Nevada Power (NVP) 8-K NV Energy Reports Financial Results for Third Quarter 2013, Revises Earnings Guidance

Earnings Report to the

Financial Community

Third Quarter 2013

Table of Contents

Page No.

Conference call slides

4 -7

Financial statements and operating statistics

8-15

Non-GAAP financial measures

16-17

Exhibit 99.2

Third Quarter 2013

Financial Results

November 1, 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

doing

business

as

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

remaining

closing

conditions

to

the

transaction,

including

the

receipt

of

regulatory

approvals

from

the

PUCN

and

FERC

on

the

terms

and

schedules

contemplated

by

the

parties;

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.

Additional

risks

and

uncertainties

relating

to

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

doing

business

as

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

doing

business

as

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

and

natural

gas

demands

for

Sierra

Pacific

Power

Company

doing

business

as

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

doing

business

as

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

and

June

30,

2013,

as

filed

with

the

Securities

and

Exchange

Commission.

NV

Energy,

Inc.,

Nevada

Power

Company

and

Sierra

Pacific

Power

Company

both

doing

business

as

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 Contacts

Max Kuniansky

Jessica Lucero

Executive, Investor Relations

Financial Analyst II

(702) 402-5627

(702) 402-5612

mkuniansky@nvenergy.com

jlucero@nvenergy.com

4

Third Quarter Financial Results

Major Drivers

Q3 2013 vs. Q3 2012

NV Energy Consolidated

Pre-Tax Total

After Tax

Gross Margin:

($ millions)

EPS Impact

Regulatory disallowance &

reserves*

$      (32.4)

$        (0.09)

Weather

(20.4)

(0.05)

Customer growth & other

15.9

0.04

Other:

Merger -

related costs

(7.9)

(0.02)

O&M expense

(4.1)

(0.01)

Depreciation

(2.3)

(0.01)

Gain on asset sale (2012)

(5.5)

(0.01)

* Primarily related to base energy efficiency implementation rates

5

Nine Month Financial Results

Major Drivers

2013 vs. 2012

NV Energy Consolidated

Pre-Tax Total

After Tax

Gross Margin:

($ millions)

EPS Impact

Regulatory disallowance &

reserves*

$      (32.4)

$       (0.09)

Weather

(14.8)

(0.04)

Customer growth & other

28.8

0.08

Other:

Merger -

related costs

(21.4)

(0.06)

O&M expense

(0.4)

-

Depreciation

(10.0)

(0.02)

* Primarily related to base energy efficiency implementation rates

6

EPS Impact of Weather: Actual vs. Normal

Weather was cooler than normal in southern Nevada in the third

quarter of 2013, adversely impacting consolidated EPS by $0.01.

Estimates; normal = 20-year average

7

2013 Earnings Guidance

EPS: $1.18-

$1.22

Guidance is based on ongoing, normalized EPS for Q4

2013, excluding unexpected events.

For further information see forward –looking statements and risk factors in 2012 SEC Form 10-K, March 31,

2013 Form 10-Q, and June 30, 2013 Form 10-Q.

Assumptions

Weather

Q1-Q3 actual; Q4 normal

Customers

1.2% increase

Gross margin

Q1-Q3 actual; Q4 forecast

Regulatory disallowance and

reserves, Q3 2013

Included

Merger-related costs

Included

O&M expense

Flat; Reid Gardner costs, NV Energize savings

Depreciation

Increase; Reid Gardner costs, capital

expenditures

Interest expense

Decrease; 2012 refinancings, debt reduction

Interest expense -

regulatory

Decrease due to under-collections

NV ENERGY, INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Dollars in Thousands, Except Share Amounts)

(Unaudited)

	Three Months Ended September 30,						Nine Months Ended September 30,
	2013			2012			2013			2012
OPERATING REVENUES	$	1,013,151		$	1,026,488		$	2,329,011		$	2,378,606
OPERATING EXPENSES:
Fuel for power generation		217,954			171,316			554,181			400,936
Purchased power		205,970			205,686			498,141			486,894
Gas purchased for resale		7,383			5,382			62,277			46,491
Deferred energy		(55,270	)		(29,036	)		(221,022	)		(30,285	)
Energy efficiency program costs		16,042			32,584			38,486			76,609
Regulatory disallowance		17,335			—			17,335			—
Merger-related costs		7,857			—			21,409			—
Other operating expenses		106,068			100,108			317,538			307,080
Maintenance		17,176			19,014			66,128			76,190
Depreciation and amortization		96,801			94,512			291,687			281,690
Taxes other than income		14,214			15,682			46,536			44,457
Total Operating Expenses		651,530			615,248			1,692,696			1,690,062
OPERATING INCOME		361,621			411,240			636,315			688,544
OTHER INCOME (EXPENSE):
Interest expense (net of AFUDC-debt: $1,957, $1,976, $5,770 and $5,479)		(74,438	)		(73,667	)		(221,305	)		(226,162	)
Interest expense on regulatory items		(281	)		(2,024	)		(1,124	)		(6,203	)
AFUDC-equity		2,591			2,415			7,730			6,666
Other income		3,239			8,827			10,872			19,312
Other expense		(3,829	)		(4,209	)		(12,116	)		(11,909	)
Total Other Income (Expense)		(72,718	)		(68,658	)		(215,943	)		(218,296	)
Income Before Income Tax Expense		288,903			342,582			420,372			470,248
Income tax expense		101,669			119,412			148,430			165,466
NET INCOME		187,234			223,170			271,942			304,782
Other comprehensive income (loss)
Change in compensation retirement benefits liability and amortization (Net of taxes $(133), $(74), $(398) and $(246))		246			155			738			464
Change in market value of risk management assets and liabilities (Net of taxes $(154), $91, $(261) and $355)		(11	)		(193	)		485			(668	)
Unrealized net gain/(loss) on investment (Net of taxes $(49), $0, $(18) and $0)		98			—			33			—
OTHER COMPREHENSIVE INCOME(LOSS)		333			(38	)		1,256			(204	)
COMPREHENSIVE INCOME	$	187,567		$	223,132		$	273,198		$	304,578
Amount per share basic and diluted
Net income per share—basic	$	0.79		$	0.95		$	1.16		$	1.29
Net income per share—diluted	$	0.79		$	0.94		$	1.15		$	1.28
Weighted Average Shares of Common Stock Outstanding—basic		235,578,310			235,961,402			235,421,933			235,986,874
Weighted Average Shares of Common Stock Outstanding—diluted		237,605,514			238,121,732			237,339,039			237,850,530
Dividends Declared Per Share of Common Stock	$	0.19		$	0.17		$	0.57		$	0.47

8

NV ENERGY, INC.

CONSOLIDATED BALANCE SHEETS

(Dollars in Thousands, Except Share Amounts)

(Unaudited)

	September 30, 2013		December 31, 2012
ASSETS
Current Assets:
Cash and cash equivalents	$	373,026	$	298,271
Accounts receivable less allowance for uncollectible accounts: 2013—$9,643; 2012—$8,748		483,178		373,099
Materials, supplies and fuel, at average cost		121,699		138,337
Deferred energy costs		82,235		—
Deferred income taxes		120,186		60,592
Other current assets		49,041		40,750
Total Current Assets		1,229,365		911,049
Utility Property:
Plant in service		12,195,312		12,031,053
Construction work-in-progress		821,430		708,109
Total		13,016,742		12,739,162
Less accumulated provision for depreciation		3,526,824		3,313,188
Total Utility Property, Net		9,489,918		9,425,974
Investments and other property, net		65,354		56,660
Deferred Charges and Other Assets:
Deferred energy		85,055		87,072
Regulatory assets		1,048,204		1,132,768
Regulatory asset for pension plans		270,565		281,195
Other deferred charges and assets		76,705		89,418
Total Deferred Charges and Other Assets		1,480,529		1,590,453
TOTAL ASSETS	$	12,265,166	$	11,984,136

(Continued)

9

NV ENERGY, INC.

CONSOLIDATED BALANCE SHEETS

(Dollars in Thousands, Except Share Amounts)

(Unaudited)

	September 30, 2013			December 31, 2012
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current Liabilities:
Current maturities of long-term debt	$	129,457		$	356,283
Accounts payable		316,681			332,245
Accrued expenses		104,781			127,693
Deferred energy		—			136,865
Other current liabilities		88,299			66,221
Total Current Liabilities		639,218			1,019,307
Long-term debt		4,791,809			4,669,798
Commitments and Contingencies
Deferred Credits and Other Liabilities:
Deferred income taxes		1,680,896			1,470,973
Deferred investment tax credit		11,623			13,538
Accrued retirement benefits		144,696			162,260
Regulatory liabilities		631,368			550,687
Other deferred credits and liabilities		656,963			540,202
Total Deferred Credits and Other Liabilities		3,125,546			2,737,660
Shareholders’ Equity:
Common stock, $1.00 par value; 350 million shares authorized; 235,999,750 issued for 2013 and 2012; 235,581,074 and 235,079,156 outstanding for 2013 and 2012, respectively		236,000			236,000
Treasury stock at cost, 418,675 shares and 920,594 shares for 2013 and 2012, respectively		(7,898	)		(16,804	)
Other paid-in capital		2,716,311			2,712,943
Retained earnings		772,995			635,303
Accumulated other comprehensive loss		(8,815	)		(10,071	)
Total Shareholders’ Equity		3,708,593			3,557,371
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY	$	12,265,166		$	11,984,136

(Concluded)

10

NV ENERGY, INC.

FREE CASH FLOW AND CONSOLIDATED OPERATING STATISTICS

(Unaudited)

FREE CASH FLOW

(dollars in thousands)

	Nine Months Ended September 30,
	2013		2012		Change from Prior Year
Free Cash Flow*	$	285,908	$	256,404		11.5	%

* 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 September 30,										Nine Months Ended September 30,
	2013		2012		Change from Prior Year			Change in Average Customers			2013		2012		Change from Prior Year			Change in Average Customers
Residential		4,298		4,419		(2.7	)%		1.1	%		9,386		9,356		0.3	%		0.9	%
Commercial		2,180		2,223		(1.9	)%		1.9	%		5,691		5,713		(0.4	)%		1.8	%
Industrial		2,779		2,831		(1.8	)%		(0.6	)%		7,848		7,841		0.1	%		0.1	%
TOTAL RETAIL		9,257		9,473		(2.3	)%		1.2	%		22,925		22,910		0.1	%		1.0	%

GAS SALES—Dth

(in thousands)

	Three Months Ended September 30,							Nine Months Ended September 30,
	2013		2012		Change from Prior Year			2013		2012		Change from Prior Year
Residential		698		642		8.7	%		6,039		5,613		7.6	%
Commercial		400		374		7.0	%		3,086		2,939		5.0	%
Industrial		190		153		24.2	%		986		876		12.6	%
TOTAL RETAIL		1,288		1,169		10.2	%		10,111		9,428		7.2	%

ELECTRIC SOURCES—MWh’s

(in thousands)

	Three Months Ended September 30,							Nine Months Ended September 30,
	2013		2012		Change from Prior Year			2013		2012		Change from Prior Year
Generated		6,822		6,617		3.1	%		17,139		16,093		6.5	%
Purchased		2,993		3,363		(11.0	)%		7,394		8,446		(12.5	)%
TOTAL		9,815		9,980		(1.7	)%		24,533		24,539		—	%

DEGREE DAYS

	Three Months Ended September 30,												Nine Months Ended September 30,
							% Change From												% Change From
	2013		2012		Normal*		Prior Year			Normal			2013		2012		Normal*		Prior Year			Normal
SOUTH
Heating		—		—		—		N/A			N/A			1,084		986		1,105		9.9	%		(1.9	)%
Cooling		2,164		2,313		2,222		(6.4	)%		(2.6	)%		3,658		3,771		3,419		(3.0	)%		7.0	%
NORTH
Heating		85		1		66		N/A			28.8	%		2,859		2,677		3,014		6.8	%		(5.1	)%
Cooling		914		1,020		725		(10.4	)%		26.1	%		1,177		1,255		905		(6.2	)%		30.1	%

* Normal = 20-year average

11

NEVADA POWER COMPANY

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Dollars in Thousands)

(Unaudited)

	Three Months Ended September 30,						Nine Months Ended September 30,
	2013			2012			2013			2012
OPERATING REVENUES	$	786,142		$	802,334		$	1,695,129		$	1,751,165
OPERATING EXPENSES:
Fuel for power generation		163,127			123,992			412,904			285,799
Purchased power		172,582			171,687			383,386			388,494
Deferred energy		(45,381	)		(22,685	)		(154,484	)		(15,461	)
Energy efficiency program costs		13,998			28,492			32,807			65,466
Regulatory disallowance		11,866			—			11,866			—
Merger-related costs		5,620			—			14,487			—
Other operating expenses		70,844			65,372			208,336			200,484
Maintenance		11,208			12,533			45,172			52,594
Depreciation and amortization		68,849			66,975			207,915			201,096
Taxes other than income		8,213			9,743			27,804			26,793
Total Operating Expenses		480,926			456,109			1,190,193			1,205,265
OPERATING INCOME		305,216			346,225			504,936			545,900
OTHER INCOME (EXPENSE):
Interest expense (net of AFUDC-debt: $1,520, $1,528, $4,763 and $4,021)		(52,856	)		(51,784	)		(155,758	)		(158,791	)
Interest income (expense) on regulatory items		(194	)		(1,623	)		(1,177	)		(5,488	)
AFUDC-equity		1,959			1,833			6,151			4,823
Other income		1,948			7,096			5,330			14,197
Other expense		(1,966	)		(2,823	)		(6,200	)		(7,162	)
Total Other Income (Expense)		(51,109	)		(47,301	)		(151,654	)		(152,421	)
Income Before Income Tax Expense		254,107			298,924			353,282			393,479
Income tax expense		89,665			103,754			124,730			137,328
NET INCOME		164,442			195,170			228,552			256,151
Other comprehensive income
Change in compensation retirement benefits liability and amortization (Net of taxes $(52), $(33), $(156) and $(103))		96			65			290			192
COMPREHENSIVE INCOME	$	164,538		$	195,235		$	228,842		$	256,343

12

NEVADA POWER COMPANY

CONSOLIDATED OPERATING STATISTICS

(Unaudited)

ELECTRIC SALES—MWh’s

(in thousands)

	Three Months Ended September 30,										Nine Months Ended September 30,
	2013		2012		Change from Prior Year			Change in Average Customers			2013		2012		Change from Prior Year			Change in Average Customers
Residential		3,627		3,752		(3.3	)%		1.3	%		7,592		7,619		(0.4	)%		1.0	%
Commercial		1,329		1,374		(3.3	)%		1.7	%		3,423		3,480		(1.6	)%		1.6	%
Industrial		2,078		2,145		(3.1	)%		(0.6	)%		5,756		5,836		(1.4	)%		(0.1	)%
TOTAL RETAIL		7,034		7,271		(3.3	)%		1.3	%		16,771		16,935		(1.0	)%		1.0	%

ELECTRIC SOURCES—MWh’s

(in thousands)

	Three Months Ended September 30,							Nine Months Ended September 30,
	2013		2012		Change from Prior Year			2013		2012		Change from Prior Year
Generated		5,242		5,105		2.7	%		13,310		12,264		8.5	%
Purchased		2,077		2,392		(13.2	)%		4,225		5,415		(22.0	)%
TOTAL		7,319		7,497		(2.4	)%		17,535		17,679		(0.8	)%

13

SIERRA PACIFIC POWER COMPANY

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Dollars in Thousands)

(Unaudited)

	Three Months Ended September 30,						Nine Months Ended September 30,
	2013			2012			2013			2012
OPERATING REVENUES:
Electric	$	213,463		$	212,073		$	560,392		$	549,886
Gas		13,543			12,077			73,480			77,543
Total Operating Revenues		227,006			224,150			633,872			627,429
OPERATING EXPENSES:
Fuel for power generation		54,827			47,324			141,277			115,137
Purchased power		33,388			33,999			114,755			98,400
Gas purchased for resale		7,383			5,382			62,277			46,491
Deferral of energy—electric—net		(7,925	)		(5,498	)		(44,223	)		(13,854	)
Deferral of energy—gas—net		(1,964	)		(853	)		(22,315	)		(970	)
Energy efficiency program costs		2,044			4,092			5,679			11,143
Regulatory disallowance		5,469			—			5,469			—
Merger-related costs		2,008			—			5,528			—
Other operating expenses		34,394			34,128			106,455			104,214
Maintenance		5,968			6,481			20,956			23,596
Depreciation and amortization		27,952			27,537			83,772			80,594
Taxes other than income		5,944			5,894			18,414			17,382
Total Operating Expenses		169,488			158,486			498,044			482,133
OPERATING INCOME		57,518			65,664			135,828			145,296
OTHER INCOME (EXPENSE):
Interest expense (net of AFUDC-debt: $437, $448, $1,007 and $1,458)		(15,122	)		(15,298	)		(46,020	)		(47,650	)
Interest expense on regulatory items		(87	)		(401	)		53			(715	)
AFUDC-equity		632			582			1,579			1,843
Other income		983			1,399			4,641			4,181
Other expense		(982	)		(998	)		(3,803	)		(3,609	)
Total Other Income (Expense)		(14,576	)		(14,716	)		(43,550	)		(45,950	)
Income Before Income Tax Expense		42,942			50,948			92,278			99,346
Income tax expense		13,691			16,521			30,347			33,596
NET INCOME		29,251			34,427			61,931			65,750
Other comprehensive income
Change in compensation retirement benefits liability and amortization (Net of taxes $(32), $(22), $(95) and $(68))		59			42			176			127
COMPREHENSIVE INCOME	$	29,310		$	34,469		$	62,107		$	65,877

14

SIERRA PACIFIC POWER COMPANY

CONSOLIDATED OPERATING STATISTICS

(Unaudited)

ELECTRIC SALES—MWh’s

(in thousands)

	Three Months Ended September 30,										Nine Months Ended September 30,
	2013		2012		Change from Prior Year			Change in Average Customers			2013		2012		Change from Prior Year			Change in Average Customers
Residential		671		667		0.6	%		0.7	%		1,794		1,737		3.3	%		0.7	%
Commercial		851		849		0.2	%		2.5	%		2,268		2,233		1.6	%		2.1	%
Industrial		701		686		2.2	%		—	%		2,092		2,005		4.3	%		1.8	%
TOTAL RETAIL		2,223		2,202		1.0	%		1.0	%		6,154		5,975		3.0	%		0.9	%

GAS SALES—Dth

(in thousands)

	Three Months Ended September 30,							Nine Months Ended September 30,
	2013		2012		Change from Prior Year			2013		2012		Change from Prior Year
Residential		698		642		8.7	%		6,039		5,613		7.6	%
Commercial		400		374		7.0	%		3,086		2,939		5.0	%
Industrial		190		153		24.2	%		986		876		12.6	%
TOTAL RETAIL		1,288		1,169		10.2	%		10,111		9,428		7.2	%

ELECTRIC SOURCES—MWh’s

(in thousands)

	Three Months Ended September 30,							Nine Months Ended September 30,
	2013		2012		Change from Prior Year			2013		2012		Change from Prior Year
Generated		1,580		1,512		4.5	%		3,829		3,829		—	%
Purchased		916		971		(5.7	)%		3,169		3,031		4.6	%
TOTAL		2,496		2,483		0.5	%		6,998		6,860		2.0	%

15

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).

	Nine Months Ended September 30,
	2013			2012			Change from Prior Year
Net Cash from Operating Activities	$	553,706		$	644,194			(14.0	)%
Less Additions to Utility Plant (Excluding AFUDC-Equity)		(267,798	)		(387,790	)		(30.9	)%
Free Cash Flow	$	285,908		$	256,404			11.5	%

Gross Margin

NV Energy, Inc. presents gross margin in order to aid the reader in determining how profitable Nevada Power Company’s and Sierra Pacific Power Company’s (collectively, “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 costs, energy efficiency program costs and regulatory disallowances, 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 and regulatory disallowances (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.

16

NV Energy, Inc.

Consolidated Gross Margin

(dollars in thousands)

	Three Months Ended September 30,									Nine Months Ended September 30,
	2013			2012			Change from Prior Year			2013			2012			Change from Prior Year
Operating Revenues:	$	1,013,151		$	1,026,488			(1.3	)%	$	2,329,011		$	2,378,606			(2.1	)%
Energy Costs:
Fuel for power generation		217,954			171,316			27.2	%		554,181			400,936			38.2	%
Purchased power		205,970			205,686			0.1	%		498,141			486,894			2.3	%
Gas purchased for resale		7,383			5,382			37.2	%		62,277			46,491			34.0	%
Deferred energy		(55,270	)		(29,036	)		90.3	%		(221,022	)		(30,285	)		629.8	%
Energy efficiency program costs		16,042			32,584			(50.8	)%		38,486			76,609			(49.8	)%
Regulatory disallowance		17,335			—			N/A			17,335			—			N/A
Total Costs	$	409,414		$	385,932			6.1	%	$	949,398		$	980,645			(3.2	)%
Gross Margin	$	603,737		$	640,556			(5.7	)%	$	1,379,613		$	1,397,961			(1.3	)%
Merger-related costs		7,857			—						21,409			—
Other operating expenses		106,068			100,108						317,538			307,080
Maintenance		17,176			19,014						66,128			76,190
Depreciation and amortization		96,801			94,512						291,687			281,690
Taxes other than income		14,214			15,682						46,536			44,457
Operating Income	$	361,621		$	411,240			(12.1	)%	$	636,315		$	688,544			(7.6	)%

17