Nevada Power (NVP) 8-K NV Energy Reports Financial Results for Second Quarter 2013; Earnings Guidance Reaffirmed

Earnings Report to the

Financial Community

Second  Quarter 2013

Table of Contents

Page No.

Conference call slides

2 -7

Quarterly EPS

8

Financial statements and operating statistics

9 -

16

Non-GAAP financial measures

17 -

18

Exhibit 99.2

Second Quarter 2013

Financial Results

July 26, 2013

3

Safe Harbor Statement

This

presentation

may

contain

forward-looking

statements

within

the

meaning

of

the

Private

Securities

Litigation

Reform

Act

of

1995

regarding

the

future

performance

of

NV

Energy,

Inc.

and

its

subsidiaries,

Nevada

Power

Company

and

Sierra

Pacific

Power

Company

both

d/b/a

NV

Energy.

Forward-looking

statements

include

earnings

guidance

and

estimates

or

forecasts

of

operating

and

financial

metrics.

These

statements

reflect

current

expectations

of

future

conditions

and

events

and

as

such

are

subject

to

a

variety

of

risks,

uncertainties

and

assumptions

that

could

cause

actual

results

to

differ

materially

from

current

expectations.

These

risks,

uncertainties

and

assumptions

include,

but

are

not

limited

to,

the

risk

that

the

transaction

between

NV

Energy,

Inc.

and

MidAmerican

will

not

be

consummated

due

to

a

failure

to

satisfy

the

closing

conditions

to

the

transaction,

including

the

approval

of

the

transaction

by

NV

Energy

Inc.’s

shareholders

and

the

receipt

of

certain

regulatory

approvals

on

the

proposed

terms

and

schedules

contemplated

by

the

parties,

including,

among

other

regulatory

approvals,

approvals

from

the

Public

Utilities

Commission

of

Nevada

and

the

Federal

Energy

Regulatory

Commission;

the

risk

that

an

event,

effect

or

change

occurs

that

gives

rise

to

a

termination

of

the

definitive

agreement

entered

into

with

MidAmerican;

the

risk

that

NV

Energy

Inc.

or

MidAmerican

will

be

unable

to

perform

certain

obligations

under

the

transaction

agreements;

the

risk

relating

to

unanticipated

difficulties

and/or

expenditures

relating

to

the

transaction;

the

risk

that

legal

proceedings

against

NV

Energy,

Inc.

and

others

related

to

the

definitive

agreement

entered

into

with

MidAmerican

will

be

successful;

the

risk

that

the

proposed

transaction

disrupts

current

plans

and

operations

and

creates

potential

difficulties

in

employee

retention;

and

the

impact

of

delay

or

failure

to

complete

the

merger

with

MidAmerican

on

NV

Energy,

Inc.’s

common

stock

price.

Other

factors

outside

the

control

of

NV

Energy,

Inc.,

include,

but

are

not

limited

to,

NV

Energy

Inc.'s

ability

to

maintain

access

to

the

capital

markets,

NV

Energy,

Inc.'s

ability

to

receive

dividends

from

its

subsidiaries,

the

financial

performance

of

NV

Energy,

Inc.'s

subsidiaries,

particularly

Nevada

Power

Company

and

Sierra

Pacific

Power

Company

both

d/b/a

NV

Energy,

and

the

discretion

of

NV

Energy,

Inc.'s

Board

of

Directors

with

respect

to

the

payment

of

future

dividends

based

on

its

periodic

review

of

factors

that

ordinarily

affect

dividend

policy,

such

as

current

and

prospective

financial

condition,

earnings

and

liquidity,

prospective

business

conditions,

regulatory

factors,

and

dividend

restrictions

in

NV

Energy,

Inc.'s

and

its

subsidiaries'

financing

agreements.

For

Nevada

Power

Company

and

Sierra

Pacific

Power

Company

both

d/b/a

NV

Energy,

these

risks

and

uncertainties

include,

but

are

not

limited

to,

future

economic

conditions,

changes

in

the

rate

of

industrial,

commercial

and

residential

growth

in

their

service

territories,

their

ability

to

procure

sufficient

renewable

energy

sources

in

each

compliance

year

to

satisfy

the

Nevada

Renewable

Energy

Portfolio

Standard,

the

effect

of

future

or

existing

Nevada

or

federal

laws

or

regulations

affecting

the

electric

industry,

changes

in

environmental

laws

and

regulations,

construction

risks,

including

but

not

limited

to

those

associated

with

the

ON

Line

project,

their

ability

to

maintain

access

to

the

capital

markets

for

general

corporate

purposes

and

to

finance

construction

projects,

employee

workforce

factors,

unseasonable

weather,

drought,

wildfire

and

other

natural

phenomena,

explosions,

fires,

accidents,

vandalism,

or

mechanical

breakdowns

that

may

occur

while

operating

and

maintaining

an

electric

and

natural

gas

system,

their

ability

to

purchase

sufficient

fuel,

natural

gas

and

power

to

meet

their

power

demands

and

natural

gas

demands

for

Sierra

Pacific

Power

Company

d/b/a

NV

Energy,

financial

market

conditions,

and

unfavorable

rulings,

penalties

or

findings

in

their

rate

or

other

cases.

Further

risks,

uncertainties

and

assumptions

that

may

cause

actual

results

to

differ

from

current

expectations

pertain

to

weather

conditions,

customer

and

sales

growth,

plant

outages,

operations

and

maintenance

expense,

depreciation

and

allowance

for

funds

used

during

construction,

interest

rates

and

expense,

cash

flow

and

regulatory

matters.

Additional

cautionary

statements

regarding

other

risk

factors

that

could

have

an

effect

on

the

future

performance

of

NV

Energy,

Inc.,

Nevada

Power

Company

and

Sierra

Pacific

Power

Company

both

d/b/a

NV

Energy

are

contained

in

their

Annual

Reports

on

Form

10-K

for

the

year

ended

December

31,

2012,

and

quarterly

reports

on

Form

10-Q

for

the

period

ended

March

31,

2013,

filed

with

the

Securities

and

Exchange

Commission.

NV

Energy,

Inc.,

Nevada

Power

Company

and

Sierra

Pacific

Power

Company

both

d/b/a

NV

Energy

undertake

no

obligation

to

release

publicly

the

result

of

any

revisions

to

these

forward-looking

statements

that

may

be

made

to

reflect

events

or

circumstances

after

the

date

hereof

or

to

reflect

the

occurrence

of

unanticipated

events.

IR Contact

Max Kuniansky

Executive, Investor Relations

(702) 402-5627

mkuniansky@nvenergy.com

Second Quarter Financial Results

NV Energy Consolidated

4

Six Month Financial Results

NV Energy Consolidated

5

6

EPS Impact of Weather: Actual vs. Normal

Estimates; normal = 20-year average

7

2013 Earnings Guidance

EPS: $1.25 -

$1.35

For further information see forward –looking statements and risk factors in 2012 SEC Form 10-K and March

31, 2013 Form 10-Q

8

Third Quarter is Key to 12-Month Results

Earnings Per Share (diluted)

NV ENERGY, INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Dollars in Thousands, Except Share Amounts)

(Unaudited)

	Three Months Ended June 30,						Six Months Ended June 30,
	2013			2012			2013			2012
OPERATING REVENUES	$	731,638		$	740,698		$	1,315,860		$	1,352,118
OPERATING EXPENSES:
Fuel for power generation		188,979			112,585			336,227			229,620
Purchased power		170,861			164,092			292,171			281,208
Gas purchased for resale		17,274			9,492			54,894			41,109
Deferred energy		(86,687	)		10,490			(165,752	)		(1,249	)
Energy efficiency program costs		12,599			24,600			22,444			44,025
Merger related costs		13,552			—			13,552			—
Other operating expenses		106,798			103,371			211,470			206,972
Maintenance		24,046			24,650			48,952			57,176
Depreciation and amortization		98,884			96,316			194,886			187,178
Taxes other than income		15,846			14,266			32,322			28,775
Total Operating Expenses		562,152			559,862			1,041,166			1,074,814
OPERATING INCOME		169,486			180,836			274,694			277,304
OTHER INCOME (EXPENSE):
Interest expense (net of AFUDC-debt: $1,682 , $1,908 , $3,813 and $3,503)		(73,530	)		(74,564	)		(146,867	)		(152,495	)
Interest income (expense) on regulatory items		(16	)		(1,977	)		(843	)		(4,179	)
AFUDC-equity		2,250			2,319			5,139			4,251
Other income		3,813			6,291			7,633			10,485
Other expense		(4,036	)		(4,640	)		(8,287	)		(7,700	)
Total Other Income (Expense)		(71,519	)		(72,571	)		(143,225	)		(149,638	)
Income Before Income Tax Expense		97,967			108,265			131,469			127,666
Income tax expense		34,734			38,826			46,761			46,054
NET INCOME		63,233			69,439			84,708			81,612
Other comprehensive income (loss)
Change in compensation retirement benefits liability and amortization (Net of taxes $(129), $(83), $(265) and $(172))		246			154			492			309
Change in market value of risk management assets and liabilities (Net of taxes $3, $123, $(107) and $264)		297			(229	)		496			(475	)
Unrealized net gain/(loss) on investment (Net of taxes $31, $0, $31 and $0)		(65	)		—			(65	)		—
OTHER COMPREHENSIVE INCOME (LOSS)		478			(75	)		923			(166	)
COMPREHENSIVE INCOME	$	63,711		$	69,364		$	85,631		$	81,446
Amount per share basic and diluted
Net income per share—basic	$	0.27		$	0.29		$	0.36		$	0.35
Net income per share—diluted	$	0.27		$	0.29		$	0.36		$	0.34
Weighted Average Shares of Common Stock Outstanding—basic		235,489,559			235,999,750			235,342,448			235,999,750
Weighted Average Shares of Common Stock Outstanding—diluted		237,401,400			237,903,276			237,204,505			237,715,070
Dividends Declared Per Share of Common Stock	$	0.19		$	0.17		$	0.38		$	0.30

9

NV ENERGY, INC.

CONSOLIDATED BALANCE SHEETS

(Dollars in Thousands, Except Share Amounts)

(Unaudited)

	June 30, 2013		December 31, 2012
ASSETS
Current Assets:
Cash and cash equivalents	$	261,068	$	298,271
Accounts receivable less allowance for uncollectible accounts: 2013—$7,150; 2012—$8,748		433,336		373,099
Materials, supplies and fuel, at average cost		130,747		138,337
Deferred energy costs—electric		30,122		—
Deferred energy costs—gas		991		—
Deferred income taxes		109,450		60,592
Other current assets		47,591		40,750
Total Current Assets		1,013,305		911,049
Utility Property:
Plant in service		12,159,227		12,031,053
Construction work-in-progress		757,924		708,109
Total		12,917,151		12,739,162
Less accumulated provision for depreciation		3,448,469		3,313,188
Total Utility Property, Net		9,468,682		9,425,974
Investments and other property, net		63,387		56,660
Deferred Charges and Other Assets:
Deferred energy		81,274		87,072
Regulatory assets		1,077,364		1,132,768
Regulatory asset for pension plans		274,200		281,195
Other deferred charges and assets		75,029		89,418
Total Deferred Charges and Other Assets		1,507,867		1,590,453
TOTAL ASSETS	$	12,053,241	$	11,984,136

(Continued)

10

NV ENERGY, INC.

CONSOLIDATED BALANCE SHEETS

(Dollars in Thousands, Except Share Amounts)

(Unaudited)

	June 30, 2013			December 31, 2012
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current Liabilities:
Current maturities of long-term debt	$	480,018		$	356,283
Accounts payable		333,588			332,245
Accrued expenses		119,245			127,693
Deferred energy		—			136,865
Other current liabilities		69,895			66,221
Total Current Liabilities		1,002,746			1,019,307
Long-term debt		4,543,733			4,669,798
Commitments and Contingencies
Deferred Credits and Other Liabilities:
Deferred income taxes		1,564,260			1,470,973
Deferred investment tax credit		12,430			13,538
Accrued retirement benefits		167,793			162,260
Regulatory liabilities		583,217			550,687
Other deferred credits and liabilities		614,873			540,202
Total Deferred Credits and Other Liabilities		2,942,573			2,737,660
Shareholders’ Equity:
Common stock, $1.00 par value; 350 million shares authorized; 235,999,750 issued for 2013 and 2012; 235,546,924 and 235,079,156 outstanding for 2013 and 2012, respectively		236,000			236,000
Treasury stock at cost, 452,826 shares and 920,594 shares for 2013 and 2012, respectively		(8,542	)		(16,804	)
Other paid-in capital		2,715,358			2,712,943
Retained earnings		630,521			635,303
Accumulated other comprehensive loss		(9,148	)		(10,071	)
Total Shareholders’ Equity		3,564,189			3,557,371
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY	$	12,053,241		$	11,984,136

(Concluded)

11

NV ENERGY, INC.

FREE CASH FLOW AND CONSOLIDATED OPERATING STATISTICS

(Unaudited)

FREE CASH FLOW

(dollars in thousands)

	Six Months Ended June 30,
	2013		2012		Change from Prior Year
Free Cash Flow*	$	36,470	$	31,104		17.3	%

* Free cash flow is a non-GAAP financial measure as defined by the SEC. See the “Non-GAAP Financial Measures” section for additional information and GAAP reconciliation.

ELECTRIC SALES—MWh’s

(in thousands)

	Three Months Ended June 30,										Six Months Ended June 30,
	2013		2012		Change from Prior Year			Change in Average Customers			2013		2012		Change from Prior Year			Change in Average Customers
Residential		2,848		2,801		1.7	%		1.0	%		5,088		4,937		3.1	%		0.8	%
Commercial		1,944		1,873		3.8	%		2.4	%		3,512		3,490		0.6	%		1.7	%
Industrial		2,767		2,727		1.5	%		(0.2	)%		5,068		5,011		1.1	%		0.3	%
TOTAL RETAIL		7,559		7,401		2.1	%		1.2	%		13,668		13,438		1.7	%		0.9	%

GAS SALES—Dth

(in thousands)

	Three Months Ended June 30,							Six Months Ended June 30,
	2013		2012		Change from Prior Year			2013		2012		Change from Prior Year
Residential		1,205		1,263		(4.6	)%		5,341		4,970		7.5	%
Commercial		610		685		(10.9	)%		2,686		2,565		4.7	%
Industrial		264		247		6.9	%		797		723		10.2	%
TOTAL RETAIL		2,079		2,195		(5.3	)%		8,824		8,258		6.9	%

ELECTRIC SOURCES—MWh’s

(in thousands)

	Three Months Ended June 30,							Six Months Ended June 30,
	2013		2012		Change from Prior Year			2013		2012		Change from Prior Year
Generated		5,495		5,009		9.7	%		10,316		9,474		8.9	%
Purchased		2,654		3,046		(12.9	)%		4,402		5,083		(13.4	)%
TOTAL		8,149		8,055		1.2	%		14,718		14,557		1.1	%

DEGREE DAYS

	Three Months Ended June 30,												Six Months Ended June 30,
							% Change From												% Change From
	2013		2012		Normal*		Prior Year			Normal			2013		2012		Normal*		Prior Year			Normal
SOUTH
Heating		34		62		80		(45.2	)%		(57.5	)%		1,084		986		1,105		9.9	%		(1.9	)%
Cooling		1,408		1,417		1,167		(0.6	)%		20.7	%		1,494		1,458		1,197		2.5	%		24.8	%
NORTH
Heating		489		548		721		(10.8	)%		(32.2	)%		2,774		2,676		2,948		3.7	%		(5.9	)%
Cooling		263		235		180		11.9	%		46.1	%		263		235		180		11.9	%		46.1	%

* Normal = 20-year average

12

NEVADA POWER COMPANY

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Dollars in Thousands)

(Unaudited)

	Three Months Ended June 30,						Six Months Ended June 30,
	2013			2012			2013			2012
OPERATING REVENUES	$	537,124		$	553,143		$	908,987		$	948,831
OPERATING EXPENSES:
Fuel for power generation		144,246			81,258			249,777			161,807
Purchased power		129,396			135,276			210,804			216,807
Deferred energy		(63,748	)		5,053			(109,103	)		7,224
Energy efficiency program costs		10,842			21,200			18,809			36,974
Merger related costs		8,867			—			8,867			—
Other operating expenses		70,100			68,650			137,492			135,112
Maintenance		15,889			16,988			33,964			40,061
Depreciation and amortization		70,405			69,131			139,066			134,121
Taxes other than income		9,632			8,596			19,591			17,050
Total Operating Expenses		395,629			406,152			709,267			749,156
OPERATING INCOME		141,495			146,991			199,720			199,675
OTHER INCOME (EXPENSE):
Interest expense (net of AFUDC-debt: $1,406, $1,314, $3,243 and $2,493)		(51,643	)		(52,602	)		(102,902	)		(107,007	)
Interest income (expense) on regulatory items		(181	)		(1,849	)		(983	)		(3,865	)
AFUDC-equity		1,826			1,577			4,192			2,990
Other income		978			5,392			3,382			7,101
Other expense		(1,833	)		(2,993	)		(4,234	)		(4,339	)
Total Other Income (Expense)		(50,853	)		(50,475	)		(100,545	)		(105,120	)
Income Before Income Tax Expense		90,642			96,516			99,175			94,555
Income tax expense		31,977			34,219			35,065			33,574
NET INCOME		58,665			62,297			64,110			60,981
Other comprehensive income
Change in compensation retirement benefits liability and amortization (Net of taxes $(50), $(38), $(104) and $(70))		97			64			194			127
COMPREHENSIVE INCOME	$	58,762		$	62,361		$	64,304		$	61,108

13

NEVADA POWER COMPANY

CONSOLIDATED OPERATING STATISTICS

(Unaudited)

ELECTRIC SALES—MWh’s

(in thousands)

	Three Months Ended June 30,										Six Months Ended June 30,
	2013		2012		Change from Prior Year			Change in Average Customers			2013		2012		Change from Prior Year			Change in Average Customers
Residential		2,354		2,331		1.0	%		1.1	%		3,965		3,867		2.5	%		0.8	%
Commercial		1,178		1,149		2.5	%		2.1	%		2,095		2,107		(0.6	)%		1.6	%
Industrial		2,043		2,040		0.1	%		(0.2	)%		3,677		3,691		(0.4	)%		0.3	%
TOTAL RETAIL		5,575		5,520		1.0	%		1.2	%		9,737		9,665		0.7	%		0.9	%

ELECTRIC SOURCES—MWh’s

(in thousands)

	Three Months Ended June 30,							Six Months Ended June 30,
	2013		2012		Change from Prior Year			2013		2012		Change from Prior Year
Generated		4,393		3,871		13.5	%		8,068		7,158		12.7	%
Purchased		1,505		1,997		(24.6	)%		2,148		3,023		(28.9	)%
TOTAL		5,898		5,868		0.5	%		10,216		10,181		0.3	%

14

SIERRA PACIFIC POWER COMPANY

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Dollars in Thousands)

(Unaudited)

	Three Months Ended June 30,						Six Months Ended June 30,
	2013			2012			2013			2012
OPERATING REVENUES:
Electric	$	174,302		$	168,007		$	346,929		$	337,813
Gas		20,208			19,544			59,937			65,466
Total Operating Revenues		194,510			187,551			406,866			403,279
OPERATING EXPENSES:
Fuel for power generation		44,733			31,327			86,450			67,813
Purchased power		41,465			28,816			81,367			64,401
Gas purchased for resale		17,274			9,492			54,894			41,109
Deferral of energy—electric—net		(16,963	)		4,314			(36,298	)		(8,356	)
Deferral of energy—gas—net		(5,976	)		1,123			(20,351	)		(117	)
Energy efficiency program costs		1,757			3,400			3,635			7,051
Merger related costs		3,520			—			3,520			—
Other operating expenses		36,256			33,654			72,061			70,086
Maintenance		8,157			7,662			14,988			17,115
Depreciation and amortization		28,479			27,185			55,820			53,057
Taxes other than income		6,175			5,625			12,470			11,488
Total Operating Expenses		164,877			152,598			328,556			323,647
OPERATING INCOME		29,633			34,953			78,310			79,632
OTHER INCOME (EXPENSE):
Interest expense (net of AFUDC-debt: $276, $594, $570 and $1,010)		(15,373	)		(15,379	)		(30,898	)		(32,352	)
Interest income (expense) on regulatory items		165			(128	)		140			(314	)
AFUDC-equity		424			742			947			1,261
Other income		2,518			599			3,658			2,782
Other expense		(1,573	)		(1,276	)		(2,821	)		(2,611	)
Total Other Income (Expense)		(13,839	)		(15,442	)		(28,974	)		(31,234	)
Income Before Income Tax Expense		15,794			19,511			49,336			48,398
Income tax expense		5,018			6,832			16,656			17,075
NET INCOME		10,776			12,679			32,680			31,323
Other comprehensive income
Change in compensation retirement benefits liability and amortization (Net of taxes $(32), $(23), $(63) and $(46))		58			43			117			85
COMPREHENSIVE INCOME	$	10,834		$	12,722		$	32,797		$	31,408

15

SIERRA PACIFIC POWER COMPANY

CONSOLIDATED OPERATING STATISTICS

(Unaudited)

ELECTRIC SALES—MWh’s

(in thousands)

	Three Months Ended June 30,										Six Months Ended June 30,
	2013		2012		Change from Prior Year			Change in Average Customers			2013		2012		Change from Prior Year			Change in Average Customers
Residential		494		470		5.1	%		0.8	%		1,123		1,070		5.0	%		0.7	%
Commercial		766		724		5.8	%		3.0	%		1,417		1,383		2.5	%		1.9	%
Industrial		724		687		5.4	%		(0.9	)%		1,391		1,320		5.4	%		0.9	%
TOTAL RETAIL		1,984		1,881		5.5	%		1.1	%		3,931		3,773		4.2	%		0.9	%

GAS SALES—Dth

(in thousands)

	Three Months Ended June 30,							Six Months Ended June 30,
	2013		2012		Change from Prior Year			2013		2012		Change from Prior Year
Residential		1,205		1,263		(4.6	)%		5,341		4,970		7.5	%
Commercial		610		685		(10.9	)%		2,686		2,565		4.7	%
Industrial		264		247		6.9	%		797		723		10.2	%
TOTAL RETAIL		2,079		2,195		(5.3	)%		8,824		8,258		6.9	%

ELECTRIC SOURCES—MWh’s

(in thousands)

	Three Months Ended June 30,							Six Months Ended June 30,
	2013		2012		Change from Prior Year			2013		2012		Change from Prior Year
Generated		1,102		1,138		(3.2	)%		2,248		2,316		(2.9	)%
Purchased		1,149		1,049		9.5	%		2,254		2,060		9.4	%
TOTAL		2,251		2,187		2.9	%		4,502		4,376		2.9	%

16

Non-GAAP Financial Measures

Free Cash Flow

“Free cash flow” meets the definition of a non-GAAP financial measure. NV Energy, Inc. defines free cash flow as net cash from operating activities less additions to utility plant (excluding AFUDC-equity). Since free cash flow is not a measure of liquidity calculated in accordance with GAAP, it should be considered in addition to, but not as a substitute for, the GAAP measure net cash from operating activities.

NV Energy, Inc. considers free cash flow to be a liquidity measure that provides useful information to management and investors about the amount of cash generated from operations after capital expenditures that may be available for increasing its common stock dividend payout ratio, strengthening its capital structure, and considering new investment opportunities.

NV Energy, Inc.’s definition of free cash flow is limited, in that it does not represent residual cash flows available for discretionary expenditures due to the fact that the measure does not deduct the payments required for debt service and other contractual obligations. The table below provides a reconciliation between GAAP net cash from operating activities and non-GAAP free cash flow (dollars in thousands).

	Six Months Ended June 30,
	2013			2012			Change from Prior Year
Net Cash from Operating Activities	$	228,143		$	292,663			(22.0	)%
Less Additions to Utility Plant (Excluding AFUDC-Equity)		(191,673	)		(261,559	)		(26.7	)%
Free Cash Flow	$	36,470		$	31,104			17.3	%

Gross Margin

NV Energy, Inc. presents gross margin in order to aid the reader in determining how profitable the utilities’ electric and gas businesses are at the most fundamental level. Gross margin, which is a “non-GAAP financial measure” as defined in accordance with SEC rules, provides a measure of income available to support the other operating expenses of the business and is utilized by management in its analysis of its business.

NV Energy, Inc. believes presenting gross margin allows the reader to assess the impact of the utilities’ regulatory treatment and their overall regulatory environment on a consistent basis. Gross margin, as a percentage of revenue, is primarily impacted by the fluctuations in regulated utility electric and natural gas supply costs versus the fixed rates collected from utility customers. While these fluctuating costs impact gross margin as a percentage of revenue, they only impact gross margin amounts if the costs cannot be passed through to utility customers. Gross margin, which NV Energy, Inc. calculates as operating revenues less energy and energy efficiency program costs, provides a measure of income available to support the other operating expenses of the utilities. Gross margin changes are based primarily on the utilities’ general base rate adjustments (which are required to be filed by statute every three years). These non-GAAP measures should not be considered as substitutes for the GAAP measures. Reconciliations between GAAP operating income and gross margin are provided in the table below.

17

NV Energy, Inc.

Consolidated Gross Margin

(dollars in thousands)

	Three Months Ended June 30,								Six Months Ended June 30,
	2013			2012		Change from Prior Year			2013			2012			Change from Prior Year
Operating Revenues:	$	731,638		$	740,698		(1.2	)%	$	1,315,860		$	1,352,118			(2.7	)%
Energy Costs:
Fuel for power generation		188,979			112,585		67.9	%		336,227			229,620			46.4	%
Purchased power		170,861			164,092		4.1	%		292,171			281,208			3.9	%
Gas purchased for resale		17,274			9,492		82.0	%		54,894			41,109			33.5	%
Deferred energy		(86,687	)		10,490		N/A			(165,752	)		(1,249	)		N/A
Energy efficiency program costs		12,599			24,600		(48.8	)%		22,444			44,025			(49.0	)%
Total Costs	$	303,026		$	321,259		(5.7	)%	$	539,984		$	594,713			(9.2	)%
Gross Margin	$	428,612		$	419,439		2.2	%	$	775,876		$	757,405			2.4	%
Merger related costs		13,552			—					13,552			—
Other operating expenses		106,798			103,371					211,470			206,972
Maintenance		24,046			24,650					48,952			57,176
Depreciation and amortization		98,884			96,316					194,886			187,178
Taxes other than income		15,846			14,266					32,322			28,775
Operating Income	$	169,486		$	180,836		(6.3	)%	$	274,694		$	277,304			(0.9	)%

18