangible plant	5 - 70 years		14			14		Natural gas general and intangible plant	5 - 70 years			15			14
Common general	Common general	5 - 70 years		370			370		Common general	5 - 70 years			376			370
Utility plant	Utility plant			5,026			4,975		Utility plant				5,229			4,975
Accumulated depreciation and amortization	Accumulated depreciation and amortization			(1,878)			(1,854)		Accumulated depreciation and amortization				(1,936)			(1,854)
Utility plant, net	Utility plant, net			3,148			3,121		Utility plant, net				3,293			3,121

Construction work-in-progress	Construction work-in-progress			238			219		Construction work-in-progress				183			219
Property, plant and equipment, net	Property, plant and equipment, net			$	3,386		$	3,340	Property, plant and equipment, net				$	3,476		$	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 ("LIBOR") market plus a spread of 0.75%.

Credit Facilities

In June 2022, Sierra Pacific amended and restated its existing $250 million secured credit facility expiring in June 2024. The amendment extended the expiration date to June 2025 and amended pricing from LIBOR to the Secured Overnight Financing Rate.

138

(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				Three-Month Periods				Six-Month Periods
		Ended March 31,				Ended June 30,				Ended June 30,
		2022		2021				2022		2021		2022		2021

Federal statutory income tax rate	Federal statutory income tax rate	21	%	21	%		Federal statutory income tax rate	21	%	21	%	21	%	21	%
Effects of ratemaking	Effects of ratemaking	(7)		(10)			Effects of ratemaking	(8)		(11)		(7)		(9)

Income tax credits							Income tax credits	—		(1)		—		—

Other	Other	1		2			Other	—		(3)		1		(2)
Effective income tax rate	Effective income tax rate	15	%	13	%		Effective income tax rate	13	%	6	%	15	%	10	%

~~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.

Berkshire Hathaway includes BHE and its subsidiaries in its U.S. federal income tax return. Consistent with established regulatory practice, Sierra Pacific's provision for federal income tax has been computed on a separate return basis, and substantially all of its currently payable or receivable income tax is remitted to or received from BHE.For the six-month periods ended June 30, 2022 and 2021, Sierra Pacific made no net cash payments for federal income tax to BHE.

(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~~six-month period ended ~~March 31,~~June 30, 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					As of
		March 31,		December 31,			June 30,		December 31,
		2022		2021			2022		2021
Qualified Pension Plan:	Qualified Pension Plan:					Qualified Pension Plan:

Other non-current assets	Other non-current assets	$	63	$	62	Other non-current assets	$	64	$	62

Non-Qualified Pension Plans:	Non-Qualified Pension Plans:					Non-Qualified Pension Plans:

Other current liabilities	Other current liabilities	(1)		(1)		Other current liabilities	(1)		(1)
Other long-term liabilities	Other long-term liabilities	(7)		(7)		Other long-term liabilities	(7)		(7)

Other Postretirement Plans:	Other Postretirement Plans:					Other Postretirement Plans:

Other long-term liabilities	Other long-term liabilities	(8)		(10)		Other long-term liabilities	(8)		(10)

139

(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											Derivative
		Other		Contracts -		Other					Other				Contracts -		Other
		Current		Current		Long-term					Current		Other		Current		Long-term
		Assets		Liabilities		Liabilities		Total			Assets		Assets		Liabilities		Liabilities		Total

As of March 31, 2022
As of June 30, 2022										As of June 30, 2022
Not designated as hedging contracts (1):	Not designated as hedging contracts (1):									Not designated as hedging contracts(1):
Commodity assets	Commodity assets	$	1	$	—	$	—	$	1	Commodity assets	$	—	$	1	$	—	$	—	$	1
Commodity liabilities	Commodity liabilities	—		(28)		(25)		(53)		Commodity liabilities	—		—		(38)		(17)		(55)

Total derivative - net basis	Total derivative - net basis	$	1	$	(28)	$	(25)	$	(52)	Total derivative - net basis	$	—	$	1	$	(38)	$	(17)	$	(54)

As of December 31, 2021	As of December 31, 2021									As of December 31, 2021
Not designated as hedging contracts(1):	Not designated as hedging contracts(1):									Not designated as hedging contracts(1):
Commodity assets	Commodity assets	$	2	$	—	$	—	$	2	Commodity assets	$	2	$	—	$	—	$	—	$	2
Commodity liabilities	Commodity liabilities	—		(16)		(19)		(35)		Commodity liabilities	—		—		(16)		(19)		(35)

Total derivative - net basis	Total derivative - net basis	$	2	$	(16)	$	(19)	$	(33)	Total derivative - net basis	$	2	$	—	$	(16)	$	(19)	$	(33)

(1)Sierra Pacific's commodity derivatives not designated as hedging contracts are included in regulated rates. As of ~~March 31,~~June 30, 2022 a net regulatory asset of ~~$52~~$54 million was recorded related to the net derivative liability of ~~$52~~$54 million. As of December 31, 2021 a net regulatory asset of $33 million was recorded related to the net derivative liability of $33 million.

140

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


		Unit of	March 31,	December 31,		Unit of	June 30,	December 31,
		Measure	2022	2021		Measure	2022	2021

Electricity purchases	Electricity purchases	Megawatt hours	1	1	Electricity purchases	Megawatt hours	1	1
Natural gas purchases	Natural gas purchases	Decatherms	60	53	Natural gas purchases	Decatherms	50	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,~~June 30, 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,~~June 30, 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 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.

141

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									Input Levels for Fair Value Measurements
		Level 1		Level 2		Level 3		Total			Level 1		Level 2		Level 3		Total
As of March 31, 2022:
As of June 30, 2022:										As of June 30, 2022:
Assets:	Assets:									Assets:
Commodity derivatives	Commodity derivatives	$	—	$	—	$	1	$	1	Commodity derivatives	$	—	$	—	$	1	$	1
Money market mutual funds	Money market mutual funds	13		—		—		13		Money market mutual funds	14		—		—		14
Investment funds	Investment funds	1		—		—		1		Investment funds	1		—		—		1
		$	14	$	—	$	1	$	15		$	15	$	—	$	1	$	16

Liabilities - commodity derivatives	Liabilities - commodity derivatives	$	—	$	—	$	(53)	$	(53)	Liabilities - commodity derivatives	$	—	$	—	$	(55)	$	(55)

As of December 31, 2021:	As of December 31, 2021:									As of December 31, 2021:
Assets:	Assets:									Assets:
Commodity derivatives	Commodity derivatives	$	—	$	—	$	2	$	2	Commodity derivatives	$	—	$	—	$	2	$	2
Money market mutual funds	Money market mutual funds	10		—		—		10		Money market mutual funds	10		—		—		10
Investment funds	Investment funds	1		—		—		1		Investment funds	1		—		—		1
		$	11	$	—	$	2	$	13		$	11	$	—	$	2	$	13

Liabilities - commodity derivatives	Liabilities - commodity derivatives	$	—	$	—	$	(35)	$	(35)	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					Three-Month Periods				Six-Month Periods
		Ended March 31,					Ended June 30,				Ended June 30,
		2022		2021			2022		2021		2022		2021

Beginning balance	Beginning balance	$	(33)	$	7	Beginning balance	$	(52)	$	12	$	(33)	$	7
Changes in fair value recognized in regulatory assets	Changes in fair value recognized in regulatory assets	(19)		5		Changes in fair value recognized in regulatory assets	(7)		(1)		(26)		4

Settlements						Settlements	5		1		5		1
Ending balance	Ending balance	$	(52)	$	12	Ending balance	$	(54)	$	12	$	(54)	$	12

142

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, 2022 As of December 31, 2021
Carrying Fair Carrying Fair
Value Value Value Value
Long-term debt $ 1,164 $ 1,261 $ 1,164 $ 1,316


	As of June 30, 2022				As of December 31, 2021
	Carrying		Fair		Carrying		Fair
	Value		Value		Value		Value

Long-term debt	$	1,148	$	1,164	$	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~~143

(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													Three-Month Periods
		Ended March 31,													Ended June 30,
		2022						2021							2022						2021
		Electric		Natural Gas		Total		Electric		Natural Gas		Total			Electric		Natural Gas		Total		Electric		Natural Gas		Total
Customer Revenue:	Customer Revenue:													Customer Revenue:
Retail:	Retail:													Retail:
Residential	Residential	$	85	$	32	$	117	$	71	$	25	$	96	Residential	$	79	$	19	$	98	$	68	$	13	$	81
Commercial	Commercial	70		15		85		54		10		64		Commercial	82		6		88		64		5		69
Industrial	Industrial	49		4		53		39		3		42		Industrial	53		3		56		42		2		44
Other	Other	1		—		1		1		—		1		Other	1		—		1		1		—		1
Total fully bundled	Total fully bundled	205		51		256		165		38		203		Total fully bundled	215		28		243		175		20		195
Distribution only service	Distribution only service	1		—		1		1		—		1		Distribution only service	1		—		1		1		—		1
Total retail	Total retail	206		51		257		166		38		204		Total retail	216		28		244		176		20		196
Wholesale, transmission and other	Wholesale, transmission and other	21		—		21		15		—		15		Wholesale, transmission and other	14		—		14		12		—		12
Total Customer Revenue	Total Customer Revenue	227		51		278		181		38		219		Total Customer Revenue	230		28		258		188		20		208
Other revenue	Other revenue	—		1		1		—		1		1		Other revenue	—		—		—		1		—		1
Total revenue	Total revenue	$	227	$	52	$	279	$	181	$	39	$	220	Total revenue	$	230	$	28	$	258	$	189	$	20	$	209


	Six-Month Periods
	Ended June 30,
	2022						2021
	Electric		Natural Gas		Total		Electric		Natural Gas		Total
Customer Revenue:
Retail:
Residential	$	162	$	51	$	213	$	138	$	38	$	176
Commercial	151		21		172		117		15		132
Industrial	102		7		109		81		5		86
Other	3		—		3		3		—		3
Total fully bundled	418		79		497		339		58		397
Distribution only service	3		—		3		2		—		2
Total retail	421		79		500		341		58		399
Wholesale, transmission and other	35		—		35		28		—		28
Total Customer Revenue	456		79		535		369		58		427
Other revenue	1		1		2		1		1		2
Total revenue	$	457	$	80	$	537	$	370	$	59	$	429

~~131~~144

(11) Segment Information

Sierra Pacific has identified 2 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				Three-Month Periods				Six-Month Periods
		Ended March 31,				Ended June 30,				Ended June 30,
		2022		2021				2022		2021		2022		2021
Operating revenue:	Operating revenue:						Operating revenue:
Regulated electric	Regulated electric	$	227	$	181		Regulated electric	$	230	$	189	$	457	$	370
Regulated natural gas	Regulated natural gas	52		39			Regulated natural gas	28		20		80		59
Total operating revenue	Total operating revenue	$	279	$	220		Total operating revenue	$	258	$	209	$	537	$	429

Operating income:	Operating income:						Operating income:
Regulated electric	Regulated electric	$	30	$	31		Regulated electric	$	19	$	21	$	49	$	52
Regulated natural gas	Regulated natural gas	8		8			Regulated natural gas	4		4		12		12
Total operating income	Total operating income	38		39			Total operating income	23		25		61		64
Interest expense	Interest expense	(13)		(14)			Interest expense	(14)		(13)		(27)		(27)
Allowance for borrowed funds	Allowance for borrowed funds	1		—			Allowance for borrowed funds	—		1		1		1
Allowance for equity funds	Allowance for equity funds	2		1			Allowance for equity funds	2		2		4		3
Interest and dividend income	Interest and dividend income	3		2			Interest and dividend income	4		1		7		3
Other, net	Other, net	2		4			Other, net	—		2		2		6
Income before income tax expense	Income before income tax expense	$	33	$	32		Income before income tax expense	$	15	$	18	$	48	$	50


		As of						As of
			March 31,		December 31,				June 30,		December 31,
			2022		2021				2022		2021
Assets:	Assets:						Assets:
Regulated electric	Regulated electric		$	3,869	$	3,829	Regulated electric		$	3,995	$	3,829
Regulated natural gas	Regulated natural gas		375		365		Regulated natural gas		385		365
Other(1)	Other(1)		35		29		Other(1)		35		29
Total assets	Total assets		$	4,279	$	4,223	Total assets		$	4,415	$	4,223

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

~~132~~145

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 Second Quarter and First ~~Quarter~~Six Months of 2022 and 2021

Overview

Net income for the ~~first~~second quarter of 2022 was ~~$28~~$13 million, ~~consistent when~~a decrease of $4 million, or 24%, compared to 2021 primarily due to $5$6 million of higher operations and maintenance expenses, mainly due to higher plant operations and maintenance expenses, $2 million of unfavorable other, net, mainly due to lower cash surrender value of corporate-owned life insurance policies, and higher income tax expense, partially offset by $4 million of higher electric utility margin and higher interest and dividend income, mainly from carrying charges on regulatory balances. Electric utility margin increased primarily due to higher regulatory-related revenue deferrals and an increase in the average number of customers, partially offset by the unfavorable impact of weather, unfavorable price impacts from changes in sales mix and unfavorable changes in customer usage patterns. Energy generated decreased 33% for the second quarter of 2022 compared to 2021 primarily due to lower natural gas- and coal-fueled generation. Wholesale electricity sales volumes decreased 9% and purchased electricity volumes increased 38%.

Net income for the first six months of 2022 was $41 million, a decrease of $4 million, or 9%, compared to 2021 primarily due to $11 million of higher operations and maintenance expenses, mainly due to higher plant operations and maintenance expenses and higher earnings sharing, ~~and $2~~$4 million of ~~lower~~unfavorable other, net, mainly due to lower cash surrender value of corporate-owned life insurance policies, and higher income tax expense, partially offset by $4$9 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$4 million of higher interest and dividend income, mainly from carrying charges on regulatory ~~balances.~~balances, and higher allowance for equity funds, mainly due to higher construction work-in-progress. Electric utility margin increased primarily due to higher transmission and wholesale revenue, higher regulatory-related revenue deferrals and an increase in the average number of customers, partially offset by the unfavorable impact of weather, unfavorable price impacts from changes in sales mix and unfavorable changes in customer usage patterns. Energy generated ~~increased 3%~~decreased 18% for the first ~~quarter~~six months of 2022 compared to 2021 primarily due to ~~higher coal-fueled~~lower natural gas-fueled generation, partially offset by ~~lower natural gas-fueled~~higher coal-fueled generation. Wholesale electricity sales volumes increased ~~66%~~35% and purchased electricity volumes ~~decreased 25%~~increased 4%.

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~~146

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								Second Quarter						First Six Months
		2022		2021		Change						2022			2021			Change					2022			2021			Change
Electric utility margin:	Electric utility margin:										Electric utility margin:
Operating revenue	Operating revenue	$	227	$	181	$	46	25	%		Operating revenue		$	230		$	189		$	41	22	%		$	457		$	370		$	87	24	%
Cost of fuel and energy	Cost of fuel and energy	124		82		42		51			Cost of fuel and energy		129			93			36		39			253			175			78		45
Electric utility margin	Electric utility margin	103		99		4		4			Electric utility margin		101			96			5		5	%		204			195			9		5	%

Natural gas utility margin:	Natural gas utility margin:										Natural gas utility margin:
Operating revenue	Operating revenue	52		39		13		33	%		Operating revenue		28			20			8		40	%		80			59			21		36	%
Natural gas purchased for resale	Natural gas purchased for resale	34		21		13		62			Natural gas purchased for resale		16			8			8		100			50			29			21		72
Natural gas utility margin	Natural gas utility margin	18		18		—		—			Natural gas utility margin		12			12			—		—	%		30			30			—		—	%

Utility margin	Utility margin	121		117		4		3	%		Utility margin		113			108			5		5	%		234			225			9		4	%

Operations and maintenance	Operations and maintenance	41		36		5		14	%		Operations and maintenance		47			41			6		15	%		88			77			11		14	%
Depreciation and amortization	Depreciation and amortization	36		36		—		—			Depreciation and amortization		37			36			1		3			73			72			1		1
Property and other taxes	Property and other taxes	6		6		—		—			Property and other taxes		6			6			—		—			12			12			—		—
Operating income	Operating income	$	38	$	39	$	(1)	(3)	%		Operating income		$	23		$	25		$	(2)	(8)	%		$	61		$	64		$	(3)	(5)	%

~~134~~147

Electric Utility Margin

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


		First Quarter								Second Quarter						First Six Months
		2022		2021		Change						2022			2021			Change					2022			2021			Change
Utility margin (in millions):	Utility margin (in millions):										Utility margin (in millions):
Operating revenue	Operating revenue	$	227	$	181	$	46	25	%		Operating revenue		$	230		$	189		$	41	22	%		$	457		$	370		$	87	24	%
Cost of fuel and energy	Cost of fuel and energy	124		82		42		51			Cost of fuel and energy		129			93			36		39			253			175			78		45
Utility margin	Utility margin	$	103	$	99	$	4	4	%		Utility margin		$	101		$	96		$	5	5	%		$	204		$	195		$	9	5	%

Sales (GWhs):	Sales (GWhs):										Sales (GWhs):
Residential	Residential	663		671		(8)		(1)	%		Residential		573			626			(53)		(8)	%		1,236			1,297			(61)		(5)	%
Commercial	Commercial	700		677		23		3			Commercial		778			788			(10)		(1)			1,478			1,465			13		1
Industrial	Industrial	755		897		(142)		(16)			Industrial		721			900			(179)		(20)			1,476			1,797			(321)		(18)
Other	Other	4		4		—		—			Other		3			3			—		—			7			7			—		—
Total fully bundled(1)	Total fully bundled(1)	2,122		2,249		(127)		(6)			Total fully bundled(1)		2,075			2,317			(242)		(10)			4,197			4,566			(369)		(8)
Distribution only service	Distribution only service	585		397		188		47			Distribution only service		752			420			332		79			1,337			817			520		64
Total retail	Total retail	2,707		2,646		61		2			Total retail		2,827			2,737			90		3			5,534			5,383			151		3
Wholesale	Wholesale	291		175		116		66			Wholesale		114			125			(11)		(9)			405			300			105		35
Total GWhs sold	Total GWhs sold	2,998		2,821		177		6	%		Total GWhs sold		2,941			2,862			79		3	%		5,939			5,683			256		5	%

Average number of retail customers (in thousands)	Average number of retail customers (in thousands)	369		363		6		2	%		Average number of retail customers (in thousands)		370			365			5		1	%		370			364			6		2	%

Average revenue per MWh:	Average revenue per MWh:										Average revenue per MWh:
Retail - fully bundled(1)	Retail - fully bundled(1)	$	96.40	$	73.17	$	23.23	32	%		Retail - fully bundled(1)		$	103.25		$	75.42		$	27.83	37	%		$	99.79		$	74.31		$	25.48	34	%

Wholesale	Wholesale	$	51.14	$	60.18	$	(9.04)	(15)	%		Wholesale		$	65.84		$	52.18		$	13.66	26	%		$	55.28		$	56.84		$	(1.56)	(3)	%

Heating degree days	Heating degree days	2,037		2,198		(161)		(7)	%		Heating degree days		661			498			163		33	%		2,698			2,696			2		—	%

Cooling degree days											Cooling degree days		214			369			(155)		(42)	%		214			369			(155)		(42)	%

Sources of energy (GWhs)(2):	Sources of energy (GWhs)(2):										Sources of energy (GWhs)(2):
Natural gas	Natural gas	990		1,082		(92)		(9)	%		Natural gas		707			1,133			(426)		(38)	%		1,697			2,215			(518)		(23)	%
Coal	Coal	153		29		124		*			Coal		352			436			(84)		(19)			505			465			40		9
Renewables(3)	Renewables(3)	5		6		(1)		(17)			Renewables(3)		8			13			(5)		(38)			13			19			(6)		(32)
Total energy generated	Total energy generated	1,148		1,117		31		3			Total energy generated		1,067			1,582			(515)		(33)			2,215			2,699			(484)		(18)
Energy purchased	Energy purchased	1,033		1,373		(340)		(25)			Energy purchased		1,590			1,149			441		38			2,623			2,522			101		4
Total	Total	2,181		2,490		(309)		(12)	%		Total		2,657			2,731			(74)		(3)	%		4,838			5,221			(383)		(7)	%

Average cost of energy per MWh(4):	Average cost of energy per MWh(4):										Average cost of energy per MWh(4):
Energy generated	Energy generated	$	59.86	$	25.23	$	34.63	*			Energy generated		$	47.59		$	23.88		$	23.71	99	%		$	53.95		$	24.44		$	29.51	*
Energy purchased	Energy purchased	$	53.19	$	38.93	$	14.26	37	%		Energy purchased		$	49.73		$	48.21		$	1.52	3	%		$	51.09		$	43.16		$	7.93	18	%

* 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~~148

Natural Gas Utility Margin

A comparison of key operating results related to natural gas utility margin is as follows:


		First Quarter								Second Quarter						First Six Months
		2022		2021		Change						2022			2021			Change					2022			2021			Change
Utility margin (in millions):	Utility margin (in millions):										Utility margin (in millions):
Operating revenue	Operating revenue	$	52	$	39	$	13	33	%		Operating revenue		$	28		$	20		$	8	40	%		$	80		$	59		$	21	36	%
Natural gas purchased for resale	Natural gas purchased for resale	34		21		13		62			Natural gas purchased for resale		16			8			8		*			50			29			21		72
Utility margin	Utility margin	$	18	$	18	$	—	—	%		Utility margin		$	12		$	12		$	—	—	%		$	30		$	30		$	—	—	%

Sold (000's Dths):	Sold (000's Dths):										Sold (000's Dths):
Residential	Residential	4,552		4,658		(106)		(2)	%		Residential		1,797			1,450			347		24	%		6,349			6,108			241		4	%
Commercial	Commercial	2,512		2,304		208		9			Commercial		751			775			(24)		(3)			3,263			3,079			184		6
Industrial	Industrial	653		745		(92)		(12)			Industrial		402			395			7		2			1,055			1,140			(85)		(7)
Total retail	Total retail	7,717		7,707		10		—	%		Total retail		2,950			2,620			330		13	%		10,667			10,327			340		3	%

Average number of retail customers (in thousands)	Average number of retail customers (in thousands)	179		176		3		2	%		Average number of retail customers (in thousands)		179			177			2		1	%		179			176			3		2	%

Average revenue per retail Dth sold	Average revenue per retail Dth sold	$	6.69	$	5.03	$	1.66	33	%		Average revenue per retail Dth sold		$	9.47		$	7.62		$	1.85	24	%		$	7.46		$	5.69		$	1.77	31	%

Heating degree days	Heating degree days	2,037		2,198		(161)		(7)	%		Heating degree days		661			498			163		33	%		2,698			2,696			2		—	%

Average cost of natural gas per retail Dth sold	Average cost of natural gas per retail Dth sold	$	4.36	$	2.73	$	1.63	60	%		Average cost of natural gas per retail Dth sold		$	5.48		$	3.21		$	2.27	71	%		$	4.67		$	2.86		$	1.81	63	%

* Not meaningful

Quarter Ended ~~March 31,~~June 30, 2022 Compared to Quarter Ended ~~March 31,~~June 30, 2021

Electric utility margin increased $45 million, or 4%5%, for the ~~first~~second quarter of 2022 compared to 2021 primarily due to:

•$35 million of higher ~~transmission~~ON Line temporary rider (offset in operations and ~~wholesale revenue;~~

•~~$2 million~~maintenance expense) for the recovery of ~~higher energy efficiency implementation rates;~~deferred costs for the ON Line lease due to the regulatory-directed reallocation of costs between Nevada Power and Sierra Pacific and

•$14 million of higher regulatory-related revenue deferrals.

The increase in utility margin was offset by:

•$3 million of lower electric retail utility margin ~~primarily~~ due to unfavorable price impacts from changes in sales mix, offset by higher retail customer volumes. Retail customer volumes, including distribution only service customers, increased ~~2.3%~~3.3% primarily due to an increase in the average number of customers, offset by the unfavorable impact of ~~weather.~~

~~The increase~~weather and unfavorable changes in ~~utility margin was offset by:~~

•~~$1 million of lower regulatory-related revenue deferrals;~~customer usage patterns and

•$1 million of lower energy efficiency programs rates (offset in operations and maintenance expense).

Operations and maintenance increased $5$6 million, or ~~14%~~15%, for the ~~first~~second quarter of 2022 compared to 2021 primarily due to higher regulatory-approved cost recovery for the ON Line lease of $5 million (offset in operating revenue) and 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$3 million for the ~~first~~second quarter of 2022 compared to 2021 primarily due to higher interest income, mainly from carrying charges on regulatory balances.

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

149

Income tax expense increased $1 million for the second quarter of 2022 compared to 2021 primarily due to the effects of ratemaking, offset by lower pretax income. The effective tax rate was 13% in 2022 and 6% in 2021.

First Six Months Ended June 30, 2022 Compared to First Six Months Ended June 30, 2021

Electric utility margin increased$9 million, or 5%, for the first six months of 2022 compared to 2021 primarily due to:

•$5 million of higher ON Line temporary rider (offset in operations and maintenance expense) for the recovery of deferred costs for the ON Line lease due to the regulatory-directed reallocation of costs between Nevada Power and Sierra Pacific;

•$3 million of higher transmission and wholesale revenue;

•$3 million of higher regulatory-related revenue deferrals; and

•$2 million of higher energy efficiency implementation rates.

The increase in utility margin was offset by:

•$2 million of lower electric retail utility margin due to unfavorable price impacts from changes in sales mix, offset by higher retail customer volumes. Retail customer volumes, including distribution only service customers, increased 2.8% primarily due to an increase in the average number of customers, offset by the unfavorable impact of weather and unfavorable changes in customer usage patterns and

•$2 million of lower energy efficiency programs rates (offset in operations and maintenance expense).

Operations and maintenance increased $11 million, or 14%, for the first six months of 2022 compared to 2021 primarily due to higher regulatory-approved cost recovery for the ON Line lease of $5 million (offset in operating revenue), higher plant operations and maintenance expenses of $5 million and higher earnings sharing, partially offset by lower energy efficiency program costs (offset in operating revenue).

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

Other, net unfavorable $4 million, or 67%, for the first six months of 2022 compared to 2021 primarily due to lower cash surrender value of corporate-owned life insurance policies and higher pension costs.

Income tax expense increased $1$2 million, or ~~25%~~40%, for the first ~~quarter~~six months of 2022 compared to 2021 primarily due to ~~higher~~the effects of ratemaking, offset by lower pretax income. The effective tax rate was 15% in 2022 and ~~13%~~10% in 2021.

~~136~~

Liquidity and Capital Resources

As of ~~March 31,~~June 30, 2022, Sierra Pacific's total net liquidity was as follows (in millions):


Cash and cash equivalents	$	1517

Credit facility	250
~~Less -~~

~~Short-term debt~~	~~(57)~~
~~Net credit facility~~	~~193~~

Total net liquidity	$	~~208~~267
Credit facility:
Maturity date	~~2024~~2025

Operating Activities

Net cash flows from operating activities for the ~~three-month~~six-month periods ended ~~March 31,~~June 30, 2022 and 2021 were ~~$63~~$108 million and ~~$42~~$92 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~~six-month periods ended ~~March 31,~~June 30, 2022 and 2021 were ~~$(83)~~$(191) million and ~~$(61)~~$(128) million, respectively. The change was primarily due to increased capital expenditures. Refer to "Future Uses of Cash" for further discussion of capital expenditures.

150

Financing Activities

Net cash flows from financing activities for the ~~three-month~~six-month periods ended ~~March 31,~~June 30, 2022 and 2021 were ~~$26~~$91 million and $8$25 million, respectively. The change was primarily due to contributions from NV Energy, Inc., and higher proceeds from the issuance of long-term debt, partially offset by higher long-term debt reacquired, higher repayments of short-term ~~debt.~~debt and higher dividends paid to NV Energy, Inc.

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~~Offered Rate market plus a spread of 0.75%.

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.

151

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 Periods				Annual			Six-Month Periods				Annual
		Ended March 31,				Forecast			Ended June 30,				Forecast
		2021		2022		2022			2021		2022		2022

Electric distribution	Electric distribution	$	20	$	20	$	125	Electric distribution	$	42	$	46	$	114
Electric transmission	Electric transmission	16		20		128		Electric transmission	31		45		104
Solar generation		—		—		1

Other	Other	25		43		171		Other	55		100		186
Total	Total	$	61	$	83	$	425	Total	$	128	$	191	$	404

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.

•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,~~June 30, 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.~~2021, other than those disclosed in Note 4 of the Notes to Consolidated Financial Statements in Part I, Item 1 of this Form 10-Q.

~~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.

152

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~~153

Eastern Energy Gas Holdings, LLC and its subsidiaries

Consolidated Financial Section

~~140~~154

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,~~June 30, 2022, the related consolidated statements of operations, comprehensive income, and changes in equity for the three-month and six-month periods ended June 30, 2022 and 2021, and of cash flows for the ~~three-month~~six-month periods ended ~~March 31,~~June 30, 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.

/s/ Deloitte & Touche LLP

Richmond, Virginia

~~April 29,~~August 5, 2022

~~141~~155

EASTERN ENERGY GAS HOLDINGS, LLC AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS (Unaudited)

(Amounts in millions)


		As of					As of
		March 31, 2022		December 31, 2021			June 30, 2022		December 31, 2021
ASSETS	ASSETS					ASSETS
Current assets:	Current assets:					Current assets:
Cash and cash equivalents	Cash and cash equivalents	$	54	$	22	Cash and cash equivalents	$	106	$	22

Trade receivables, net	Trade receivables, net	154		183		Trade receivables, net	174		183
Receivables from affiliates	Receivables from affiliates	32		47		Receivables from affiliates	26		47

Notes receivable from affiliates	Notes receivable from affiliates	122		7		Notes receivable from affiliates	198		7
Other receivables		3		9

Inventories	Inventories	124		122		Inventories	127		122

Natural gas imbalances	Natural gas imbalances	105		100		Natural gas imbalances	194		100
Other current assets	Other current assets	132		131		Other current assets	126		140
Total current assets	Total current assets	726		621		Total current assets	951		621

Property, plant and equipment, net	Property, plant and equipment, net	10,183		10,200		Property, plant and equipment, net	10,131		10,200
Goodwill	Goodwill	1,286		1,286		Goodwill	1,286		1,286

Investments	Investments	423		412		Investments	419		412

Other assets	Other assets	122		129		Other assets	140		129

Total assets	Total assets	$	12,740	$	12,648	Total assets	$	12,927	$	12,648

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

~~142~~156

EASTERN ENERGY GAS HOLDINGS, LLC AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS (Unaudited) (continued)

(Amounts in millions)


		As of					As of
		March 31, 2022		December 31, 2021			June 30, 2022		December 31, 2021
LIABILITIES AND EQUITY	LIABILITIES AND EQUITY					LIABILITIES AND EQUITY
Current liabilities:	Current liabilities:					Current liabilities:
Accounts payable	Accounts payable	$	42	$	79	Accounts payable	$	45	$	79
Accounts payable to affiliates	Accounts payable to affiliates	13		38		Accounts payable to affiliates	20		38
Accrued interest	Accrued interest	54		19		Accrued interest	14		19
Accrued property, income and other taxes	Accrued property, income and other taxes	59		89		Accrued property, income and other taxes	78		89
Accrued employee expenses		21		13

Regulatory liabilities	Regulatory liabilities	44		40		Regulatory liabilities	49		40

Current portion of long-term debt						Current portion of long-term debt	250		—
Other current liabilities	Other current liabilities	110		87		Other current liabilities	187		100
Total current liabilities	Total current liabilities	343		365		Total current liabilities	643		365

Long-term debt	Long-term debt	3,899		3,906		Long-term debt	3,636		3,906

Regulatory liabilities	Regulatory liabilities	645		645		Regulatory liabilities	640		645

Other long-term liabilities	Other long-term liabilities	263		238		Other long-term liabilities	291		238
Total liabilities	Total liabilities	5,150		5,154		Total liabilities	5,210		5,154

Commitments and contingencies (Note 8)	Commitments and contingencies (Note 8)	0		0		Commitments and contingencies (Note 8)	0		0

Equity:	Equity:					Equity:
Member's equity:	Member's equity:					Member's equity:

Membership interests	Membership interests	3,595		3,501		Membership interests	3,733		3,501

Accumulated other comprehensive loss, net	Accumulated other comprehensive loss, net	(38)		(43)		Accumulated other comprehensive loss, net	(39)		(43)
Total member's equity	Total member's equity	3,557		3,458		Total member's equity	3,694		3,458
Noncontrolling interests	Noncontrolling interests	4,033		4,036		Noncontrolling interests	4,023		4,036
Total equity	Total equity	7,590		7,494		Total equity	7,717		7,494

Total liabilities and equity	Total liabilities and equity	$	12,740	$	12,648	Total liabilities and equity	$	12,927	$	12,648

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

~~143~~157

EASTERN ENERGY GAS HOLDINGS, LLC AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)

(Amounts in millions)


		Three-Month Periods				Three-Month Periods				Six-Month Periods
		Ended March 31,				Ended June 30,				Ended June 30,
		2022		2021				2022		2021		2022		2021

Operating revenue	Operating revenue	$	482	$	486		Operating revenue	$	504	$	437	$	986	$	923

Operating expenses:	Operating expenses:						Operating expenses:

Excess gas	Excess gas	(1)		—			Excess gas	(21)		(10)		(22)		(10)
Operations and maintenance	Operations and maintenance	118		124			Operations and maintenance	124		113		242		237
Depreciation and amortization	Depreciation and amortization	85		80			Depreciation and amortization	80		81		165		161
Property and other taxes	Property and other taxes	29		39			Property and other taxes	37		38		66		77

Total operating expenses	Total operating expenses	231		243			Total operating expenses	220		222		451		465

Operating income	Operating income	251		243			Operating income	284		215		535		458

Other income (expense):	Other income (expense):						Other income (expense):
Interest expense	Interest expense	(36)		(44)			Interest expense	(36)		(42)		(72)		(86)

Allowance for equity funds	Allowance for equity funds	2		2			Allowance for equity funds	1		1		3		3

Other, net	Other, net	(1)		1			Other, net	—		1		(1)		2
Total other income (expense)	Total other income (expense)	(35)		(41)			Total other income (expense)	(35)		(40)		(70)		(81)

Income before income tax expense and equity income	Income before income tax expense and equity income	216		202			Income before income tax expense and equity income	249		175		465		377
Income tax expense	Income tax expense	30		27			Income tax expense	37		22		67		49
Equity income	Equity income	19		16			Equity income	9		7		28		23

Net income	Net income	205		191			Net income	221		160		426		351
Net income attributable to noncontrolling interests	Net income attributable to noncontrolling interests	111		102			Net income attributable to noncontrolling interests	118		100		229		202
Net income attributable to Eastern Energy Gas	Net income attributable to Eastern Energy Gas	$	94	$	89		Net income attributable to Eastern Energy Gas	$	103	$	60	$	197	$	149

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

~~144~~158

EASTERN ENERGY GAS HOLDINGS, LLC AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Unaudited)

(Amounts in millions)


		Three-Month Periods				Three-Month Periods				Six-Month Periods
		Ended March 31,				Ended June 30,				Ended June 30,
		2022		2021				2022		2021		2022		2021

Net income	Net income	$	205	$	191		Net income	$	221	$	160	$	426	$	351

Other comprehensive income, net of tax:
Unrecognized amounts on retirement benefits, net of tax of $— and $—		1		2
Other comprehensive (loss) income, net of tax:							Other comprehensive (loss) income, net of tax:
Unrecognized amounts on retirement benefits, net of tax of $—, $—, $— and $—							Unrecognized amounts on retirement benefits, net of tax of $—, $—, $— and $—	—		2		1		4

Unrealized gains on cash flow hedges, net of tax of $1 and $3		4		10
Total other comprehensive income, net of tax		5		12
Unrealized (losses) gains on cash flow hedges, net of tax of $—, $—, $1 and $3							Unrealized (losses) gains on cash flow hedges, net of tax of $—, $—, $1 and $3	(1)		3		3		13
Total other comprehensive (loss) income, net of tax							Total other comprehensive (loss) income, net of tax	(1)		5		4		17

Comprehensive income	Comprehensive income	210		203			Comprehensive income	220		165		430		368
Comprehensive income attributable to noncontrolling interests	Comprehensive income attributable to noncontrolling interests	111		106			Comprehensive income attributable to noncontrolling interests	118		100		229		206
Comprehensive income attributable to Eastern Energy Gas	Comprehensive income attributable to Eastern Energy Gas	$	99	$	97		Comprehensive income attributable to Eastern Energy Gas	$	102	$	65	$	201	$	162

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

~~145~~159

EASTERN ENERGY GAS HOLDINGS, LLC AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY (Unaudited)

(Amounts in millions)


				Accumulated									Accumulated
				Other									Other
		Membership		Comprehensive		Noncontrolling		Total			Membership		Comprehensive		Noncontrolling		Total
		Interests		Loss, Net		Interests		Equity			Interests		Loss, Net		Interests		Equity

Balance, March 31, 2021										Balance, March 31, 2021	$	3,035	$	(45)	$	4,088	$	7,078
Net income										Net income	60		—		100		160
Other comprehensive income										Other comprehensive income	—		5		—		5
Contributions										Contributions	271		—		—		271
Distributions										Distributions	—		—		(116)		(116)
Balance, June 30, 2021										Balance, June 30, 2021	$	3,366	$	(40)	$	4,072	$	7,398

Balance, December 31, 2020	Balance, December 31, 2020	$	2,957	$	(53)	$	4,091	$	6,995	Balance, December 31, 2020	$	2,957	$	(53)	$	4,091	$	6,995
Net income	Net income	89		—		102		191		Net income	149		—		202		351
Other comprehensive income	Other comprehensive income	—		8		4		12		Other comprehensive income	—		13		4		17

Contributions	Contributions	11		—		—		11		Contributions	282		—		—		282
Distributions	Distributions	(22)		—		(109)		(131)		Distributions	(22)		—		(225)		(247)

Balance, March 31, 2021		$	3,035	$	(45)	$	4,088	$	7,078
Balance, June 30, 2021										Balance, June 30, 2021	$	3,366	$	(40)	$	4,072	$	7,398

Balance, March 31, 2022										Balance, March 31, 2022	$	3,595	$	(38)	$	4,033	$	7,590
Net income										Net income	103		—		118		221
Other comprehensive loss										Other comprehensive loss	—		(1)		—		(1)
Contributions										Contributions	68		—		—		68
Distributions										Distributions	(33)		—		(128)		(161)
Balance, June 30, 2022										Balance, June 30, 2022	$	3,733	$	(39)	$	4,023	$	7,717

Balance, December 31, 2021	Balance, December 31, 2021	$	3,501	$	(43)	$	4,036	$	7,494	Balance, December 31, 2021	$	3,501	$	(43)	$	4,036	$	7,494
Net income	Net income	94		—		111		205		Net income	197		—		229		426
Other comprehensive income	Other comprehensive income	—		5		—		5		Other comprehensive income	—		4		—		4

Contributions										Contributions	68		—		—		68
Distributions	Distributions	—		—		(114)		(114)		Distributions	(33)		—		(242)		(275)

Balance, March 31, 2022		$	3,595	$	(38)	$	4,033	$	7,590
Balance, June 30, 2022										Balance, June 30, 2022	$	3,733	$	(39)	$	4,023	$	7,717

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

~~146~~160

EASTERN ENERGY GAS HOLDINGS, LLC AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)

(Amounts in millions)


		Three-Month Periods					Six-Month Periods
		Ended March 31,					Ended June 30,
		2022		2021			2022		2021
Cash flows from operating activities:	Cash flows from operating activities:					Cash flows from operating activities:
Net income	Net income	$	205	$	191	Net income	$	426	$	351
Adjustments to reconcile net income to net cash flows from operating activities:	Adjustments to reconcile net income to net cash flows from operating activities:					Adjustments to reconcile net income to net cash flows from operating activities:

Losses on other items, net	Losses on other items, net	1		—		Losses on other items, net	2		3
Depreciation and amortization	Depreciation and amortization	85		80		Depreciation and amortization	165		161
Allowance for equity funds	Allowance for equity funds	(2)		(2)		Allowance for equity funds	(3)		(3)
Equity income, net of distributions	Equity income, net of distributions	(8)		(5)		Equity income, net of distributions	(5)		(3)
Changes in regulatory assets and liabilities	Changes in regulatory assets and liabilities	(14)		6		Changes in regulatory assets and liabilities	(2)		1
Deferred income taxes	Deferred income taxes	27		30		Deferred income taxes	52		118
Other, net	Other, net	2		—		Other, net	5		(9)
Changes in other operating assets and liabilities:	Changes in other operating assets and liabilities:					Changes in other operating assets and liabilities:
Trade receivables and other assets	Trade receivables and other assets	44		(56)		Trade receivables and other assets	4		65

Derivative collateral, net	Derivative collateral, net	2		2		Derivative collateral, net	(3)		(1)

Accrued property, income and other taxes	Accrued property, income and other taxes	(29)		(25)		Accrued property, income and other taxes	(3)		(63)

Accounts payable and other liabilities	Accounts payable and other liabilities	28		20		Accounts payable and other liabilities	43		(39)
Net cash flows from operating activities	Net cash flows from operating activities	341��		241		Net cash flows from operating activities	681		581

Cash flows from investing activities:	Cash flows from investing activities:					Cash flows from investing activities:
Capital expenditures	Capital expenditures	(75)		(55)		Capital expenditures	(151)		(150)

Repayment of loans by affiliates		3		—
Loans to affiliates		(117)		—
Repayment of notes by affiliates						Repayment of notes by affiliates	15		268
Notes to affiliates						Notes to affiliates	(204)		(158)

Other, net	Other, net	(5)		(1)		Other, net	(7)		(12)
Net cash flows from investing activities	Net cash flows from investing activities	(194)		(56)		Net cash flows from investing activities	(347)		(52)

Cash flows from financing activities:	Cash flows from financing activities:					Cash flows from financing activities:

Repayments of long-term debt						Repayments of long-term debt	—		(500)

Repayment of notes payable, net	Repayment of notes payable, net	—		(9)		Repayment of notes payable, net	—		(9)

Proceeds from equity contributions						Proceeds from equity contributions	—		256
Distributions	Distributions	(114)		(109)		Distributions	(242)		(225)

Other, net						Other, net	—		(2)
Net cash flows from financing activities	Net cash flows from financing activities	(114)		(118)		Net cash flows from financing activities	(242)		(480)

Net change in cash and cash equivalents and restricted cash and cash equivalents	Net change in cash and cash equivalents and restricted cash and cash equivalents	33		67		Net change in cash and cash equivalents and restricted cash and cash equivalents	92		49
Cash and cash equivalents and restricted cash and cash equivalents at beginning of period	Cash and cash equivalents and restricted cash and cash equivalents at beginning of period	39		48		Cash and cash equivalents and restricted cash and cash equivalents at beginning of period	39		48
Cash and cash equivalents and restricted cash and cash equivalents at end of period	Cash and cash equivalents and restricted cash and cash equivalents at end of period	$	72	$	115	Cash and cash equivalents and restricted cash and cash equivalents at end of period	$	131	$	97

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

~~147~~161

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 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~~six-month period ended ~~March 31,~~June 30, 2022.

~~148~~162

(2) Property, Plant and Equipment, Net

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


			As of						As of
			March 31,		December 31,				June 30,		December 31,
		Depreciable Life	2022		2021			Depreciable Life	2022		2021
Utility Plant:	Utility Plant:						Utility Plant:

Interstate natural gas pipeline assets	Interstate natural gas pipeline assets	21 - 44 years	$	8,776	$	8,675	Interstate natural gas pipeline assets	21 - 44 years	$	8,728	$	8,675
Intangible plant	Intangible plant	5 - 10 years	110		110		Intangible plant	5 - 10 years	106		110
Utility plant in-service	Utility plant in-service		8,886		8,785		Utility plant in-service		8,834		8,785
Accumulated depreciation and amortization	Accumulated depreciation and amortization		(2,936)		(2,901)		Accumulated depreciation and amortization		(2,962)		(2,901)
Utility plant in-service, net	Utility plant in-service, net		5,950		5,884		Utility plant in-service, net		5,872		5,884

Nonutility Plant:	Nonutility Plant:						Nonutility Plant:

LNG facility	LNG facility	40 years	4,477		4,475		LNG facility	40 years	4,484		4,475
Intangible plant	Intangible plant	14 years	25		25		Intangible plant	14 years	25		25
Nonutility plant in-service	Nonutility plant in-service		4,502		4,500		Nonutility plant in-service		4,509		4,500
Accumulated depreciation and amortization	Accumulated depreciation and amortization		(454)		(423)		Accumulated depreciation and amortization		(484)		(423)
Nonutility plant in-service, net	Nonutility plant in-service, net		4,048		4,077		Nonutility plant in-service, net		4,025		4,077

Plant, net	Plant, net		9,998		9,961		Plant, net		9,897		9,961
Construction work-in-progress	Construction work-in-progress		185		239		Construction work-in-progress		234		239
Property, plant and equipment, net	Property, plant and equipment, net		$	10,183	$	10,200	Property, plant and equipment, net		$	10,131	$	10,200

Construction work-in-progress includes ~~$151~~$200 million and $209 million as of ~~March 31,~~June 30, 2022 and December 31, 2021, respectively, related to the construction of utility plant.

(3) 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. In June 2022, the parties reached an agreement in principle and the litigation procedural schedule was ordered held in abeyance for 90 days to enable the parties to finalize a settlement. The settlement is expected to be filed by September 30, 2022. As of June 30, 2022, EGTS' provision for rate refund for April 2022 through June 2022 totaled $35 million and was included in other current liabilities on the Consolidated Balance Sheet.

~~149~~163

~~(3)~~In July 2017, the FERC audit staff communicated to EGTS that it had substantially completed an audit of EGTS' compliance with the accounting and reporting requirements of the FERC's Uniform System of Accounts and provided a description of matters and preliminary recommendations. In November 2017, the FERC audit staff issued its audit report. In December 2017, EGTS provided its response to the audit report. EGTS requested FERC review of the contested findings and submitted its plan for compliance with the uncontested portions of the report. EGTS reached resolution of certain matters with the FERC in the fourth quarter of 2018. EGTS recognized a charge for a disallowance of plant, originally established beginning in 2012, for the resolution of one matter with the FERC. In December 2020, the FERC issued a final ruling on the remaining matter, which resulted in a $43 million ($31 million after-tax) estimated charge for disallowance of capitalized allowance for funds used during construction. As a condition of the December 2020 ruling, EGTS filed its proposed accounting entries and supporting documentation with the FERC during the second quarter of 2021. During the finalization of these entries, EGTS refined the estimated charge for disallowance of capitalized allowance for funds used during construction, which resulted in a reduction to the estimated charge of $11 million ($8 million after-tax) that was recorded in operations and maintenance expense in its Consolidated Statements of Operations in the second quarter of 2021. In September 2021, the FERC approved EGTS' accounting entries and supporting documentation.

(4) Investments and Restricted Cash and Cash Equivalents

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


		As of					As of
		March 31,		December 31,			June 30,		December 31,
		2022		2021			2022		2021
Investments:	Investments:					Investments:
Investment funds	Investment funds	$	15	$	13	Investment funds	$	13	$	13

Equity method investments:	Equity method investments:					Equity method investments:
Iroquois	Iroquois	408		399		Iroquois	406		399

Total investments	Total investments	423		412		Total investments	419		412

Restricted cash and cash equivalents:	Restricted cash and cash equivalents:					Restricted cash and cash equivalents:
Customer deposits	Customer deposits	18		17		Customer deposits	25		17
Total restricted cash and cash equivalents	Total restricted cash and cash equivalents	18		17		Total restricted cash and cash equivalents	25		17

Total investments and restricted cash and cash equivalents	Total investments and restricted cash and cash equivalents	$	441	$	429	Total investments and restricted cash and cash equivalents	$	444	$	429

Reflected as:	Reflected as:					Reflected as:
Current assets	Current assets	$	18	$	17	Current assets	$	25	$	17
Noncurrent assets	Noncurrent assets	423		412		Noncurrent assets	419		412
Total investments and restricted cash and cash equivalents	Total investments and restricted cash and cash equivalents	$	441	$	429	Total investments and restricted cash and cash equivalents	$	444	$	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,~~June 30, 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~~$23 million and ~~$10~~$20 million for the ~~three-month~~six-month periods ended ~~March 31,~~June 30, 2022 and 2021, respectively.

~~150~~164

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,
2022 2021
Cash and cash equivalents $ 54 $ 22
Restricted cash and cash equivalents included in other current assets 18 17
Total cash and cash equivalents and restricted cash and cash equivalents $ 72 $ 39

~~(4) Regulatory Matters~~


	As of
	June 30,		December 31,
	2022		2021

Cash and cash equivalents	$	106	$	22
Restricted cash and cash equivalents included in other current assets	25		17
Total cash and cash equivalents and restricted cash and cash equivalents	$	131	$	39

(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			Three-Month Periods						Six-Month Periods
		Ended March 31,			Ended June 30,						Ended June 30,
			2022			2021			2022		2021		2022		2021

Federal statutory income tax rate	Federal statutory income tax rate		21	%		21	%	Federal statutory income tax rate	21	%	21	%	21	%	21	%
State income tax, net of federal income tax benefit	State income tax, net of federal income tax benefit		5			3		State income tax, net of federal income tax benefit	3		2		4		3

Equity interest	Equity interest		2			2		Equity interest	1		1		1		1
Effects of ratemaking	Effects of ratemaking		(4)			(1)		Effects of ratemaking	—		(1)		(2)		(1)

Noncontrolling interest	Noncontrolling interest		(11)			(11)		Noncontrolling interest	(10)		(12)		(10)		(11)

Other, net	Other, net		1			(1)		Other, net	—		2		—		—
Effective income tax rate	Effective income tax rate		14	%		13	%	Effective income tax rate	15	%	13	%	14	%	13	%

For the period ended ~~March 31,~~June 30, 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.

~~151~~

(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$6 million to the MidAmerican Energy Company Retirement Plan and $1 million to the MidAmerican Energy Company Welfare Benefit Plan for the ~~three-month~~six-month period ended ~~March 31,~~June 30, 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,~~June 30, 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.

165

(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.

~~152~~

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									Input Levels for Fair Value Measurements
		Level 1		Level 2		Level 3		Total			Level 1		Level 2		Level 3		Total
As of March 31, 2022:
As of June 30, 2022:										As of June 30, 2022:
Assets:	Assets:									Assets:

Money market mutual funds	Money market mutual funds	$	28	$	—	$	—	$	28	Money market mutual funds	$	66	$	—	$	—	$	66
Equity securities:	Equity securities:									Equity securities:
Investment funds	Investment funds	15		—		—		15		Investment funds	13		—		—		13
		$	43	$	—	$	—	$	43		$	79	$	—	$	—	$	79

Liabilities:	Liabilities:									Liabilities:
Commodity derivatives	Commodity derivatives	$	—	$	(2)	$	—	$	(2)	Commodity derivatives	$	—	$	(1)	$	—	$	(1)
Foreign currency exchange rate derivatives	Foreign currency exchange rate derivatives	—		(3)		—		(3)		Foreign currency exchange rate derivatives	—		(19)		—		(19)

		$	—	$	(5)	$	—	$	(5)		$	—	$	(20)	$	—	$	(20)

As of December 31, 2021:	As of December 31, 2021:									As of December 31, 2021:
Assets:	Assets:									Assets:

Foreign currency exchange rate derivatives	Foreign currency exchange rate derivatives	$	—	$	3	$	—	$	3	Foreign currency exchange rate derivatives	$	—	$	3	$	—	$	3
Equity securities:	Equity securities:									Equity securities:
Investment funds	Investment funds	13		—		—		13		Investment funds	13		—		—		13
		$	13	$	3	$	—	$	16		$	13	$	3	$	—	$	16

Liabilities:	Liabilities:									Liabilities:

Foreign currency exchange rate derivatives	Foreign currency exchange rate derivatives	$	—	$	(3)	$	—	$	(3)	Foreign currency exchange rate derivatives	$	—	$	(3)	$	—	$	(3)

		$	—	$	(3)	$	—	$	(3)		$	—	$	(3)	$	—	$	(3)

Eastern Energy Gas' 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.

166

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, 2022 As of December 31, 2021
Carrying Fair Carrying Fair
Value Value Value Value
Long-term debt $ 3,899 $ 3,911 $ 3,906 $ 4,266


	As of June 30, 2022				As of December 31, 2021
	Carrying		Fair		Carrying		Fair
	Value		Value		Value		Value

Long-term debt	$	3,886	$	3,656	$	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.

167

(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			Three-Month Periods						Six-Month Periods
		Ended March 31,			Ended June 30,						Ended June 30,
			2022			2021			2022		2021		2022		2021
Customer Revenue:	Customer Revenue:							Customer Revenue:
Regulated:	Regulated:							Regulated:
Gas transportation and storage	Gas transportation and storage		$	285		$	279	Gas transportation and storage	$	286	$	246	$	571	$	525
Wholesale	Wholesale		—			17		Wholesale	—		—		—		17

Total regulated	Total regulated		285			296		Total regulated	286		246		571		542

Nonregulated	Nonregulated		203			190		Nonregulated	216		190		419		380
Total Customer Revenue	Total Customer Revenue		488			486		Total Customer Revenue	502		436		990		922
Other revenue(1)	Other revenue(1)		(6)			—		Other revenue(1)	2		1		(4)		1
Total operating revenue	Total operating revenue		$	482		$	486	Total operating revenue	$	504	$	437	$	986	$	923

(1)Other revenue consists primarily of revenue recognized in accordance with Accounting Standards Codification 815, "Derivative and Hedging" and includes unrealized gains and losses for derivatives not designated as hedges related to natural gas sales contracts.

~~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,~~June 30, 2022 (in millions):

Performance obligations expected to be satisfied
Less than 12 months More than 12 months Total
Eastern Energy Gas $ 1,832 $ 17,061 $ 18,893


	Performance obligations expected to be satisfied
	Less than 12 months		More than 12 months		Total
Eastern Energy Gas	$	2,228	$	16,609	$	18,837

(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):


		Unrecognized						Accumulated			Unrecognized						Accumulated
		Amounts On		Unrealized				Other			Amounts On		Unrealized				Other
		Retirement		Losses on Cash		Noncontrolling		Comprehensive			Retirement		Losses on Cash		Noncontrolling		Comprehensive
		Benefits		Flow Hedges		Interests		Loss, Net			Benefits		Flow Hedges		Interests		Loss, Net
Balance, December 31, 2020	Balance, December 31, 2020	$	(12)	$	(51)	$	10	$	(53)	Balance, December 31, 2020	$	(12)	$	(51)	$	10	$	(53)
Other comprehensive income (loss)	Other comprehensive income (loss)	2		10		(4)		8		Other comprehensive income (loss)	4		13		(4)		13
Balance, March 31, 2021		$	(10)	$	(41)	$	6	$	(45)
Balance, June 30, 2021										Balance, June 30, 2021	$	(8)	$	(38)	$	6	$	(40)

Balance, December 31, 2021	Balance, December 31, 2021	$	(6)	$	(42)	$	5	$	(43)	Balance, December 31, 2021	$	(6)	$	(42)	$	5	$	(43)
Other comprehensive income	Other comprehensive income	1		4		—		5		Other comprehensive income	1		3		—		4
Balance, March 31, 2022		$	(5)	$	(38)	$	5	$	(38)
Balance, June 30, 2022										Balance, June 30, 2022	$	(5)	$	(39)	$	5	$	(39)

~~155~~168

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 Second Quarter and First ~~Quarter~~Six Months of 2022 and 2021

Overview

Net income attributable to Eastern Energy Gas for the ~~first~~second quarter of 2022 was ~~$94~~$103 million, an increase of $5$43 million compared to 2021. Net income increased primarily due to ~~lower than estimated 2021~~higher margins from regulated gas transportation and storage operations of $52 million, partially offset by an increase in income tax ~~assessments~~expense of ~~$10~~$15 million primarily due to higher pre-tax income.

Net income attributable to Eastern Energy Gas for the first six months of 2022 was $197 million, an increase of $48 million compared to 2021. Net income increased primarily due to higher margins from regulated gas transportation and storage operations of $37 million, lower interest expense of $8$13 million primarily due to the repayment of long-term debt in the second quarter of ~~2021. These increases were~~2021 and lower than estimated 2021 tax assessments of $11 million, partially offset by ~~lower margins from regulated gas transportation and storage operations~~an increase in income tax expense of ~~$16~~$18 million primarily due to ~~unfavorable natural gas prices and volumes.~~higher pre-tax income.

Quarter Ended ~~March 31,~~June 30, 2022 Compared to Quarter Ended ~~March 31,~~June 30, 2021

Operating revenue increased $67 million, or 15%, for the second quarter of 2022 compared to 2021, primarily due to an increase in regulated gas transportation and storage services rates due to an agreement in principle for EGTS' general rate case of $25 million, an increase in Cove Point liquefied natural gas variable revenue of $25 million, an increase in variable revenue related to park and loan activity of $6 million and a $4 million increase from the West Loop transmission pipeline being placed into service in the third quarter of 2021.

Excess gas increased $11 million for the second quarter of 2022 compared to 2021, primarily due to favorable valuations of system gas of $27 million, partially offset by a decrease in retained volumes of $16 million.

Operations and maintenance increased $11 million, or 10%, for the second quarter of 2022 compared to 2021, primarily due to a 2021 benefit from the finalization of entries for the disallowance of capitalized AFUDC of $11 million and an increase in post-retirement benefit related costs of $6 million, partially offset by bank and legal fees recorded in 2021 related to Eastern Energy Gas' debt exchange of $4 million.

Depreciation and amortizationdecreased $4$1 million, or 1%, for the ~~first~~second 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~~an agreement in principle for EGTS' general rate case of ~~$17~~$6 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~~in-service of ~~2022 compared to 2021, primarily due to lower than estimated 2021 tax assessments.~~$5 million.

Interest expense decreased $86 million, or ~~18%~~14%, for the ~~first~~second 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$15 million, or ~~11%~~68%, for the ~~first~~second quarter of 2022 compared to 2021, primarily due to higher pre-tax income. The effective tax rate was ~~14%~~15% for the ~~first~~second quarter of 2022 and 13% for the ~~first~~second quarter of 2021.

Net income attributable to noncontrolling interests increased $9$18 million, or 9%18%, for the ~~first~~second quarter of 2022 compared to 2021, primarily due to an increase in Cove Point liquefied natural gas variable revenue.

~~156~~169

First Six Months Ended June 30, 2022 Compared to First Six Months Ended June 30, 2021

Operating revenue increased $63 million, or 7%, for the first six months of 2022 compared to 2021, primarily due to an increase in Cove Point liquefied natural gas variable revenue of $38 million, an increase in regulated gas transportation and storage services rates due to an agreement in principle for EGTS' general rate case of $25 million, an increase in variable revenue related to park and loan activity of $11 million and a $7 million increase from the West Loop transmission pipeline being placed into service in the third quarter of 2021, partially offset by a decrease in regulated gas sales of $17 million for operational and system balancing purposes due to decreased volumes.

Excess gas increased $12 million for the first six months of 2022 compared to 2021, primarily due to a decrease in volumes sold of $14 million and favorable valuations of system gas of $18 million, partially offset by an unfavorable change to volumes of $20 million.

Operations and maintenance increased $5 million, or 2%, for the first six months of 2022 compared to 2021, primarily due to a 2021 benefit from the finalization of entries for the disallowance of capitalized AFUDC of $11 million, partially offset by bank and legal fees recorded in 2021 related to Eastern Energy Gas' debt exchange of $4 million.

Depreciation and amortization increased $4 million, or 2%, for the first six months of 2022 compared to 2021, primarily due to higher plant placed in-service of $10 million, partially offset by a decrease due to an agreement in principle for EGTS' general rate case of $6 million.

Property and other taxes decreased $11 million, or 14%, for the first six months of 2022 compared to 2021, primarily due to lower than estimated 2021 tax assessments.

Interest expense decreased$14 million, or 16%, for the first six months 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 $18 million, or 37%, for the first six months of 2022 compared to 2021, primarily due to higher pre-tax income. The effective tax rate was 14% for the first six months of 2022 and 13% for the first six months of 2021.

Net income attributable to noncontrolling interests increased $27 million, or 13%, for the first six months of 2022 compared to 2021, primarily due to an increase in Cove Point liquefied natural gas variable revenue.

Liquidity and Capital Resources

As of ~~March 31,~~June 30, 2022, Eastern Energy Gas' total net liquidity was ~~$454~~$506 million as follows (in millions):


Cash and cash equivalents	$	54106

Intercompany revolving credit agreement	400





Total net liquidity	$	~~454~~506

Intercompany revolving credit agreement:
Maturity date	2022

Operating Activities

Net cash flows from operating activities for the ~~three-month~~six-month periods ended ~~March 31,~~June 30, 2022 and 2021 were ~~$341~~$681 million and ~~$241~~$581 million, respectively. The change ~~was~~is primarily due to ~~increased cash receipts~~the timing of income tax payments, the impacts from ~~receivables~~the proposed rates in effect April 1, 2022 for the EGTS general rate case 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.

170

Investing Activities

Net cash flows from investing activities for the ~~three-month~~six-month periods ended ~~March 31,~~June 30, 2022 and 2021 were ~~$(194)~~$(347) million and ~~$(56)~~$(52) million, respectively. The ~~change was~~increase is primarily due to a decrease in repayments of loans by affiliates of $253 million and an increase in loans to its parent under an intercompany revolving credit agreement of ~~$117 million and an increase in capital expenditures of $20~~$46 million.

Financing Activities

Net cash flows from financing activities for the ~~three-month~~six-month period ended ~~March 31,~~June 30, 2022 were ~~$(114) million. Uses of cash totaled $114~~$(242) million and consisted of distributions to noncontrolling interests from Cove Point.

Net cash flows from financing activities for the ~~three-month~~six-month period ended ~~March 31,~~June 30, 2021 were ~~$(118)~~$(480) million. Sources of cash totaled $256 million and consisted of proceeds from equity contributions, that primarily included a contribution from its indirect parent, BHE, to Eastern Energy Gas to assist in the repayment of $500 million of debt. Uses of cash totaled ~~$118~~$736 million and consisted ~~primarily~~mainly of repayments of long-term debt of $500 million, distributions to noncontrolling interests from Cove Point of ~~$109~~$225 million and repayment of notes to affiliates of $9 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~~intercompany revolving 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.~~natural gas transportation pipeline and storage and LNG export, import and storage industries.

Capital Expenditures

~~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 Periods				Annual			Six-Month Periods				Annual
		Ended March 31,				Forecast			Ended June 30,				Forecast
		2021		2022		2022			2021		2022		2022

Natural gas transmission and storage	Natural gas transmission and storage	$	8	$	7	$	57	Natural gas transmission and storage	$	11	$	23	$	51
Other	Other	47		68		319		Other	139		128		314
Total	Total	$	55	$	75	$	376	Total	$	150	$	151	$	365

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,~~June 30, 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.~~2021, other than natural gas supply and transportation cash requirements increasing $87 million, primarily due to rate increases for pipeline transportation and storage purchase obligations as a result of a recent rate case.

171

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~~172

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 67 of the Notes to Consolidated Financial Statements of PacifiCorp, Note 67 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,~~June 30, 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,~~June 30, 2022 that has materially affected, or is reasonably likely to materially affect, its internal control over financial reporting.

~~159~~173

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. In May 2022, the Multnomah Circuit Court granted issue class certification and consolidated this case with others as described below. PacifiCorp requested an immediate appeal of the issue class certification before the Oregon Court of Appeals.

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. In May 2022, this case was consolidated with others as described below.

In May 2022, the Multnomah Circuit Court granted plaintiffs' motion to consolidate Shylo Salter et al. v. PacifiCorp, Case No. 21cv33595 (described above) and Amy Allen, et al. v. PacifiCorp, Case No. 20cv37430 ("Allen") into Jeanyne James et al. v. PacifiCorp et al., Case No. 20cv33885 (described above). Plaintiffs' motion to bifurcate issues for trial between class-wide liability and individual damages was also granted. The Allen case was filed by five individuals as amended in September 2021 claiming in excess of $32 million in economic and noneconomic damages, as well as claims for statutory doubling or trebling of damages, attorneys' fees and other costs and pre- and post-judgment interest.

In June 2022, an amended complaint against PacifiCorp was filed, captioned Tim Goforth et al. v. PacifiCorp, Case No. 20cv37637, Douglas County, Oregon, in which a previously filed complaint associated with the Archie Creek Fire, Susan Creek Fire and Smith Springs Road Fire in Douglas County in September 2020 was amended to add punitive damages. The complaint alleges (i) PacifiCorp's conduct not only constituted common law negligence but gross negligence and contributed to or was the cause of 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 of $11 million under a determination of negligence or inverse condemnation and subject to doubling under Oregon statute if applicable; (ii) doubling of those economic and property damages to $22 million under a determination of gross negligence; (iii) damages for injuries in excess of $47 million; (iv) punitive damages not to exceed 10 times the amount of non-economic damages awarded; (v) all costs of the lawsuit; (vi) pre- and post-judgment interest as allowed by law; and (vii) attorneys' fees and other costs.

174

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 89 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,~~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.

~~160~~175

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~~176


Exhibit No.			Description

BERKSHIRE HATHAWAY ENERGY


4.1			Seventeenth Supplemental Indenture, dated as of April 21, 2022, by and between Berkshire Hathaway Energy Company and The Bank of New York Mellon Trust Company, N.A., as trustee, relating to the 4.600% Senior Notes due 2053 (incorporated by reference to Exhibit 4.1 to the Berkshire Hathaway Energy Company Current Report on Form 8-K dated April 25, 2022).

4.2			Trust Deed, dated as of April 1, 2022, among Northern Powergrid (Northeast) plc and HSBC Corporate Trustee Company (UK) Limited, relating to the £350,000,000 in principal amount of the 3.250% Bonds due ~~2052.~~2052 (incorporated by reference to Exhibit 4.2 to the Berkshire Hathaway Energy Company Quarterly Report on Form 10-Q for the quarter ended March 31, 2022).

10.1			$3,500,000,000 Third Amended and Restated Credit Agreement, dated as of June 30, 2022, among Berkshire Hathaway Energy Company, as Borrower, the Banks, Financial Institutions and Other Institutional Lenders, as Initial Lenders, MUFG Bank, Ltd. as Administrative Agent and the LC Issuing Banks.

15.1			Awareness Letter of Independent Registered Public Accounting Firm.

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

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

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

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

PACIFICORP


15.2			Awareness Letter of Independent Registered Public Accounting Firm.

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

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

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

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

BERKSHIRE HATHAWAY ENERGY AND PACIFICORP


10.2			$1,200,000,000 Third Amended and Restated Credit Agreement , dated as of June 30, 202 2 , among PacifiCorp, as Borrower, the Banks, Financial Institutions and Other Institutional Lenders, as Initial Lenders, JP Morgan Chase Bank, N.A. as Administrative Agent and the LC Issuing Banks.
95			Mine Safety Disclosures Required by the Dodd-Frank Wall Street Reform and Consumer Protection Act.

MIDAMERICAN ENERGY


15.3			Awareness Letter of Independent Registered Public Accounting Firm.

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

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

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

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

177


Exhibit No.			Description

BERKSHIRE HATHAWAY ENERGY AND MIDAMERICAN ENERGY


10.3			$1,500,000,000 Third Amended and Restated Credit Agreement, dated as of June 30, 2022, among MidAmerican Energy Company, as Borrower, the Banks, Financial Institutions and Other Institutional Lenders, as Initial Lenders, Mizuho Bank, Ltd. as Administrative Agent and the LC Issuing Banks.

MIDAMERICAN FUNDING


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

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

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

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

~~162~~


~~Exhibit No.~~			~~Description~~

NEVADA POWER


15.4			Awareness Letter of Independent Registered Public Accounting Firm.

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

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

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

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

BERKSHIRE HATHAWAY ENERGY AND NEVADA POWER


10.4			$4 0 0,000,000 Fifth Amended and Restated Credit Agreement, dated as of June 30, 2022, among Nevada Power Company, as Borrower, the Banks, Financial Institutions and Other Institutional Lenders, as Initial Lenders, Wells Fargo Bank, National Association, as Administrative Agent and the LC Issuing Banks.

SIERRA PACIFIC


~~10.1~~10.5			$200,000,000 Demand Promissory Note,, dated as of April 14, 2022, among Sierra Pacific Power Company, as the Maker, and NV Energy Inc., as the Holder (incorp orate d by reference to Exhibit 10.1 to the ~~Holder.~~Sierra Pacific Power Company Quarterly Report on Form 10-Q for the quarter ended March 31, 2 02 2).

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

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

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

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

178


Exhibit No.			Description

BERKSHIRE HATHAWAY ENERGY AND SIERRA PACIFIC


4.3			Bond Purchase Agreement, dated as of May 31, 2022, by and among Sierra Pacific Power Company and the Purchasers, relating to the $250,000,000 in principal amount of the 4.71% General and Refunding Mortgage Bonds due 2052 (incorporated by reference to Exhibit 4.1 to the Sierra Pacific Power Company Current Report on Form 8-K dated June 3, 2022).

4.4			Third Supplemental Indenture, dated as of May 31, 2022, by and between Sierra Pacific Power Company and the Bank of New York Mellon Trust Company, N.A., as Trustee (incorporated by reference to Exhibit 4.2 to the Sierra Pacific Power Company Current Report on Form 8-K dated June 3, 2022).

4.5			Officer's Certificate establishing the terms of Sierra Pacific Power Company's 4.71% General and Refunding Mortgage Bonds, Series W, due 2052 (incorporated by reference to Exhibit 4.3 to the Sierra Pacific Power Company Current Report on Form 8-K dated June 3, 2022).

10.6			$2 5 0,000,000 Fifth Amended and Restated Credit Agreement, dated as of June 30, 2022, among Sierra Pacific Power Company, as Borrower, the Banks, Financial Institutions and Other Institutional Lenders, as Initial Lenders, Wells Fargo Bank, National Association, as Administrative Agent and the LC Issuing Banks.

EASTERN ENERGY GAS


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

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

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

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

ALL REGISTRANTS


101			The following financial information from each respective Registrant's Quarterly Report on Form 10-Q for the quarter ended ~~March 31,~~June 30, 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.

104			Cover Page Interactive Data File formatted in iXBRL (Inline eXtensible Business Reporting Language) and contained in Exhibit 101.

~~163~~179

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,~~August 5, 2022			/s/ Calvin D. Haack
			Calvin D. Haack
			Senior Vice President and Chief Financial Officer
			(principal financial and accounting officer)

			PACIFICORP

Date: ~~April 29,~~August 5, 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,~~August 5, 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,~~August 5, 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,~~August 5, 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,~~August 5, 2022			/s/ Scott C. Miller
			Scott C. Miller
			Vice President, Chief Financial Officer and Treasurer
			(principal financial and accounting officer)

~~164~~180


Item 1.	Legal Proceedings	~~160~~174
Item 1A.	Risk Factors	~~161~~176
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	~~161~~176
Item 3.	Defaults Upon Senior Securities	~~161~~176
Item 4.	Mine Safety Disclosures	~~161~~176
Item 5.	Other Information	~~161~~176
Item 6.	Exhibits	~~161~~176
Signatures		~~164~~180