FALSE2022Q1000108131612/31000007559412/31000109829612/31000092857612/31000007118012/31000009014412/31000160329112/311111200 million0 million0 million1200001081316bhe:MidamericanEnergyCompanyAndSubsidiariesMemberbhe:RegulatedwholesaleMemberus-gaap:RegulatedOperationMember2022-01-012022-03-310001081316bhe:RegulatedretailMemberus-gaap:RegulatedOperationMemberbhe:IndustrialMemberbhe:MidamericanEnergyCompanyAndSubsidiariesMember2022-01-012022-03-31

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, ~~2022~~2023

☐ 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

333-266049

EASTERN GAS TRANSMISSION AND STORAGE, INC.

55-0629203

(A Delaware Corporation)

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
EASTERN GAS TRANSMISSION AND STORAGE, INC.			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
EASTERN GAS TRANSMISSION AND STORAGE, INC.			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	☒
EASTERN GAS TRANSMISSION AND STORAGE, INC.	☒

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

☐

☒

☐

EASTERN GAS TRANSMISSION AND STORAGE, INC.

☐

☒

☐

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

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

Yes ☐ No x

All shares of outstanding common stock of Berkshire Hathaway Energy Company are privately held by a limited group of investors. As of ~~April 28, 2022, 76,368,874~~May 4, 2023, 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, 2022,~~May 4, 2023, 357,060,915 shares of common stock, no par value, were outstanding.

All of the member's equity of MidAmerican Funding, LLC is held by its parent company, Berkshire Hathaway Energy Company, as of ~~April 28, 2022.~~May 4, 2023.

All shares of outstanding common stock of MidAmerican Energy Company are owned by its parent company, MHC Inc., which is a direct, wholly owned subsidiary of MidAmerican Funding, LLC. As of ~~April 28, 2022,~~May 4, 2023, 70,980,203 shares of common stock, no par value, were outstanding.

All shares of outstanding common stock of Nevada Power Company are owned by its parent company, NV Energy, Inc., which is an indirect, wholly owned subsidiary of Berkshire Hathaway Energy Company. As of ~~April 28, 2022,~~May 4, 2023, 1,000 shares of common stock, $1.00 stated value, were outstanding.

All shares of outstanding common stock of Sierra Pacific Power Company are owned by its parent company, NV Energy, Inc. As of ~~April 28, 2022,~~May 4, 2023, 1,000 shares of common stock, $3.75 par value, were outstanding.

All of the member's equity of Eastern Energy Gas Holdings, LLC is held indirectly by its parent company, Berkshire Hathaway Energy Company, as of ~~April 28, 2022.~~May 4, 2023.

All shares of outstanding common stock of Eastern Gas Transmission and Storage, Inc. are owned by its parent company, Eastern Energy Gas Holdings, LLC, which is an indirect, wholly owned subsidiary of Berkshire Hathaway Energy Company. As of May 4, 2023, 60,101 shares of common stock, $10,000 par value, were outstanding.

This combined Form 10-Q is separately filed by Berkshire Hathaway Energy Company, PacifiCorp, MidAmerican Funding, LLC, MidAmerican Energy Company, Nevada Power Company, Sierra Pacific Power Company, ~~and~~ Eastern Energy Gas Holdings, ~~LLC.~~LLC and Eastern Gas Transmission and Storage, Inc. 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~~178
Item 4.	Controls and Procedures	~~159~~178

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
EGTS						Eastern Gas Transmission and Storage, Inc. 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 and Eastern Gas Transmission and Storage, Inc. 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~~2020 Wildfires						~~The Tax Cuts~~Wildfires in Oregon and ~~Jobs Act enacted on December 22, 2017, effective January 1, 2018~~Northern California that occurred September of 2020


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

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

CPUC						California Public Utilities Commission
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~~						~~Greenhouse Gases~~
GTA						General Tariff Application
GWh						Gigawatt Hour


IRP						Integrated Resource Plan
IUB						Iowa Utilities Board
kV						Kilovolt

LNG						Liquefied Natural Gas
MATS						Mercury and Air Toxics Standards
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, costly 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;~~wildfires;

•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 (Loss)						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						4647
Consolidated Balance Sheets						4748
Consolidated Statements of Operations						4950
Consolidated Statements of Changes in Shareholders' Equity						5051
Consolidated Statements of Cash Flows						5152
Notes to Consolidated Financial Statements						5253
MidAmerican Energy Company
Report of Independent Registered Public Accounting Firm						6871
Balance Sheets						6972
Statements of Operations						7174
Statements of Changes in Shareholder's Equity						7275
Statements of Cash Flows						7376
Notes to Financial Statements						7477
MidAmerican Funding, LLC and its subsidiaries
Report of Independent Registered Public Accounting Firm						8185
Consolidated Balance Sheets						8286
Consolidated Statements of Operations						8488
Consolidated Statements of Changes in Member's Equity						8589
Consolidated Statements of Cash Flows						8690
Notes to Consolidated Financial Statements						8791
Nevada Power Company and its subsidiaries
Report of Independent Registered Public Accounting Firm						~~101~~104
Consolidated Balance Sheets						~~102~~105
Consolidated Statements of Operations						~~103~~106
Consolidated Statements of Changes in Shareholder's Equity						~~104~~107
Consolidated Statements of Cash Flows						~~105~~108
Notes to Consolidated Financial Statements						~~106~~109
Sierra Pacific Power Company and its subsidiaries
Report of Independent Registered Public Accounting Firm						~~120~~124
Consolidated Balance Sheets						~~121~~125
Consolidated Statements of Operations						~~122~~126
Consolidated Statements of Changes in Shareholder's Equity						~~123~~127
Consolidated Statements of Cash Flows						~~124~~128
Notes to Consolidated Financial Statements						~~125~~129
Eastern Energy Gas Holdings, LLC and its subsidiaries
Report of Independent Registered Public Accounting Firm						~~141~~145
Consolidated Balance Sheets						~~142~~146
Consolidated Statements of Operations						~~144~~148
Consolidated Statements of Comprehensive Income						~~145~~149
Consolidated Statements of Changes in Equity						~~146~~150
Consolidated Statements of Cash Flows						~~147~~151
Notes to Consolidated Financial Statements						~~148~~152
Eastern Gas Transmission and Storage, Inc. and its subsidiaries
Report of Independent Registered Public Accounting Firm						163
Consolidated Balance Sheets						164
Consolidated Statements of Operations						166
Consolidated Statements of Comprehensive Income						167
Consolidated Statements of Changes in Shareholder's Equity						168
Consolidated Statements of Cash Flows						169
Notes to Consolidated Financial Statements						170

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						6163
MidAmerican Funding, LLC and its subsidiaries and MidAmerican Energy Company						9195
Nevada Power Company and its subsidiaries						~~113~~117
Sierra Pacific Power Company and its subsidiaries						~~133~~137
Eastern Energy Gas Holdings, LLC and its subsidiaries						~~156~~159
Eastern Gas Transmission and Storage, Inc. and its subsidiaries						175

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, ~~2022,~~2023, the related consolidated statements of operations, comprehensive income (loss) ~~income,~~, changes in equity, and cash flows for the three-month periods ended March 31, ~~2022~~2023 and ~~2021,~~2022, 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,~~2022, 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,~~24, 2023, 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,~~2022, is fairly stated, in all material respects, in relation to the consolidated balance sheet from which it has been derived.

Basis for Review Results

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

We conducted our reviews in accordance with standards of the PCAOB. A review of interim financial information consists principally of applying analytical procedures and making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an audit conducted in accordance with the standards of the PCAOB, the objective of which is the expression of an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion.

/s/ Deloitte & Touche LLP

Des Moines, Iowa

~~April 29, 2022~~May 5, 2023

BERKSHIRE HATHAWAY ENERGY COMPANY AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS (Unaudited)

(Amounts in millions)


		As of					As of
		March 31,		December 31,			March 31,		December 31,
		2022		2021			2023		2022
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	$	963	$	1,591
Restricted cash and cash equivalents		129		127
Investments and restricted cash and cash equivalents						Investments and restricted cash and cash equivalents	3,032		2,141
Trade receivables, net	Trade receivables, net	2,342		2,468		Trade receivables, net	2,567		2,876
Income tax receivable		656		344

Inventories	Inventories	1,091		1,122		Inventories	1,299		1,256
Mortgage loans held for sale	Mortgage loans held for sale	975		1,263		Mortgage loans held for sale	650		474

Derivative contracts		437		188

Regulatory assets	Regulatory assets	627		544		Regulatory assets	1,612		1,319
Other current assets	Other current assets	815		1,096		Other current assets	1,202		1,345
Total current assets	Total current assets	8,504		8,248		Total current assets	11,325		11,002

Property, plant and equipment, net	Property, plant and equipment, net	90,283		89,816		Property, plant and equipment, net	93,583		93,043
Goodwill	Goodwill	11,649		11,650		Goodwill	11,503		11,489
Regulatory assets	Regulatory assets	3,458		3,419		Regulatory assets	3,945		3,743
Investments and restricted cash, cash equivalents and investments		14,394		15,788
Investments and restricted cash and cash equivalents and investments						Investments and restricted cash and cash equivalents and investments	10,825		11,273
Other assets	Other assets	3,181		3,144		Other assets	3,273		3,290

Total assets	Total assets	$	131,469	$	132,065	Total assets	$	134,454	$	133,840

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,			March 31,		December 31,
		2022		2021			2023		2022
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	$	2,109	$	2,679
Accrued interest	Accrued interest	644		537		Accrued interest	701		558
Accrued property, income and other taxes	Accrued property, income and other taxes	606		606		Accrued property, income and other taxes	625		746
Accrued employee expenses	Accrued employee expenses	398		372		Accrued employee expenses	351		333
Short-term debt	Short-term debt	1,849		2,009		Short-term debt	1,819		1,119
Current portion of long-term debt	Current portion of long-term debt	1,494		1,265		Current portion of long-term debt	3,090		3,201
Other current liabilities	Other current liabilities	1,647		1,837		Other current liabilities	1,720		1,677
Total current liabilities	Total current liabilities	8,458		8,762		Total current liabilities	10,415		10,313

BHE senior debt	BHE senior debt	12,605		13,003		BHE senior debt	13,097		13,096
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	34,863		35,238
Regulatory liabilities	Regulatory liabilities	7,063		6,960		Regulatory liabilities	6,578		7,070
Deferred income taxes	Deferred income taxes	12,786		12,938		Deferred income taxes	12,705		12,678
Other long-term liabilities	Other long-term liabilities	4,327		4,319		Other long-term liabilities	5,045		4,706
Total liabilities	Total liabilities	81,045		81,476		Total liabilities	82,803		83,201

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

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 1 shares issued and outstanding						Preferred stock - 100 shares authorized, $0.01 par value, 1 and 1 shares issued and outstanding	850		850
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		6,298
Long-term income tax receivable		(744)		(744)

Retained earnings	Retained earnings	40,608		40,754		Retained earnings	42,814		41,833
Accumulated other comprehensive loss, net	Accumulated other comprehensive loss, net	(1,358)		(1,340)		Accumulated other comprehensive loss, net	(2,109)		(2,149)
Total BHE shareholders' equity	Total BHE shareholders' equity	46,530		46,694		Total BHE shareholders' equity	47,853		46,832
Noncontrolling interests	Noncontrolling interests	3,894		3,895		Noncontrolling interests	3,798		3,807
Total equity	Total equity	50,424		50,589		Total equity	51,651		50,639

Total liabilities and equity	Total liabilities and equity	$	131,469	$	132,065	Total liabilities and equity	$	134,454	$	133,840

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
		Ended March 31,						Ended March 31,
			2022		2021				2023		2022
Operating revenue:	Operating revenue:						Operating revenue:
Energy	Energy		$	4,823	$	4,849	Energy		$	5,471	$	4,823
Real estate	Real estate		1,207		1,232		Real estate		875		1,207
Total operating revenue	Total operating revenue		6,030		6,081		Total operating revenue		6,346		6,030

Operating expenses:	Operating expenses:						Operating expenses:
Energy:	Energy:						Energy:
Cost of sales	Cost of sales		1,460		1,569		Cost of sales		1,955		1,460
Operations and maintenance	Operations and maintenance		943		934		Operations and maintenance		1,542		943
Depreciation and amortization	Depreciation and amortization		1,007		915		Depreciation and amortization		1,050		1,007
Property and other taxes	Property and other taxes		205		210		Property and other taxes		212		205
Real estate	Real estate		1,179		1,120		Real estate		920		1,179
Total operating expenses	Total operating expenses		4,794		4,748		Total operating expenses		5,679		4,794

Operating income	Operating income		1,236		1,333		Operating income		667		1,236

Other income (expense):	Other income (expense):						Other income (expense):
Interest expense	Interest expense		(532)		(530)		Interest expense		(586)		(532)
Capitalized interest	Capitalized interest		17		14		Capitalized interest		24		17
Allowance for equity funds	Allowance for equity funds		38		26		Allowance for equity funds		49		38
Interest and dividend income	Interest and dividend income		23		21		Interest and dividend income		86		23
Losses on marketable securities, net			(1,257)		(1,118)
Gains (losses) on marketable securities, net							Gains (losses) on marketable securities, net		699		(1,257)
Other, net	Other, net		5		8		Other, net		40		5
Total other income (expense)	Total other income (expense)		(1,706)		(1,579)		Total other income (expense)		312		(1,706)

Loss before income tax benefit and equity loss			(470)		(246)
Income tax benefit			(507)		(535)
Equity loss			(57)		(179)
Net (loss) income			(20)		110
Income (loss) before income tax expense (benefit) and equity income (loss)							Income (loss) before income tax expense (benefit) and equity income (loss)		979		(470)
Income tax expense (benefit)							Income tax expense (benefit)		(162)		(507)
Equity income (loss)							Equity income (loss)		(38)		(57)
Net income (loss)							Net income (loss)		1,103		(20)
Net income attributable to noncontrolling interests	Net income attributable to noncontrolling interests		109		106		Net income attributable to noncontrolling interests		114		109
Net (loss) income attributable to BHE shareholders			(129)		4
Net income (loss) attributable to BHE shareholders							Net income (loss) attributable to BHE shareholders		989		(129)
Preferred dividends	Preferred dividends		16		38		Preferred dividends		8		16
Loss on common shares			$	(145)	$	(34)
Earnings (loss) on common shares							Earnings (loss) on common shares		$	981	$	(145)

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

BERKSHIRE HATHAWAY ENERGY COMPANY AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (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
	Ended March 31,
		2023		2022

Net income (loss)		$	1,103	$	(20)

Other comprehensive income (loss), net of tax:
Unrecognized amounts on retirement benefits, net of tax of $(3) and $3		(4)		15
Foreign currency translation adjustment		99		(110)
Unrealized (losses) gains on cash flow hedges, net of tax of $(20) and $28		(55)		77
Total other comprehensive income (loss), net of tax		40		(18)

Comprehensive income (loss)		1,143		(38)
Comprehensive income attributable to noncontrolling interests		114		109
Comprehensive income (loss) attributable to BHE shareholders		$	1,029	$	(147)

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

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

Distributions		—		—		—		—		—		—		(113)		(113)

Other equity transactions		—		—		—		—		1		—		2		3
Balance, March 31, 2021		$	3,750	$	—	$	6,377	$	(658)	$	35,060	$	(1,440)	$	3,962	$	47,051
																			Stock		Stock		Capital		Receivable		Earnings		Loss, Net		Interests		Equity


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	Net (loss) income	—		—		—		—		(129)		—		109		(20)		Net (loss) income	—		—		—		—		(129)		—		109		(20)
Other comprehensive loss	Other comprehensive loss	—		—		—		—		—		(18)		—		(18)		Other comprehensive loss	—		—		—		—		—		(18)		—		(18)

Preferred stock dividend	Preferred stock dividend	—		—		—		—		(16)		—		—		(16)		Preferred stock dividend	—		—		—		—		(16)		—		—		(16)

Distributions	Distributions	—		—		—		—		—		—		(116)		(116)		Distributions	—		—		—		—		—		—		(116)		(116)

Other equity transactions	Other equity transactions	—		—		—		—		(1)		—		6		5		Other equity transactions	—		—		—		—		(1)		—		6		5
Balance, March 31, 2022	Balance, March 31, 2022	$	1,650	$	—	$	6,374	$	(744)	$	40,608	$	(1,358)	$	3,894	$	50,424	Balance, March 31, 2022	$	1,650	$	—	$	6,374	$	(744)	$	40,608	$	(1,358)	$	3,894	$	50,424


Balance, December 31, 2022																		Balance, December 31, 2022	$	850	$	—	$	6,298	$	—	$	41,833	$	(2,149)	$	3,807	$	50,639
Net income																		Net income	—		—		—		—		989		—		114		1,103
Other comprehensive income																		Other comprehensive income	—		—		—		—		—		40		—		40

Preferred stock dividend																		Preferred stock dividend	—		—		—		—		(8)		—		—		(8)

Distributions																		Distributions	—		—		—		—		—		—		(125)		(125)
Contributions																		Contributions	—		—		—		—		—		—		2		2

Balance, March 31, 2023																		Balance, March 31, 2023	$	850	$	—	$	6,298	$	—	$	42,814	$	(2,109)	$	3,798	$	51,651

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					Three-Month Periods
		Ended March 31,					Ended March 31,
		2022		2021			2023		2022
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 (loss)						Net income (loss)	$	1,103	$	(20)
Adjustments to reconcile net income (loss) to net cash flows from operating activities:						Adjustments to reconcile net income (loss) to net cash flows from operating activities:
(Gains) losses on marketable securities, net						(Gains) losses on marketable securities, net	(699)		1,257
Depreciation and amortization	Depreciation and amortization	1,022		927		Depreciation and amortization	1,063		1,022
Allowance for equity funds	Allowance for equity funds	(38)		(26)		Allowance for equity funds	(49)		(38)
Equity loss, net of distributions		88		221
Changes in regulatory assets and liabilities		(42)		(9)
Equity (income) loss, net of distributions						Equity (income) loss, net of distributions	68		88
Net power cost deferrals						Net power cost deferrals	(504)		(72)
Amortization of net power cost deferrals						Amortization of net power cost deferrals	130		47
Other changes in regulatory assets and liabilities						Other changes in regulatory assets and liabilities	(26)		(17)
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	(11)		(203)
Other, net	Other, net	6		9		Other, net	15		6
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	120		333
Derivative collateral, net	Derivative collateral, net	85		14		Derivative collateral, net	(225)		85
Pension and other postretirement benefit plans	Pension and other postretirement benefit plans	(11)		(21)		Pension and other postretirement benefit plans	(7)		(11)
Accrued property, income and other taxes, net	Accrued property, income and other taxes, net	(347)		(453)		Accrued property, income and other taxes, net	(177)		(347)
Accounts payable and other liabilities	Accounts payable and other liabilities	91		19		Accounts payable and other liabilities	294		91
Net cash flows from operating activities	Net cash flows from operating activities	2,221		1,525		Net cash flows from operating activities	1,095		2,221

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	(1,848)		(1,553)

Purchases of marketable securities	Purchases of marketable securities	(170)		(128)		Purchases of marketable securities	(106)		(170)
Proceeds from sales of marketable securities	Proceeds from sales of marketable securities	149		104		Proceeds from sales of marketable securities	1,091		149

Purchases of U.S. Treasury Bills						Purchases of U.S. Treasury Bills	(1,519)		—
Proceeds from maturities of U.S. Treasury Bills						Proceeds from maturities of U.S. Treasury Bills	623		—
Equity method investments	Equity method investments	(17)		(26)		Equity method investments	(19)		(17)
Other, net	Other, net	19		(29)		Other, net	—		19
Net cash flows from investing activities	Net cash flows from investing activities	(1,572)		(1,374)		Net cash flows from investing activities	(1,778)		(1,572)

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

Repayments of BHE senior debt	Repayments of BHE senior debt	—		(450)		Repayments of BHE senior debt	(400)		—
Proceeds from subsidiary debt	Proceeds from subsidiary debt	405		—		Proceeds from subsidiary debt	—		405
Repayments of subsidiary debt	Repayments of subsidiary debt	(193)		(26)		Repayments of subsidiary debt	(136)		(193)
Net (repayments of) proceeds from short-term debt		(165)		409
Net proceeds from (repayments of) short-term debt						Net proceeds from (repayments of) short-term debt	699		(165)

Distributions to noncontrolling interests	Distributions to noncontrolling interests	(117)		(115)		Distributions to noncontrolling interests	(126)		(117)

Other, net	Other, net	(240)		(9)		Other, net	(17)		(240)
Net cash flows from financing activities	Net cash flows from financing activities	(310)		(191)		Net cash flows from financing activities	20		(310)

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

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	(662)		338
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	1,817		1,244
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	$	1,155	$	1,582

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 8eight 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 4four utility companies in the U.S. serving customers in 11 states, two electricity distribution companies in Great Britain, 5five 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, one of the largest residential real estate brokerage ~~firm in the U.S.~~firms 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, ~~2022~~2023, and for the three-month periods ended March 31, ~~2022~~2023 and ~~2021.~~2022. The results of operations for the three-month period ended March 31, ~~2022~~2023, 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~~2022, 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 accounting policies or its assumptions regarding significant accounting estimates ~~and policies~~ during the three-month period ended March 31, ~~2022.~~2023, other than the updates associated with the Company's estimates of loss contingencies related to the Oregon and Northern California 2020 wildfires (the "2020 Wildfires") and the 2022 McKinney fire as discussed in Note 9.

(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	March 31,		December 31,
		Life	2022		2021			Life	2023		2022
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	$	93,123	$	92,759
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	18,492		18,328
			108,086		107,646				111,615		111,087
Accumulated depreciation and amortization	Accumulated depreciation and amortization		(33,248)		(32,680)		Accumulated depreciation and amortization		(35,395)		(34,599)
Regulated assets, net	Regulated assets, net		74,838		74,966		Regulated assets, net		76,220		76,488

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	8,514		8,545
Cove Point LNG facility	Cove Point LNG facility	40 years	3,366		3,364		Cove Point LNG facility	40 years	3,416		3,412
Other assets	Other assets	2-30 years	2,688		2,666		Other assets	2-30 years	2,680		2,693
			13,986		13,695				14,610		14,650
Accumulated depreciation and amortization	Accumulated depreciation and amortization		(3,146)		(3,041)		Accumulated depreciation and amortization		(3,493)		(3,452)
Nonregulated assets, net	Nonregulated assets, net		10,840		10,654		Nonregulated assets, net		11,117		11,198

Net operating assets			85,678		85,620
									87,337		87,686
Construction work-in-progress	Construction work-in-progress		4,605		4,196		Construction work-in-progress		6,246		5,357
Property, plant and equipment, net	Property, plant and equipment, net		$	90,283	$	89,816	Property, plant and equipment, net		$	93,583	$	93,043

Construction work-in-progress includes ~~$4.3~~$5.8 billion as of March 31, ~~2022~~2023 and ~~$3.8~~$4.9 billion as of December 31, ~~2021,~~2022, related to the construction of regulated assets.

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

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


		As of					As of
		March 31,		December 31,			March 31,		December 31,
		2022		2021			2023		2022
Investments:	Investments:					Investments:
BYD Company Limited common stock	BYD Company Limited common stock	$	6,446	$	7,693	BYD Company Limited common stock	$	3,321	$	3,763
U.S. Treasury Bills						U.S. Treasury Bills	2,854		1,931
Rabbi trusts	Rabbi trusts	475		492		Rabbi trusts	449		433
Other	Other	315		305		Other	318		335
Total investments	Total investments	7,236		8,490		Total investments	6,942		6,462

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	4,430		4,535
Electric Transmission Texas, LLC						Electric Transmission Texas, LLC	641		623
Iroquois Gas Transmission System, L.P.	Iroquois Gas Transmission System, L.P.	744		735		Iroquois Gas Transmission System, L.P.	604		600
Electric Transmission Texas, LLC		598		595
JAX LNG, LLC		93		92
Bridger Coal Company		44		45
Other	Other	152		156		Other	352		304
Total equity method investments	Total equity method investments	6,443		6,554		Total equity method investments	6,027		6,062

Restricted cash, cash equivalents and investments:
Restricted cash and cash equivalents and investments:						Restricted cash and 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	696		664
Other restricted cash and cash equivalents	Other restricted cash and cash equivalents	150		148		Other restricted cash and cash equivalents	192		226
Total restricted cash, cash equivalents and investments		883		916
Total restricted cash and cash equivalents and investments						Total restricted cash and cash equivalents and investments	888		890

Total investments and restricted cash, cash equivalents and investments		$	14,562	$	15,960
Total investments and restricted cash and cash equivalents and investments						Total investments and restricted cash and cash equivalents and investments	$	13,857	$	13,414

Reflected as:	Reflected as:					Reflected as:
Current assets		$	168	$	172
Other current assets						Other current assets	$	3,032	$	2,141
Noncurrent assets	Noncurrent assets	14,394		15,788		Noncurrent assets	10,825		11,273
Total investments and restricted cash, cash equivalents and investments		$	14,562	$	15,960
Total investments and restricted cash and cash equivalents and investments						Total investments and restricted cash and cash equivalents and investments	$	13,857	$	13,414

Investments

~~Losses~~Gains (losses) 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
	Ended March 31,
		2023		2022
Unrealized gains (losses) recognized on marketable securities held at the reporting date		$	529	$	(1,257)
Net gains recognized on marketable securities sold during the period		170		—
Gains (losses) on marketable securities, net		$	699	$	(1,257)

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 inon 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,
		March 31,		December 31,			2023		2022
		2022		2021
Cash and cash equivalents	Cash and cash equivalents	$	1,432	$	1,096	Cash and cash equivalents	$	963	$	1,591
Restricted cash and cash equivalents		129		127
Investments and restricted cash, cash equivalents and investments		21		21
Investments and restricted cash and cash equivalents						Investments and restricted cash and cash equivalents	133		173
Investments and restricted cash and cash equivalents and investments						Investments and restricted cash and cash equivalents and investments	59		53
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	$	1,155	$	1,817

(4) Recent Financing Transactions

~~Long-Term Debt~~Credit Facilities

In April ~~2022, BHE issued $1 billion of~~2023, AltaLink Investments, L.P. extended, with lender consent, the expiration date for its ~~4.6% Senior Notes due 2053 and intends~~existing C$200 million one year revolving credit facility to ~~use the net proceeds for general corporate purposes, which may include repaying~~April 2024, by exercising 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.~~one-year extension option.

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

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

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

(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 (loss) before income tax ~~benefit~~expense (benefit) is as follows:


		Three-Month Periods						Three-Month Periods
		Ended March 31,						Ended March 31,
			2022		2021				2023		2022

Federal statutory income tax rate	Federal statutory income tax rate		21	%	21	%	Federal statutory income tax rate		21	%	21	%
Income tax credits	Income tax credits		72		136		Income tax credits		(35)		72
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		(4)		(3)
Income tax effect of foreign income	Income tax effect of foreign income		3		6		Income tax effect of foreign income		7		3
Effects of ratemaking	Effects of ratemaking		8		10		Effects of ratemaking		(3)		8
Equity income	Equity income		3		15		Equity income		(1)		3
Noncontrolling interest	Noncontrolling interest		5		9		Noncontrolling interest		(2)		5
Other, net	Other, net		(1)		(1)		Other, net		—		(1)
Effective income tax rate	Effective income tax rate		108	%	217	%	Effective income tax rate		(17)	%	108	%

Income tax credits relate primarily to ~~PTCs~~production tax credits ("PTCs") from ~~wind-powered~~wind- and solar-powered generating facilities owned by MidAmerican Energy, PacifiCorp and BHE Renewables. Federal renewable electricity PTCs are earned as energy from qualifying ~~wind-powered~~wind- and solar-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~~Wind- and solar-powered generating facilities are eligible for the credits for 10 years from the date the qualifying generating facilities are placed in-service. PTCs recognized for the three-month periods ended March 31, 2023 and 2022 totaled $343 million and ~~2021 totaled~~ $338 million, ~~and $315~~respectively.

Income tax effect on foreign income includes, among other items, a deferred income tax charge of $82 million ~~respectively.~~recognized in March 2023 related to the July 2022 enactment of a new Energy Profits Levy 25% income tax in the United Kingdom effective May 26, 2022, through December 31, 2025, as well as an increase in the tax rate from 25% to 35% effective January 1, 2023, through March 31, 2028, enacted in January 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 payments for federal income taxes to Berkshire Hathaway for the three-month periods ended March 31, ~~2022~~2023 and ~~2021.~~

2022.

15In July 2022, the Company amended its tax allocation agreement with Berkshire Hathaway, which changed how state tax attributes will be settled with respect to state income tax returns that Berkshire Hathaway includes the Company. As a result, the Company no longer expects to receive the cash benefits from the state of Iowa net operating loss carryforward previously recorded as a long-term income tax receivable from Berkshire Hathaway as a component of BHE's shareholders' equity, and recognized a noncash distribution of $744 million to retained earnings.

(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
		Ended March 31,						Ended March 31,
			2022		2021				2023		2022
Pension:	Pension:						Pension:
Service cost	Service cost		$	7	$	7	Service cost		$	4	$	7
Interest cost	Interest cost		19		20		Interest cost		28		19
Expected return on plan assets	Expected return on plan assets		(27)		(33)		Expected return on plan assets		(31)		(27)
Settlement	Settlement		2		—		Settlement		(5)		2
Net amortization	Net amortization		4		6		Net amortization		4		4
Net periodic benefit cost	Net periodic benefit cost		$	5	$	—	Net periodic benefit cost		$	—	$	5

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

Amounts other than the service cost for pension and other postretirement benefit plans are recorded in ~~Other,~~other, net inon the Consolidated Statements of Operations. Employer contributions to the domestic pension and other postretirement benefit plans are expected to be $13 million and $4$7 million, respectively, during ~~2022.~~2023. As of March 31, ~~2022, $4~~2023, $3 million and $3$1 million of contributions had been made to the domestic pension and other postretirement benefit plans, respectively.

Foreign Operations

Net periodic benefit ~~credit~~cost (credit) for the United Kingdom pension plan included the following components (in millions):


		Three-Month Periods						Three-Month Periods
		Ended March 31,						Ended March 31,
			2022		2021				2023		2022

Service cost	Service cost		$	4	$	4	Service cost		$	2	$	4
Interest cost	Interest cost		10		8		Interest cost		14		10
Expected return on plan assets	Expected return on plan assets		(25)		(28)		Expected return on plan assets		(19)		(25)

Net amortization	Net amortization		6		14		Net amortization		6		6
Net periodic benefit credit			$	(5)	$	(2)
Net periodic benefit cost (credit)							Net periodic benefit cost (credit)		$	3	$	(5)

Amounts other than the service cost for the United Kingdom pension plan are recorded in ~~Other,~~other, net inon the Consolidated Statements of Operations. Employer contributions to the United Kingdom pension plan are expected to be ~~£12~~£11 million during ~~2022.~~2023. As of March 31, ~~2022,~~2023, £3 million, or $4 million, of contributions had been made to the United Kingdom pension plan.

(7) Asset Retirement Obligations

MidAmerican Energy estimates its asset retirement obligation ("ARO") liabilities based upon detailed engineering calculations of the amount and timing of the future cash spending for a third party to perform the required work. Spending estimates are escalated for inflation and then discounted at a credit-adjusted, risk-free rate. Changes in estimates could occur for a number of reasons including changes in laws and regulations, plan revisions, inflation and changes in the amount and timing of expected work. During the three-month period ended March 31, 2023, MidAmerican Energy recorded an increase of $88 million for decommissioning its wind-generating facilities due to an updated decommissioning estimate reflecting changes in the projected removal costs per turbine.

(78) 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 March 31, 2023:												As of March 31, 2023:
Assets:	Assets:											Assets:
Commodity derivatives	Commodity derivatives	$	13	$	534	$	59	$	(64)	$	542	Commodity derivatives	$	3	$	280	$	16	$	(65)	$	234

Interest rate derivatives	Interest rate derivatives	11		58		25		—		94		Interest rate derivatives	42		43		16		—		101
Mortgage loans held for sale	Mortgage loans held for sale	—		975		—		—		975		Mortgage loans held for sale	—		650		—		—		650
Money market mutual funds	Money market mutual funds	715		—		—		—		715		Money market mutual funds	671		—		—		—		671
Debt securities:	Debt securities:											Debt securities:
U.S. government obligations	U.S. government obligations	225		—		—		—		225		U.S. government obligations	3,079		—		—		—		3,079
International government obligations	International government obligations	—		1		—		—		1		International government obligations	—		1		—		—		1
Corporate obligations	Corporate obligations	—		79		—		—		79		Corporate obligations	—		70		—		—		70
Municipal obligations	Municipal obligations	—		3		—		—		3		Municipal obligations	—		4		—		—		4
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	385		—		—		—		385
International companies	International companies	6,455		—		—		—		6,455		International companies	3,329		—		—		—		3,329
Investment funds	Investment funds	285		—		—		—		285		Investment funds	278		—		—		—		278
		$	8,119	$	1,651	$	84	$	(64)	$	9,790		$	7,787	$	1,048	$	32	$	(65)	$	8,802
Liabilities:	Liabilities:											Liabilities:
Commodity derivatives	Commodity derivatives	$	(1)	$	(88)	$	(298)	$	69	$	(318)	Commodity derivatives	$	(8)	$	(92)	$	(166)	$	52	$	(214)
Foreign currency exchange rate derivatives	Foreign currency exchange rate derivatives	—		(3)		—		—		(3)		Foreign currency exchange rate derivatives	—		(20)		—		—		(20)
Interest rate derivatives	Interest rate derivatives	—		—		(12)		—		(12)		Interest rate derivatives	—		(5)		(1)		1		(5)
		$	(1)	$	(91)	$	(310)	$	69	$	(333)		$	(8)	$	(117)	$	(167)	$	53	$	(239)


		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 December 31, 2021:
As of December 31, 2022:												As of December 31, 2022:
Assets:	Assets:											Assets:
Commodity derivatives	Commodity derivatives	$	5	$	271	$	73	$	(47)	$	302	Commodity derivatives	$	6	$	614	$	51	$	(194)	$	477
Foreign currency exchange rate derivatives		—		3		—		—		3

Interest rate derivatives	Interest rate derivatives	1		3		20		—		24		Interest rate derivatives	50		54		8		—		112
Mortgage loans held for sale	Mortgage loans held for sale	—		1,263		—		—		1,263		Mortgage loans held for sale	—		474		—		—		474
Money market mutual funds	Money market mutual funds	554		—		—		—		554		Money market mutual funds	1,178		—		—		—		1,178
Debt securities:	Debt securities:											Debt securities:
U.S. government obligations	U.S. government obligations	232		—		—		—		232		U.S. government obligations	2,146		—		—		—		2,146
International government obligations	International government obligations	—		2		—		—		2		International government obligations	—		1		—		—		1
Corporate obligations	Corporate obligations	—		90		—		—		90		Corporate obligations	—		70		—		—		70
Municipal obligations	Municipal obligations	—		3		—		—		3		Municipal obligations	—		3		—		—		3
Agency, asset and mortgage-backed obligations	Agency, asset and mortgage-backed obligations	—		2		—		—		2		Agency, asset and mortgage-backed obligations	—		1		—		—		1
Equity securities:	Equity securities:											Equity securities:
U.S. companies	U.S. companies	428		—		—		—		428		U.S. companies	360		—		—		—		360
International companies	International companies	7,703		—		—		—		7,703		International companies	3,771		—		—		—		3,771
Investment funds	Investment funds	237		—		—		—		237		Investment funds	231		—		—		—		231
		$	9,160	$	1,637	$	93	$	(47)	$	10,843		$	7,742	$	1,217	$	59	$	(194)	$	8,824
Liabilities:	Liabilities:											Liabilities:
Commodity derivatives	Commodity derivatives	$	(2)	$	(113)	$	(224)	$	73	$	(266)	Commodity derivatives	$	(8)	$	(206)	$	(110)	$	106	$	(218)
Foreign currency exchange rate derivatives	Foreign currency exchange rate derivatives	—		(3)		—		—		(3)		Foreign currency exchange rate derivatives	—		(21)		—		—		(21)
Interest rate derivatives	Interest rate derivatives	—		(7)		(1)		—		(8)		Interest rate derivatives	—		(2)		(2)		1		(3)
		$	(2)	$	(123)	$	(225)	$	73	$	(277)		$	(8)	$	(229)	$	(112)	$	107	$	(242)

(1)Represents netting under master netting arrangements and a net cash collateral ~~receivable~~payable of $5$12 million and ~~$26~~$87 million as of March 31, ~~2022~~2023 and December 31, ~~2021,~~2022, 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
		Ended March 31,						Ended March 31,
					Interest						Interest
			Commodity		Rate				Commodity		Rate
			Derivatives		Derivatives				Derivatives		Derivatives
2022:
2023:							2023:
Beginning balance	Beginning balance		$	(151)	$	19	Beginning balance		$	(59)	$	6
Changes included in earnings(1)	Changes included in earnings(1)		(56)		(6)		Changes included in earnings(1)		9		9
Changes in fair value recognized in OCI	Changes in fair value recognized in OCI		5		—		Changes in fair value recognized in OCI		(3)		—
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		(98)		—

Settlements	Settlements		23		—		Settlements		1		—

Ending balance	Ending balance		$	(239)	$	13	Ending balance		$	(150)	$	15


2021:
2022:						2022:
Beginning balance	Beginning balance	$	116	$	62	Beginning balance	$	(151)	$	19
Changes included in earnings(1)	Changes included in earnings(1)	(6)		(21)		Changes included in earnings(1)	(56)		(6)
Changes in fair value recognized in OCI	Changes in fair value recognized in OCI	(1)		—		Changes in fair value recognized in OCI	5		—
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	(60)		—

Settlements	Settlements	(1)		—		Settlements	23		—

Ending balance	Ending balance	$	124	$	41	Ending balance	$	(239)	$	13

(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 March 31, 2023				As of December 31, 2022
	Carrying		Fair		Carrying		Fair
	Value		Value		Value		Value

Long-term debt	$	51,150	$	47,805	$	51,635	$	46,906

(8)9) Commitments and Contingencies

Commitments

The Company has the following firm commitments that are not reflected on the Consolidated Balance Sheets.

Construction Commitments

In April 2023, PacifiCorp entered into build transfer agreements totaling $1.2 billion through 2025 for the construction of certain wind-powered generating facilities in Wyoming.

During the three-month period ended March 31, 2023, MidAmerican Energy entered into firm construction commitments totaling $183 million for the remainder of 2023 through 2024 related to the construction of wind-powered generating facilities in Iowa.

Fuel Contracts

During the three-month period ended March 31, 2023, PacifiCorp entered into certain coal supply and transportation agreements totaling $247 million through 2025.

Environmental Laws and Regulations

The Company is subject to federal, state, local and foreign laws and regulations regarding air quality, climate change, emissions performance standards, water quality, coal ash disposal, hazardous 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.

Lower Klamath Hydroelectric Project

In November 2022, the Federal Energy Regulatory Commission ("FERC") issued a license surrender order for the Lower Klamath Project, which was accepted by the Klamath River Renewal Corporation ("KRRC") and the states of Oregon and California ("States") in December 2022, along with the transfer of the Lower Klamath Project dams. Although PacifiCorp no longer owns the Lower Klamath Project, PacifiCorp will continue to operate the facilities under an operation and maintenance agreement with the KRRC until each facility is ready for removal. Removal of the Copco No. 2 facility is anticipated to begin in 2023, and removal of the remaining three dams (J.C. Boyle, Copco No. 1 and Iron Gate) is anticipated to begin in 2024. The KRRC has $450 million in funding available for dam removal and restoration; $200 million collected from PacifiCorp's Oregon and California customers and $250 million in California bond funds. PacifiCorp and the States have also agreed to equally share cost overruns that may occur above the initial $450 million in funding. Specifically, PacifiCorp and the States have agreed to equally fund an initial $45 million contingency fund and equally share any additional costs above that amount to ensure dam removal and restoration is complete.

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~~Wildfire Liability Overview

A provision for a loss contingency is recorded when it is probable that a liability has been incurred and ~~Oregon 2020 Wildfires~~the amount of loss can be reasonably estimated. The Company evaluates the related range of reasonably estimated losses and records a loss based on its best estimate within that range or the lower end of the range if there is no better estimate.

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

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

In California, under inverse condemnation, courts have held that investor-owned utilities can be liable for real and personal property damages from wildfires 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;~~damages; fire suppression costs; personal injury and loss of life damages; and interest.

2020 Wildfires

In September 2020, a severe weather event resulting in high winds, low humidity and warm temperatures contributed to several major wildfires, which resulted in real and personal property and natural resource damage, personal injuries and loss of life and widespread power outages in Oregon and Northern 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 U.S. Forest Service, the California Public Utilities Commission, the Oregon Department of Forestry, the Oregon Department of Justice, PacifiCorp and various experts engaged by PacifiCorp.

As of the date of this filing, numerous lawsuits have been filed in Oregon and California, including a class action complaint in Oregon, on behalf of plaintiffs related to the 2020 Wildfires. The plaintiffs seek damages that include property damages, economic losses, punitive damages, exemplary damages, attorneys' fees and other damages. Additionally, several insurance carriers have filed subrogation complaints in Oregon and California with allegations similar to those made in the aforementioned lawsuits. Final determinations of liability, however, will only be made following the completion of comprehensive investigations and litigation processes.

Based on the facts and circumstances available to PacifiCorp as of the date of this filing, which includes the status of litigation and recent settlements, PacifiCorp has accrued ~~$136 million as its best estimate of the potential~~cumulative estimated probable losses ~~net of expected insurance recoveries~~ associated with the 2020 Wildfires ~~that are considered probable~~ of ~~being incurred. These accruals include estimated~~$877 million through March 31, 2023. PacifiCorp's cumulative accrual includes estimates of losses for fire suppression costs, real and personal property ~~damage,~~damages, natural resource damages for certain areas 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 certain areas of 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.

The following table presents changes in PacifiCorp's liability for estimated losses associated with the 2020 Wildfires (in millions):


	Three-Month Periods
	Ended March 31,
	2023		2022
Beginning balance	$	424	$	252
Accrued losses	400		—

Ending balance	$	824	$	252

~~Environmental Laws~~PacifiCorp's receivable for expected insurance recoveries associated with the probable losses was $287 million and ~~Regulations~~$246 million, respectively, as of March 31, 2023 and December 31, 2022. During the three-month periods ended March 31, 2023 and 2022 PacifiCorp recognized probable losses net of expected insurance recoveries associated with the 2020 Wildfires of $359 million and $— million, respectively, and are recorded in operations and maintenance on the Consolidated Statements of Operations.

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.2022 McKinney Fire

~~Hydroelectric Relicensing~~According to the California Department of Forestry and Fire Protection, on July 29, 2022, a wildfire began in the Oak Knoll Ranger District of the Klamath National Forest in Siskiyou County, California (the "2022 McKinney Fire") located in PacifiCorp's service territory. Third-party reports indicate that the 2022 McKinney Fire resulted in 11 structures damaged, 185 structures destroyed, 12 injuries and four fatalities and consumed 60,000 acres. The cause of the 2022 McKinney Fire is undetermined and remains under investigation by the U.S. Forest Service.

Due to the preliminary nature of the investigation PacifiCorp does not believe a loss is probable and therefore has not accrued any loss as of the date of this filing. While the loss is not probable, PacifiCorp estimates the potential loss, excluding losses for natural resource damages, to be $31 million, net of expected insurance recoveries. The loss estimate includes PacifiCorp's estimate of losses for fire suppression costs; real and personal property damages; and noneconomic damages such as personal injury damages and loss of life damages. PacifiCorp is unable to estimate the total potential loss, including losses for natural resource damages, because there are a ~~party~~number of unknown facts and legal considerations that may impact the amount of any potential liability, including the total scope and nature of claims that may be asserted against PacifiCorp. PacifiCorp has insurance available and estimates the potential insurance recoveries to ~~the 2016 amended Klamath Hydroelectric Settlement Agreement ("KHSA"), which is intended~~be $103 million, 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.cover potential losses.

~~In September 2016,~~As of the ~~KRRC and PacifiCorp~~date of this filing, multiple lawsuits have been filed ~~a joint application with the FERC to transfer the license for the four mainstem Klamath dams from PacifiCorp~~in California on behalf of plaintiffs related to the ~~KRRC.~~2022 McKinney Fire. The ~~FERC approved partial transfer~~plaintiffs seek damages that include property damages, economic and noneconomic losses, punitive damages, exemplary damages, attorneys' fees and other damages but the amount of ~~the Klamath license in a July 2020 order, subject to the condition that PacifiCorp remains co-licensee. Under the amended KHSA, PacifiCorp did~~damages sought are not ~~agree to remain co-licensee during the surrender and removal process given concerns about~~specified. Final determinations of 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 only be ~~effective within 30 days~~made following the ~~issuance~~completion 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,comprehensive investigations and ~~a final environmental impact statement is expected later in 2022.~~litigation processes.

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)~~(10) 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 March 31, 2023
		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	$	1,349	$	491	$	848	$	—	$	—	$	—	$	—	$	—	$	2,688
Retail gas	Retail gas	—		460		38		—		—		—		—		—		498		Retail gas	—		296		96		—		—		—		—		—		392
Wholesale	Wholesale	36		125		15		—		17		—		—		—		193		Wholesale	61		100		31		—		—		—		—		(1)		191
Transmission and distribution	Transmission and distribution	25		15		21		263		—		172		—		—		496		Transmission and distribution	38		14		18		281		—		165		—		—		516
Interstate pipeline	Interstate pipeline	—		—		—		—		815		—		—		(41)		774		Interstate pipeline	—		—		—		—		878		—		—		(56)		822
Other	Other	23		—		—		—		2		—		—		—		25		Other	32		—		—		—		2		—		—		—		34
Total Regulated	Total Regulated	1,229		1,052		585		263		834		172		—		(41)		4,094		Total Regulated	1,480		901		993		281		880		165		—		(57)		4,643
Nonregulated	Nonregulated	—		10		—		10		237		8		166		187		618		Nonregulated	—		3		1		45		266		40		305		—		660
Total Customer Revenue	Total Customer Revenue	1,229		1,062		585		273		1,071		180		166		146		4,712		Total Customer Revenue	1,480		904		994		326		1,146		205		305		(57)		5,303
Other revenue	Other revenue	13		5		6		27		22		—		24		40		137		Other revenue	4		16		5		28		27		—		88		—		168
Total	Total	$	1,242	$	1,067	$	591	$	300	$	1,093	$	180	$	190	$	186	$	4,849	Total	$	1,484	$	920	$	999	$	354	$	1,173	$	205	$	393	$	(57)	$	5,471


	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		302		—		604
Total Customer Revenue	1,292		987		688		284		1,024		183		302		(41)		4,719
Other revenue	5		18		5		31		11		—		34		—		104
Total	$	1,297	$	1,005	$	693	$	315	$	1,035	$	183	$	336	$	(41)	$	4,823

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

2223

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
		Ended March 31,						Ended March 31,
			2022		2021				2023		2022
Customer Revenue:	Customer Revenue:						Customer Revenue:
Brokerage	Brokerage		$	1,092	$	1,022	Brokerage		$	799	$	1,092
Franchise	Franchise		20		18		Franchise		12		20
Total Customer Revenue	Total Customer Revenue		1,112		1,040		Total Customer Revenue		811		1,112
Mortgage and other revenue	Mortgage and other revenue		95		192		Mortgage and other revenue		64		95
Total	Total		$	1,207	$	1,232	Total		$	875	$	1,207

Remaining Performance Obligations

The following table summarizes the Company's revenue it expects to recognize in future periods related to significant unsatisfied remaining performance obligations for fixed contracts with expected durations in excess of one year as of March 31, ~~2022,~~2023, 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	$	2,786	$	20,146	$	22,932
BHE Transmission	490		—		490
Total	$	3,276	$	20,146	$	23,422

(1011) 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		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		$	(492)	$	(1,062)	$	(8)	$	10	$	(1,552)
Other comprehensive income		7		91		14		—		112
Balance, March 31, 2021		$	(485)	$	(971)	$	6	$	10	$	(1,440)

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)	15		(110)		77		—		(18)
Balance, March 31, 2022	Balance, March 31, 2022	$	(303)	$	(1,196)	$	136	$	5	$	(1,358)	Balance, March 31, 2022	$	(303)	$	(1,196)	$	136	$	5	$	(1,358)

Balance, December 31, 2022												Balance, December 31, 2022	$	(390)	$	(1,896)	$	135	$	2	$	(2,149)
Other comprehensive (loss) income												Other comprehensive (loss) income	(4)		99		(55)		—		40
Balance, March 31, 2023												Balance, March 31, 2023	$	(394)	$	(1,797)	$	80	$	2	$	(2,109)

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. Effective January 1, 2023, the Company's unregulated retail energy services business was transferred to a subsidiary of BHE Renewables. Prior period amounts, which were previously reported in BHE and Other, have been changed to reflect this activity in BHE Renewables. Information related to the Company's reportable segments is shown below (in millions):


		Three-Month Periods						Three-Month Periods
		Ended March 31,						Ended March 31,
			2022		2021				2023		2022
Operating revenue:	Operating revenue:						Operating revenue:
PacifiCorp	PacifiCorp		$	1,297	$	1,242	PacifiCorp		$	1,484	$	1,297
MidAmerican Funding	MidAmerican Funding		1,005		1,067		MidAmerican Funding		920		1,005
NV Energy	NV Energy		693		591		NV Energy		999		693
Northern Powergrid	Northern Powergrid		315		300		Northern Powergrid		354		315
BHE Pipeline Group	BHE Pipeline Group		1,035		1,093		BHE Pipeline Group		1,173		1,035
BHE Transmission	BHE Transmission		183		180		BHE Transmission		205		183
BHE Renewables	BHE Renewables		167		190		BHE Renewables		393		336
HomeServices	HomeServices		1,207		1,232		HomeServices		875		1,207
BHE and Other(1)	BHE and Other(1)		128		186		BHE and Other(1)		(57)		(41)
Total operating revenue	Total operating revenue		$	6,030	$	6,081	Total operating revenue		$	6,346	$	6,030

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	$	280
MidAmerican Funding	234		250
NV Energy	152		140
Northern Powergrid	85		80
BHE Pipeline Group	172		131
BHE Transmission	61		58
BHE Renewables	66		66
HomeServices	13		15
BHE and Other(1)	1		2
Total depreciation and amortization	$	1,063	$	1,022


		As of					Three-Month Periods
		March 31,		December 31,			Ended March 31,
		2022		2021				2023		2022
Assets:
Operating income:						Operating income:
PacifiCorp	PacifiCorp	$	27,999	$	27,615	PacifiCorp		$	(167)	$	216
MidAmerican Funding	MidAmerican Funding	25,451		25,352		MidAmerican Funding		88		100
NV Energy	NV Energy	15,430		15,239		NV Energy		57		62
Northern Powergrid	Northern Powergrid	9,175		9,326		Northern Powergrid		146		159
BHE Pipeline Group	BHE Pipeline Group	20,486		20,434		BHE Pipeline Group		584		538
BHE Transmission	BHE Transmission	9,618		9,476		BHE Transmission		88		83
BHE Renewables	BHE Renewables	12,138		11,829		BHE Renewables		(69)		54
HomeServices	HomeServices	4,036		4,574		HomeServices		(45)		28
BHE and Other(1)	BHE and Other(1)	7,136		8,220		BHE and Other(1)		(15)		(4)
Total assets		$	131,469	$	132,065
Total operating income						Total operating income		667		1,236
Interest expense						Interest expense		(586)		(532)
Capitalized interest						Capitalized interest		24		17
Allowance for equity funds						Allowance for equity funds		49		38
Interest and dividend income						Interest and dividend income		86		23
Gains (losses) on marketable securities, net						Gains (losses) on marketable securities, net		699		(1,257)
Other, net						Other, net		40		5
Total income (loss) before income tax expense (benefit) and equity income (loss)						Total income (loss) before income tax expense (benefit) and equity income (loss)		$	979	$	(470)





Interest expense:
PacifiCorp	$	124	$	106
MidAmerican Funding	84		82
NV Energy	63		51
Northern Powergrid	30		32
BHE Pipeline Group	39		37
BHE Transmission	37		38
BHE Renewables	45		42
HomeServices	4		1
BHE and Other(1)	160		143
Total interest expense	$	586	$	532


Earnings (loss) on common shares:
PacifiCorp	$	(120)	$	130
MidAmerican Funding	249		241
NV Energy	34		29
Northern Powergrid	11		111
BHE Pipeline Group	369		322
BHE Transmission	64		62
BHE Renewables	79		145
HomeServices	(34)		21
BHE and Other(1)	329		(1,206)
Total earnings (loss) on common shares	$	981	$	(145)


	As of
	March 31,		December 31,
	2023		2022
Assets:
PacifiCorp	$	30,268	$	30,559
MidAmerican Funding	25,899		26,077
NV Energy	17,210		16,676
Northern Powergrid	9,216		9,005
BHE Pipeline Group	20,931		21,005
BHE Transmission	9,380		9,334
BHE Renewables	11,693		12,632
HomeServices	3,625		3,436
BHE and Other(1)	6,232		5,116
Total assets	$	134,454	$	133,840

(1)The differences between the reportable segment amounts and the consolidated amounts, described as BHE and Other, relate principally to other corporate entities, ~~including MidAmerican Energy Services, LLC,~~ corporate functions and intersegment eliminations.


		Three-Month Periods						Three-Month Periods
		Ended March 31,						Ended March 31,
			2022		2021				2023		2022
Operating revenue by country:	Operating revenue by country:						Operating revenue by country:
U.S.	U.S.		$	5,534	$	5,597	U.S.		$	5,815	$	5,534
United Kingdom	United Kingdom		315		300		United Kingdom		333		315
Canada	Canada		181		177		Canada		177		181
Other			—		7
Australia							Australia		21		—

Total operating revenue by country	Total operating revenue by country		$	6,030	$	6,081	Total operating revenue by country		$	6,346	$	6,030


Loss before income tax benefit and equity loss by country:
Income (loss) before income tax expense (benefit) and equity income (loss) by country:						Income (loss) before income tax expense (benefit) and equity income (loss) by country:
U.S.	U.S.	$	(654)	$	(423)	U.S.	$	819	$	(654)
United Kingdom	United Kingdom	139		132		United Kingdom	113		139
Canada	Canada	46		39		Canada	43		46
Australia						Australia	5		—
Other	Other	(1)		6		Other	(1)		(1)
Total loss before income tax benefit and equity loss by country		$	(470)	$	(246)
Total income (loss) before income tax expense (benefit) and equity income (loss) by country						Total income (loss) before income tax expense (benefit) and equity income (loss) by country	$	979	$	(470)

The following table shows the change in the carrying amount of goodwill by reportable segment for the three-month period ended March 31, ~~2022~~2023 (in millions):

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

December 31, 2021 $ 1,129 $ 2,102 $ 2,369 $ 992 $ 1,814 $ 1,563 $ 95 $ 1,586 $ 11,650
Acquisitions — — — — — — — 3 3
Foreign currency translation — — — (20) — 16 — — (4)
March 31, 2022 $ 1,129 $ 2,102 $ 2,369 $ 972 $ 1,814 $ 1,579 $ 95 $ 1,589 $ 11,649


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

December 31, 2022	$	1,129	$	2,102	$	2,369	$	917	$	1,814	$	1,461	$	95	$	1,602	$	11,489

Foreign currency translation	—		—		—		13		—		1		—		—		14

March 31, 2023	$	1,129	$	2,102	$	2,369	$	930	$	1,814	$	1,462	$	95	$	1,602	$	11,503

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 and operated businesses principally engaged in the energy industry and is a consolidated subsidiary of Berkshire Hathaway. As of May 4, 2023, 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, owned 92% and 8%, respectively, of BHE's voting 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 in the U.S., one of which owns a ~~liquefied natural gas ("LNG")~~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, one of the largest residential real estate brokerage ~~firm~~firms 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 corporate entities, ~~including MidAmerican Energy Services, LLC,~~ corporate functions and intersegment eliminations. Effective January 1, 2023, the Company's unregulated retail energy services business was transferred to a subsidiary of BHE Renewables. Prior period amounts, which were previously reported in BHE and Other, have been changed to reflect this activity in BHE Renewables.

2728

Results of Operations for the First Quarter of ~~2022~~2023 and ~~2021~~2022

Overview

Operating revenue and earnings (loss) on common shares for the Company's reportable segments are summarized as follows (in millions):


		First Quarter								First Quarter
		2022		2021		Change					2023		2022		Change
Operating revenue:	Operating revenue:											Operating revenue:
PacifiCorp	PacifiCorp	$	1,297	$	1,242	$	55	4	%			PacifiCorp	$	1,484	$	1,297	$	187	14	%
MidAmerican Funding	MidAmerican Funding	1,005		1,067		(62)		(6)				MidAmerican Funding	920		1,005		(85)		(8)
NV Energy	NV Energy	693		591		102		17				NV Energy	999		693		306		44
Northern Powergrid	Northern Powergrid	315		300		15		5				Northern Powergrid	354		315		39		12
BHE Pipeline Group	BHE Pipeline Group	1,035		1,093		(58)		(5)				BHE Pipeline Group	1,173		1,035		138		13
BHE Transmission	BHE Transmission	183		180		3		2				BHE Transmission	205		183		22		12
BHE Renewables	BHE Renewables	167		190		(23)		(12)				BHE Renewables	393		336		57		17
HomeServices	HomeServices	1,207		1,232		(25)		(2)				HomeServices	875		1,207		(332)		(28)
BHE and Other	BHE and Other	128		186		(58)		(31)				BHE and Other	(57)		(41)		(16)		39
Total operating revenue	Total operating revenue	$	6,030	$	6,081	$	(51)	(1)	%			Total operating revenue	$	6,346	$	6,030	$	316	5	%

Loss on common shares:
Earnings (loss) on common shares:												Earnings (loss) on common shares:
PacifiCorp	PacifiCorp	$	130	$	169	$	(39)	(23)	%			PacifiCorp	$	(120)	$	130	$	(250)	*
MidAmerican Funding	MidAmerican Funding	241		144		97		67				MidAmerican Funding	249		241		8		3
NV Energy	NV Energy	29		34		(5)		(15)				NV Energy	34		29		5		17
Northern Powergrid	Northern Powergrid	111		104		7		7				Northern Powergrid	11		111		(100)		(90)
BHE Pipeline Group	BHE Pipeline Group	322		383		(61)		(16)				BHE Pipeline Group	369		322		47		15
BHE Transmission	BHE Transmission	62		59		3		5				BHE Transmission	64		62		2		3
BHE Renewables(1)	BHE Renewables(1)	104		16		88		*				BHE Renewables(1)	79		145		(66)		(46)
HomeServices	HomeServices	21		84		(63)		(75)				HomeServices	(34)		21		(55)		*
BHE and Other	BHE and Other	(1,165)		(1,027)		(138)		(13)				BHE and Other	329		(1,206)		1,535		*
Total loss on common shares		$	(145)	$	(34)	$	(111)	*
Total earnings (loss) on common shares												Total earnings (loss) on common shares	$	981	$	(145)	$	1,126	*

(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 $1,126 million for the first quarter of ~~2022~~2023 compared to ~~2021. The~~2022. Included in these results was a pre-tax gain in the first quarter of ~~2022 included~~2023 of $717 million ($567 million after-tax) compared to a pre-tax ~~unrealized~~ loss in the first quarter of 2022 of $1,247 million ($985 million after-tax) ~~compared~~related to ~~a pre-tax unrealized loss in the first quarter of 2021 of $1,124 million ($818 million after-tax) on~~ the Company's investment in BYD Company Limited. Excluding the impact of this item, adjusted earnings on common shares for the first quarter of ~~2022~~2023 was ~~$840~~$414 million, ~~an increase~~a decrease of ~~$56~~$426 million, or 7%51%, compared to adjusted earnings on common shares infor the first quarter of ~~2021~~2022 of ~~$784~~$840 million.

The ~~decrease~~increase in earnings on common shares for the first quarter of ~~2022~~2023 compared to ~~2021 was~~2022 were primarily due to the following:

•The Utilities' earnings ~~increased $53~~decreased $237 million for the first quarter of ~~2022~~2023 compared to ~~2021, reflecting higher electric utility margin and favorable income tax expense~~2022, primarily from ~~higher PTCs recognized, partially offset by higher depreciation and amortization expense and~~ higher operations and maintenance ~~expense.~~expense, largely due to an increase in loss accruals, net of expected insurance recoveries, associated with the 2020 Wildfires. The higher operations and maintenance expense was partially offset by favorable electric utility margin, higher allowances for equity and borrowed funds used during construction, increases in the cash surrender value of corporate-owned life insurance policies and a favorable income tax benefit from valuation allowance changes on state net operating loss carryforwards. Electric retail customer volumes increased ~~3.4%~~2.6% for the first quarter of ~~2022~~2023 compared to ~~2021, primarily due to~~2022, driven by higher customer usage and an increase in the average number of ~~customers and~~customers;

•Northern Powergrid's earnings decreased $100 million for the ~~favorable~~first quarter of 2023 compared to 2022, primarily due to a deferred income tax charge of $82 million recognized in March 2023 related to the enactment of a new Energy Profits Levy income tax. Units distributed declined 4.8% due to the unfavorable impact of ~~weather;~~weather and lower customer usage;

•BHE Pipeline Group's earnings ~~decreased $61~~increased $47 million for the first quarter of ~~2022~~2023 compared to ~~2021, primarily~~2022, largely due to ~~lower earnings~~a favorable general rate case settlement at EGTS in 2022 and the impacts of ~~$70 million~~a general rate case, with interim rates effective January 1, 2023, subject to refund, at Northern Natural Gas from higher gross margin on gas sales and higher transportation revenue recognized in the first quarter of 2021 from the February 2021 polar vortex weather event, partially offset by favorable recurring transportation revenue due to higher volumes and rates;Gas;

•BHE Renewables' earnings ~~increased $88~~decreased $66 million for the first quarter of ~~2022~~2023 compared to ~~2021,~~2022, primarily due to ~~higher earnings~~unfavorable changes in unrealized positions on ~~tax equity investments of $96 million as a result of the unfavorable impacts recognized in the first quarter of 2021 from the February 2021 polar vortex weather event;~~derivative contracts due to lower forward electricity price curves;

•HomeServices' earnings decreased ~~$63~~$55 million for the first quarter of ~~2022~~2023 compared to ~~2021,~~2022, primarily due to ~~lower earnings from mortgage services of $48 million, from a decrease in funded volume, and~~ lower earnings from brokerage and settlement services and from mortgage services, reflecting the impact of ~~$16 million, largely attributable to~~rising interest rates and a ~~decrease~~corresponding decline in ~~closed units at existing companies;~~home sales; and

•BHE and Other's earnings ~~decreased $138~~increased $1,535 million for the first quarter of ~~2022~~2023 compared to ~~2021, mainly~~2022, primarily due to the ~~$167~~$1,552 million ~~unfavorable~~favorable comparative change ~~in the after-tax unrealized position of~~related to the Company's investment in BYD Company ~~Limited, partially offset by $21 million of lower dividends on BHE's 4.00% Perpetual Preferred Stock issued to certain subsidiaries of Berkshire Hathaway.~~Limited.

Reportable Segment Results

PacifiCorp

Operating revenue increased ~~$55~~$187 million for the first quarter of ~~2022~~2023 compared to ~~2021,~~2022, primarily due to higher retail revenue of ~~$40~~$159 million and higher wholesale and other revenue of ~~$15 million.~~$28 million, primarily from higher average wholesale market prices, partially offset by lower wholesale volumes. Retail revenue increased primarily due to ~~higher retail volumes of $25 million and~~ price impacts of ~~$15~~$107 million from higher ~~tariffs.~~average retail rates largely due to tariff changes and product mix and $52 million from higher volumes. Retail customer volumes increased ~~1.9%~~3.3%, primarily due to the favorable impact of weather, higher customer usage and 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.~~customers.

Earnings decreased ~~$39~~$250 million for the first quarter of ~~2022~~2023 compared to ~~2021,~~2022, primarily due to higher operations and maintenance expense of ~~$18~~$428 million, ~~higher depreciation and amortization expense of $16 million, from additional assets placed in-service, and increased income tax expense,~~ partially offset by higher utility margin of ~~$14 million.~~$38 million, higher allowances for equity and borrowed funds used during construction of $21 million and a favorable income tax benefit from valuation allowance changes on state net operating loss carryforwards. Operations and maintenance expense ~~increased mainly~~was unfavorable primarily due to an increase in loss accruals, net of expected insurance recoveries, associated with the 2020 Wildfires of $359 million, higher ~~thermal~~wildfire mitigation and vegetation management costs, 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~~rates and ~~other revenues and higher~~volumes, favorable deferred net power costs ~~in accordance with established adjustment mechanisms,~~and higher average wholesale market prices, partially offset by higher purchased power and thermal generation ~~costs.~~costs and lower wholesale volumes.

MidAmerican Funding

Operating revenue decreased ~~$62~~$85 million for the first quarter of ~~2022~~2023 compared to ~~2021,~~2022, primarily due to lower natural gas operating revenue of ~~$116~~$70 million ~~partially offset by higher~~and lower electric operating revenue of ~~$63~~$17 million. Natural gas operating revenue decreased primarily due to a lower average per-unit cost of natural gas sold resulting in lower purchased gas adjustment recoveries of ~~$134~~$61 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~~unfavorable impact of weather of $4$5 million. Electric operating revenue ~~increased~~decreased due to ~~higher~~lower wholesale and other revenue of ~~$43~~$33 million, ~~and~~partially offset by higher retail revenue of ~~$20~~$16 million. Electric wholesale and other revenue ~~increased~~decreased mainly due to ~~higher~~lower wholesale volumes of ~~$24~~$22 million and ~~higher~~lower average wholesale per-unit prices of ~~$19~~$13 million. Electric retail revenue increased primarily due to higher ~~customer volumes of $18 million and higher~~ recoveries through adjustment clauses of $4$14 million ~~(fully~~(largely offset in expense, primarily cost of sales)~~, partially offset by price impacts from changes in sales mix of $2 million.~~. Electric retail customer volumes increased ~~5.6% due to higher customer usage and the favorable impact of weather.~~

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

~~NV Energy~~

Operating revenue increased $102 million for the first quarter of 2022 compared to 2021, primarily due to higher electric operating revenue of $90 million and higher natural gas operating revenue of $13 million. Electric operating revenue increased primarily due to higher fully-bundled energy rates (fully offset in cost of sales) of $88 million, higher retail customer volumes of $4 million and higher transmission and wholesale revenue of $4 million, partially offset by lower regulatory-related revenue deferrals. Electric retail customer volumes increased 4.0%1.0%, primarily due to ~~an increase in the average number of customers and~~ higher customer usage, partially offset by the unfavorable impact of weather.

NV Energy

Operating revenue increased $306 million for the first quarter of 2023 compared to 2022, primarily due to higher electric operating revenue of $260 million and higher natural gas operating revenue ~~increased due to~~of $44 million from a higher average per-unit cost of natural gas sold (fully offset in cost of sales). Electric operating revenue increased primarily due to higher fully bundled energy rates (fully offset in cost of sales) of $229 million, higher customer volumes of $8 million, increased base tariff general rates of $8 million at Sierra Pacific and favorable transmission and wholesale revenue of $7 million. Electric retail customer volumes increased 2.9%, primarily due to the favorable impact of weather and an increase in the average number of customers.

Earnings ~~decreased~~increased $5 million for the first quarter of ~~2022~~2023 compared to ~~2021,~~2022, primarily due to higher electric utility margin of $31 million and favorable interest and dividend income of $16 million, mainly ~~due to~~from carrying charges on higher deferred energy balances, partially offset by higher operations and maintenance expenses of $24 million, unfavorable depreciation and amortization expense of $6$13 million ~~largely from~~and increased ~~plant operations~~interest expense of $12 million due to higher outstanding long-term debt balances. Electric utility margin increased primarily due to higher electric retail customer volumes, increased base tariff general rates at Sierra Pacific and higher transmission and wholesale revenue. Operations and maintenance ~~expenses~~expense increased primarily due to higher general and ~~an unfavorable change in earnings sharing at the Nevada Utilities.~~plant maintenance costs and higher customer service operations costs. Depreciation and amortization expense increased primarily due to additional assets placed in-service.

Northern Powergrid

Operating revenue increased ~~$15~~$39 million for the first quarter of ~~2022~~2023 compared to ~~2021,~~2022, primarily due to higher distribution revenue of ~~$10 million, revenue from a gas project reaching commercial operation in March 2022 totaling $10~~$41 million and higher ~~smart metering~~ revenue at CE Gas of $6$29 million, partially offset by $9$37 million from the stronger U.S. dollar. Distribution revenue increased ~~from~~primarily due to the recovery of Supplier of Last Resort payments of $43 million (fully offset in cost of sales) and higher tariff rates of ~~$14 million, partially offset by~~$10 million. Also impacting distribution revenue was a ~~2.6%~~4.8% decline in units distributed, largely due to the unfavorable impact of $3weather and lower customer usage, of $11 million. CE Gas revenue increased from a gas project that commenced commercial operation in March 2022 and a solar project that commenced commercial operation in July 2022.

Earnings ~~increased $7~~decreased $100 million for the first quarter of ~~2022~~2023 compared to ~~2021,~~2022, primarily due to a deferred income tax charge of $82 million recognized in March 2023 related to the enactment of a new Energy Profits Levy income tax. Earnings were also impacted by unfavorable distribution-related operating and depreciation expenses of $11 million and increased non-service benefit plan costs of $10 million, partially offset by favorable operating performance at CE Gas of $8 million from the gas and solar projects that commenced commercial operations in 2022.

BHE Pipeline Group

Operating revenue increased $138 million for the first quarter of 2023 compared to 2022, primarily due to higher ~~distribution~~operating revenue of $71 million at Northern Natural Gas and $55 million at BHE GT&S. The increase in operating revenue at Northern Natural Gas was largely due to the impacts of a general rate case, with interim rates effective January 1, 2023, subject to refund, of $63 million and higher transportation revenue of $34 million from higher rates in the Field Area, partially offset by lower gas sales of $25 million (largely offset in cost of sales) from system balancing activities. The increase in operating revenue at BHE GT&S was primarily due to an increase in regulated gas transportation and storage services rates due to the settlement of EGTS' general rate case of $42 million, higher LNG revenue of $16 million at Cove Point, and an increase in variable revenue related to park and loan activity of $10 million at EGTS, partially offset by lower non-regulated revenue of $22 million (largely offset in cost of sales) from lower volumes and unfavorable commodity prices.

Earnings increased $47 million for the first quarter of 2023 compared to 2022, largely due to higher earnings at Northern Natural Gas of $28 million and higher earnings at BHE GT&S of $14 million. The increase at Northern Natural Gas is due to the impacts of a general rate case of $16 million and higher transportation revenue in the Field Area, partially offset by higher operations and maintenance expense. The increase at BHE GT&S is due to a favorable general rate case settlement at EGTS in 2022 and higher equity earnings at Iroquois Gas Transmission System, partially offset by higher operations and maintenance expense and increased cost of gas from the unfavorable revaluation of volumes retained, due to lower natural gas prices.

BHE Transmission

Operating revenue increased $22 million for the first quarter of 2023 compared to 2022, primarily due to $26 million of incremental revenue from non-regulated wind-powered generating facilities acquired in November 2022 and higher other non-regulated revenue at BHE Canada, partially offset by $12 million from the stronger U.S. dollar.

Earnings increased $2 million for the first quarter of 2023 compared to 2022, primarily due to $6 million of incremental earnings at non-regulated wind-powered generating facilities acquired in November 2022, partially offset by $3 million from the stronger U.S. dollar.

BHE ~~Pipeline Group~~Renewables

Operating revenue ~~decreased $58~~increased $57 million for the first quarter of ~~2022~~2023 compared to ~~2021,~~2022, primarily due to ~~lower gas sales~~higher wind revenues of ~~$41~~$60 million, related to system balancing activities at Northern Natural Gas, lower transportation revenue of $20 million at Northern Natural Gas and lower gas sales of $17 million at EGTS used for operational and system balancing purposes, partially offset by higher LNG variable revenue of $13 million at BHE GT&S and higher non-regulated revenue of $11 million at BHE GT&S. The variances in gas sales and transportation revenue at Northern Natural Gas included favorable impacts recognized in the first quarter of 2021 of $77 million and $49 million, respectively, from the February 2021 polar vortex weather event. Excluding this item, gas sales increased $36 million (largely offset in cost of sales) and transportation revenue increased $29 millionlargely due to ~~higher volumes and rates.~~

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

~~BHE Transmission~~

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

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

~~BHE Renewables~~

~~Operating revenue decreased $23 million for the first quarter of 2022 compared to 2021, primarily due to unfavorable~~ changes in the valuation of certain derivative contracts, ~~totaling $43~~and higher natural gas and electric retail energy services revenue of $23 million, partially offset by lower solar revenues of $20 million from lower generation due to weather events in California. Natural gas and electric retail energy services revenue increased due to higher electric volumes and favorable natural gas and electric pricing, partially offset by lower natural gas volumes.

Earnings decreased $66 million for the first quarter of 2023 compared to 2022, primarily due to lower earnings of $79 million from the retail energy services business, largely due to unfavorable changes in unrealized positions on derivative contracts caused by lower forward electricity price curves, lower natural gas and geothermal earnings of $40 million, primarily due to maintenance outages, and lower ~~hydro revenues~~solar earnings of $8$18 million from lower generation due to ~~the transfer of the Casecnan generating facility to the National Irrigation Administration~~weather events in ~~December 2021,~~California. These items were partially offset by higher wind ~~solar and geothermal revenues of $27 million from higher generation and pricing.~~

~~Earnings increased $88 million for the first quarter 2022 compared to 2021, primarily due to higher wind~~ earnings of ~~$92 million and higher solar earnings of $6~~$74 million, largely due to favorable changes in the ~~higher operating revenue, partially offset by lower hydro earnings~~valuation of ~~$10 million due to the Casecnan generating facility transfer. Wind earnings increased primarily due to~~certain derivative contracts and higher earnings onfrom tax equity investments of ~~$96~~$28 million ~~as a result of the unfavorable impacts recognized in the first quarter of 2021 from the February 2021 polar vortex weather event.~~due to lower equity losses and higher production tax credits.

HomeServices

Operating revenue decreased ~~$25~~$332 million for the first quarter of ~~2022~~2023 compared to ~~2021,~~2022, primarily due to lower brokerage and settlement services revenue of $293 million and lower mortgage revenue of ~~$97 million~~$34 million. The decrease in brokerage and settlement services revenue resulted from a 29% decrease in closed transaction volume due to rising interest rates and a corresponding decline in home sales. The lower mortgage revenue was due to a 41% decrease in funded volume, primarily due to lower refinance activity, partially offset by higher brokerage revenue of $78 million from a 9% increase in closed transaction volume. The increase in brokerage volume was due to acquisitions and an 11% increase in average sales price at existing companies offset by 12% fewer closed units at existing companies.rising interest rates.

Earnings decreased ~~$63~~$55 million for the first quarter of ~~2022~~2023 compared to ~~2021,~~2022, primarily due to ~~lower earnings from mortgage services of $48 million, from the decrease in funded volume, and~~ lower earnings from brokerage and settlement services of ~~$16~~$38 million and mortgage services of $12 million, largely ~~attributable~~from the decrease in funded volumes from rising interest rates. Earnings at brokerage and settlement services declined due to the decrease in closed ~~units at existing companies.~~transaction volume, partially offset by favorable operating expenses primarily due to lower compensation costs.

BHE and Other

Operating revenue decreased ~~$58~~$16 million for the first quarter of ~~2022~~2023 compared to ~~2021, primarily~~2022, due to ~~lower electricity sales revenue at MidAmerican Energy Services, LLC, from unfavorable pricing.~~higher intersegment eliminations.

Earnings ~~decreased $138~~increased $1,535 million for the first quarter of ~~2022~~2023 compared to ~~2021,~~2022, primarily due to the ~~$167~~$1,552 million ~~unfavorable~~favorable comparative change ~~in the after-tax unrealized position of~~related to the Company's investment in BYD Company Limited, ~~and $54 million of lower federal income tax credits recognized on a consolidated basis, partially offset by higher earnings of $41 million at MidAmerican Energy Services, LLC, mainly due to~~ favorable changes in ~~unrealized positions on derivative contracts, lower corporate costs~~the cash surrender value of corporate-owned life insurance policies of $14 million and ~~$21~~$8 million of lower dividends on BHE's 4.00% Perpetual Preferred Stock issued to certain insurance subsidiaries of Berkshire Hathaway. These items were partially offset by higher BHE corporate interest expense from an April 2022 debt issuance and $17 million of lower federal income tax credits recognized on a consolidated basis.

3132

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~~2022 for further discussion regarding the limitation of distributions from BHE's subsidiaries.

As of March 31, ~~2022,~~2023, 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	$	173	$	19	$	58	$	21	$	18	$	64	$	216	$	394	$	963

Credit facilities(1)	Credit facilities(1)	3,500		1,200		1,509		650		263		860		3,300		—		11,282		Credit facilities(1)	3,500		2,000		1,509		650		295		795		2,725		—		11,474
Less:	Less:																			Less:
Short-term debt	Short-term debt	(110)		—		—		(161)		—		(375)		(1,203)		—		(1,849)		Short-term debt	(755)		—		—		(83)		(49)		(127)		(805)		—		(1,819)
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	—		(249)		(363)		—		—		(1)		—		—		(613)
Net credit facilities	Net credit facilities	3,390		982		1,139		489		263		484		2,097		—		8,844		Net credit facilities	2,745		1,751		1,146		567		246		667		1,920		—		9,042

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)~~	$	2,918	$	1,770	$	1,204	$	588	$	264	$	731	$	2,136	$	394	$	10,005
Credit facilities:	Credit facilities:																			Credit facilities:
Maturity dates	Maturity dates	2024		2024		2022, 2024		2024		2024		2022, 2026		2022, 2023, 2026						Maturity dates	2025		2024, 2025		2023, 2025		2025		2025		2023, 2026, 2027		2023, 2024, 2026

(1) ~~Excludes $100~~Includes $48 million ~~of available liquidity under a delayed draw term loan~~drawn on capital expenditure and other uncommitted credit facilities at ~~Nevada Power.~~Northern Powergrid.

Operating Activities

Net cash flows from operating activities for the three-month periods ended March 31, 2023 and 2022, ~~and 2021~~ were ~~$2.2~~$1.1 billion and ~~$1.5~~$2.2 billion, respectively. The ~~increase~~decrease was primarily due to changes in working ~~capital.~~capital and regulatory assets and unfavorable operating results.

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~~PacifiCorp

~~Net cash flows from investing activities~~Operating revenue increased $187 million for the ~~three-month periods ended March 31,~~first quarter of 2023 compared to 2022, ~~and 2021 were $(1.6) billion and $(1.4) billion, respectively. The change was~~ primarily due to higher ~~capital expenditures~~retail revenue of ~~$258~~$159 million and higher wholesale and other revenue of $28 million, primarily from higher average wholesale market prices, partially offset by lower wholesale volumes. Retail revenue increased primarily due to price impacts of $107 million from higher average retail rates largely due to tariff changes and product mix and $52 million from higher volumes. Retail customer volumes increased 3.3%, primarily due to the favorable impact of weather, higher customer usage and an increase in the average number of customers.

Earnings decreased $250 million for the first quarter of 2023 compared to 2022, primarily due to higher operations and maintenance expense of $428 million, partially offset by higher utility margin of $38 million, higher allowances for equity and borrowed funds used during construction of $21 million and a favorable income tax benefit from valuation allowance changes on state net operating loss carryforwards. Operations and maintenance expense was unfavorable primarily due to an increase in loss accruals, net of expected insurance recoveries, associated with the 2020 Wildfires of $359 million, higher wildfire mitigation and vegetation management costs, and higher general and plant maintenance costs. Utility margin increased primarily due to higher retail rates and volumes, favorable deferred net power costs and higher average wholesale market prices, partially offset by higher purchased power and thermal generation costs and lower wholesale volumes.

MidAmerican Funding

Operating revenue decreased $85 million for the first quarter of 2023 compared to 2022, primarily due to lower natural gas operating revenue of $70 million and lower electric operating revenue of $17 million. ~~Refer~~Natural gas operating revenue decreased primarily due to ~~"Future Uses~~a lower average per-unit cost of ~~Cash"~~natural gas sold resulting in lower purchased gas adjustment recoveries of $61 million (fully offset in cost of sales) and the unfavorable impact of weather of $5 million. Electric operating revenue decreased due to lower wholesale and other revenue of $33 million, partially offset by higher retail revenue of $16 million. Electric wholesale and other revenue decreased mainly due to lower wholesale volumes of $22 million and lower average wholesale per-unit prices of $13 million. Electric retail revenue increased primarily due to higher recoveries through adjustment clauses of $14 million (largely offset in expense, primarily cost of sales). Electric retail customer volumes increased 1.0%, primarily due to higher customer usage, partially offset by the unfavorable impact of weather.

Earnings increased $8 million for the first quarter of 2023 compared to 2022, primarily due to lower depreciation and amortization expense of $17 million, a ~~discussion~~one-time gain on the sale of ~~capital expenditures.~~an investment of $13 million and favorable changes in the cash surrender value of corporate-owned life insurance policies of $12 million, partially offset by higher operations and maintenance expense of $13 million, lower natural gas utility margin of $8 million and lower electric utility margin of $7 million. Depreciation and amortization expense decreased primarily from the impacts of certain regulatory mechanisms, partially offset by additional assets placed in-service. Operations and maintenance expense increased due to higher general and plant maintenance costs and unfavorable property insurance costs. Natural gas utility margin decreased primarily due to the unfavorable impact of weather. Electric utility margin decreased primarily due to lower wholesale revenue, partially offset by higher retail revenue and lower purchased power costs.

3230

~~Financing Activities~~NV Energy

~~Net cash flows from financing activities~~Operating revenue increased $306 million for the ~~three-month period ended March 31,~~first quarter of 2023 compared to 2022, ~~was $(310) million. Sources~~primarily due to higher electric operating revenue of ~~cash totaled $405~~$260 million and ~~consisted~~higher natural gas operating revenue of ~~proceeds~~$44 million from ~~subsidiary debt issuances. Uses~~a higher average per-unit cost of ~~cash totaled $715~~natural gas sold (fully offset in cost of sales). Electric operating revenue increased primarily due to higher fully bundled energy rates (fully offset in cost of sales) of $229 million, higher customer volumes of $8 million, increased base tariff general rates of $8 million at Sierra Pacific and ~~consisted mainly~~favorable transmission and wholesale revenue of ~~repayments~~$7 million. Electric retail customer volumes increased 2.9%, primarily due to the favorable impact of ~~subsidiary debt totaling $193 million, net repayments~~weather and an increase in the average number of ~~short-term debt totaling $165 million and distributions to noncontrolling interests of $117 million.~~customers.

~~For~~Earnings increased $5 million for the first quarter of 2023 compared to 2022, primarily due to higher electric utility margin of $31 million and favorable interest and dividend income of $16 million, mainly from carrying charges on higher deferred energy balances, partially offset by higher operations and maintenance expenses of $24 million, unfavorable depreciation and amortization expense of $13 million and increased interest expense of $12 million due to higher outstanding long-term debt balances. Electric utility margin increased primarily due to higher electric retail customer volumes, increased base tariff general rates at Sierra Pacific and higher transmission and wholesale revenue. Operations and maintenance expense increased primarily due to higher general and plant maintenance costs and higher customer service operations costs. Depreciation and amortization expense increased primarily due to additional assets placed in-service.

Northern Powergrid

Operating revenue increased $39 million for the first quarter of 2023 compared to 2022, primarily due to higher distribution revenue of $41 million and higher revenue at CE Gas of $29 million, partially offset by $37 million from the stronger U.S. dollar. Distribution revenue increased primarily due to the recovery of Supplier of Last Resort payments of $43 million (fully offset in cost of sales) and higher tariff rates of $10 million. Also impacting distribution revenue was a ~~discussion~~4.8% decline in units distributed, largely due to the unfavorable impact of ~~recent~~weather and lower customer usage, of $11 million. CE Gas revenue increased from a gas project that commenced commercial operation in March 2022 and a solar project that commenced commercial operation in July 2022.

Earnings decreased $100 million for the first quarter of 2023 compared to 2022, primarily due to a deferred income tax charge of $82 million recognized in March 2023 related to the enactment of a new Energy Profits Levy income tax. Earnings were also impacted by unfavorable distribution-related operating and depreciation expenses of $11 million and increased non-service benefit plan costs of $10 million, partially offset by favorable operating performance at CE Gas of $8 million from the gas and solar projects that commenced commercial operations in 2022.

BHE Pipeline Group

Operating revenue increased $138 million for the first quarter of 2023 compared to 2022, primarily due to higher operating revenue of $71 million at Northern Natural Gas and $55 million at BHE GT&S. The increase in operating revenue at Northern Natural Gas was largely due to the impacts of a general rate case, with interim rates effective January 1, 2023, subject to refund, of $63 million and higher transportation revenue of $34 million from higher rates in the Field Area, partially offset by lower gas sales of $25 million (largely offset in cost of sales) from system balancing activities. The increase in operating revenue at BHE GT&S was primarily due to an increase in regulated gas transportation and storage services rates due to the settlement of EGTS' general rate case of $42 million, higher LNG revenue of $16 million at Cove Point, and an increase in variable revenue related to park and loan activity of $10 million at EGTS, partially offset by lower non-regulated revenue of $22 million (largely offset in cost of sales) from lower volumes and unfavorable commodity prices.

BHE Transmission

Operating revenue increased $22 million for the first quarter of 2023 compared to 2022, primarily due to $26 million of incremental revenue from non-regulated wind-powered generating facilities acquired in November 2022 and higher other non-regulated revenue at BHE Canada, partially offset by $12 million from the stronger U.S. dollar.

BHE Renewables

Operating revenue increased $57 million for the first quarter of 2023 compared to 2022, primarily due to higher wind revenues of $60 million, largely due to favorable changes in the valuation of certain derivative contracts, and higher natural gas and electric retail energy services revenue of $23 million, partially offset by lower solar revenues of $20 million from lower generation due to weather events in California. Natural gas and electric retail energy services revenue increased due to higher electric volumes and favorable natural gas and electric pricing, partially offset by lower natural gas volumes.

Earnings decreased $66 million for the first quarter of 2023 compared to 2022, primarily due to lower earnings of $79 million from the retail energy services business, largely due to unfavorable changes in unrealized positions on derivative contracts caused by lower forward electricity price curves, lower natural gas and geothermal earnings of $40 million, primarily due to maintenance outages, and lower solar earnings of $18 million from lower generation due to weather events in California. These items were partially offset by higher wind earnings of $74 million, largely due to favorable changes in the valuation of certain derivative contracts and higher earnings from tax equity investments of $28 million due to lower equity losses and higher production tax credits.

HomeServices

Operating revenue decreased $332 million for the first quarter of 2023 compared to 2022, primarily due to lower brokerage and settlement services revenue of $293 million and lower mortgage revenue of $34 million. The decrease in brokerage and settlement services revenue resulted from a 29% decrease in closed transaction volume due to rising interest rates and a corresponding decline in home sales. The lower mortgage revenue was due to a 41% decrease in funded volume, primarily due to rising interest rates.

Earnings decreased $55 million for the first quarter of 2023 compared to 2022, primarily due to lower earnings from brokerage and settlement services of $38 million and mortgage services of $12 million, largely from the decrease in funded volumes from rising interest rates. Earnings at brokerage and settlement services declined due to the decrease in closed transaction volume, partially offset by favorable operating expenses primarily due to lower compensation costs.

BHE and Other

Operating revenue decreased $16 million for the first quarter of 2023 compared to 2022, due to higher intersegment eliminations.

Earnings increased $1,535 million for the first quarter of 2023 compared to 2022, primarily due to the $1,552 million favorable comparative change related to the Company's investment in BYD Company Limited, favorable changes in the cash surrender value of corporate-owned life insurance policies of $14 million and $8 million of lower dividends on BHE's 4.00% Perpetual Preferred Stock issued to certain insurance subsidiaries of Berkshire Hathaway. These items were partially offset by higher BHE corporate interest expense from an April 2022 debt issuance and $17 million of lower federal income tax credits recognized on a consolidated basis.

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 ~~transactions, refer~~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 418 of Notes to Consolidated Financial Statements in ~~Part I,~~ Item ~~1 of this Form 10-Q.~~

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

~~Future Uses of Cash~~

The Company has available a variety of sources of liquidity and capital resources, both internal and external, including net cash flows from operating activities, public and private debt offerings, the issuance of commercial paper, the use of unsecured revolving credit facilities, the issuance of equity and other sources. These sources are expected to provide funds required for current operations, capital expenditures, acquisitions, investments, debt retirements and other capital requirements. The availability and terms under which BHE and each subsidiary has access to external financing depends on a variety of factors, including regulatory approvals, its credit ratings, investors' judgment of risk and conditions in the overall capital markets, including the condition of the utility industry and project finance markets, among other items.

~~Capital Expenditures~~

The Company has significant future capital requirements. Capital expenditure needs are reviewed regularly by management and may change significantly as a result of these reviews, which may consider, among other factors, impacts to customers' rates; changes in environmental and other rules and regulations; outcomes of regulatory proceedings; changes in income tax laws; general business conditions; load projections; system reliability standards; the cost and efficiency of construction labor, equipment and materials; commodity prices; and the cost and availability of capital.

~~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
Ended March 31, Forecast
2021 2022 2022
Capital expenditures by business:
PacifiCorp $ 439 $ 374 $ 2,359
MidAmerican Funding 298 459 2,013
NV Energy 167 272 1,282
Northern Powergrid 179 169 652
BHE Pipeline Group 102 205 1,243
BHE Transmission 77 47 191
BHE Renewables 18 19 184
HomeServices 8 12 60
BHE and Other(1)
7 (4) 13
Total $ 1,295 $ 1,553 $ 7,997

Capital expenditures by type:
Wind generation $ 97 $ 155 $ 990
Electric distribution 427 392 1,737
Electric transmission 157 258 1,820
Natural gas transmission and storage 85 103 982
Solar generation 4 51 220
Other 525 594 2,248
Total $ 1,295 $ 1,553 $ 7,997

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

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

•~~Wind generation includes both growth and operating expenditures. Growth expenditures include spending for the following:~~

◦Construction of wind-powered generating facilities at MidAmerican Energy totaling $3 million for the three-month period ended March 31, 2022. Planned spending for the construction of additional wind-powered generating facilities totals $142 million for the remainder of 2022.

◦Repowering of wind-powered generating facilities at MidAmerican Energy totaling $120 million and $24 million for the three-month periods ended March 31, 2022 and 2021, respectively. Planned spending for the repowering of wind-powered generating facilities totals $386 million for the remainder of 2022. MidAmerican Energy expects its repowered facilities to meet Internal Revenue Service guidelines for the re-establishment of PTCs for 10 years from the date the facilities are placed in-service. The rate at which PTCs are re-established for a facility depends upon the date construction begins. Of the 812 MWs of current repowering projects not in-service as of March 31, 2022, 511 MWs are currently expected to qualify for 80% of the PTCs available for 10 years following each facility's return to service and 301 MWs are expected to qualify for 60% of such credits.

◦Construction of wind-powered generating facilities at PacifiCorp totaling $3 million and $27 million for the three-month periods ended March 31, 2022 and 2021, respectively. Construction includes 516 MWs of new wind-powered generating facilities that were placed in-service in 2021. Planned spending for the construction of additional wind-powered generating facilities totals $109 million for the remainder of 2022. The energy production from the new wind-powered generating facilities placed in-service by the end of 2024 is expected to qualify for 60% of the federal PTCs available for 10 years once the equipment is placed in-service.

◦Planned acquisition and repowering of two wind-powered generating facilities by PacifiCorp totaling $3 million and $1 million for the three-month periods ended March 31, 2022 and 2021, respectively. The repowered facilities are expected to be placed in-service in 2023 and 2024. Planned spending for acquiring and repowering generating facilities totals $18 million for the remainder of 2022.

◦Repowering of wind-powered generating facilities at BHE Renewables totaling $25 million for the three-month period ended March 31, 2022. Planned spending for repowering generating facilities totals $64 million for the remainder of 2022.

•Electric distribution includes both growth and operating expenditures. Growth expenditures include spending for new customer connections and enhancements to existing customer connections. Operating expenditures include spending for ongoing distribution systems infrastructure needed at the Utilities and Northern Powergrid, wildfire mitigation, storm damage restoration and repairs and investments in routine expenditures for distribution needed to serve existing and expected demand.

•~~Electric transmission includes both growth and operating expenditures. Growth expenditures include spending for the following:~~

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

◦Nevada Utilities' Greenlink Nevada transmission expansion program. In this project, the company has received approval from the PUCN to build a 350-mile, 525-kV transmission line, known as Greenlink West, connecting the Ft. Churchill substation to the Northwest substation to the Harry Allen substation; a 235-mile, 525-kV transmission line, known as Greenlink North, connecting the new Ft. Churchill substation to the Robinson Summit substation; a 46-mile, 345-kV transmission line from the new Ft. Churchill substation to the Mira Loma substations; and a 38-mile, 345-kV transmission line from the new Ft. Churchill substation to the Robinson Summit substations. Expenditures for the expansion program and other growth projects totaled $30 million and $19 million for the three-month periods ended March 31, 2022 and 2021, respectively. Planned spending for the expansion program estimated to be placed in-service in 2026-2028 and other growth projects totals $166 million for the remainder of 2022.

◦Operating expenditures include spending for system reinforcement, upgrades and replacements of facilities to maintain system reliability and investments in routine expenditures for transmission needed to serve existing and expected demand.

•Natural gas transmission and storage includes both growth and operating expenditures. Growth expenditures include, among other items, spending for the Northern Natural Gas Twin Cities Area Expansion and Spraberry Compression projects. Operating expenditures include, among other items, spending for asset modernization, pipeline integrity projects and natural gas transmission, storage and liquefied natural gas terminalling infrastructure needs to serve existing and expected demand.

•~~Solar generation includes growth expenditures, including spending for the following:~~

◦Construction of solar-powered generating facilities at MidAmerican Energy totaling 141 MWs of small- and utility-scale solar generation, with total spend of $44 million and $3 million for the three-month periods ended March 31, 2022 and 2021, respectively and planned spending of $96 million for the remainder of 2022.

◦Construction of a solar-powered generating facility at Nevada Power totaling $7 million for the three-month period ended March 31, 2022 and planned spending of $74 million for the remainder of 2022. Construction includes expenditures for a 150-MW solar photovoltaic facility with an additional 100 MWs of co-located battery storage that will be developed in Clark County, Nevada. Commercial operation is expected by the end of 2023.

•Other capital expenditures includes both growth and operating expenditures, including spending for routine expenditures for generation and other infrastructure needed to serve existing and expected demand, natural gas distribution, technology, and environmental spending relating to emissions control equipment and the management of coal combustion residuals.

~~Other Renewable Investments~~

The Company has invested in projects sponsored by third parties, commonly referred to as tax equity investments. Under the terms of these tax equity investments, the Company has entered into equity capital contribution agreements with the project sponsors that require contributions. The Company has made no contributions for the three-month period ended March 31, 2022, and has commitments as of March 31, 2022, subject to satisfaction of certain specified conditions, to provide equity contributions of $356 million for the remainder of 2022 pursuant to these equity capital contribution agreements as the various projects achieve commercial operation. However, the Company expects to assign its rights and obligations under these equity capital contribution agreements, including any related funding commitments, to an entity affiliated through common ownership. Once a project achieves commercial operation, the Company enters into a partnership agreement with the project sponsor that directs and allocates the operating profits and tax benefits from the project.

~~Material Cash Requirements~~

~~As of March 31, 2022, there have been no material changes outside the normal course of business in material cash requirements from the information provided in Item 7~~8 of the Company's Annual Report on Form 10-K for the year ended December 31, ~~2021 other than~~2022 for further discussion regarding the ~~recent financing transactions previously discussed.~~limitation of distributions from BHE's subsidiaries.

As of March 31, 2023, the Company's total net liquidity was as follows (in millions):

~~Quad Cities Generating Station Operating Status~~


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

Cash and cash equivalents	$	173	$	19	$	58	$	21	$	18	$	64	$	216	$	394	$	963

Credit facilities(1)	3,500		2,000		1,509		650		295		795		2,725		—		11,474
Less:
Short-term debt	(755)		—		—		(83)		(49)		(127)		(805)		—		(1,819)
Tax-exempt bond support and letters of credit	—		(249)		(363)		—		—		(1)		—		—		(613)
Net credit facilities	2,745		1,751		1,146		567		246		667		1,920		—		9,042

Total net liquidity	$	2,918	$	1,770	$	1,204	$	588	$	264	$	731	$	2,136	$	394	$	10,005
Credit facilities:
Maturity dates	2025		2024, 2025		2023, 2025		2025		2025		2023, 2026, 2027		2023, 2024, 2026

~~Constellation Energy Corp. ("Constellation Energy," previously Exelon Generation Company, LLC, which~~(1)Includes $48 million drawn on capital expenditure and other uncommitted credit facilities at Northern Powergrid.

Operating Activities

Net cash flows from operating activities for the three-month periods ended March 31, 2023 and 2022, were $1.1 billion and $2.2 billion, respectively. The decrease was ~~a subsidiary of Exelon Corporation prior~~primarily due to ~~February 1, 2022), the operator of Quad Cities Generating Station Units 1~~changes in working capital 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 ZECsregulatory assets 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.unfavorable operating results.

The ~~PJM Interconnection, L.L.C. ("PJM") capacity market includes a Minimum Offer Price Rule ("MOPR"). If a generation resource is subjected~~timing of the Company's income tax cash flows from period to ~~a MOPR, its offer price in~~period can be significantly affected by 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.estimated federal income tax payment methods selected and assumptions made for each payment date.

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

Operating revenue increased $187 million for the first quarter of 2023 compared to 2022, primarily due to higher retail revenue of $159 million and higher wholesale and other revenue of $28 million, primarily from higher average wholesale market prices, partially offset by lower wholesale volumes. Retail revenue increased primarily due to price impacts of $107 million from higher average retail rates largely due to tariff changes and product mix and $52 million from higher volumes. Retail customer volumes increased 3.3%, primarily due to the favorable impact of weather, higher customer usage and an increase in the average number of customers.

MidAmerican Funding

Operating revenue decreased $85 million for the first quarter of 2023 compared to 2022, primarily due to lower natural gas operating revenue of $70 million and lower electric operating revenue of $17 million. Natural gas operating revenue decreased primarily due to a lower average per-unit cost of natural gas sold resulting in lower purchased gas adjustment recoveries of $61 million (fully offset in cost of sales) and the unfavorable impact of weather of $5 million. Electric operating revenue decreased due to lower wholesale and other revenue of $33 million, partially offset by higher retail revenue of $16 million. Electric wholesale and other revenue decreased mainly due to lower wholesale volumes of $22 million and lower average wholesale per-unit prices of $13 million. Electric retail revenue increased primarily due to higher recoveries through adjustment clauses of $14 million (largely offset in expense, primarily cost of sales). Electric retail customer volumes increased 1.0%, primarily due to higher customer usage, partially offset by the unfavorable impact of weather.

NV Energy

Operating revenue increased $306 million for the first quarter of 2023 compared to 2022, primarily due to higher electric operating revenue of $260 million and higher natural gas operating revenue of $44 million from a higher average per-unit cost of natural gas sold (fully offset in cost of sales). Electric operating revenue increased primarily due to higher fully bundled energy rates (fully offset in cost of sales) of $229 million, higher customer volumes of $8 million, increased base tariff general rates of $8 million at Sierra Pacific and favorable transmission and wholesale revenue of $7 million. Electric retail customer volumes increased 2.9%, primarily due to the favorable impact of weather and an increase in the average number of customers.

Earnings increased $5 million for the first quarter of 2023 compared to 2022, primarily due to higher electric utility margin of $31 million and favorable interest and dividend income of $16 million, mainly from carrying charges on higher deferred energy balances, partially offset by higher operations and maintenance expenses of $24 million, unfavorable depreciation and amortization expense of $13 million and increased interest expense of $12 million due to higher outstanding long-term debt balances. Electric utility margin increased primarily due to higher electric retail customer volumes, increased base tariff general rates at Sierra Pacific and higher transmission and wholesale revenue. Operations and maintenance expense increased primarily due to higher general and plant maintenance costs and higher customer service operations costs. Depreciation and amortization expense increased primarily due to additional assets placed in-service.

Northern Powergrid

Operating revenue increased $39 million for the first quarter of 2023 compared to 2022, primarily due to higher distribution revenue of $41 million and higher revenue at CE Gas of $29 million, partially offset by $37 million from the stronger U.S. dollar. Distribution revenue increased primarily due to the recovery of Supplier of Last Resort payments of $43 million (fully offset in cost of sales) and higher tariff rates of $10 million. Also impacting distribution revenue was a 4.8% decline in units distributed, largely due to the unfavorable impact of weather and lower customer usage, of $11 million. CE Gas revenue increased from a gas project that commenced commercial operation in March 2022 and a solar project that commenced commercial operation in July 2022.

BHE Pipeline Group

BHE Transmission

Operating revenue increased $22 million for the first quarter of 2023 compared to 2022, primarily due to $26 million of incremental revenue from non-regulated wind-powered generating facilities acquired in November 2022 and higher other non-regulated revenue at BHE Canada, partially offset by $12 million from the stronger U.S. dollar.

BHE Renewables

Earnings decreased $66 million for the first quarter of 2023 compared to 2022, primarily due to lower earnings of $79 million from the retail energy services business, largely due to unfavorable changes in unrealized positions on derivative contracts caused by lower forward electricity price curves, lower natural gas and geothermal earnings of $40 million, primarily due to maintenance outages, and lower solar earnings of $18 million from lower generation due to weather events in California. These items were partially offset by higher wind earnings of $74 million, largely due to favorable changes in the valuation of certain derivative contracts and higher earnings from tax equity investments of $28 million due to lower equity losses and higher production tax credits.

HomeServices

BHE and Other

Operating revenue decreased $16 million for the first quarter of 2023 compared to 2022, due to higher intersegment eliminations.

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, 2022 for further discussion regarding the limitation of distributions from BHE's subsidiaries.

As of March 31, 2023, the Company's total net liquidity was as follows (in millions):


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

Cash and cash equivalents	$	173	$	19	$	58	$	21	$	18	$	64	$	216	$	394	$	963

Credit facilities(1)	3,500		2,000		1,509		650		295		795		2,725		—		11,474
Less:
Short-term debt	(755)		—		—		(83)		(49)		(127)		(805)		—		(1,819)
Tax-exempt bond support and letters of credit	—		(249)		(363)		—		—		(1)		—		—		(613)
Net credit facilities	2,745		1,751		1,146		567		246		667		1,920		—		9,042

Total net liquidity	$	2,918	$	1,770	$	1,204	$	588	$	264	$	731	$	2,136	$	394	$	10,005
Credit facilities:
Maturity dates	2025		2024, 2025		2023, 2025		2025		2025		2023, 2026, 2027		2023, 2024, 2026

(1)Includes $48 million drawn on capital expenditure and other uncommitted credit facilities at Northern Powergrid.

Operating Activities

Net cash flows from operating activities for the three-month periods ended March 31, 2023 and 2022, were $1.1 billion and $2.2 billion, respectively. The decrease was primarily due to changes in working capital and regulatory assets and unfavorable operating results.

Investing Activities

Net cash flows from investing activities for the three-month periods ended March 31, 2023 and 2022, were $(1.8) billion and $(1.6) billion, respectively. The change was primarily due to higher purchases, net of proceeds from maturities, of U.S. Treasury Bills totaling $896 million and higher capital expenditures of $295 million, partially offset by higher proceeds from sales of marketable securities of $942 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 period ended March 31, 2023, was $20 million. Sources of cash totaled $699 million and consisted of net proceeds from short-term debt. Uses of cash totaled $679 million and consisted mainly of repayments of BHE senior debt totaling $400 million, repayments of subsidiary debt totaling $136 million and distributions to noncontrolling interests of $126 million.

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

Future Uses of Cash

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 customer 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.

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
	Ended March 31,				Forecast
	2022		2023		2023
Capital expenditures by business:
PacifiCorp	$	374	$	643	$	3,662
MidAmerican Funding	459		382		2,324
NV Energy	272		437		1,751
Northern Powergrid	169		124		597
BHE Pipeline Group	205		169		1,431
BHE Transmission	47		43		191
BHE Renewables	19		29		269
HomeServices	12		11		46
BHE and Other(1)	(4)		10		12
Total	$	1,553	$	1,848	$	10,283





Capital expenditures by type:
Wind generation	$	153	$	105	$	2,172
Electric distribution	388		477		2,071
Electric transmission	261		291		2,063
Natural gas transmission and storage	103		65		1,097
Solar generation	51		40		236
Electric battery and pumped hydro storage	1		40		236
Other	596		830		2,408
Total	$	1,553	$	1,848	$	10,283

(1)BHE and Other represents amounts related principally to other entities 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 $75 million and $3 million for the three-month periods ended March 31, 2023 and 2022, respectively. The timing and amount of forecast wind generation capital expenditures may be substantially impacted by the ultimate outcome of MidAmerican Energy's Wind PRIME filing. Planned spending for the construction of additional wind-powered generating facilities totals $1,025 million for the remainder of 2023.

◦Repowering of wind-powered generating facilities at MidAmerican Energy totaling $5 million and $120 million for the three-month periods ended March 31, 2023 and 2022, respectively. Planned spending for the repowering of wind-powered generating facilities totals $16 million for the remainder of 2023. 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.

◦Construction of new wind-powered generating facilities and construction at existing wind-powered generating facility sites acquired from third parties at PacifiCorp totaling $14 million and $6 million for the three-month periods ended March 31, 2023 and 2022, respectively. Planned spending for the construction of additional wind-powered generating facilities and those at acquired sites totals $807 million for the remainder of 2023.

◦Repowering of wind-powered generating facilities at BHE Renewables totaling $25 million for the three-month period ended March 31, 2022. Planned spending for the repower of wind-powered facilities totals $50 million for the remainder of 2023.

•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 enhancements 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 investments primarily reflect costs associated with Energy Gateway Transmission segments that are expected to be placed in-service in 2024 through 2028. Expenditures for these projects totaled $110 million and $96 million for the three-month periods ended March 31, 2023 and 2022, respectively. Planned spending for these Energy Gateway Transmission segments totals $898 million for the remainder of 2023.

◦Nevada Utilities' Greenlink Nevada transmission expansion program. The Nevada Utilities have 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 substation; and a 38-mile, 345-kV transmission line from the new Ft. Churchill substation to the Robinson Summit substation. Expenditures for the expansion program and other growth projects totaled $42 million and $30 million for the three-month periods ended March 31, 2023 and 2022, respectively. Planned spending for the expansion program estimated to be placed in-service in 2026 through 2028 and other growth projects totals $88 million for the remainder of 2023.

•Natural gas transmission and storage includes both growth and operating expenditures. Growth expenditures include, among other items, spending for asset modernization and the Northern Natural Gas Twin Cities Area Expansion and Spraberry Compression projects. Operating expenditures include, among other items, spending for pipeline integrity projects, automation and controls upgrades, corrosion control, unit exchanges, compressor modifications, projects related to Pipeline and Hazardous Materials Safety Administration natural gas storage rules and natural gas transmission, storage and LNG 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 PacifiCorp totaling 377 MWs of new generation and are expected to be placed in-service in 2026. Planned spending totals $12 million for the remainder of 2023.

◦Construction and operation of solar-powered generating facilities at MidAmerican Energy, primarily consisting of 141 MWs of small- and utility-scale solar generation, all of which were placed in-service in 2022. For the three-month periods ended March 31, 2023 and 2022 solar generation spend totaled $9 million and $44 million, respectively. Planned spending totals $1 million for the remainder of 2023.

◦Construction of a solar-powered generating facility at Nevada Power totaling $31 million and $7 million for the three-month periods ended March 31, 2023 and 2022, respectively. Planned spending totals $175 million for the remainder of 2023. 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.

•Electric battery and pumped hydro storage includes growth expenditures, including spending for the following:

•Other 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.

Material Cash Requirements

As of March 31, 2023, there have been no material changes in 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, 2022, 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

Utah

In May 2023, PacifiCorp filed its energy balancing account application to recover deferred net power costs from 2022. The filing requested a rate increase of $98 million, or 4.6%, effective on an interim basis July 1, 2023.

Oregon

In April 2023, PacifiCorp filed its transition adjustment mechanism requesting approval to update net power costs for 2024. The filing requested a rate increase of $164 million, or 9.5%, to become effective January 1, 2024.

Wyoming

In March 2023, PacifiCorp filed a general rate case requesting a rate increase of $140 million, or 21.6%, to become effective January 1, 2024. The requested rate increase includes recovery of increases in net power costs and new major capital investments in transmission and wind-powered generating facilities.

In April 2023, PacifiCorp filed its energy cost adjustment and renewable energy credit and sulfur dioxide revenue credit mechanisms to recover deferred net power costs from 2022. The combined filing requested a rate increase of $49 million, or 7.4%, to become effective on an interim basis July 1, 2023.

Washington

In March 2023, PacifiCorp filed a general rate case requesting a two-year rate plan with a rate increase of $27 million, or 6.6%, to become effective March 1, 2024, and a second rate increase of $28 million, or 6.5%, to become effective March 1, 2025. The requested rate increase includes recovery of increases in net power costs and new major capital investments in transmission and wind-powered generating facilities.

California

In May 2022, PacifiCorp filed a general rate case requesting an overall rate change of ~~$82~~$28 million, or ~~6.6%~~25.7%, to become effective January 1, 2023. ~~A hearing~~In November 2022, the CPUC granted the requested rate effective date and directed PacifiCorp to establish a memorandum account to track the change in rates beginning January 1, 2023, until the new rates become effective upon the issuance of a decision in late 2023. PacifiCorp filed rebuttal testimony in February 2023 with a slight adjustment of an overall rate increase of $27 million, or 25.0%. Also in February 2023, the CPUC issued a ruling requesting additional information on PacifiCorp's wildfire and risk analyses and requested additional information regarding wildfire memorandum accounts. In March 2023, the CPUC split the general rate case ~~will be held in September 2022~~into two tracks. The first track addresses the general rate case with an ~~order~~ expected decision from the CPUC in ~~December 2022.~~late 2023, and the second track addresses the wildfire memorandum accounts with an expected decision in early 2024.

~~Washington~~

MidAmerican Energy

South Dakota

In ~~June 2021, PacifiCorp~~May 2022, MidAmerican Energy filed a ~~power cost only rate case to update baseline net power costs~~request with the South Dakota Public Utilities Commission ("SDPUC") for ~~2022. The proposed $13~~a $7 million, or ~~3.7%~~6.4%, ~~rate~~annual increase ~~has~~in South Dakota retail natural gas rates. In March 2023, MidAmerican Energy filed a ~~requested effective date~~settlement agreement between all parties allowing a total increase of ~~January 1, 2022. In November 2021, PacifiCorp reached a proposed settlement with most~~$6 million, or 5.5%, annual increase in South Dakota retail natural gas rates, upon completion of the ~~parties, which includes an agreement to adjust~~capital investment phase-in adjustment clause. On March 31, 2023, 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~~SDPUC issued an order approving the settlement agreement with final rates effective April 1, 2023.

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 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 expects to be eligible for 100% PTCs under current tax law for the Wind PRIME projects. In December 2022, MidAmerican Energy, the Iowa Office of Consumer Advocate and the Iowa Business Energy Coalition filed a non-unanimous settlement with the IUB that includes a rate of return of 11.0%. The settlement would benefit customers by providing an immediate rate decrease through lower retail fuel costs and future rate increase mitigation through accelerated depreciation of generation assets. The IUB conducted a hearing on the application and proposed settlement during the week of February 20, 2023. On April 27, 2023, the IUB issued its final order regarding the application. The IUB found that MidAmerican Energy met the statutory requisites for a grant of advance ratemaking principles and granted the application, but rejected the settlement and proposed its own principles for the project. MidAmerican Energy is reviewing the order and assessing options for rejection or motion to reconsider. MidAmerican Energy must either accept or reject the order, or file a motion for reconsideration within 20 days and no later than May 17, 2023.

Iowa Transmission Legislation

In June 2020, Iowa enacted legislation that grants incumbent electric transmission owners the right to construct, own and maintain electric transmission lines that have been approved for construction in a federally registered planning authority's transmission plan and that connect to the incumbent electric transmission owner's facility. Also known as the Right of First Refusal, the law provides MidAmerican Energy, as an incumbent electric transmission owner, the legal right to construct, own and maintain transmission lines in MidAmerican Energy's service territory that have been approved by the MISO (or another federally registered planning authority) and are eligible to receive regional cost allocation. To exercise the legal right, MidAmerican Energy must notify the IUB within 90 days of any such approval for the construction of eligible electric transmission lines that it intends to construct, own and maintain. The law still requires an incumbent electric transmission owner to obtain a state franchise from the IUB to construct, erect, maintain or operate an electric transmission line and, upon issuance of a franchise, the incumbent electric transmission owner must provide the IUB an estimate of the cost to construct the eligible electric transmission line and, until the construction is complete, a quarterly report updating the estimated cost to construct the eligible electric transmission line. In October 2020, national transmission interests filed a lawsuit that challenged the law on state constitutional grounds. The suit argues that the law was enacted in violation of the "single-subject" provision of Iowa's state constitution because it was "log-rolled" into a late session appropriations bill and violates the equal protection provision of the Iowa constitution. The State of Iowa defended the law, and MidAmerican Energy and ITC Midwest both intervened and defended the law as well. The Iowa district court dismissed the lawsuit in March ~~2022. A compliance filing, reflecting~~2021 for lack of standing, and the national transmission interests appealed. In June 2022, the Iowa Court of Appeals upheld the district court's decision, after which the national transmission interests asked the Iowa Supreme Court to reconsider. In November 2022, the Iowa Supreme Court granted the motion to reconsider. On March 24, 2023, the Iowa Supreme Court issued an opinion that reversed the lower courts, held the national transmission interests had standing, and remanded the case to the district court to consider the state constitutional claims on their merits. The opinion also imposed a ~~$43 million,~~temporary injunction that stayed enforcement of the law pending a decision on the merits. On April 7, 2023, the State of Iowa, acting individually, and MidAmerican Energy and ITC Midwest, acting jointly, filed petitions for rehearing with the Iowa Supreme Court. On April 19, 2023, the national transmission interests filed a reply that (1) expressed its opposition to the petitions for rehearing, (2) asked the Iowa Supreme Court to hold that the injunction specifically applied to and precluded advancement of MidAmerican Energy's Long Range Transmission Projects ("LRTP") Tranche 1 projects, and (3) asked the Iowa Supreme Court to retain the matter and rule on the constitutional claims on the merits without further briefing or ~~12.2%, increase was filed~~argument. On April 26, 2023, the Iowa Supreme Court issued an order that denied the petitions for rehearing without comment and made minor, non-substantive changes to the decision, with no changes to the injunction. No earlier than May 18, 2023, the Iowa Supreme Court will remand the case to the district court for further proceedings on the merits. To this point, MISO has taken no action to reverse or disrupt its approval of MidAmerican Energy's LRTP Tranche 1 projects. This matter only potentially affects the manner in ~~April 2022 with rates effective May 1, 2022.~~which MidAmerican Energy would secure the right to construct transmission lines that are eligible for regional cost allocation and are otherwise subject to competitive bidding under the MISO tariff; it does not negatively affect or implicate MidAmerican Energy's ongoing rights to construct any other transmission lines, including lines required to serve new or expanded retail load, connect new generators or meet reliability criteria.

NV Energy (Nevada Power and Sierra Pacific)

~~Senate Bill 448 ("SB 448")~~

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

~~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. AnIn October 2022, all parties to the proceedings relating to the joint application entered into a Stipulation to delay the procedural schedule. The Nevada Utilities made a supplemental filing on December 30, 2022. In March 2023, the proceedings relating to the joint application were postponed to May 2023. In April 2023, the Nevada Utilities filed a notice with the PUCN requesting to withdraw the joint application to merge into a single corporate entity and vacate the current procedural schedule, and executed a termination of the related merger agreement.

Transportation Electrification Plan ("TEP")

In September 2022, the Nevada Utilities filed an amendment to the 2021 Joint IRP for the approval of a Distributed Resource Plan amendment to implement the state's first TEP pursuant to Section 51 of SB 448 and approve proposed tariffs and schedules to implement the TEP. The 2022 TEP outlines programs, investments and incentives to accelerate transportation electrification across Nevada. The Nevada Utilities proposed a budget of $348 million, which represents the maximum cost over the depreciable life of the TEP's programs and assets, to deploy the TEP in 2023 through 2024. In March 2023, the PUCN issued an order approving certain programs in the TEP, authorizing a lower program budget of $70 million and ordering specific caps on the program management and contingency budget amounts. The unapproved programs have been deferred for approval in future TEP filings. The PUCN also granted regulatory asset treatment of the approved program costs.In April 2023, interveners filed a petition for reconsideration of the PUCN's March 2023 Order.

Northern Powergrid Distribution Companies

Ofgem has completed the price control review that resulted in a new price control effective April 1, 2023. The license modifications that give effect to the price control were published by Ofgem on February 3, 2023 and were subject to appeal to the Competition and Markets Authority ("CMA") if an appeal was filed by March 3, 2023. On March 2, 2023, Northern Powergrid sought permission from the CMA to appeal against the license modifications that give effect to the RIIO-ED2 price control. The appeal relates to two specific areas:

•Ofgem's misallocation of allowances that is inconsistent with efficient costs; and

•Ofgem's approach to determine rewards for the Business Plan Incentive.

The permission for the appeal was granted by the CMA and the appeal is expected to conclude in ~~2022.~~the fourth quarter of 2023 in accordance with the timetable required of the CMA. The outcome of this appeal may increase the revenue available to the Company if the CMA amends the price control determination.

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~~transmission 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. In September 2022, a settlement agreement was filed with the FERC, which provided for increased service rates and decreased depreciation rates. Under the terms of the settlement agreement, EGTS' rates result in an increase to annual firm transmission and storage services revenues of approximately $160 million and a decrease in annual depreciation expense of approximately $30 million, compared to the rates in effect prior to April 1, 2022. EGTS' provision for rate refund for April 2022 through February 2023, including accrued interest, totaled $91 million. In November 2022, the FERC approved the settlement agreement and the rate refunds to customers were processed in late February 2023.

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 and storage reservation rates. In January 2023, the FERC approved Northern Natural Gas filing to implement its interim rates effective January 1, 2023, subject to refund and the outcome of hearing procedures. ~~This matter is pending.~~Procedural hearings are scheduled to begin June 14, 2023.

BHE Transmission

AltaLink

~~2022-2023~~2024-2025 General Tariff Application

In April ~~2021,~~2023, AltaLink filed its ~~2022-2023~~2024-2025 GTA ~~delivering on~~with the ~~last two years~~AUC with total total transmission tariffs of ~~its~~C$902.3 million and C$908.6 million for 2024 and 2025, respectively, which extends AltaLink's previous five-year commitment to ~~keep rates flat for customers~~maintain its tariff 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~~another year. The application ~~requested~~also requests the approval to reinstate C$98.9 million cost of ~~transmission tariffs of C$824 million and C$847 million for 2022 and 2023, respectively.~~removal to rate base which was not previously approved, based on additional information filed.

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 the AUC to review and vary its decision to deny AltaLink's proposed C$120 million refund of accumulated depreciation surplus, given material changes in circumstances since the decision was issued in January 2022. The existing pressures on Albertans and Alberta businesses that resulted from the COVID-19 pandemic have been compounded by cost increases due to higher inflation and global supply chain disruptions.

~~2023~~ Generic Cost of Capital Proceeding

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

In February 2023, AltaLink and other stakeholders filed evidence. AltaLink filed expert evidence recommending a 10.3% return on equity, on a recommended equity ratio of 40%. Other utilities filed similar recommendations. The Consumers' Coalition of Alberta, the Utilities Consumer Advocate and the Industrial Power Consumers Association of Alberta recommended returns on equity ranging from 6.75% to 7.7% and equity ratios ranging from 35% to 37%. AltaLink's expert witness, as well as all other utility experts, submitted that they are generally not in favor of implementing a formulaic adjustment mechanism for allowed return on equity due to the challenges in maintaining the Fair Return Standard through formulaic adjustments. The interveners are generally in favor of a formula. The AUC expects to conclude the second stage of the GCOC proceeding in the third ~~quarter of 2022 and to conclude in the second~~ quarter of 2023.

Environmental Laws and Regulations

Each Registrant is subject to federal, state, local and foreign laws and regulations regarding air quality, climate change, ~~RPS, air and water quality,~~ emissions performance standards, water quality, coal ~~combustion byproduct~~ash 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,~~2022, and new environmental matters occurring in ~~2022.~~2023.

~~Clean~~ Air ~~Act~~Quality Regulations

The Clean Air Act, ~~is a federal law administered by the EPA that~~as well as state laws and regulations impacting air emissions, 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~~These laws and regulations ~~programs and policies~~continue to be ~~followed. SIPs vary by~~promulgated and implemented and will impact the operation of BHE's generating facilities and require them to reduce emissions at those facilities to comply with the requirements. In addition, the potential adoption of state or federal clean energy standards, which include low-carbon, non-carbon and ~~are subject to public hearings~~renewable electricity generating resources, may also impact electricity generators 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.natural gas providers.

~~National Ambient Air Quality Standards~~

~~Under the authority of the Clean Air Act, the EPA sets minimum NAAQS for six principal pollutants, consisting of carbon monoxide, lead, NOx, particulate matter, ozone and SO~~2, 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.

3941

OnMercury and Air Toxics Standards

In March 2011, the EPA proposed a rule that requires coal-fueled generating facilities to reduce mercury emissions and other hazardous air pollutants through the establishment of "Maximum Achievable Control Technology" standards. The final MATS became effective on April 16, 2012, and required that new and existing coal-fueled generating facilities achieve emission standards for mercury, acid gases and other non-mercury hazardous air pollutants. Existing sources were required to comply with the new standards by April 16, 2015, with the potential for individual sources to obtain an extension of up to one additional year, at the discretion of the Title V permitting authority, to complete installation of controls or for transmission system reliability reasons. The relevant Registrants have completed emission reduction projects and unit retirements to comply with the final rule's standards for acid gases and non-mercury metallic hazardous air pollutants.

Numerous lawsuits have been filed in the D.C. Circuit challenging the MATS. In April 2014, the D.C. Circuit upheld the MATS requirements. In November 2014, the U.S. Supreme Court agreed to hear the MATS appeal on the limited issue of whether the EPA unreasonably refused to consider costs in determining whether it is appropriate to regulate hazardous air pollutants emitted by electric utilities. In June 4,2015, the U.S. Supreme Court reversed and remanded the MATS rule, finding that the EPA had acted unreasonably when it deemed cost irrelevant to the decision to regulate generating facilities, and that cost, including costs of compliance, must be considered before deciding whether regulation is necessary and appropriate. In December 2018, the EPA ~~published final ozone designations~~issued a proposed revised supplemental cost finding for ~~much~~the MATS, as well as the required risk and technology review under Clean Air Act Section 112. The EPA proposed to determine that it is not appropriate and necessary to regulate hazardous air pollutant emissions from generating facilities under Section 112; however, the EPA proposed to retain the emission standards and other requirements of the ~~U.S. Relevant~~MATS rule, because the EPA did not propose to ~~the Registrants, these designations include classifying Yuma County, Arizona; Clark County, Nevada;~~remove coal- 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 yearsoil-fueled generating facilities from the ~~August 3, 2018, effective date. All other areas relevant~~list of sources regulated under Section 112. In May 2020, the EPA published its decision to repeal the ~~Registrants~~appropriate and necessary findings in the MATS rule and retain the overall emission standards. The rule took effect in July 2020. A number of petitions for review were ~~designated attainment/unclassifiable with this same action. However, on January 29, 2021,~~filed in the D.C. Circuit ~~vacated several provisions of~~by parties challenging and supporting the ~~2018 implementing rules for~~EPA's decision to rescind the ~~2015 ozone standards for contravening~~appropriate and necessary finding, which were stayed pending the ~~Clean Air Act. The EPA and environmental groups finalized a consent decree in~~EPA's plans to revisit the finding. On January 2022 that sets deadlines for the agency to approve or disapprove the "good neighbor" provisions of interstate ozone plans of dozens of states. Relevant to the Registrants, the EPA must, by April 30, 2022, propose to approve or disapprove the interstate ozone SIPs of Alabama, Iowa, Maryland, Michigan, Minnesota, New York, Ohio, Pennsylvania, Texas, West Virginia and Wisconsin. On February 22, 2022, the EPA published a series of proposed decisions to disapprove the SIPs for interstate ozone transport of 19 states. Relevant to the Registrants, these states include Alabama, Maryland, Michigan, Minnesota, New York, Ohio, West Virginia and Wisconsin. The EPA also proposed to approve Iowa's SIP after re-analyzing the state's data. The EPA must finalize the proposed rules by December 15, 2022. In addition, the EPA must, by December 15, 2022, approve or disapprove the interstate plans of Arizona, California, Nevada and Wyoming. On April 15, 2022, the EPA issued its final rule approving Iowa's SIP as meeting the good neighbor provisions for the 2015 ozone standard. Until the EPA takes final action consistent with this decree, additional impacts to the relevant Registrants cannot be determined.

~~Separately, on March 28,~~31, 2022, the EPA proposed ~~determinations as to whether certain areas have achieved levels of ground-level ozone pollution that meet the 2008 and 2015 ozone NAAQS, respectively. Relevant~~several actions relating to the ~~Registrants, the Southern Wasatch Front in Utah and Yuma, Arizona are~~MATS. The EPA proposed to ~~have met~~restore the ~~2015 ozone standard;~~appropriate and necessary finding to regulate generating facilities under Clean Air Act Section 112. The EPA finalized its restoration of the MATS appropriate and necessary finding in February 2023.

On April 5, 2023, the EPA released a proposal to revise several aspects of the MATS rule following the agency's review of the 2020 Residual Risk and Technology Review. The EPA proposes two specific standard changes - one applicable to all covered units and one specific to the existing lignite subcategory. The EPA proposes a more stringent standard for emissions of filterable particulate matter, the surrogate standard for non-mercury metals for coal-fueled electric generating units. The EPA proposes to reduce the filterable particulate matter emission standard by two-thirds based on a demonstration that 91% of coal-based capacity, which has not been identified as retiring before the proposed compliance period, has an emission rate at or below the proposed limit. The EPA also proposes to require continuous emissions monitoring for filterable particulate matter to demonstrate compliance with the revised standard. Compliance would be due no later than three years after the effective date of a final rule and the ~~Cincinnati area of Ohio and Kentucky and~~EPA will accept comments on the ~~Northern Wasatch Front~~proposal for 60 days following its publication in ~~Utah~~the Federal Register. The relevant Registrants are ~~proposed to~~not included in the lignite subcategory. The relevant Registrants have ~~not met the 2015 ozone, will~~identified that compliance can be ~~reclassified as Moderate Non-Attainment, and will have until August 3, 2024 to meet the standard.~~achieved with existing controls. Until the EPA takes final action on the proposal, ~~and~~ the ~~affected states submit any required SIPs, the relevant Registrants cannot determine the~~full impacts of the ~~proposed rule.~~rule cannot be determined.

~~Cross-State Air Pollution Rule~~PacifiCorp

~~The EPA promulgated~~Operating revenue increased $187 million for the first quarter of 2023 compared to 2022, primarily due to higher retail revenue of $159 million and higher wholesale and other revenue of $28 million, primarily from higher average wholesale market prices, partially offset by lower wholesale volumes. Retail revenue increased primarily due to price impacts of $107 million from higher average retail rates largely due to tariff changes and product mix and $52 million from higher volumes. Retail customer volumes increased 3.3%, primarily due to the favorable impact of weather, higher customer usage and an ~~initial rule in March 2005 to reduce emissions of NO~~x ~~and SO~~2~~, precursors of ozone and particulate matter, from down-wind sources~~increase 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 transportaverage number of SO2 ~~and NO~~x ~~emissions in 27 eastern and Midwestern states.~~customers.

~~The~~Earnings decreased $250 million for the first ~~phase~~quarter of 2023 compared to 2022, primarily due to higher operations and maintenance expense of $428 million, partially offset by higher utility margin of $38 million, higher allowances for equity and borrowed funds used during construction of $21 million and a favorable income tax benefit from valuation allowance changes on state net operating loss carryforwards. Operations and maintenance expense was unfavorable primarily due to an increase in loss accruals, net of expected insurance recoveries, associated with the ~~rule was implemented January 1, 2015. In November 2015,~~2020 Wildfires of $359 million, higher wildfire mitigation and vegetation management costs, and higher general and plant maintenance costs. Utility margin increased primarily due to higher retail rates and volumes, favorable deferred net power costs and higher average wholesale market prices, partially offset by higher purchased power and thermal generation costs and lower wholesale volumes.

MidAmerican Funding

Operating revenue decreased $85 million for the ~~EPA released~~first quarter of 2023 compared to 2022, primarily due to lower natural gas operating revenue of $70 million and lower electric operating revenue of $17 million. Natural gas operating revenue decreased primarily due to a ~~proposed rule that would further reduce NO~~x ~~emissions~~lower average per-unit cost of natural gas sold resulting in ~~2017. The final "CSAPR Update Rule" was published~~lower purchased gas adjustment recoveries of $61 million (fully offset in cost of sales) and the unfavorable impact of weather of $5 million. Electric operating revenue decreased due to lower wholesale and other revenue of $33 million, partially offset by higher retail revenue of $16 million. Electric wholesale and other revenue decreased mainly due to lower wholesale volumes of $22 million and lower average wholesale per-unit prices of $13 million. Electric retail revenue increased primarily due to higher recoveries through adjustment clauses of $14 million (largely offset in expense, primarily cost of sales). Electric retail customer volumes increased 1.0%, primarily due to higher customer usage, partially offset by the unfavorable impact of weather.

Earnings increased $8 million for the first quarter of 2023 compared to 2022, primarily due to lower depreciation and amortization expense of $17 million, a one-time gain on the sale of an investment of $13 million and favorable changes in the ~~Federal Register~~ ~~in October 2016~~cash surrender value of corporate-owned life insurance policies of $12 million, partially offset by higher operations and ~~required~~maintenance expense of $13 million, lower natural gas utility margin of $8 million and lower electric utility margin of $7 million. Depreciation and amortization expense decreased primarily from the impacts of certain regulatory mechanisms, partially offset by additional ~~reductions in NO~~x ~~emissions beginning in May 2017. On December 6, 2018, the EPA finalized a rule~~assets placed in-service. Operations and maintenance expense increased due 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 obligationshigher general and ~~that there will be no remaining nonattainment or~~plant maintenance ~~receptors with respect~~costs and unfavorable property insurance costs. Natural gas utility margin decreased primarily due to the ~~2008 ozone NAAQS in the eastern U.S. in that year. Accordingly, the 20 CSAPR Update-affected states would not contribute significantly~~unfavorable impact of weather. Electric utility margin decreased primarily due to ~~nonattainment in, or interfere with maintenance of, any other state with regard to the 2008 ozone NAAQS. Both the CSAPR Update~~lower wholesale revenue, partially offset by higher retail revenue and the CSAPR Close-Out rules were challenged in the D.C. Circuit. The D.C. Circuit ruled September 13, 2019, that because the EPA allowed upwind States to continue to significantly contribute to downwind air quality problems beyond statutory deadlines, the CSAPR Update Rule provided only a partial remedy that did not fully address interstate ozone transport, and remanded the CSAPR Update Rule back to the EPA. The D.C. Circuit issued an opinion October 1, 2019, finding that because the CSAPR Close-Out Rule relied on the same faulty reasoning as the CSAPR Update Rule, the CSAPR Close-Out Rule must be vacated. On October 15, 2020, the EPA proposed to tighten caps on emissions of NOx from generating facilities in 12 states in the CSAPR trading program in response to the D.C. Circuit's decision to vacate the CSAPR Update Rule. The rule is intended to fully resolve 21 upwind states' remaining good neighbor obligations under the 2008 ozone NAAQS. Additional emissions reductions are required at generating facilities in 12 states, including Illinois; the EPA predicts that emissions from the remaining nine states, including Iowa and Texas, will not significantly contribute to downwind states' ability to attain or maintain the ozone standard. The EPA accepted comment on the proposal through December 15, 2020. On March 15, 2021, the EPA finalized the Revised CSAPR Update Rule largely as proposed. Significant new compliance obligations are not anticipated as a result of the rule. In June 2021, a new lawsuit was filed that challenges the Revised CSAPR Update Rule. Litigation is ongoing in the D.C. Circuit Court. Until litigation is exhausted, the relevant Registrants cannot determine whether additional action may be required.lower purchased power costs.

4030

NV Energy

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 NO
x~~, precursors to ozone formation and covers 26 states. Relevant to the Registrants, four states are included in the cross-state program~~

Operating revenue increased $306 million for the first ~~time - California, Nevada, Utah~~quarter of 2023 compared to 2022, primarily due to higher electric operating revenue of $260 million and ~~Wyoming. Iowa is not included~~higher natural gas operating revenue of $44 million from a higher average per-unit cost of natural gas sold (fully offset in cost of sales). Electric operating revenue increased primarily due to higher fully bundled energy rates (fully offset in cost of sales) of $229 million, higher customer volumes of $8 million, increased base tariff general rates of $8 million at Sierra Pacific and favorable transmission and wholesale revenue of $7 million. Electric retail customer volumes increased 2.9%, primarily due to the favorable impact of weather and an increase in the ~~proposal. In a separate but related action in February 2022, the EPA proposed to approve the good neighbor provisions~~average number 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 sectorcustomers.

Earnings increased $5 million for the first ~~time, with a focus~~quarter of 2023 compared to 2022, primarily due to higher electric utility margin of $31 million and favorable interest and dividend income of $16 million, mainly from carrying charges on ~~the top NO~~x ~~emitting stationary source categories. These include natural gas pipeline compressor stations, pulp~~higher deferred energy balances, partially offset by higher operations and ~~paper mills, cement production, iron~~maintenance expenses of $24 million, unfavorable depreciation and ~~steel boilers~~amortization expense of $13 million and ~~furnaces, glass furnaces, chemical manufacturing~~increased interest expense of $12 million due to higher outstanding long-term debt balances. Electric utility margin increased primarily due to higher electric retail customer volumes, increased base tariff general rates at Sierra Pacific and ~~petroleum~~higher transmission and ~~coal product manufacturing. These sources will not have access~~wholesale revenue. Operations and maintenance expense increased primarily due to ~~trading~~higher general and ~~will instead be subject~~plant maintenance costs and higher customer service operations costs. Depreciation and amortization expense increased primarily due to rate-based limits that are assigned for each source category. The EPA is accepting comments on the proposal through June 6, 2022. Until the EPA takes final action consistent with this decree, impacts to the relevant Registrants cannot be determined.additional assets placed in-service.

~~Regional Haze~~Northern Powergrid

Operating revenue increased $39 million for the first quarter of 2023 compared to 2022, primarily due to higher distribution revenue of $41 million and higher revenue at CE Gas of $29 million, partially offset by $37 million from the stronger U.S. dollar. Distribution revenue increased primarily due to the recovery of Supplier of Last Resort payments of $43 million (fully offset in cost of sales) and higher tariff rates of $10 million. Also impacting distribution revenue was a 4.8% decline in units distributed, largely due to the unfavorable impact of weather and lower customer usage, of $11 million. CE Gas revenue increased from a gas project that commenced commercial operation in March 2022 and a solar project that commenced commercial operation in July 2022.

BHE Pipeline Group

Operating revenue increased $138 million for the first quarter of 2023 compared to 2022, primarily due to higher operating revenue of $71 million at Northern Natural Gas and $55 million at BHE GT&S. The ~~EPA's Regional Haze Rule, finalized~~increase in ~~1999, requires states~~operating revenue at Northern Natural Gas was largely due to ~~develop~~the impacts of a general rate case, with interim rates effective January 1, 2023, subject to refund, of $63 million and ~~implement plans~~higher transportation revenue of $34 million from higher rates in the Field Area, partially offset by lower gas sales of $25 million (largely offset in cost of sales) from system balancing activities. The increase in operating revenue at BHE GT&S was primarily due to ~~improve visibility~~an increase in ~~designated federally protected areas ("Class I areas"). Some~~regulated gas transportation and storage services rates due to the settlement of ~~PacifiCorp's coal-fueled~~EGTS' general rate case of $42 million, higher LNG revenue of $16 million at Cove Point, and an increase in variable revenue related to park and loan activity of $10 million at EGTS, partially offset by lower non-regulated revenue of $22 million (largely offset in cost of sales) from lower volumes and unfavorable commodity prices.

BHE Transmission

Operating revenue increased $22 million for the first quarter of 2023 compared to 2022, primarily due to $26 million of incremental revenue from non-regulated wind-powered generating facilities acquired in ~~Utah, Wyoming, Arizona~~November 2022 and ~~Colorado and certain of Nevada Power's and Sierra Pacific's fossil-fueled generating facilities are subject to~~higher other non-regulated revenue at BHE Canada, partially offset by $12 million from 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.stronger U.S. dollar.

4131

~~The state~~Earnings increased $2 million for the first quarter of ~~Utah issued a regional haze SIP requiring~~2023 compared to 2022, primarily due to $6 million of incremental earnings at non-regulated wind-powered generating facilities acquired in November 2022, partially offset by $3 million from the ~~installation~~stronger U.S. dollar.

BHE Renewables

Operating revenue increased $57 million for the first quarter of SO2~~, NO~~x ~~and particulate matter controls on Hunter Units 1 and 2 and Huntington Units 1 and 2. In December 2012, the EPA approved the SO~~2 ~~portion~~2023 compared to 2022, primarily due to higher wind revenues of ~~the Utah regional haze SIP and disapproved the NO~~x 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$60 million, largely due to ~~either approve the Utah SIP as written or reject the Utah SIP relating to NO~~x 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 positionfavorable changes in the ~~litigation, the Tenth Circuit held the litigation~~valuation of certain derivative contracts, and higher natural gas and electric retail energy services revenue of $23 million, partially offset by lower solar revenues of $20 million from lower generation due to weather events in ~~abeyance~~California. Natural gas and ~~imposed a stay of the compliance obligations of the FIP~~electric retail energy services revenue increased due to higher electric volumes and favorable natural gas and electric pricing, partially offset by lower natural gas volumes.

Earnings decreased $66 million for the ~~number~~first quarter of ~~days~~2023 compared to 2022, primarily due to lower earnings of $79 million from the ~~stay is~~retail energy services business, largely due to unfavorable changes in ~~effect while~~unrealized positions on derivative contracts caused by lower forward electricity price curves, lower natural gas and geothermal earnings of $40 million, primarily due to maintenance outages, and lower solar earnings of $18 million from lower generation due to weather events in California. These items were partially offset by higher wind earnings of $74 million, largely due to favorable changes in the ~~EPA conducts its reconsideration process. To support~~valuation of certain derivative contracts and higher earnings from tax equity investments of $28 million due to lower equity losses and higher production tax credits.

HomeServices

Operating revenue decreased $332 million for the ~~reconsideration, PacifiCorp undertook additional air quality modeling using~~first quarter of 2023 compared to 2022, primarily due to lower brokerage and settlement services revenue of $293 million and lower mortgage revenue of $34 million. The decrease in brokerage and settlement services revenue resulted from a 29% decrease in closed transaction volume due to rising interest rates and a corresponding decline in home sales. The lower mortgage revenue was due to a 41% decrease in funded volume, primarily due to rising interest rates.

Earnings decreased $55 million for the ~~Comprehensive Air Quality Model with Extensions dispersion model. On January 14, 2019,~~first quarter of 2023 compared to 2022, primarily due to lower earnings from brokerage and settlement services of $38 million and mortgage services of $12 million, largely from the ~~state of Utah submitted a SIP revision~~decrease in funded volumes from rising interest rates. Earnings at brokerage and settlement services declined due to the ~~EPA, which includes~~decrease in closed transaction volume, partially offset by favorable operating expenses primarily due to lower compensation costs.

BHE and Other

Operating revenue decreased $16 million for the ~~updated modeling information and additional analysis. On June 24, 2019,~~first quarter of 2023 compared to 2022, due to higher intersegment eliminations.

Earnings increased $1,535 million for the ~~Utah Air Quality Board unanimously voted~~first quarter of 2023 compared 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 revision2022, primarily due to the ~~EPA for approval at~~$1,552 million favorable comparative change related to 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 AlternativeCompany's investment in BYD Company Limited, favorable changes in the ~~Tenth Circuit. PacifiCorp~~cash surrender value of corporate-owned life insurance policies of $14 million and ~~the state~~$8 million of ~~Utah moved~~lower dividends on BHE's 4.00% Perpetual Preferred Stock issued to ~~intervene in the litigation. After review~~certain insurance subsidiaries of ~~the rule~~Berkshire Hathaway. These items were partially offset by ~~the Biden administration, the EPA determined it would defend the rule,~~higher BHE corporate interest expense from an April 2022 debt issuance 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~~$17 million of ~~Air Quality's SIP for the regional haze second planning period~~lower federal income tax credits recognized 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 NO~~x ~~emission limits for both generating facilities based on actual emissions. The state is on track to submit~~ a ~~final implementation plan to the EPA by July 2022.~~consolidated basis.

~~The state of Wyoming issued two regional haze SIPs requiring the installation of SO~~2~~, NO~~x ~~and particulate matter controls on certain PacifiCorp coal-fueled generating facilities in Wyoming. The EPA approved the SO~~2 ~~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 NO~~x ~~and particulate matter SIP and instead issue a FIP. The EPA withdrew its initial proposed actions on the NO~~x 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-NO~~x 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 SO~~2 emission limits on the four Jim Bridger units and submitted a regional haze SIP revision to the EPA. The revised SIP would grant approval of PacifiCorp's Jim Bridger reasonable progress reassessment application and incorporates PacifiCorp's proposed emission limits in lieu of the requirement to install SCR systems on Jim Bridger Units 1 and 2. On December 27, 2021, Wyoming's governor issued an emergency suspension order under Section 110(g) of the Clean Air Act, allowing the operation of Jim Bridger Unit 2 through April 30, 2022, while the state, the EPA and PacifiCorp continue settlement discussions. On January 18, 2022, the EPA proposed to reject the SIP revisions. The EPA took comment on the proposal through February 17, 2022. On February 14, 2022, the First Judicial District Court for the State of Wyoming entered a consent decree reached between the state of Wyoming and PacifiCorp under Sections 201 and 209(a) of the Wyoming Environmental Quality Act, resolving claims of threatened violations of the Clean Air Act, the Wyoming Environmental Quality Act and the Wyoming Air Quality Standards and Regulations at the Jim Bridger facility. No penalties were imposed under the consent decree. Consistent with the terms and conditions of the consent decree and as forecasted in PacifiCorp's 2021 IRP, PacifiCorp must convert both units to natural gas and begin meeting emissions limits consistent with that conversion by January 1, 2024. In addition, PacifiCorp must propose an RFP by January 1, 2023, for carbon capture technology at Jim Bridger Units 3 and 4. Wyoming issued its proposed implementation plan for second planning period reasonable progress on February 18, 2022 and accepted comments through March 23, 2022. Wyoming determined that no controls will be necessary on any Wyoming resources to make reasonable progress for the second round of regional haze planning. It is estimated that the state will submit a final state-approved implementation plan to the EPA in May 2022.

In February 2022, NV Energy received 30-day notice letters from the Nevada Division of Environmental Protection regarding the reopening and revision of the Valmy and Tracy Generating Station's Title V air quality operating permits to add federally enforceable retirement dates of December 31, 2028 for Valmy Units 1 and 2 and December 31, 2031 for Tracy Unit 4. The enforceable retirement dates will implement Nevada's SIP for the regional haze second planning period. The revised permits were received in March and April 2022. It is anticipated that the Nevada Division of Environmental Protection will begin the public comment period for its SIP by May 2022 and submit the final SIP to the EPA by June 2022.

4332

~~Critical Accounting Estimates~~Liquidity and Capital Resources

~~Certain accounting measurements require~~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, 2022 for further discussion regarding the limitation of distributions from BHE's subsidiaries.

As of March 31, 2023, the Company's total net liquidity was as follows (in millions):


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

Cash and cash equivalents	$	173	$	19	$	58	$	21	$	18	$	64	$	216	$	394	$	963

Credit facilities(1)	3,500		2,000		1,509		650		295		795		2,725		—		11,474
Less:
Short-term debt	(755)		—		—		(83)		(49)		(127)		(805)		—		(1,819)
Tax-exempt bond support and letters of credit	—		(249)		(363)		—		—		(1)		—		—		(613)
Net credit facilities	2,745		1,751		1,146		567		246		667		1,920		—		9,042

Total net liquidity	$	2,918	$	1,770	$	1,204	$	588	$	264	$	731	$	2,136	$	394	$	10,005
Credit facilities:
Maturity dates	2025		2024, 2025		2023, 2025		2025		2025		2023, 2026, 2027		2023, 2024, 2026

(1)Includes $48 million drawn on capital expenditure and other uncommitted credit facilities at Northern Powergrid.

Operating Activities

Investing Activities

Financing Activities

Future Uses of Cash

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 ~~make estimates~~customer rates; changes in environmental and ~~judgments concerning transactions~~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.

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
	Ended March 31,				Forecast
	2022		2023		2023
Capital expenditures by business:
PacifiCorp	$	374	$	643	$	3,662
MidAmerican Funding	459		382		2,324
NV Energy	272		437		1,751
Northern Powergrid	169		124		597
BHE Pipeline Group	205		169		1,431
BHE Transmission	47		43		191
BHE Renewables	19		29		269
HomeServices	12		11		46
BHE and Other(1)	(4)		10		12
Total	$	1,553	$	1,848	$	10,283





Capital expenditures by type:
Wind generation	$	153	$	105	$	2,172
Electric distribution	388		477		2,071
Electric transmission	261		291		2,063
Natural gas transmission and storage	103		65		1,097
Solar generation	51		40		236
Electric battery and pumped hydro storage	1		40		236
Other	596		830		2,408
Total	$	1,553	$	1,848	$	10,283

(1)BHE and Other represents amounts related principally to other entities 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:

•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 enhancements 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:

•Solar generation includes growth expenditures, including spending for the following:

◦Construction of a solar-powered generating facility at Nevada Power totaling $31 million and $7 million for the three-month periods ended March 31, 2023 and 2022, respectively. Planned spending totals $175 million for the remainder of 2023. Construction includes expenditures for a 150-MW solar photovoltaic facility with an additional 100 MWs of co-located battery storage that will be ~~settled several years~~developed in Clark County, Nevada. Commercial operation is expected by the ~~future. Amounts recognized~~end of 2023.

•Electric battery and pumped hydro storage includes growth expenditures, including spending for the following:

◦Construction at the Nevada Utilities of a 100-MW battery energy storage system co-located with a 150-MW solar photovoltaic facility that will be developed in Clark County, Nevada and a 220-MW grid-tied battery energy storage system that will be developed on the ~~Consolidated Financial Statements based~~site of the retired Reid Gardner generating station in Clark County, Nevada, both with commercial operation expected by the end of 2023. Also, a 200-MW battery energy storage system that will be developed on ~~such estimates involve numerous assumptions subject to varying and potentially significant degrees~~the site of ~~judgment and uncertainty and will likely change~~the Valmy generating station in Humboldt County, Nevada with commercial operation expected by the ~~future as additional information becomes available. Estimates are used for, but not limited to, the accounting~~end of 2025. Total spending for the ~~effects~~three-month period ended March 31, 2023, was $39 million with planned spending of ~~certain types~~$159 million for the remainder of ~~regulation, impairment of goodwill~~2023.

•Other includes both growth and ~~long-lived assets, pension~~operating expenditures, including spending for routine expenditures for generation and other ~~postretirement benefits, income taxes~~infrastructure needed to serve existing and ~~revenue recognition - unbilled revenue. For additional discussion~~expected demand, natural gas distribution, technology, and environmental spending relating to emissions control equipment and the management of coal combustion residuals.

Material Cash Requirements

As of March 31, 2023, there have been no material changes in cash requirements from the ~~Company's critical accounting estimates, see~~information provided in 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~~2022, other than those disclosed in Note 9 of the ~~Company's assumptions regarding critical accounting estimates since~~Notes to Consolidated Financial Statements in Part I, Item 1 of this Form 10-Q.

Regulatory Matters

PacifiCorp

Utah

Oregon

Wyoming

Washington

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 November 2022, the CPUC granted the requested rate effective date and directed PacifiCorp to establish a memorandum account to track the change in rates beginning January 1, 2023, until the new rates become effective upon the issuance of a decision in late 2023. PacifiCorp filed rebuttal testimony in February 2023 with a slight adjustment of an overall rate increase of $27 million, or 25.0%. Also in February 2023, the CPUC issued a ruling requesting additional information on PacifiCorp's wildfire and risk analyses and requested additional information regarding wildfire memorandum accounts. In March 2023, the CPUC split the general rate case into two tracks. The first track addresses the general rate case with an expected decision from the CPUC in late 2023, and the second track addresses the wildfire memorandum accounts with an expected decision in early 2024.

4437

~~PacifiCorp~~MidAmerican Energy

South Dakota

In May 2022, MidAmerican Energy filed a request with the South Dakota Public Utilities Commission ("SDPUC") for a $7 million, or 6.4%, annual increase in South Dakota retail natural gas rates. In March 2023, MidAmerican Energy filed a settlement agreement between all parties allowing a total increase of $6 million, or 5.5%, annual increase in South Dakota retail natural gas rates, upon completion of the capital investment phase-in adjustment clause. On March 31, 2023, the SDPUC issued an order approving the settlement agreement with final rates effective April 1, 2023.

Wind PRIME

~~Consolidated Financial Section~~Iowa retail customers' annual energy needs. MidAmerican Energy expects to be eligible for 100% PTCs under current tax law for the Wind PRIME projects. In December 2022, MidAmerican Energy, the Iowa Office of Consumer Advocate and the Iowa Business Energy Coalition filed a non-unanimous settlement with the IUB that includes a rate of return of 11.0%. The settlement would benefit customers by providing an immediate rate decrease through lower retail fuel costs and future rate increase mitigation through accelerated depreciation of generation assets. The IUB conducted a hearing on the application and proposed settlement during the week of February 20, 2023. On April 27, 2023, the IUB issued its final order regarding the application. The IUB found that MidAmerican Energy met the statutory requisites for a grant of advance ratemaking principles and granted the application, but rejected the settlement and proposed its own principles for the project. MidAmerican Energy is reviewing the order and assessing options for rejection or motion to reconsider. MidAmerican Energy must either accept or reject the order, or file a motion for reconsideration within 20 days and no later than May 17, 2023.

4538

~~PART I~~Iowa Transmission Legislation

~~Item 1.~~

In June 2020, Iowa enacted legislation that grants incumbent electric transmission owners the right to construct, own and maintain electric transmission lines that have been approved for construction in a federally registered planning authority's transmission plan and that connect to the incumbent electric transmission owner's facility. Also known as the Right of First Refusal, the law provides MidAmerican Energy, as an incumbent electric transmission owner, the legal right to construct, own and maintain transmission lines in MidAmerican Energy's service territory that have been approved by the MISO (or another federally registered planning authority) and are eligible to receive regional cost allocation. To exercise the legal right, MidAmerican Energy must notify the IUB within 90 days of any such approval for the construction of eligible electric transmission lines that it intends to construct, own and maintain. The law still requires an incumbent electric transmission owner to obtain a state franchise from the IUB to construct, erect, maintain or operate an electric transmission line and, upon issuance of a franchise, the incumbent electric transmission owner must provide the IUB an estimate of the cost to construct the eligible electric transmission line and, until the construction is complete, a quarterly report updating the estimated cost to construct the eligible electric transmission line. In October 2020, national transmission interests filed a lawsuit that challenged the law on state constitutional grounds. The suit argues that the law was enacted in violation of the "single-subject" provision of Iowa's state constitution because it was "log-rolled" into a late session appropriations bill and violates the equal protection provision of the Iowa constitution. The State of Iowa defended the law, and MidAmerican Energy and ITC Midwest both intervened and defended the law as well. The Iowa district court dismissed the lawsuit in March 2021 for lack of standing, and the national transmission interests appealed. In June 2022, the Iowa Court of Appeals upheld the district court's decision, after which the national transmission interests asked the Iowa Supreme Court to reconsider. In November 2022, the Iowa Supreme Court granted the motion to reconsider. On March 24, 2023, the Iowa Supreme Court issued an opinion that reversed the lower courts, held the national transmission interests had standing, and remanded the case to the district court to consider the state constitutional claims on their merits. The opinion also imposed a temporary injunction that stayed enforcement of the law pending a decision on the merits. On April 7, 2023, the State of Iowa, acting individually, and MidAmerican Energy and ITC Midwest, acting jointly, filed petitions for rehearing with the Iowa Supreme Court. On April 19, 2023, the national transmission interests filed a reply that (1) expressed its opposition to the petitions for rehearing, (2) asked the Iowa Supreme Court to hold that the injunction specifically applied to and precluded advancement of MidAmerican Energy's Long Range Transmission Projects ("LRTP") Tranche 1 projects, and (3) asked the Iowa Supreme Court to retain the matter and rule on the constitutional claims on the merits without further briefing or argument. On April 26, 2023, the Iowa Supreme Court issued an order that denied the petitions for rehearing without comment and made minor, non-substantive changes to the decision, with no changes to the injunction. No earlier than May 18, 2023, the Iowa Supreme Court will remand the case to the district court for further proceedings on the merits. To this point, MISO has taken no action to reverse or disrupt its approval of MidAmerican Energy's LRTP Tranche 1 projects. This matter only potentially affects the manner in which MidAmerican Energy would secure the right to construct transmission lines that are eligible for regional cost allocation and are otherwise subject to competitive bidding under the MISO tariff; it does not negatively affect or implicate MidAmerican Energy's ongoing rights to construct any other transmission lines, including lines required to serve new or expanded retail load, connect new generators or meet reliability criteria.

NV Energy (Nevada Power and Sierra Pacific)

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. In October 2022, all parties to the proceedings relating to the joint application entered into a Stipulation to delay the procedural schedule. The Nevada Utilities made a supplemental filing on December 30, 2022. In March 2023, the proceedings relating to the joint application were postponed to May 2023. In April 2023, the Nevada Utilities filed a notice with the PUCN requesting to withdraw the joint application to merge into a single corporate entity and vacate the current procedural schedule, and executed a termination of the related merger agreement.

Transportation~~Financial Statements~~ Electrification Plan ("TEP")

Northern Powergrid Distribution Companies

•Ofgem's misallocation of allowances that is inconsistent with efficient costs; and

•Ofgem's approach to determine rewards for the Business Plan Incentive.

The permission for the appeal was granted by the CMA and the appeal is expected to conclude in the fourth quarter of 2023 in accordance with the timetable required of the CMA. The outcome of this appeal may increase the revenue available to the Company if the CMA amends the price control determination.

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 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 transmission 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. In September 2022, a settlement agreement was filed with the FERC, which provided for increased service rates and decreased depreciation rates. Under the terms of the settlement agreement, EGTS' rates result in an increase to annual firm transmission and storage services revenues of approximately $160 million and a decrease in annual depreciation expense of approximately $30 million, compared to the rates in effect prior to April 1, 2022. EGTS' provision for rate refund for April 2022 through February 2023, including accrued interest, totaled $91 million. In November 2022, the FERC approved the settlement agreement and the rate refunds to customers were processed in late February 2023.

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 and storage reservation rates. In January 2023, the FERC approved Northern Natural Gas filing to implement its interim rates effective January 1, 2023, subject to refund and the outcome of hearing procedures. Procedural hearings are scheduled to begin June 14, 2023.

BHE Transmission

AltaLink

2024-2025 General Tariff Application

In April 2023, AltaLink filed its 2024-2025 GTA with the AUC with total total transmission tariffs of C$902.3 million and C$908.6 million for 2024 and 2025, respectively, which extends AltaLink's previous five-year commitment to maintain its tariff at or below C$904 million from 2019 to 2023 for another year. The application also requests the approval to reinstate C$98.9 million cost of removal to rate base which was not previously approved, based on additional information filed.

Generic Cost of Capital Proceeding

In January 2022, the AUC initiated the 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 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. In June 2022, the AUC initiated the second stage to explore a formula-based approach to determine the return on equity for 2024 and future test periods.

~~REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM~~Environmental Laws and Regulations

Each Registrant is subject to federal, state, local and foreign laws and regulations regarding air quality, climate change, emissions performance standards, water quality, coal ash disposal 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, 2022, and new environmental matters occurring in 2023.

ToAir Quality Regulations

The Clean Air Act, as well as state laws and regulations impacting air emissions, provides a framework for protecting and improving the ~~Board~~nation's air quality and controlling sources of ~~Directors~~air emissions. These laws and ~~Shareholders~~regulations continue to be promulgated and implemented and will impact the operation of BHE's generating facilities and require them to reduce emissions at those facilities to comply with the requirements. In addition, the potential adoption of state or federal clean energy standards, which include low-carbon, non-carbon and renewable electricity generating resources, may also impact electricity generators and natural gas providers.

Mercury and Air Toxics Standards

On April 5, 2023, the EPA released a proposal to revise several aspects of the MATS rule following the agency's review of the 2020 Residual Risk and Technology Review. The EPA proposes two specific standard changes - one applicable to all covered units and one specific to the existing lignite subcategory. The EPA proposes a more stringent standard for emissions of filterable particulate matter, the surrogate standard for non-mercury metals for coal-fueled electric generating units. The EPA proposes to reduce the filterable particulate matter emission standard by two-thirds based on a demonstration that 91% of coal-based capacity, which has not been identified as retiring before the proposed compliance period, has an emission rate at or below the proposed limit. The EPA also proposes to require continuous emissions monitoring for filterable particulate matter to demonstrate compliance with the revised standard. Compliance would be due no later than three years after the effective date of a final rule and the EPA will accept comments on the proposal for 60 days following its publication in the Federal Register. The relevant Registrants are not included in the lignite subcategory. The relevant Registrants have identified that compliance can be achieved with existing controls. Until the EPA takes final action on the proposal, the full impacts of the rule cannot be determined.

PacifiCorp

MidAmerican Funding

Operating revenue decreased $85 million for the first quarter of 2023 compared to 2022, primarily due to lower natural gas operating revenue of $70 million and lower electric operating revenue of $17 million. Natural gas operating revenue decreased primarily due to a lower average per-unit cost of natural gas sold resulting in lower purchased gas adjustment recoveries of $61 million (fully offset in cost of sales) and the unfavorable impact of weather of $5 million. Electric operating revenue decreased due to lower wholesale and other revenue of $33 million, partially offset by higher retail revenue of $16 million. Electric wholesale and other revenue decreased mainly due to lower wholesale volumes of $22 million and lower average wholesale per-unit prices of $13 million. Electric retail revenue increased primarily due to higher recoveries through adjustment clauses of $14 million (largely offset in expense, primarily cost of sales). Electric retail customer volumes increased 1.0%, primarily due to higher customer usage, partially offset by the unfavorable impact of weather.

NV Energy

Operating revenue increased $306 million for the first quarter of 2023 compared to 2022, primarily due to higher electric operating revenue of $260 million and higher natural gas operating revenue of $44 million from a higher average per-unit cost of natural gas sold (fully offset in cost of sales). Electric operating revenue increased primarily due to higher fully bundled energy rates (fully offset in cost of sales) of $229 million, higher customer volumes of $8 million, increased base tariff general rates of $8 million at Sierra Pacific and favorable transmission and wholesale revenue of $7 million. Electric retail customer volumes increased 2.9%, primarily due to the favorable impact of weather and an increase in the average number of customers.

Northern Powergrid

Operating revenue increased $39 million for the first quarter of 2023 compared to 2022, primarily due to higher distribution revenue of $41 million and higher revenue at CE Gas of $29 million, partially offset by $37 million from the stronger U.S. dollar. Distribution revenue increased primarily due to the recovery of Supplier of Last Resort payments of $43 million (fully offset in cost of sales) and higher tariff rates of $10 million. Also impacting distribution revenue was a 4.8% decline in units distributed, largely due to the unfavorable impact of weather and lower customer usage, of $11 million. CE Gas revenue increased from a gas project that commenced commercial operation in March 2022 and a solar project that commenced commercial operation in July 2022.

BHE Pipeline Group

BHE Transmission

Operating revenue increased $22 million for the first quarter of 2023 compared to 2022, primarily due to $26 million of incremental revenue from non-regulated wind-powered generating facilities acquired in November 2022 and higher other non-regulated revenue at BHE Canada, partially offset by $12 million from the stronger U.S. dollar.

BHE Renewables

Earnings decreased $66 million for the first quarter of 2023 compared to 2022, primarily due to lower earnings of $79 million from the retail energy services business, largely due to unfavorable changes in unrealized positions on derivative contracts caused by lower forward electricity price curves, lower natural gas and geothermal earnings of $40 million, primarily due to maintenance outages, and lower solar earnings of $18 million from lower generation due to weather events in California. These items were partially offset by higher wind earnings of $74 million, largely due to favorable changes in the valuation of certain derivative contracts and higher earnings from tax equity investments of $28 million due to lower equity losses and higher production tax credits.

HomeServices

BHE and Other

Operating revenue decreased $16 million for the first quarter of 2023 compared to 2022, due to higher intersegment eliminations.

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, 2022 for further discussion regarding the limitation of distributions from BHE's subsidiaries.

As of March 31, 2023, the Company's total net liquidity was as follows (in millions):


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

Cash and cash equivalents	$	173	$	19	$	58	$	21	$	18	$	64	$	216	$	394	$	963

Credit facilities(1)	3,500		2,000		1,509		650		295		795		2,725		—		11,474
Less:
Short-term debt	(755)		—		—		(83)		(49)		(127)		(805)		—		(1,819)
Tax-exempt bond support and letters of credit	—		(249)		(363)		—		—		(1)		—		—		(613)
Net credit facilities	2,745		1,751		1,146		567		246		667		1,920		—		9,042

Total net liquidity	$	2,918	$	1,770	$	1,204	$	588	$	264	$	731	$	2,136	$	394	$	10,005
Credit facilities:
Maturity dates	2025		2024, 2025		2023, 2025		2025		2025		2023, 2026, 2027		2023, 2024, 2026

(1)Includes $48 million drawn on capital expenditure and other uncommitted credit facilities at Northern Powergrid.

Operating Activities

Investing Activities

Financing Activities

Future Uses of Cash

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 customer 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.

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
	Ended March 31,				Forecast
	2022		2023		2023
Capital expenditures by business:
PacifiCorp	$	374	$	643	$	3,662
MidAmerican Funding	459		382		2,324
NV Energy	272		437		1,751
Northern Powergrid	169		124		597
BHE Pipeline Group	205		169		1,431
BHE Transmission	47		43		191
BHE Renewables	19		29		269
HomeServices	12		11		46
BHE and Other(1)	(4)		10		12
Total	$	1,553	$	1,848	$	10,283





Capital expenditures by type:
Wind generation	$	153	$	105	$	2,172
Electric distribution	388		477		2,071
Electric transmission	261		291		2,063
Natural gas transmission and storage	103		65		1,097
Solar generation	51		40		236
Electric battery and pumped hydro storage	1		40		236
Other	596		830		2,408
Total	$	1,553	$	1,848	$	10,283

(1)BHE and Other represents amounts related principally to other entities 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:

•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 enhancements 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:

•Solar generation includes growth expenditures, including spending for the following:

•Electric battery and pumped hydro storage includes growth expenditures, including spending for the following:

Material Cash Requirements

Regulatory Matters

PacifiCorp

Utah

Oregon

Wyoming

Washington

California

MidAmerican Energy

South Dakota

Wind PRIME

Iowa Transmission Legislation

In June 2020, Iowa enacted legislation that grants incumbent electric transmission owners the right to construct, own and maintain electric transmission lines that have been approved for construction in a federally registered planning authority's transmission plan and that connect to the incumbent electric transmission owner's facility. Also known as the Right of First Refusal, the law provides MidAmerican Energy, as an incumbent electric transmission owner, the legal right to construct, own and maintain transmission lines in MidAmerican Energy's service territory that have been approved by the MISO (or another federally registered planning authority) and are eligible to receive regional cost allocation. To exercise the legal right, MidAmerican Energy must notify the IUB within 90 days of any such approval for the construction of eligible electric transmission lines that it intends to construct, own and maintain. The law still requires an incumbent electric transmission owner to obtain a state franchise from the IUB to construct, erect, maintain or operate an electric transmission line and, upon issuance of a franchise, the incumbent electric transmission owner must provide the IUB an estimate of the cost to construct the eligible electric transmission line and, until the construction is complete, a quarterly report updating the estimated cost to construct the eligible electric transmission line. In October 2020, national transmission interests filed a lawsuit that challenged the law on state constitutional grounds. The suit argues that the law was enacted in violation of the "single-subject" provision of Iowa's state constitution because it was "log-rolled" into a late session appropriations bill and violates the equal protection provision of the Iowa constitution. The State of Iowa defended the law, and MidAmerican Energy and ITC Midwest both intervened and defended the law as well. The Iowa district court dismissed the lawsuit in March 2021 for lack of standing, and the national transmission interests appealed. In June 2022, the Iowa Court of Appeals upheld the district court's decision, after which the national transmission interests asked the Iowa Supreme Court to reconsider. In November 2022, the Iowa Supreme Court granted the motion to reconsider. On March 24, 2023, the Iowa Supreme Court issued an opinion that reversed the lower courts, held the national transmission interests had standing, and remanded the case to the district court to consider the state constitutional claims on their merits. The opinion also imposed a temporary injunction that stayed enforcement of the law pending a decision on the merits. On April 7, 2023, the State of Iowa, acting individually, and MidAmerican Energy and ITC Midwest, acting jointly, filed petitions for rehearing with the Iowa Supreme Court. On April 19, 2023, the national transmission interests filed a reply that (1) expressed its opposition to the petitions for rehearing, (2) asked the Iowa Supreme Court to hold that the injunction specifically applied to and precluded advancement of MidAmerican Energy's Long Range Transmission Projects ("LRTP") Tranche 1 projects, and (3) asked the Iowa Supreme Court to retain the matter and rule on the constitutional claims on the merits without further briefing or argument. On April 26, 2023, the Iowa Supreme Court issued an order that denied the petitions for rehearing without comment and made minor, non-substantive changes to the decision, with no changes to the injunction. No earlier than May 18, 2023, the Iowa Supreme Court will remand the case to the district court for further proceedings on the merits. To this point, MISO has taken no action to reverse or disrupt its approval of MidAmerican Energy's LRTP Tranche 1 projects. This matter only potentially affects the manner in which MidAmerican Energy would secure the right to construct transmission lines that are eligible for regional cost allocation and are otherwise subject to competitive bidding under the MISO tariff; it does not negatively affect or implicate MidAmerican Energy's ongoing rights to construct any other transmission lines, including lines required to serve new or expanded retail load, connect new generators or meet reliability criteria.

NV Energy (Nevada Power and Sierra Pacific)

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. In October 2022, all parties to the proceedings relating to the joint application entered into a Stipulation to delay the procedural schedule. The Nevada Utilities made a supplemental filing on December 30, 2022. In March 2023, the proceedings relating to the joint application were postponed to May 2023. In April 2023, the Nevada Utilities filed a notice with the PUCN requesting to withdraw the joint application to merge into a single corporate entity and vacate the current procedural schedule, and executed a termination of the related merger agreement.

Transportation Electrification Plan ("TEP")

Northern Powergrid Distribution Companies

•Ofgem's misallocation of allowances that is inconsistent with efficient costs; and

•Ofgem's approach to determine rewards for the Business Plan Incentive.

BHE Pipeline Group

BHE GT&S

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 and storage reservation rates. In January 2023, the FERC approved Northern Natural Gas filing to implement its interim rates effective January 1, 2023, subject to refund and the outcome of hearing procedures. Procedural hearings are scheduled to begin June 14, 2023.

BHE Transmission

AltaLink

2024-2025 General Tariff Application

Generic Cost of Capital Proceeding

Environmental Laws and Regulations

Air Quality Regulations

The Clean Air Act, as well as state laws and regulations impacting air emissions, provides a framework for protecting and improving the nation's air quality and controlling sources of air emissions. These laws and regulations continue to be promulgated and implemented and will impact the operation of BHE's generating facilities and require them to reduce emissions at those facilities to comply with the requirements. In addition, the potential adoption of state or federal clean energy standards, which include low-carbon, non-carbon and renewable electricity generating resources, may also impact electricity generators and natural gas providers.

Mercury and Air Toxics Standards

On April 5, 2023, the EPA released a proposal to revise several aspects of the MATS rule following the agency's review of the 2020 Residual Risk and Technology Review. The EPA proposes two specific standard changes - one applicable to all covered units and one specific to the existing lignite subcategory. The EPA proposes a more stringent standard for emissions of filterable particulate matter, the surrogate standard for non-mercury metals for coal-fueled electric generating units. The EPA proposes to reduce the filterable particulate matter emission standard by two-thirds based on a demonstration that 91% of coal-based capacity, which has not been identified as retiring before the proposed compliance period, has an emission rate at or below the proposed limit. The EPA also proposes to require continuous emissions monitoring for filterable particulate matter to demonstrate compliance with the revised standard. Compliance would be due no later than three years after the effective date of a final rule and the EPA will accept comments on the proposal for 60 days following its publication in the Federal Register. The relevant Registrants are not included in the lignite subcategory. The relevant Registrants have identified that compliance can be achieved with existing controls. Until the EPA takes final action on the proposal, the full impacts of the rule cannot be determined.

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. 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. 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. In March 2023, the EPA released the final Good Neighbor Rule. The electric generation sector remains the key industry regulated by the rule and will have access to emissions allowance trading beginning in summer 2023. The final rule shifted the maximum daily backstop rate for coal-fueled generating units, which drives the installation of new controls or curtailment, to take effect in 2030 instead of 2027. PacifiCorp's Hunter Units 1-3 and Huntington Units 1-2, which do not have SCR controls, are impacted by the rule. PacifiCorp's 2023 IRP selected the installation of non-SCR on the Hunter and Huntington Units by 2026 as part of the preferred portfolio. The level of NOx allowances for the Utah units remains similar to 2021 levels, with significant reductions for the coal units beginning in 2026. The daily limit, which takes effect in 2030, will further restrict operation of units without adequate controls. NV Energy's fossil-fueled units are also covered by the final rule. North Valmy Units 1 and 2, which do not have SCR, will require additional controls or reduced operations during the ozone season if operated beyond 2025. Nevada's regional haze SIP has an enforceable retirement date for North Valmy Units 1 and 2 of December 31, 2028, and NV Energy's IRP identified a December 31, 2025, retirement date for the units. The EPA's updated modeling suggests that Arizona, Iowa and Kansas may be significantly contributing to nonattainment in downwind states. The EPA intends to undertake additional assessment of its modeling for these states and will determine if it is necessary to address obligations for these states in future actions. The EPA also deferred final action for Wyoming, pending further review of updated air quality and contribution modeling and analysis. Additional notice and comment rulemaking, such as a supplemental rule, would be required to rescind Iowa's approved SIP and incorporate additional states into the program. The states of Utah and Wyoming challenged the EPA's denial and deferral, respectively, of their interstate ozone transport SIPs in the Tenth Circuit Court of Appeals. PacifiCorp also filed petitions with the court opposing the EPA's action in both states. At the time of filing, at least six other states have challenged the EPA's action to disapprove SIPs in different regional federal Courts of Appeal. Until additional rulemaking is completed and litigation is exhausted, the potential impacts to the relevant Registrants cannot be determined.

The EPA included additional sectors in the expanded CSAPR program. Relevant to the Registrants, this includes the pipeline transportation of natural gas. Requirements for that sector focus on emissions reductions from reciprocating internal combustion engines involved in the transport of natural gas and take effect in 2026. There is no access to allowance trading for the non-electric generation sectors. The EPA excluded emergency engines and engines that do not operate during the ozone season, included a facility-wide averaging plan and eased requirements for monitoring. Northern Natural Gas operates 18 affected units; BHE GT&S operates 157 affected units; and Kern River is not affected by the final rule.

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.

In June 2019, the state of Utah incorporated a BART alternative into its SIP for regional haze planning period one. 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 EPA approved the SIP revision with the BART alternative in October 2020. The EPA's actions also withdrew a prior FIP that required installation of SCR equipment on Hunter Units 1 and 2 and Huntington Units 1 and 2. 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. The EPA defended the SIP, and PacifiCorp and the state of Utah intervened in the litigation. Oral arguments in HEAL Utah v. EPA were held March 21, 2023. A final decision from the court is expected by fall 2023. The Utah Air Quality Board approved the Utah Division of Air Quality's SIP for the regional haze second planning period on June 6, 2022. The SIP sets mass-based NOx emissions limits and rate-based SO2 limits for PacifiCorp's Hunter and Huntington generating facilities to ensure reasonable visibility progress for the second planning period. The state submitted the SIP to the EPA in August 2022 and the EPA determined the submission was complete August 22, 2022. The EPA is required to make a determination on the Utah SIP by August 2023.

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. The EPA's final action on the Wyoming SIP in 2014 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 by 2019. PacifiCorp filed an appeal of the EPA's final action on Wyodak in March 2014. The state of Wyoming and several environmental groups also filed an appeal of the EPA's final action. 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 parties worked to mediate claims under the Wyoming regional haze requirements until the abatement on litigation was lifted in September 2022. Opening briefs were submitted in October 2022. In the litigation, PacifiCorp objects to the EPA's FIP requiring SCR on the Wyodak Unit. That requirement in the agency's plan remains stayed by the court. PacifiCorp has also intervened on behalf of the EPA against claims that Naughton Units 1 and 2 should have been subject to a SCR requirement. Oral argument will be held May 16, 2023. PacifiCorp has claimed the Naughton claims are moot but that a court ruling on the Wyodak claims is necessary to determine whether the EPA's federal plan complies with the Clean Air Act. Separately, 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 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, PacifiCorp must convert Jim Bridger Units 1 and 2 to natural gas and begin meeting emissions limits consistent with that conversion by January 1, 2024. 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. On December 30, 2022, the Wyoming Air Quality Division submitted the state-approved revised regional haze SIP requiring natural gas conversion of Jim Bridger Units 1 and 2 to the EPA for approval. The plan revision replaces a previous requirement for SCR at the units. The Wyoming Air Quality Division also issued an air permit for the natural gas conversion of Jim Bridger Units 1 and 2 on December 28, 2022. PacifiCorp submitted a notice of compliance to the EPA on March 9, 2023, to certify completion of the Jim Bridger administrative compliance order through completion of the requirements to comply with Wyoming's consent decree and revised SIP submission. PacifiCorp remains subject to the compliance terms of the Wyoming consent decree as it works to convert Jim Bridger Units 1 and 2 to natural gas. The EPA is in on-going discussions with Wyoming to finalize a determination on the SIP revisions, with a decision anticipated by fall 2023. Wyoming submitted a SIP for the second round of regional haze planning to the EPA in August 2022 and the EPA determined the submission was complete that same month. Wyoming determined that no additional controls are necessary on any Wyoming resources to make reasonable progress under the regional haze rules. The EPA is required to make a determination on the Wyoming SIP by August 2023.

The state of Colorado regional haze SIP requires SCR equipment at Craig Unit 2 and Hayden Units 1 and 2, in which PacifiCorp has ownership interests. Each of those regional haze compliance projects are in-service. In addition, in February 2015, the state of Colorado finalized an amendment to its regional haze SIP relating to Craig Unit 1, in which PacifiCorp has an ownership interest, to require the installation of SCR controls by 2021. In September 2016, the owners of Craig Units 1 and 2 reached an agreement with state and federal agencies and certain environmental groups that were parties to the previous settlement requiring SCR to retire Unit 1 by December 31, 2025, in lieu of SCR installation, or alternatively to remove the unit from coal-fueled service by August 31, 2021, with an option to convert the unit to natural gas by August 31, 2023, in lieu of SCR installation. The terms of the agreement were approved by the Colorado Air Quality Board in December 2016, incorporated into an amended Colorado regional haze SIP in 2017 and approved by the EPA in August 2018. PacifiCorp identified a December 31, 2025, retirement date for Craig Unit 1 in its 2023 IRP.

Nevada, Utah and Wyoming each submitted regional haze SIPs for the regional haze second planning period to the EPA in August 2022. The EPA has 18 months to approve or disapprove all or parts of the states' plans. On August 25, 2022, the EPA promulgated a finding of failure to submit a SIP for the regional haze second planning period for 15 states, including Iowa. The finding establishes a two-year deadline for the agency to promulgate FIPs to address the requirements, unless prior to promulgating a FIP, the state submits, and the agency approves, a SIP meeting the requirements. The finding says the agency intends to continue to work with states in developing approvable SIP submittals in a timely manner. The Iowa Department of Natural Resources continues to work with the EPA on development of its SIP. On February 13, 2023, Iowa issued a draft SIP and accepted comment on the draft plan through March 16, 2023. Iowa proposes to require operational improvements to existing control equipment at MidAmerican Energy's Louisa Generation Station and Walter Scott Jr. Energy Center - Unit 3. Iowa anticipates submitting a final plan to the EPA in summer 2023.

Water Quality Standards

In November 2015, the EPA published final effluent limitation guidelines and standards for the steam electric power generating sector which, among other things, regulate the discharge of bottom ash transport water, fly ash transport water, combustion residual leachate and non-chemical metal cleaning wastes. In November 2019, the EPA proposed updates to the 2015 rule, specifically addressing flue gas desulfurization wastewater and bottom ash transport water. The rule took effect in December 2020. The final rule changes the technology-basis for treatment of flue gas desulfurization wastewater and bottom ash transport water, revises the voluntary incentives program for flue gas desulfurization wastewater, and adds subcategories for high-flow units, low utilization units, and those that will transition away from coal combustion by 2028. While most of the issues raised by this rule are already being addressed through the CCR rule and are not expected to impose significant additional requirements, the Dave Johnston generating facility is impacted by the rule's bottom ash handling requirements at Units 1 and 2. The generating facility submitted notice to the Wyoming Department of Environmental Quality that it will either achieve a cessation of coal combustion at Units 1 and 2 by December 31, 2028, or install bottom ash transport treatment technology by December 31, 2025. On March 8, 2023, the EPA proposed additional changes to the effluent limitations guidelines to replace the 2020 rule and provide stricter limits for bottom ash transport water, flue gas desulfurization wastewater and coal combustion residual leachate. The relevant Registrants use a combination of zero discharge, enrollment in cessation-of-coal subcategory and dry bottom ash handling to manage the affected wastestreams. As a result, significant impacts are not anticipated. However, until the EPA takes final action on the proposal, the full impacts of the rule cannot be determined. The EPA will accept public comments through May 30, 2023, and intends to finalize a rule by spring 2024.

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, 2022. There have been no significant changes in the Company's assumptions regarding critical accounting estimates since December 31, 2022.

PacifiCorp and its subsidiaries

Consolidated Financial Section

PART I

Item 1.Financial Statements

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Shareholders of

PacifiCorp

Results of Review of Interim Financial Information

We have reviewed the accompanying consolidated balance sheet of PacifiCorp and subsidiaries ("PacifiCorp") as of March 31, ~~2022,~~2023, the related consolidated statements of operations, changes in shareholders' equity, and cash flows for the three-month periods ended March 31, ~~2022~~2023 and ~~2021,~~2022, 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,~~2022, 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,~~24, 2023, 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,~~2022, 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, 2022~~May 5, 2023

4647

PACIFICORP AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS (Unaudited)

(Amounts in millions)


		As of					As of
		March 31,		December 31,			March 31,		December 31,
		2022		2021			2023		2022
ASSETS	ASSETS					ASSETS
Current assets:	Current assets:					Current assets:
Cash and cash equivalents	Cash and cash equivalents	$	335	$	179	Cash and cash equivalents	$	19	$	641
Trade receivables, net	Trade receivables, net	674		725		Trade receivables, net	780		825
Other receivables, net	Other receivables, net	49		52		Other receivables, net	112		72
Inventories	Inventories	479		474		Inventories	491		474
Derivative contracts	Derivative contracts	145		76		Derivative contracts	114		184

Regulatory assets	Regulatory assets	125		65		Regulatory assets	302		275

Other current assets	Other current assets	163		150		Other current assets	215		213
Total current assets	Total current assets	1,970		1,721		Total current assets	2,033		2,684

Property, plant and equipment, net	Property, plant and equipment, net	23,081		22,914		Property, plant and equipment, net	24,695		24,430
Regulatory assets	Regulatory assets	1,231		1,287		Regulatory assets	1,684		1,605
Other assets	Other assets	562		534		Other assets	707		686

Total assets	Total assets	$	26,844	$	26,456	Total assets	$	29,119	$	29,405

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

4748

PACIFICORP AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS (Unaudited) (continued)

(Amounts in millions)

As of
March 31, December 31,
2022 2021
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 724 $ 680
Accrued interest 115 121
Accrued property, income and other taxes 113 78
Accrued employee expenses 109 89
Current portion of long-term debt 155 155
Regulatory liabilities 114 118
Other current liabilities 196 219
Total current liabilities 1,526 1,460

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

Commitments and contingencies (Note 8) 0 0

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

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

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

~~PACIFICORP AND SUBSIDIARIES~~

~~CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)~~

~~(Amounts in millions)~~

Three-Month Periods
Ended March 31,
2022 2021

Operating revenue $ 1,297 $ 1,242

Operating expenses:
Cost of fuel and energy 465 424
Operations and maintenance 277 259
Depreciation and amortization 280 264
Property and other taxes 59 61
Total operating expenses 1,081 1,008

Operating income 216 234

Other income (expense):
Interest expense (106) (107)
Allowance for borrowed funds 6 6
Allowance for equity funds 13 13
Interest and dividend income 7 6
Other, net (4) 6
Total other income (expense) (84) (76)

Income before income tax expense (benefit) 132 158
Income tax expense (benefit) 2 (11)
Net income $ 130 $ 169


	As of
	March 31,		December 31,
	2023		2022
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable	$	900	$	1,049
Accrued interest	143		128
Accrued property, income and other taxes	92		67

Accrued employee expenses	97		86

Current portion of long-term debt	440		449
Regulatory liabilities	97		96
Other current liabilities	389		271
Total current liabilities	2,158		2,146

Long-term debt	9,218		9,217
Regulatory liabilities	2,690		2,843
Deferred income taxes	3,097		3,152
Other long-term liabilities	1,635		1,306
Total liabilities	18,798		18,664

Commitments and contingencies (Note 9)

Shareholders' equity:
Preferred stock	2		2
Common stock - 750 shares authorized, no par value, 357 shares issued and outstanding	—		—
Additional paid-in capital	4,479		4,479
Retained earnings	5,849		6,269
Accumulated other comprehensive loss, net	(9)		(9)
Total shareholders' equity	10,321		10,741

Total liabilities and shareholders' equity	$	29,119	$	29,405

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

PACIFICORP AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF ~~CHANGES IN SHAREHOLDERS' EQUITY~~OPERATIONS (Unaudited)

(Amounts in millions)

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

Balance, December 31, 2020 $ 2 $ — $ 4,479 $ 4,711 $ (19) $ 9,173
Net income — — — 169 — 169
Balance, March 31, 2021 $ 2 $ — $ 4,479 $ 4,880 $ (19) $ 9,342

Balance, December 31, 2021 $ 2 $ — $ 4,479 $ 5,449 $ (17) $ 9,913
Net income — — — 130 — 130
Other comprehensive income — — — — 1 1
Balance, March 31, 2022 $ 2 $ — $ 4,479 $ 5,579 $ (16) $ 10,044


	Three-Month Periods
	Ended March 31,
		2023		2022

Operating revenue		$	1,484	$	1,297

Operating expenses:
Cost of fuel and energy		614		465
Operations and maintenance		705		277
Depreciation and amortization		279		280
Property and other taxes		53		59
Total operating expenses		1,651		1,081

Operating (loss) income		(167)		216

Other income (expense):
Interest expense		(124)		(106)
Allowance for borrowed funds		13		6
Allowance for equity funds		27		13
Interest and dividend income		19		7
Other, net		2		(4)
Total other income (expense)		(63)		(84)

(Loss) income before income tax expense (benefit)		(230)		132
Income tax expense (benefit)		(110)		2
Net (loss) income		$	(120)	$	130

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

PACIFICORP AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY (Unaudited)

(Amounts in millions)


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







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

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







Balance, December 31, 2022	$	2	$	—	$	4,479	$	6,269	$	(9)	$	10,741
Net loss	—		—		—		(120)		—		(120)

Common stock dividends declared	—		—		—		(300)		—		(300)
Balance, March 31, 2023	$	2	$	—	$	4,479	$	5,849	$	(9)	$	10,321

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

PACIFICORP AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)

(Amounts in millions)


		Three-Month Periods					Three-Month Periods
		Ended March 31,					Ended March 31,
		2022		2021			2023		2022
Cash flows from operating activities:	Cash flows from operating activities:					Cash flows from operating activities:
Net income		$	130	$	169
Adjustments to reconcile net income to net cash flows from operating activities:
Net (loss) income						Net (loss) income	$	(120)	$	130
Adjustments to reconcile net (loss) income to net cash flows from operating activities:						Adjustments to reconcile net (loss) income to net cash flows from operating activities:
Depreciation and amortization	Depreciation and amortization	280		264		Depreciation and amortization	279		280
Allowance for equity funds	Allowance for equity funds	(13)		(13)		Allowance for equity funds	(27)		(13)
Changes in regulatory assets and liabilities		(9)		(4)
Net power cost deferrals						Net power cost deferrals	(136)		(14)
Amortization of net power cost deferrals						Amortization of net power cost deferrals	36		11
Other changes in regulatory assets and liabilities						Other changes in regulatory assets and liabilities	(6)		(6)
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	(75)		19
Other, net	Other, net	4		(2)		Other, net	(2)		4
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	37		59
Inventories	Inventories	(5)		7		Inventories	(17)		(5)
Derivative collateral, net	Derivative collateral, net	22		7		Derivative collateral, net	(78)		22
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	(11)		15
Accounts payable and other liabilities	Accounts payable and other liabilities	35		(51)		Accounts payable and other liabilities	459		35
Net cash flows from operating activities	Net cash flows from operating activities	537		469		Net cash flows from operating activities	339		537

Cash flows from investing activities:	Cash flows from investing activities:					Cash flows from investing activities:
Capital expenditures	Capital expenditures	(374)		(439)		Capital expenditures	(643)		(374)
Other, net	Other, net	3		(1)		Other, net	(1)		3
Net cash flows from investing activities	Net cash flows from investing activities	(371)		(440)		Net cash flows from investing activities	(644)		(371)

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)		(9)
Net proceeds from short-term debt		—		2

Dividends paid						Dividends paid	(300)		—
Other, net	Other, net	(2)		(1)		Other, net	(2)		(2)
Net cash flows from financing activities	Net cash flows from financing activities	(11)		1		Net cash flows from financing activities	(311)		(11)

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	(616)		155
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	674		186
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	$	58	$	341

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

5152

PACIFICORP AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

(1) General

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

The unaudited Consolidated Financial Statements have been prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP") for interim financial information and the United States Securities and Exchange Commission's rules and regulations for Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the disclosures required by GAAP for annual financial statements. Management believes the unaudited Consolidated Financial Statements contain all adjustments (consisting only of normal recurring adjustments) considered necessary for the fair presentation of the unaudited Consolidated Financial Statements as of March 31, ~~2022~~2023, and for the three-month periods ended March 31, ~~2022~~2023 and ~~2021.~~2022. The Consolidated Statements of Comprehensive Income have been omitted as net income materially equals comprehensive income for the three-month periods ended March 31, ~~2022~~2023 and ~~2021.~~2022. The results of operations for the three-month ~~periods~~period ended March 31, ~~2022 and 2021~~2023, 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~~2022, 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 accounting policies or its assumptions regarding significant accounting estimates ~~and policies~~ during the three-month period ended March 31, ~~2022.~~2023, other than the updates associated with PacifiCorp's estimates of loss contingencies related to the Oregon and Northern California 2020 wildfires (the "2020 Wildfires") and the 2022 McKinney fire 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 and~~ nuclear decommissioning ~~funds. Restricted amounts are included in other current assets~~ and ~~other assets on the Consolidated Balance Sheets.~~custodial funds. A reconciliation of cash and cash equivalents and restricted cash and cash equivalents as presented inon 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,
		March 31,		December 31,			2023		2022
		2022		2021
Cash and cash equivalents	Cash and cash equivalents	$	335	$	179	Cash and cash equivalents	$	19	$	641
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	8		7
Restricted cash included in other assets	Restricted cash included in other assets	2		3		Restricted cash included in other assets	31		26
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	$	58	$	674

5253

(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
		March 31,		December 31,
	Depreciable Life	2023		2022
Utility plant:
Generation	15 - 59 years	$	13,721	$	13,726
Transmission	60 - 90 years	8,063		8,051
Distribution	20 - 75 years	8,578		8,477
Intangible plant(1) and other	5 - 75 years	2,758		2,755
Utility plant in-service		33,120		33,009
Accumulated depreciation and amortization		(11,256)		(11,093)
Utility plant in-service, net		21,864		21,916
Nonregulated, net of accumulated depreciation and amortization	14 - 95 years	18		18
		21,882		21,934
Construction work-in-progress		2,813		2,496
Property, plant and equipment, net		$	24,695	$	24,430

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

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

Common Shareholders' Equity

In January 2023, PacifiCorp declared a common stock dividend of $300 million, paid in February 2023, to PPW Holdings LLC.

(5) Income Taxes

The effective income tax rate for the three-month period ended March 31, 2023 of 48% results from a $110 million income tax benefit associated with a $230 million pre-tax loss primarily resulting from the $359 million pre-tax loss associated with the 2020 Wildfires described in Note 9. The $110 million income tax benefit is primarily comprised of a $48 million benefit (21%) from the application of the federal statutory income tax rate to the pre-tax loss and a $29 million benefit (13%) from federal income tax credits.

A reconciliation of the federal statutory income tax rate to the effective income tax rate applicable to (loss) income before income tax expense (benefit) ~~expense~~ is as follows:


		Three-Month Periods						Three-Month Periods
		Ended March 31,						Ended March 31,
			2022		2021				2023		2022

Federal statutory income tax rate	Federal statutory income tax rate		21	%	21	%	Federal statutory income tax rate		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		3
Federal income tax credits	Federal income tax credits		(20)		(20)		Federal income tax credits		13		(20)
Effects of ratemaking(1)	Effects of ratemaking(1)		(11)		(13)		Effects of ratemaking(1)		6		(11)

Valuation allowance	Valuation allowance		6		—		Valuation allowance		5		6
Other	Other		3		2		Other		(1)		3
Effective income tax rate	Effective income tax rate		2	%	(7)	%	Effective income tax rate		48	%	2	%

(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"~~PTC") ~~earned by~~from 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 recognized for the three-month periods ended March 31, 2023 and 2022, ~~and 2021~~ totaled ~~$26~~$29 million and ~~$31~~$26 million, respectively.

For the three-month period ended March 31, 2023, PacifiCorp released an $11 million valuation allowance related to state net operating loss carryforwards. For the three-month period ended March 31, 2022, PacifiCorp recorded aan $8 million 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. As of March 31, 2023 and December 31, 2022, federal and state income taxes receivable from BHE were $119 million and $84 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
		Ended March 31,						Ended March 31,
			2022		2021				2023		2022
Pension:	Pension:						Pension:
Service cost			$	—	$	—

Interest cost	Interest cost		7		7		Interest cost		$	10	$	7
Expected return on plan assets	Expected return on plan assets		(10)		(13)		Expected return on plan assets		(12)		(10)

Net amortization	Net amortization		4		5		Net amortization		3		4
Net periodic benefit cost (credit)			$	1	$	(1)
Net periodic benefit cost							Net periodic benefit cost		$	1	$	1

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

Amounts other than the service cost for pension and other postretirement benefit plans are recorded in ~~Other,~~other, net inon 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.~~2023. As of March 31, ~~2022,~~2023, $1 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 March 31, 2023
Not designated as hedging contracts(1):
Commodity assets	$	133	$	15	$	15	$	3	$	166
Commodity liabilities	(7)		(7)		(39)		(4)		(57)
Total	126		8		(24)		(1)		109

Total derivatives	126		8		(24)		(1)		109
Cash collateral payable	(12)		—		—		—		(12)
Total derivatives - net basis	$	114	$	8	$	(24)	$	(1)	$	97

As of December 31, 2022
Not designated as hedging contracts(1):
Commodity assets	$	279	$	27	$	9	$	3	$	318
Commodity liabilities	(22)		(7)		(14)		(5)		(48)
Total	257		20		(5)		(2)		270

Total derivatives	257		20		(5)		(2)		270
Cash collateral payable(2)	(73)		(5)		—		—		(78)
Total derivatives - net basis	$	184	$	15	$	(5)	$	(2)	$	192

(1)PacifiCorp's commodity derivatives are generally included in rates. As of March 31, ~~2022~~2023, a regulatory liability of ~~$195~~$109 million was recorded related to the net derivative asset of ~~$195~~$109 million. As of December 31, ~~2021~~2022, a regulatory liability of ~~$53~~$270 million was recorded related to the net derivative asset of ~~$53~~$270 million.

(2)As of December 31, 2022, PacifiCorp had an additional $12 million cash collateral payable that was not required to be netted against total derivatives.

The following table reconciles the beginning and ending balances of PacifiCorp's net regulatory (liabilities) assets and summarizes the pre-tax gains and losses on commodity derivative contracts recognized in net regulatory (liabilities) assets, as well as amounts reclassified to earnings (in millions):

Three-Month Periods
Ended March 31,
2022 2021
Beginning balance $ (53) $ 17
Changes in fair value recognized in regulatory assets (168) (17)
Net losses reclassified to operating revenue (3) —
Net gains reclassified to energy costs 29 —
Ending balance $ (195) $ —


	Three-Month Periods
	Ended March 31,
		2023		2022

Beginning balance		$	(270)	$	(53)
Changes in fair value recognized in regulatory (liabilities) assets		(10)		(168)
Net losses reclassified to operating revenue		(6)		(3)
Net gains reclassified to energy costs		177		29
Ending balance		$	(109)	$	(195)

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,
Measure 2022 2021
Electricity purchases, net Megawatt hours 1 2
Natural gas purchases Decatherms 105 106


	Unit of	March 31,	December 31,
	Measure	2023	2022

Electricity purchases, net	Megawatt hours	3	2
Natural gas purchases	Decatherms	158	127

Credit Risk

PacifiCorp is exposed to counterparty credit risk associated with wholesale energy supply and marketing activities with other utilities, energy marketing companies, financial institutions and other market participants. Credit risk may be concentrated to the extent PacifiCorp's counterparties have similar economic, industry or other characteristics and due to direct or indirect relationships among the counterparties. Before entering into a transaction, PacifiCorp analyzes the financial condition of each significant wholesale counterparty, establishes limits on the amount of unsecured credit to be extended to each counterparty and evaluates the appropriateness of unsecured credit limits on an ongoing basis. To further mitigate wholesale counterparty credit risk, PacifiCorp enters into netting and collateral arrangements that may include margining and cross-product netting agreements and obtains third‑party guarantees, letters of credit and cash deposits. If required, PacifiCorp exercises rights under these arrangements, including calling on the counterparty's credit support arrangement.

Collateral and Contingent Features

In accordance with industry practice, certain wholesale agreements, including derivative contracts, contain credit support provisions that in part base certain collateral requirements on credit ratings for senior unsecured debt as reported by one or more of the recognized credit rating agencies. These agreements may either specifically provide bilateral rights to demand cash or other security if credit exposures on a net basis exceed specified rating-dependent threshold levels ("credit-risk-related contingent features") or provide the right for counterparties to demand "adequate assurance" if there is a material adverse change in PacifiCorp's creditworthiness. These rights can vary by contract and by counterparty. As of March 31, ~~2022,~~2023, 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~~$56 million and ~~$37~~$48 million as of March 31, ~~2022~~2023 and December 31, ~~2021,~~2022, respectively, for which PacifiCorp had posted collateral of $— million, ~~and $5 million, respectively,~~ in the form of cash deposits. If all credit-risk-related contingent features for derivative contracts in liability positions had been triggered as of March 31, ~~2022~~2023 and December 31, ~~2021,~~2022, PacifiCorp would have been required to post $2$20 million and ~~$23~~$3 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.

5657

~~(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 March 31, 2023:
Assets:
Commodity derivatives	$	—	$	166	$	—	$	(44)	$	122
Money market mutual funds	44		—		—		—		44
Investment funds	28		—		—		—		28
	$	72	$	166	$	—	$	(44)	$	194

Liabilities - Commodity derivatives	$	—	$	(57)	$	—	$	32	$	(25)

As of December 31, 2022:
Assets:
Commodity derivatives	$	—	$	318	$	—	$	(119)	$	199
Money market mutual funds	649		—		—		—		649
Investment funds	23		—		—		—		23
	$	672	$	318	$	—	$	(119)	$	871

Liabilities - Commodity derivatives	$	—	$	(48)	$	—	$	41	$	(7)

(1)Represents netting under master netting arrangements and a net cash collateral payable of ~~$17~~$12 million and ~~a net cash collateral receivable of $5~~$78 million as of March 31, ~~2022~~2023 and December 31, ~~2021,~~2022, respectively. As of December 31, 2022, PacifiCorp had an additional $12 million cash collateral payable that was not required to be netted against total derivatives.

5758

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. A discounted cash flow valuation method was used to estimate fair value. 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 March 31, 2023				As of December 31, 2022
	Carrying		Fair		Carrying		Fair
	Value		Value		Value		Value

Long-term debt	$	9,658	$	9,350	$	9,666	$	9,045

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

Commitments

PacifiCorp has the following firm commitments that are not reflected on the Consolidated Balance Sheets.

Construction Commitments

In April 2023, PacifiCorp entered into build transfer agreements totaling $1.2 billion through 2025 for the construction of certain wind-powered generating facilities in Wyoming.

Fuel Contracts

During the three-month period ended March 31, 2023, PacifiCorp entered into certain coal supply and transportation agreements totaling $247 million through 2025.

Environmental Laws and Regulations

PacifiCorp is subject to federal, state and local laws and regulations regarding air quality, climate change, emissions performance standards, water quality, coal ash disposal, wildfire prevention and mitigation and other environmental matters that have the potential to impact its current and future operations. PacifiCorp believes it is in material compliance with all applicable laws and regulations.

Lower Klamath Hydroelectric Project

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.

~~California and Oregon 2020~~ Wildfires Overview

~~In September 2020,~~A provision for a ~~severe weather event resulting in high winds, low humidity~~loss contingency is recorded when it is probable that a liability has been incurred and ~~warm temperatures contributed to several major wildfires, real~~the amount of loss can be reasonably estimated. PacifiCorp evaluates the related range of reasonably estimated losses and ~~personal property and natural resource damage, personal injuries and~~records a loss based on its best estimate within that range or the lower end of life and widespread power outages in Oregon and Northern California (the "2020 Wildfires"). The wildfires spread across certain parts of PacifiCorp's service territory and surrounding areas across multiple counties in Oregon and California, including Siskiyou County, California; Jackson County, Oregon; Douglas County, Oregon; Marion County, Oregon; Lincoln County, Oregon; and Klamath County, Oregon burning over 500,000 acres in aggregate. Third party reports for these wildfires indicate over 2,000 structures destroyed, including residences; several structures damaged; multiple individuals injured; and several fatalities. Fire suppression costs estimated by various agencies total approximately $150 million. Investigations into the cause and origin of each wildfire are complex and ongoing and being conducted by various entities, including the United States Forest Service, the California Public Utilities Commission, the Oregon Department of Forestry, the Oregon Department of Justice, PacifiCorp and various experts engaged by PacifiCorp.

2020 Wildfires

~~Environmental Laws~~The following table presents changes in PacifiCorp's liability for estimated losses associated with the 2020 Wildfires (in millions):



	Three-Month Periods
	Ended March 31,
	2023		2022
Beginning balance	$	424	$	252
Accrued losses	400		—

Ending balance	$	824	$	252

PacifiCorp's receivable for expected insurance recoveries associated with the probable losses was $287 million and ~~Regulations~~$246 million, respectively, as of March 31, 2023 and December 31, 2022. During the three-month periods ended March 31, 2023 and 2022, PacifiCorp recognized probable losses net of expected insurance recoveries associated with the 2020 Wildfires of $359 million and $— million, respectively, and are recorded in operations and maintenance on the Consolidated Statements of Operations.

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.2022 McKinney Fire

Due to the preliminary nature of the investigation PacifiCorp does not believe a loss is probable and therefore has not accrued any loss as of the date of this filing. While the loss is not probable, PacifiCorp estimates the potential loss, excluding losses for natural resource damages, to be $31 million, net of expected insurance recoveries. The loss estimate includes PacifiCorp's estimate of losses for fire suppression costs; real and personal property damages; and noneconomic damages such as personal injury damages and loss of life damages. PacifiCorp is unable to estimate the total potential loss, including losses for natural resource damages, because there are a ~~party~~number of unknown facts and legal considerations that may impact the amount of any potential liability, including the total scope and nature of claims that may be asserted against PacifiCorp. PacifiCorp has insurance available and estimates the potential insurance recoveries to ~~the 2016 amended Klamath Hydroelectric Settlement Agreement ("KHSA"), which is intended~~be $103 million, 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.cover potential losses.

5961

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
		Ended March 31,						Ended March 31,
			2022		2021				2023		2022
Customer Revenue:	Customer Revenue:						Customer Revenue:
Retail:	Retail:						Retail:
Residential	Residential		$	505	$	483	Residential		$	585	$	505
Commercial	Commercial		370		359		Commercial		430		370
Industrial	Industrial		273		271		Industrial		290		273
Other retail	Other retail		37		32		Other retail		44		37
Total retail	Total retail		1,185		1,145		Total retail		1,349		1,185
Wholesale	Wholesale		55		36		Wholesale		61		55
Transmission	Transmission		32		25		Transmission		38		32
Other Customer Revenue	Other Customer Revenue		20		23		Other Customer Revenue		32		20
Total Customer Revenue	Total Customer Revenue		1,292		1,229		Total Customer Revenue		1,480		1,292
Other revenue	Other revenue		5		13		Other revenue		4		5
Total operating revenue	Total operating revenue		$	1,297	$	1,242	Total operating revenue		$	1,484	$	1,297

6062

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

The following is management's discussion and analysis of certain significant factors that have affected the consolidated financial condition and results of operations of PacifiCorp during the periods included herein. Explanations include management's best estimate of the impact of weather, customer growth, usage trends and other factors. This discussion should be read in conjunction with PacifiCorp's historical unaudited Consolidated Financial Statements and Notes to Consolidated Financial Statements in Part I, Item 1 of this Form 10‑Q. PacifiCorp's actual results in the future could differ significantly from the historical results.

Results of Operations for the First Quarter of ~~2022~~2023 and ~~2021~~2022

Overview

Net ~~income~~loss for the first quarter of ~~2022~~2023 was ~~$130~~$120 million, a decrease of ~~$39~~$250 million ~~or 23%,~~ compared to ~~2021. Net~~2022 net income ~~decreased~~of $130 million. The decrease in net income was primarily due to ~~higher~~increased operations and maintenance expense, largely due to an increase in loss accruals, net of expected insurance recoveries, associated with the 2020 Wildfires of $359 million, higher ~~depreciation and amortization expense, higher income tax expense~~wildfire mitigation costs, including vegetation management and higher ~~other expense,~~plant operations and maintenance costs, partially offset by higher income tax benefit, higher utility ~~margin.~~margin and lower other expense. Utility margin increased primarily due to higher retail ~~revenue from~~prices and volumes, higher ~~volumes and higher average prices,~~net power cost deferrals, higher average wholesale market prices and lower coal-fueled generation volumes, ~~and higher net power cost deferrals,~~ partially offset by higher purchased electricity costs from higher prices and volumes, ~~and~~ higher natural gas-fueled generation costs from higher prices and ~~volumes.~~volumes, lower wholesale volumes and higher coal-fueled generation prices. Retail customer volumes increased ~~1.9%,~~3.3% primarily due to favorable impacts of weather, an increase in the average number of customers ~~favorable impacts of weather~~ and an increase in commercial and residential customer usage, partially offset by a decrease in industrial customer usage. Energy generated ~~was essentially flat~~decreased 7% for the first quarter of ~~2022~~2023 compared to ~~2021.~~2022 primarily due to lower coal-fueled, wind-powered and hydroelectric generation volumes, partially offset by higher natural gas-fueled generation volumes. Wholesale electricity sales volumes decreased 2%47% and purchased electricity volumes increased 6%28%.

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								First Quarter
		2022		2021		Change					2023		2022		Change
Utility margin:	Utility margin:											Utility margin:
Operating revenue	Operating revenue	$	1,297	$	1,242	$	55	4	%			Operating revenue	$	1,484	$	1,297	$	187	14	%
Cost of fuel and energy	Cost of fuel and energy	465		424		41		10				Cost of fuel and energy	614		465		149		32
Utility margin	Utility margin	832		818		14		2				Utility margin	870		832		38		5
Operations and maintenance	Operations and maintenance	277		259		18		7				Operations and maintenance	705		277		428		155
Depreciation and amortization	Depreciation and amortization	280		264		16		6				Depreciation and amortization	279		280		(1)		—
Property and other taxes	Property and other taxes	59		61		(2)		(3)				Property and other taxes	53		59		(6)		(10)
Operating income		$	216	$	234	$	(18)	(8)	%
Operating (loss) income												Operating (loss) income	$	(167)	$	216	$	(383)	(177)	%

6163

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 %


	First Quarter
	2023		2022		Change
Utility margin (in millions):
Operating revenue	$	1,484	$	1,297	$	187	14	%
Cost of fuel and energy	614		465		149		32
Utility margin	$	870	$	832	$	38	5	%

Sales (GWhs):
Residential	5,102		4,764		338		7	%
Commercial	4,983		4,550		433		10
Industrial, irrigation and other	4,209		4,523		(314)		(7)
Total retail	14,294		13,837		457		3
Wholesale	825		1,553		(728)		(47)
Total sales	15,119		15,390		(271)		(2)	%


Average number of retail customers (in thousands)	2,057		2,025		32		2	%

Average revenue per MWh:
Retail	$	93.82	$	85.46	$	8.36	10	%
Wholesale	$	86.45	$	39.12	$	47.33	121	%

Heating degree days	5,205		4,745		460		10	%

Cooling degree days	—		5		(5)		(100)	%

Sources of energy (GWhs)(1):
Coal	5,555		6,911		(1,356)		(20)	%
Natural gas	3,955		3,115		840		27
Wind(2)	2,083		2,392		(309)		(13)
Hydroelectric and other(2)	812		984		(172)		(17)
Total energy generated	12,405		13,402		(997)		(7)
Energy purchased	4,128		3,223		905		28
Total	16,533		16,625		(92)		(1)	%

Average cost of energy per MWh:
Energy generated(3)	$	28.35	$	18.83	$	9.52	51	%
Energy purchased	$	77.72	$	55.49	$	22.23	40	%

(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.

6264

Quarter Ended March 31, ~~2022~~2023 compared to Quarter Ended March 31, ~~2021~~2022

Utility margin increased ~~$14~~$38 million, or 2%5%, for the first quarter of ~~2022~~2023 compared to ~~2021~~2022 primarily due to:

•$40159 million increase in retail revenue due to higher ~~volumes~~average prices and higher ~~average prices.~~volumes. Retail customer volumes increased ~~1.9%,~~3.3% primarily due to favorable impacts of weather, mainly in Oregon, an increase in the average number of customers ~~favorable impacts of weather~~ and an increase in commercial and residential customer ~~usage;~~usage, partially offset by a decrease in industrial customer usage across all states except Idaho;

•$1297 million of higher deferred net power costs net of amortization of previous deferrals in accordance with established adjustment mechanisms;

•$17 million of higher other revenue primarily due to higher wheeling revenue and higher revenues associated with sales of greenhouse gas allowances;

•$11 million increase in wholesale revenue primarily due to higher average market prices, partially offset by lower volumes; and

•$129 million of lower coal-fueled generation costs primarily due to lower volumes, partially offset by higher average ~~prices;~~

•~~$8 million of higher deferred net power costs in accordance with established adjustment mechanisms; and~~

•~~$8 million of favorable wheeling activities.~~prices.

The increases above were partially offset by:

•$36142 million of higher purchased electricity costs from higher average market prices and higher volumes; and

•$27109 million of higher natural gas-fueled generation costs due to higher average market prices and higher volumes.

Operations and maintenance increased ~~$18~~$428 million for the first quarter of 2023 compared to 2022 primarily due to a $359 million increase in loss accruals, net of expected insurance recoveries, associated with the 2020 Wildfires, $23 million of higher wildfire mitigation costs, including vegetation management and amortization of amounts previously deferred in Oregon, $21 million of higher general and plant maintenance costs, $10 million of higher labor and benefit expenses, and $8 million of higher demand-side management amortization expense (offset in retail revenue).

Property and other taxes decreased $6 million, or 7%10%, for the first quarter of ~~2022~~2023 compared to ~~2021~~2022 primarily due to ~~higher maintenance costs, higher DSM amortization of regulatory balances, and higher insurance premiums due to cost increases related to wildfire coverage, partially offset by~~ lower ~~labor expenses and lower vegetation management costs.~~property tax rates in Utah.

~~Depreciation and amortization~~Interest expense increased ~~$16~~$18 million, or 6%17%, for the first quarter of ~~2022~~2023 compared to ~~2021~~2022 primarily due to higher ~~plant in-service~~average long-term debt balances.

Allowance for borrowed and equity funds increased $21 million for the first quarter of 2023 compared to 2022 primarily due to higher qualified construction work-in-progress balances.

Interest and dividend income increased $12 million for the first quarter of 2023 compared to 2022 primarily due to higher investment income due to higher average interest rates and the recording of interest on higher deferred net power cost balances.

Other, net ~~decreased $10~~increased $6 million for the first quarter of ~~2022~~2023 compared to ~~2021~~2022 primarily due to higher cash surrender values of Supplemental Executive Retirement Plan life insurance policies driven by market increases and a favorable change in deferred compensation and long-term incentive plan primarily due to market movements ~~related to corporate-owned life insurance policies~~(offset in operations and ~~higher pension and postretirement costs.~~maintenance expense).

Income tax (benefit) expense ~~(benefit)~~ ~~increased $13~~decreased $112 million to a benefit of $110 million for the first quarter of 2023 compared to an expense of $2 million for the first quarter of 2022 ~~compared~~and the effective tax rate was 48% for 2023 and 2% for 2022. The $112 million decrease in income tax expense to aan income tax benefit is primarily due to the increase in loss accruals, net of ~~$11 million for~~expected insurance recoveries, associated with the 2020 Wildfires during the first quarter of ~~2021. The effective tax rate was 2% for~~2023 and the ~~first quarter~~release of ~~2022 and (7)% for the first quarter of 2021. The effective tax rate increased primarily due to~~ a valuation allowance ~~PacifiCorp recorded~~on state net operating loss carryforwards in the first quarter of ~~2022 against~~2023 compared to the establishment of a state ~~net operating loss carryforwards.~~valuation allowance in 2022.

Liquidity and Capital Resources

As of March 31, ~~2022,~~2023, PacifiCorp's total net liquidity was as follows (in millions):


Cash and cash equivalents	$	~~335~~19

Credit facilities	~~1,200~~2,000
Less:

Tax-exempt bond support and letters of credit	~~(218)~~(249)
Net credit facilities	~~982~~1,751

Total net liquidity	$	~~1,317~~1,770

Credit facilities:
Maturity dates	2024, 2025

Operating Activities

Net cash flows from operating activities for the three-month periods ended March 31, 2023 and 2022, ~~and 2021~~ were ~~$537~~$339 million and ~~$469~~$537 million, respectively. The ~~change was~~decrease is primarily due to ~~timing of operating payables~~higher wholesale and fuel purchases, collateral returned to counterparties and operations and maintenance expenses, partially offset by higher collections from retail ~~customers, partially offset by higher wholesale purchases.~~customers.

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 made for each payment date.

Investing Activities

Net cash flows from investing activities for the three-month periods ended March 31, 2023 and 2022, ~~and 2021~~ were ~~$(371)~~$(644) million and ~~$(440)~~$(371) million, respectively. The change is primarily due to ~~a decrease~~an increase in capital expenditures of ~~$65~~$269 million. Refer to "Future Uses of Cash" for discussion of capital expenditures.

Financing Activities

Net cash flows from financing activities for the three-month period ended March 31, 2023, were $(311) million. Uses of cash consisted primarily of $300 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 period ended March 31, 2022, were $(11) million. Uses of cash consisted substantially of $9 million for the repayment of long-term debt.

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

Short-term Debt

Regulatory authorities limit PacifiCorp to ~~$1.5~~$2.0 billion of short-term debt. As of March 31, ~~2022~~2023, and December 31, ~~2021,~~2022, 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$5 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.

Common Shareholders' Equity

In January 2023, PacifiCorp declared a common stock dividend of $300 million, paid in February 2023, 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'~~customer rates; changes in environmental and other rules and regulations; outcomes of regulatory ~~proceedings;~~proceedings, including regulatory filings for Certificates of Public Convenience and Necessity; changes in income tax laws; general business conditions; new customer requests; 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~~PacifiCorp'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			Three-Month Periods				Annual
		Ended March 31,				Forecast			Ended March 31,				Forecast
		2021		2022		2022			2022		2023		2023

Wind generation	Wind generation	$	33	$	8	$	154	Wind generation	$	8	$	17	$	833
Electric distribution	Electric distribution	195		142		660		Electric distribution	139		177		781
Electric transmission	Electric transmission	60		153		1,185		Electric transmission	156		169		1,484
Solar generation								Solar generation	—		—		19
Electric battery and pumped hydro storage								Electric battery and pumped hydro storage	1		1		24
Other	Other	151		71		360		Other	70		279		521
Total	Total	$	439	$	374	$	2,359	Total	$	374	$	643	$	3,662

~~PacifiCorp's 2021 IRP identified a roadmap~~PacifiCorp has included estimates for ~~a significant increase in~~new renewable and carbon free generation resources, ~~coal to natural gas~~ conversion of certain coal-fueled units to natural gas-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 resourcesassets and associated transmission assets in its forecast capital expenditures ~~for 2022 through 2024.~~based on its 2021 IRP. These estimates are likely to change as a result of the associated RFP process. PacifiCorp's historical and forecast capital expenditures include the following:

•Wind generation includes both growth projects and operating expenditures. Growth projects ~~include:~~

◦~~Construction~~include construction of new wind-powered generating facilities and construction at ~~PacifiCorp~~existing wind-powered generating facility sites acquired from third parties totaling $3$14 million and ~~$27~~$6 million for the three-month periods ended March 31, 2023 and 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 and those at acquired sites totals ~~$109~~$807 million for the remainder of ~~2022.~~

◦~~Planned acquisition~~2023 and ~~repowering of two wind-powered generating facilities by PacifiCorp totaling $3 million and $1 million~~is primarily for the ~~three-month periods ended March 31, 2022~~Rock Creek I and ~~2021, respectively. The repowered facilities~~Rock Creek II projects to be constructed in Wyoming totaling 590 MWs that are expected to be placed in-service in ~~2023~~2024 and ~~2024. Planned spending for acquiring and repowering generating facilities totals $18 million for the remainder of 2022.~~2025.

•Electric distribution includes both growth projects and operating expenditures. Operating expenditures includes spend on wildfire ~~mitigation and wildfire and storm damage restoration.~~mitigation. Expenditures for ~~these items~~wildfire mitigation totaled ~~$25~~$33 million and ~~$83~~$22 million for the three-month periods ended March 31, ~~2022~~2023 and ~~2021,~~2022, respectively. Planned spending for wildfire mitigation ~~and wildfire and storm damage restoration~~ totals ~~$118~~$162 million for the remainder of ~~2022. Remaining~~2023. The remaining investments primarily relate to expenditures for new connections and distribution operations.

•Electric transmission includes both growth projects and operating expenditures. Transmission ~~investment~~growth investments primarily ~~reflects planned~~reflect costs ~~for the 416-mile, 500-kV high-voltage transmission line between the Aeolus substation near Medicine Bow~~associated with Energy Gateway Transmission segments that are expected to be placed in-service 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.2024 through 2028. Expenditures for these ~~segments~~projects totaled ~~$95~~$110 million and ~~$16~~$96 million for the three-month periods ended March 31, ~~2022~~2023 and ~~2021,~~2022, respectively. Planned spending for these Energy Gateway Transmission segments ~~to be placed in-service in 2024-2026~~ totals ~~$814~~$898 million for the remainder of ~~2022.~~2023.

•Other includes both growth projects and operating expenditures. Expenditures for information technology totaled ~~$45~~$46 million and ~~$13~~$45 million for the three-month periods ended March 31, ~~2022~~2023 and ~~2021,~~2022, respectively. Planned information technology spending totals ~~$127~~$180 million for the remainder of ~~2022. Remaining~~2023. The 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. Acknowledgment 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.~~ Reviews of the 2021 IRP by the ~~UPSC, the~~ Wyoming Public Service Commission and the WUTC ~~and the Idaho Public Utilities Commission~~ are ongoing.

In March 2023, PacifiCorp filed its 2023 IRP in Idaho, Oregon and Wyoming. A 60-day post-filing extended comment period has been added to the 2023 IRP to provide opportunity for additional stakeholder feedback. PacifiCorp will consider feedback during the first 30 days and then prepare an addendum, if warranted, to the filed IRP on May 30, 2023.

The 2023 IRP is off cycle with regard to Washington's four-year IRP cycle and has instead been filed in that state as the "Washington Two-Year Progress Report," aligned with the Clean Energy Transformation Act requirements. The March 2023 filing is considered informational in Utah, pending the potential addendum to be filed in May 2023.

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 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~~All-Source RFP was ~~approved by the WUTC in March 2022 and by the UPSC and the OPUC~~issued to market in April 2022. In December 2022, PacifiCorp ~~expects to issue~~bid 12 eligible self-build (benchmark) resources and in March 2023, PacifiCorp received 302 bids from 74 developers and 93 different projects sites across six states. A final shortlist is expected later in 2023 with resources contracted by December 2023. PacifiCorp anticipates a similar all-source RFP will be required in connection with the ~~2022AS RFP to market in the second quarter of 2022.~~2023 IRP.

Material Cash Requirements

As of March 31, ~~2022,~~2023, 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.~~2022, 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 air quality, climate change, ~~wildfire prevention and mitigation, RPS, air and water quality,~~ emissions performance standards, water quality, coal ~~combustion byproduct~~ash 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.~~revenue and wildfire loss contingencies. 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.~~2022. There have been no significant changes in PacifiCorp's assumptions regarding critical accounting estimates since December 31, ~~2021.~~2022.

6669

MidAmerican Funding, LLC and its subsidiaries and MidAmerican Energy Company

Consolidated Financial Section

6770

PART I

Item 1.Financial Statements

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Shareholder of

MidAmerican Energy Company

Results of Review of Interim Financial Information

We have reviewed the accompanying balance sheet of MidAmerican Energy Company ("MidAmerican Energy") as of March 31, ~~2022,~~2023, the related statements of operations, changes in shareholder's equity, and cash flows for the three-month periods ended March 31, ~~2022~~2023 and ~~2021,~~2022, 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,~~2022, 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,~~24, 2023, 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,~~2022, 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, 2022~~May 5, 2023

6871

MIDAMERICAN ENERGY COMPANY

BALANCE SHEETS (Unaudited)

(Amounts in millions)


		As of					As of
		March 31,		December 31,			March 31,		December 31,
		2022		2021			2023		2022
ASSETS	ASSETS					ASSETS
Current assets:	Current assets:					Current assets:
Cash and cash equivalents	Cash and cash equivalents	$	131	$	232	Cash and cash equivalents	$	57	$	258
Trade receivables, net	Trade receivables, net	468		526		Trade receivables, net	387		536
Income tax receivable	Income tax receivable	297		79		Income tax receivable	275		42
Inventories	Inventories	185		234		Inventories	280		277
Prepayments						Prepayments	123		91
Other current assets	Other current assets	187		123		Other current assets	36		66
Total current assets	Total current assets	1,268		1,194		Total current assets	1,158		1,270

Property, plant and equipment, net	Property, plant and equipment, net	20,344		20,301		Property, plant and equipment, net	20,981		21,091
Regulatory assets	Regulatory assets	492		473		Regulatory assets	571		550
Investments and restricted investments	Investments and restricted investments	985		1,026		Investments and restricted investments	942		902
Other assets	Other assets	262		263		Other assets	155		165

Total assets	Total assets	$	23,351	$	23,257	Total assets	$	23,807	$	23,978

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

6972

MIDAMERICAN ENERGY COMPANY

BALANCE SHEETS (Unaudited) (continued)

(Amounts in millions)


		As of					As of
		March 31,		December 31,			March 31,		December 31,
		2022		2021			2023		2022
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	$	395	$	536
Accrued interest	Accrued interest	88		84		Accrued interest	88		85
Accrued property, income and other taxes	Accrued property, income and other taxes	144		158		Accrued property, income and other taxes	142		170

Current portion of long-term debt	Current portion of long-term debt	7		—		Current portion of long-term debt	310		317
Other current liabilities	Other current liabilities	144		145		Other current liabilities	106		93
Total current liabilities	Total current liabilities	812		918		Total current liabilities	1,041		1,201

Long-term debt	Long-term debt	7,719		7,721		Long-term debt	7,412		7,412
Regulatory liabilities	Regulatory liabilities	1,057		1,080		Regulatory liabilities	836		1,119
Deferred income taxes	Deferred income taxes	3,373		3,389		Deferred income taxes	3,452		3,433
Asset retirement obligations	Asset retirement obligations	723		714		Asset retirement obligations	778		683
Other long-term liabilities	Other long-term liabilities	463		475		Other long-term liabilities	500		485
Total liabilities	Total liabilities	14,147		14,297		Total liabilities	14,019		14,333

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

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	9,227		9,084

Total shareholder's equity	Total shareholder's equity	9,204		8,960		Total shareholder's equity	9,788		9,645

Total liabilities and shareholder's equity	Total liabilities and shareholder's equity	$	23,351	$	23,257	Total liabilities and shareholder's equity	$	23,807	$	23,978

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

7073

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
	Ended March 31,
		2023		2022
Operating revenue:
Regulated electric		$	591	$	608
Regulated natural gas and other		329		397
Total operating revenue		920		1,005

Operating expenses:
Cost of fuel and energy		115		125
Cost of natural gas purchased for resale and other		236		298
Operations and maintenance		205		192
Depreciation and amortization		234		250
Property and other taxes		42		40
Total operating expenses		832		905

Operating income		88		100

Other income (expense):
Interest expense		(80)		(78)
Allowance for borrowed funds		4		4
Allowance for equity funds		11		15
Other, net		16		(3)
Total other income (expense)		(49)		(62)

Income before income tax expense (benefit)		39		38
Income tax expense (benefit)		(203)		(206)

Net income		$	242	$	244

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

7174

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, December 31, 2020		$	—	$	561	$	7,504	$	8,065
Net income		—		—		147		147

Balance, March 31, 2021		$	—	$	561	$	7,651	$	8,212

Balance, December 31, 2021	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	—		—		244		244

Balance, March 31, 2022	Balance, March 31, 2022	$	—	$	561	$	8,643	$	9,204	Balance, March 31, 2022	$	—	$	561	$	8,643	$	9,204

Balance, December 31, 2022										Balance, December 31, 2022	$	—	$	561	$	9,084	$	9,645
Net income										Net income	—		—		242		242
Common stock dividend										Common stock dividend	—		—		(100)		(100)
Other equity transactions										Other equity transactions	—		—		1		1
Balance, March 31, 2023										Balance, March 31, 2023	$	—	$	561	$	9,227	$	9,788

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

7275

MIDAMERICAN ENERGY COMPANY

STATEMENTS OF CASH FLOWS (Unaudited)

(Amounts in millions)


		Three-Month Periods					Three-Month Periods
		Ended March 31,					Ended March 31,
		2022		2021			2023		2022
Cash flows from operating activities:	Cash flows from operating activities:					Cash flows from operating activities:
Net income	Net income	$	244	$	147	Net income	$	242	$	244
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	234		250
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	8		9
Allowance for equity funds	Allowance for equity funds	(15)		(6)		Allowance for equity funds	(11)		(15)
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	32		16
Settlements of asset retirement obligations	Settlements of asset retirement obligations	(7)		(4)		Settlements of asset retirement obligations	(6)		(7)
Other, net	Other, net	10		(18)		Other, net	8		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	42		(299)		Trade receivables and other assets	131		42
Inventories	Inventories	49		46		Inventories	(3)		49

Pension and other postretirement benefit plans	Pension and other postretirement benefit plans	3		1		Pension and other postretirement benefit plans	(3)		3
Accrued property, income and other taxes, net	Accrued property, income and other taxes, net	(244)		(331)		Accrued property, income and other taxes, net	(263)		(244)
Accounts payable and other liabilities	Accounts payable and other liabilities	3		10		Accounts payable and other liabilities	(81)		3
Net cash flows from operating activities	Net cash flows from operating activities	360		(85)		Net cash flows from operating activities	288		360

Cash flows from investing activities:	Cash flows from investing activities:					Cash flows from investing activities:
Capital expenditures	Capital expenditures	(459)		(298)		Capital expenditures	(382)		(459)
Purchases of marketable securities	Purchases of marketable securities	(105)		(52)		Purchases of marketable securities	(48)		(105)
Proceeds from sales of marketable securities	Proceeds from sales of marketable securities	102		47		Proceeds from sales of marketable securities	42		102
Other, net	Other, net	1		—		Other, net	4		1
Net cash flows from investing activities	Net cash flows from investing activities	(461)		(303)		Net cash flows from investing activities	(384)		(461)

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

Common stock dividend						Common stock dividend	(100)		—

Repayments of long-term debt	Repayments of long-term debt	(1)		—		Repayments of long-term debt	(7)		(1)
Net proceeds from short-term debt		—		387

Other, net	Other, net	1		—		Other, net	(1)		1
Net cash flows from financing activities	Net cash flows from financing activities	—		387		Net cash flows from financing activities	(108)		—

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	(204)		(101)
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	268		239
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	$	64	$	138

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

7376

MIDAMERICAN ENERGY COMPANY

NOTES TO FINANCIAL STATEMENTS

(Unaudited)

(1) General

MidAmerican Energy Company ("MidAmerican Energy") is a public utility with electric and natural gas operations and is the principal subsidiary of MHC Inc. ("MHC"). MHC is a holding company that conducts no business other than the ownership of its subsidiaries. MHC's nonregulated subsidiary is Midwest Capital Group, Inc. MHC is the direct wholly owned subsidiary of MidAmerican Funding, LLC ("MidAmerican Funding"), which is an Iowa limited liability company with Berkshire Hathaway Energy Company ("BHE") as its sole member. BHE is a holding company based in Des Moines, Iowa, that owns subsidiaries principally engaged in energy businesses. BHE is a consolidated subsidiary of Berkshire Hathaway Inc. ("Berkshire Hathaway").

The unaudited Financial Statements have been prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP") for interim financial information and the United States Securities and Exchange Commission's rules and regulations for Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the disclosures required by GAAP for annual financial statements. Management believes the unaudited Financial Statements contain all adjustments (consisting only of normal recurring adjustments) considered necessary for the fair presentation of the unaudited Financial Statements as of March 31, ~~2022,~~2023, and for the three-month periods ended March 31, ~~2022~~2023 and ~~2021.~~2022. The results of operations for the three-month ~~periods~~period ended March 31, ~~2022,~~2023, 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,~~2022, 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 accounting policies or its assumptions regarding significant accounting estimates ~~and policies~~ during the three-month period ended March 31, ~~2022.~~2023.

(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 inon 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,			March 31,		December 31,
		2022		2021			2023		2022

Cash and cash equivalents	Cash and cash equivalents	$	131	$	232	Cash and cash equivalents	$	57	$	258
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	7		10
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	$	64	$	268

7477

(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,				March 31,		December 31,
		Depreciable Life	2022		2021			Depreciable Life	2023		2022
Utility plant in-service, net:
Utility plant:							Utility plant:
Generation	Generation	20-70 years	$	17,466	$	17,397	Generation	20-62 years	$	18,385	$	18,582
Transmission	Transmission	52-75 years	2,488		2,474		Transmission	55-80 years	2,672		2,662
Electric distribution	Electric distribution	20-75 years	4,713		4,661		Electric distribution	15-80 years	4,983		4,931
Natural gas distribution	Natural gas distribution	29-75 years	2,055		2,039		Natural gas distribution	30-75 years	2,166		2,144
Utility plant in-service	Utility plant in-service		26,722		26,571		Utility plant in-service		28,206		28,319
Accumulated depreciation and amortization	Accumulated depreciation and amortization		(7,555)		(7,376)		Accumulated depreciation and amortization		(8,210)		(8,024)
Utility plant in-service, net	Utility plant in-service, net		19,167		19,195		Utility plant in-service, net		19,996		20,295
Nonregulated property, net:
Nonregulated property gross		20-50 years	7		7
Accumulated depreciation and amortization			(1)		(1)
Nonregulated property, net			6		6

Nonregulated property, net of accumulated depreciation and amortization							Nonregulated property, net of accumulated depreciation and amortization	20-50 years	6		6
			19,173		19,201				20,002		20,301
Construction work-in-progress	Construction work-in-progress		1,171		1,100		Construction work-in-progress		979		790
Property, plant and equipment, net	Property, plant and equipment, net		$	20,344	$	20,301	Property, plant and equipment, net		$	20,981	$	21,091

Under a revenue sharing arrangement in Iowa, MidAmerican Energy accrues throughout the year a regulatory liability based on the extent to which its anticipated annual equity return exceeds specified thresholds, with an equal amount recorded in depreciation and amortization expense. The annual regulatory liability accrual reduces utility plant upon final determination of the amount. For the three-month periods ended March 31, 2023 and 2022, $20 million and $42 million, respectively, is reflected in depreciation and amortization expense on the Statement of Operations.

(4) Income Taxes

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

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


		Three-Month Periods						Three-Month Periods
		Ended March 31,						Ended March 31,
			2022		2021				2023		2022

Federal statutory income tax rate	Federal statutory income tax rate		21	%	21	%	Federal statutory income tax rate		21	%	21	%
Income tax credits	Income tax credits		(534)		2,400		Income tax credits		(518)		(534)
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		(18)		(21)
Effects of ratemaking	Effects of ratemaking		(8)		(186)		Effects of ratemaking		(8)		(8)
Other, net	Other, net		—		(6)		Other, net		2		—
Effective income tax rate	Effective income tax rate		(542)	%	2,200	%	Effective income tax rate		(521)	%	(542)	%

Income tax credits relate primarily to production tax credits ("~~PTCs"~~PTC") from MidAmerican Energy's ~~wind-powered~~wind- and solar-powered generating facilities. Federal renewable electricity PTCs are earned as energy from qualifying ~~wind-powered~~wind- and solar-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~~Wind- and solar-powered generating facilities are eligible for the credits for 10 years from the date the qualifying generating facilities are placed in-service. PTCs recognized for the three-month periods ended March 31, 2023 and 2022, totaled $202 million and ~~2021 totaled~~ $203 million, ~~and $151 million,~~ respectively.

7578

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 nonet cash payments for income tax to BHE totaling $1 million and $— million for ~~each of~~ the three-month periods ended March 31, 2023 and 2022, ~~and 2021.~~respectively.

(5) Employee Benefit Plans

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

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


		Three-Month Periods						Three-Month Periods
		Ended March 31,						Ended March 31,
			2022		2021				2023		2022
Pension:	Pension:						Pension:
Service cost	Service cost		$	5	$	5	Service cost		$	3	$	5
Interest cost	Interest cost		5		6		Interest cost		8		5
Expected return on plan assets	Expected return on plan assets		(7)		(9)		Expected return on plan assets		(8)		(7)
Settlement	Settlement		2		—		Settlement		(5)		2

Net periodic benefit cost			$	5	$	2
Net periodic benefit cost (credit)							Net periodic benefit cost (credit)		$	(2)	$	5

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

Net periodic benefit cost (credit)							Net periodic benefit cost (credit)		$	—	$	—

Amounts other than the service cost for pension and other postretirement benefit plans are recorded in Other, net in the Statements of Operations. Employer contributions to the pension and other postretirement benefit plans during 2023 are expected to be $7 million and $3$2 million, ~~respectively, during 2022.~~respectively. As of March 31, ~~2022,~~2023, $2 million and $1 million of contributions had been made to the pension and other postretirement benefit plans, respectively.

(6) Asset Retirement Obligations

(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 March 31, 2023:
Assets:
Commodity derivatives	$	2	$	7	$	—	$	(5)	$	4
Money market mutual funds	67		—		—		—		67
Debt securities:
U.S. government obligations	225		—		—		—		225
International government obligations	—		1		—		—		1
Corporate obligations	—		70		—		—		70
Municipal obligations	—		4		—		—		4

Equity securities:
U.S. companies	385		—		—		—		385
International companies	8		—		—		—		8
Investment funds	22		—		—		—		22
	$	709	$	82	$	—	$	(5)	$	786

Liabilities - commodity derivatives	$	—	$	(10)	$	(5)	$	10	$	(5)


		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 December 31, 2021:
As of December 31, 2022:												As of December 31, 2022:
Assets:	Assets:											Assets:
Commodity derivatives	Commodity derivatives	$	—	$	32	$	3	$	(7)	$	28	Commodity derivatives	$	1	$	37	$	6	$	(10)	$	34
Money market mutual funds	Money market mutual funds	228		—		—		—		228		Money market mutual funds	225		—		—		—		225
Debt securities:	Debt securities:											Debt securities:
U.S. government obligations	U.S. government obligations	232		—		—		—		232		U.S. government obligations	215		—		—		—		215
International government obligations	International government obligations	—		2		—		—		2		International government obligations	—		1		—		—		1
Corporate obligations	Corporate obligations	—		90		—		—		90		Corporate obligations	—		70		—		—		70
Municipal obligations	Municipal obligations	—		3		—		—		3		Municipal obligations	—		3		—		—		3
Agency, asset and mortgage-backed obligations	Agency, asset and mortgage-backed obligations	—		2		—		—		2		Agency, asset and mortgage-backed obligations	—		1		—		—		1
Equity securities:	Equity securities:											Equity securities:
U.S. companies	U.S. companies	428		—		—		—		428		U.S. companies	360		—		—		—		360
International companies	International companies	10		—		—		—		10		International companies	8		—		—		—		8
Investment funds	Investment funds	18		—		—		—		18		Investment funds	16		—		—		—		16
		$	916	$	129	$	3	$	(7)	$	1,041		$	825	$	112	$	6	$	(10)	$	933

Liabilities - commodity derivatives	Liabilities - commodity derivatives	$	—	$	(6)	$	(8)	$	12	$	(2)	Liabilities - commodity derivatives	$	—	$	(12)	$	(1)	$	10	$	(3)

(1)Represents netting under master netting arrangements and a net cash collateral receivable of $—$5 million and $5$— million as of March 31, ~~2022~~2023 and December 31, ~~2021,~~2022, respectively.

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
	Ended March 31,
		2023		2022

Beginning balance		$	5	$	(5)
Changes in fair value recognized in net regulatory assets		(13)		13
Settlements		3		(4)
Ending balance		$	(5)	$	4

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 March 31, 2023				As of December 31, 2022
	Carrying Value		Fair Value		Carrying Value		Fair Value

Long-term debt	$	7,722	$	7,127	$	7,729	$	6,964

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

Commitments

MidAmerican Energy has the following firm commitments that are not reflected on the Balance Sheets.

Construction Commitments

Environmental Laws and Regulations

MidAmerican Energy is subject to federal, state and local laws and regulations regarding air quality, climate change, emissions performance standards, water quality, coal ash disposal 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.

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 formula rates approved by the 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~~base return on equity ("ROE") used to determine rates in effect prior to September 2016 no longer be found just and reasonable and sought to reduce the base ~~ROE to 9.15% and 8.67%, respectively.~~ROE. In ~~September 2016,~~August 2022, the ~~FERC~~U.S. Court of Appeals for the District of Columbia Circuit 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~~opinion vacating all orders related to the ~~first complaint occurred in February 2017. In November 2019, the FERC issued an order addressing the second complaint~~complaints 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 2016remanding them back to the ~~date of the May 2020 order. These orders continue to be subject to judicial appeal.~~FERC. MidAmerican Energy cannot predict the ultimate outcome of these matters or the amount of refunds, if any, and ~~as of March 31, 2022,~~accordingly, has reversed its previously accrued ~~an $8 million~~ liability for potential refunds of amounts collected under the higher ROE during the periods covered by ~~both~~the complaints.

7882

~~(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 911 (in millions):


		For the Three-Month Period Ended March 31, 2022					For the Three-Month Period Ended March 31, 2023
			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	$	167	$	199	$	—	$	366
Commercial	Commercial		74		88			—		162		Commercial	75		78		—		153
Industrial	Industrial		198		9			—		207		Industrial	214		7		—		221
Natural gas transportation services	Natural gas transportation services		—		14			—		14		Natural gas transportation services	—		13		—		13
Other retail~~(1)~~	Other retail~~(1)~~		32		1			—		33		Other retail~~(1)~~	35		(1)		—		34
Total retail	Total retail		472		337			—		809		Total retail	491		296		—		787
Wholesale	Wholesale		104		58			—		162		Wholesale	71		29		—		100
Multi-value transmission projects	Multi-value transmission projects		15		—			—		15		Multi-value transmission projects	14		—		—		14
Other Customer Revenue	Other Customer Revenue		—		—			1		1		Other Customer Revenue	—		—		3		3
Total Customer Revenue	Total Customer Revenue		591		395			1		987		Total Customer Revenue	576		325		3		904
Other revenue	Other revenue		17		1			—		18		Other revenue	15		1		—		16
Total operating revenue	Total operating revenue		$	608	$	396		$	1	$	1,005	Total operating revenue	$	591	$	326	$	3	$	920


		For the Three-Month Period Ended March 31, 2021					For the Three-Month Period Ended March 31, 2022
			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	$	168	$	225	$	—	$	393
Commercial	Commercial		71		129			—		200		Commercial	74		88		—		162
Industrial	Industrial		190		12			—		202		Industrial	198		9		—		207
Natural gas transportation services	Natural gas transportation services		—		10			—		10		Natural gas transportation services	—		14		—		14
Other retail~~(1)~~	Other retail~~(1)~~		30		1			—		31		Other retail~~(1)~~	32		1		—		33
Total retail	Total retail		452		460			—		912		Total retail	472		337		—		809
Wholesale	Wholesale		74		51			—		125		Wholesale	104		58		—		162
Multi-value transmission projects	Multi-value transmission projects		15		—			—		15		Multi-value transmission projects	15		—		—		15
Other Customer Revenue	Other Customer Revenue		—		—			10		10		Other Customer Revenue	—		—		1		1
Total Customer Revenue	Total Customer Revenue		541		511			10		1,062		Total Customer Revenue	591		395		1		987
Other revenue	Other revenue		4		1			—		5		Other revenue	17		1		—		18
Total operating revenue	Total operating revenue		$	545	$	512		$	10	$	1,067	Total operating revenue	$	608	$	396	$	1	$	1,005

~~(1) Other retail includes provisions for rate refunds, for which any actual refunds will be reflected~~

(10) Shareholder's Equity

In January 2023, MidAmerican Energy paid $100 million in ~~the applicable customer classes upon resolution of the related regulatory proceeding.~~cash dividends to its parent company, MHC.

7983

~~(9)~~(11) Segment Information

MidAmerican Energy has identified 2two 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
		Ended March 31,						Ended March 31,
			2022		2021				2023		2022
Operating revenue:	Operating revenue:						Operating revenue:
Regulated electric	Regulated electric		$	608	$	545	Regulated electric		$	591	$	608
Regulated natural gas	Regulated natural gas		396		512		Regulated natural gas		326		396
Other	Other		1		10		Other		3		1
Total operating revenue	Total operating revenue		$	1,005	$	1,067	Total operating revenue		$	920	$	1,005

Operating income:	Operating income:						Operating income:
Regulated electric	Regulated electric		$	51	$	9	Regulated electric		$	50	$	51
Regulated natural gas	Regulated natural gas		49		39		Regulated natural gas		38		49

Total operating income	Total operating income		100		48		Total operating income		88		100
Interest expense	Interest expense		(78)		(74)		Interest expense		(80)		(78)
Allowance for borrowed funds	Allowance for borrowed funds		4		2		Allowance for borrowed funds		4		4
Allowance for equity funds	Allowance for equity funds		15		6		Allowance for equity funds		11		15
Other, net	Other, net		(3)		11		Other, net		16		(3)
Income (loss) before income tax benefit			$	38	$	(7)
Total income before income tax expense (benefit)							Total income before income tax expense (benefit)		$	39	$	38


		As of					As of
		March 31, 2022		December 31, 2021			March 31, 2023		December 31, 2022
Assets:	Assets:					Assets:
Regulated electric	Regulated electric	$	21,613	$	21,385	Regulated electric	$	22,091	$	22,092
Regulated natural gas	Regulated natural gas	1,737		1,871		Regulated natural gas	1,716		1,885
Other	Other	1		1		Other	—		1
Total assets	Total assets	$	23,351	$	23,257	Total assets	$	23,807	$	23,978

8084

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Managers and Member of

MidAmerican Funding, LLC

Results of Review of Interim Financial Information

We have reviewed the accompanying consolidated balance sheet of MidAmerican Funding, LLC and subsidiaries ("MidAmerican Funding") as of March 31, ~~2022,~~2023, the related consolidated statements of operations, changes in member's equity, and cash flows for the three-month periods ended March 31, ~~2022~~2023 and ~~2021,~~2022, 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,~~2022, 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,~~24, 2023, 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,~~2022, is fairly stated, in all material respects, in relation to the consolidated balance sheet from which it has been derived.

Basis for Review Results

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

We conducted our reviews in accordance with standards of the PCAOB and with auditing standards generally accepted in the United States of America applicable to reviews of interim financial information. A review of interim financial information consists principally of applying analytical procedures and making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an audit conducted in accordance with the standards of the PCAOB and with auditing standards generally accepted in the United States of America, the objective of which is the expression of an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion.

/s/ Deloitte & Touche LLP

Des Moines, Iowa

~~April 29, 2022~~May 5, 2023

8185

MIDAMERICAN FUNDING, LLC AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS (Unaudited)

(Amounts in millions)


		As of					As of
		March 31,		December 31,			March 31,		December 31,
		2022		2021			2023		2022
ASSETS	ASSETS					ASSETS
Current assets:	Current assets:					Current assets:
Cash and cash equivalents	Cash and cash equivalents	$	132	$	233	Cash and cash equivalents	$	58	$	261
Trade receivables, net	Trade receivables, net	468		526		Trade receivables, net	387		536
Income tax receivable	Income tax receivable	299		80		Income tax receivable	274		43
Inventories	Inventories	185		234		Inventories	280		277
Prepayments						Prepayments	123		91
Other current assets	Other current assets	187		123		Other current assets	44		66
Total current assets	Total current assets	1,271		1,196		Total current assets	1,166		1,274

Property, plant and equipment, net	Property, plant and equipment, net	20,345		20,302		Property, plant and equipment, net	20,982		21,092
Goodwill	Goodwill	1,270		1,270		Goodwill	1,270		1,270
Regulatory assets	Regulatory assets	492		473		Regulatory assets	571		550
Investments and restricted investments	Investments and restricted investments	987		1,028		Investments and restricted investments	944		904
Other assets	Other assets	261		262		Other assets	154		164

Total assets	Total assets	$	24,626	$	24,531	Total assets	$	25,087	$	25,254

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

8286

MIDAMERICAN FUNDING, LLC AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS (Unaudited) (continued)

(Amounts in millions)


		As of					As of
		March 31,		December 31,			March 31,		December 31,
		2022		2021			2023		2022
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	$	395	$	536
Accrued interest	Accrued interest	89		89		Accrued interest	89		90
Accrued property, income and other taxes	Accrued property, income and other taxes	144		158		Accrued property, income and other taxes	142		170
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	310		317
Other current liabilities	Other current liabilities	145		146		Other current liabilities	106		93
Total current liabilities	Total current liabilities	1,011		1,113		Total current liabilities	1,042		1,206

Long-term debt	Long-term debt	7,959		7,961		Long-term debt	7,652		7,652
Regulatory liabilities	Regulatory liabilities	1,057		1,080		Regulatory liabilities	836		1,119
Deferred income taxes	Deferred income taxes	3,371		3,387		Deferred income taxes	3,451		3,431
Asset retirement obligations	Asset retirement obligations	723		714		Asset retirement obligations	778		683
Other long-term liabilities	Other long-term liabilities	463		475		Other long-term liabilities	500		484
Total liabilities	Total liabilities	14,584		14,730		Total liabilities	14,259		14,575

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

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	9,149		9,000

Total member's equity	Total member's equity	10,042		9,801		Total member's equity	10,828		10,679

Total liabilities and member's equity	Total liabilities and member's equity	$	24,626	$	24,531	Total liabilities and member's equity	$	25,087	$	25,254

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

8387

MIDAMERICAN FUNDING, LLC AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)

(Amounts in millions)


		Three-Month Periods						Three-Month Periods
		Ended March 31,						Ended March 31,
			2022		2021				2023		2022
Operating revenue:	Operating revenue:						Operating revenue:
Regulated electric	Regulated electric		$	608	$	545	Regulated electric		$	591	$	608
Regulated natural gas and other	Regulated natural gas and other		397		522		Regulated natural gas and other		329		397
Total operating revenue	Total operating revenue		1,005		1,067		Total operating revenue		920		1,005

Operating expenses:	Operating expenses:						Operating expenses:
Cost of fuel and energy	Cost of fuel and energy		125		151		Cost of fuel and energy		115		125
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		236		298
Operations and maintenance	Operations and maintenance		192		193		Operations and maintenance		205		192
Depreciation and amortization	Depreciation and amortization		250		207		Depreciation and amortization		234		250
Property and other taxes	Property and other taxes		40		36		Property and other taxes		42		40
Total operating expenses	Total operating expenses		905		1,019		Total operating expenses		832		905

Operating income	Operating income		100		48		Operating income		88		100

Other income (expense):	Other income (expense):						Other income (expense):
Interest expense	Interest expense		(82)		(78)		Interest expense		(84)		(82)
Allowance for borrowed funds	Allowance for borrowed funds		4		2		Allowance for borrowed funds		4		4
Allowance for equity funds	Allowance for equity funds		15		6		Allowance for equity funds		11		15
Other, net	Other, net		(4)		10		Other, net		28		(4)
Total other income (expense)	Total other income (expense)		(67)		(60)		Total other income (expense)		(41)		(67)

Income (loss) before income tax benefit			33		(12)
Income tax benefit			(208)		(156)
Income before income tax expense (benefit)							Income before income tax expense (benefit)		47		33
Income tax expense (benefit)							Income tax expense (benefit)		(202)		(208)

Net income	Net income		$	241	$	144	Net income		$	249	$	241

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

8488

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, December 31, 2020		$	1,679	$	7,240	$	8,919
Net income		—		144		144

Balance, March 31, 2021		$	1,679	$	7,384	$	9,063

Balance, December 31, 2021	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	—		241		241

Balance, March 31, 2022	Balance, March 31, 2022	$	1,679	$	8,363	$	10,042	Balance, March 31, 2022	$	1,679	$	8,363	$	10,042

Balance, December 31, 2022								Balance, December 31, 2022	$	1,679	$	9,000	$	10,679
Net income								Net income	—		249		249
Distribution to member								Distribution to member	—		(100)		(100)

Balance, March 31, 2023								Balance, March 31, 2023	$	1,679	$	9,149	$	10,828

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

8589

MIDAMERICAN FUNDING, LLC AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)

(Amounts in millions)


		Three-Month Periods					Three-Month Periods
		Ended March 31,					Ended March 31,
		2022		2021			2023		2022
Cash flows from operating activities:	Cash flows from operating activities:					Cash flows from operating activities:
Net income	Net income	$	241	$	144	Net income	$	249	$	241
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	234		250
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	8		9
Allowance for equity funds	Allowance for equity funds	(15)		(6)		Allowance for equity funds	(11)		(15)
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	32		16

Settlements of asset retirement obligations	Settlements of asset retirement obligations	(7)		(4)		Settlements of asset retirement obligations	(6)		(7)
Other, net	Other, net	10		(17)		Other, net	(5)		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	43		(298)		Trade receivables and other assets	123		43
Inventories	Inventories	49		46		Inventories	(3)		49

Pension and other postretirement benefit plans	Pension and other postretirement benefit plans	3		1		Pension and other postretirement benefit plans	(3)		3
Accrued property, income and other taxes, net	Accrued property, income and other taxes, net	(245)		(332)		Accrued property, income and other taxes, net	(261)		(245)
Accounts payable and other liabilities	Accounts payable and other liabilities	(1)		6		Accounts payable and other liabilities	(85)		(1)
Net cash flows from operating activities	Net cash flows from operating activities	353		(92)		Net cash flows from operating activities	272		353

Cash flows from investing activities:	Cash flows from investing activities:					Cash flows from investing activities:
Capital expenditures	Capital expenditures	(459)		(298)		Capital expenditures	(382)		(459)
Purchases of marketable securities	Purchases of marketable securities	(105)		(52)		Purchases of marketable securities	(48)		(105)
Proceeds from sales of marketable securities	Proceeds from sales of marketable securities	102		47		Proceeds from sales of marketable securities	42		102

Proceeds from sale of investment						Proceeds from sale of investment	12		—
Other, net	Other, net	1		—		Other, net	5		1
Net cash flows from investing activities	Net cash flows from investing activities	(461)		(303)		Net cash flows from investing activities	(371)		(461)

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

Distribution to member						Distribution to member	(100)		—

Repayments of long-term debt	Repayments of long-term debt	(1)		—		Repayments of long-term debt	(7)		(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
Net proceeds from short-term debt		—		387

Other, net						Other, net	(1)		—
Net cash flows from financing activities	Net cash flows from financing activities	7		394		Net cash flows from financing activities	(108)		7

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	(207)		(101)
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	271		240
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	$	64	$	139

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

8690

MIDAMERICAN FUNDING, LLC AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

(1) General

MidAmerican Funding, LLC ("MidAmerican Funding") is an Iowa limited liability company with Berkshire Hathaway Energy Company ("BHE") as its sole member. BHE is a holding company based in Des Moines, Iowa, that owns subsidiaries principally engaged in energy businesses. BHE is a consolidated subsidiary of Berkshire Hathaway Inc. ("Berkshire Hathaway"). MidAmerican Funding's direct wholly owned subsidiary is MHC Inc. ("MHC"), which constitutes substantially all of MidAmerican Funding's assets, liabilities and business activities except those related to MidAmerican Funding's long-term debt securities. MHC conducts no business other than the ownership of its subsidiaries. MHC's principal subsidiary is MidAmerican Energy Company ("MidAmerican Energy"), a public utility with electric and natural gas operations, and its direct wholly owned nonregulated subsidiary is Midwest Capital Group, Inc.

The unaudited Consolidated Financial Statements have been prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP") for interim financial information and the United States Securities and Exchange Commission's rules and regulations for Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the disclosures required by GAAP for annual financial statements. Management believes the unaudited Consolidated Financial Statements contain all adjustments (consisting only of normal recurring adjustments) considered necessary for the fair presentation of the unaudited Consolidated Financial Statements as of March 31, ~~2022,~~2023, and for the three-month periods ended March 31, ~~2022~~2023 and ~~2021.~~2022. The results of operations for the three-month ~~periods~~period ended March 31, ~~2022,~~2023, 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,~~2022, 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 accounting policies or its assumptions regarding significant accounting estimates ~~and policies~~ during the three-month period ended March 31, ~~2022.~~2023.

(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 inon 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,			March 31,		December 31,
		2022		2021			2023		2022

Cash and cash equivalents	Cash and cash equivalents	$	132	$	233	Cash and cash equivalents	$	58	$	261
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	6		10
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	$	64	$	271

(3) Property, Plant and Equipment, Net

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

(4) Income Taxes

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

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


		Three-Month Periods						Three-Month Periods
		Ended March 31,						Ended March 31,
			2022		2021				2023		2022

Federal statutory income tax rate	Federal statutory income tax rate		21	%	21	%	Federal statutory income tax rate		21	%	21	%
Income tax credits	Income tax credits		(618)		1,400		Income tax credits		(430)		(618)
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		(13)		(24)
Effects of ratemaking	Effects of ratemaking		(9)		(108)		Effects of ratemaking		(6)		(9)
Other, net	Other, net		—		(5)		Other, net		(2)		—
Effective income tax rate	Effective income tax rate		(630)	%	1,300	%	Effective income tax rate		(430)	%	(630)	%

Income tax credits relate primarily to production tax credits ("~~PTCs"~~PTC") from MidAmerican Energy's ~~wind-powered~~wind- and solar-powered generating facilities. Federal renewable electricity PTCs are earned as energy from qualifying ~~wind-powered~~wind- and solar-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~~Wind- and solar-powered generating facilities are eligible for the credits for 10 years from the date the qualifying generating facilities are placed in-service. PTCs recognized for the three-month periods ended March 31, 2023 and 2022, ~~and 2021~~ totaled ~~$203~~$202 million and ~~$151~~$203 million, respectively.

Berkshire Hathaway includes BHE and subsidiaries in its U.S. federal and Iowa state income tax returns. Consistent with established regulatory practice, MidAmerican Funding's and MidAmerican Energy's provisions for income tax have been computed on a stand-alone basis, and substantially all of their currently payable or receivable income tax is remitted to or received from BHE. MidAmerican Funding made no cash payments for income tax to BHE for each of the three-month periods ended March 31, ~~2022~~2023 and ~~2021.~~2022.

(5) Employee Benefit Plans

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

(6) Asset Retirement Obligations

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

~~(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 March 31, 2023				As of December 31, 2022
	Carrying Value		Fair Value		Carrying Value		Fair Value

Long-term debt	$	7,962	$	7,386	$	7,969	$	7,219

~~(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.

(10) Member's Equity

In January 2023, MidAmerican Funding paid a $100 million cash distribution to its parent company, BHE.

~~(9)~~

(11) Segment Information

MidAmerican Funding has identified 2two 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
		Ended March 31,						Ended March 31,
			2022		2021				2023		2022
Operating revenue:	Operating revenue:						Operating revenue:
Regulated electric	Regulated electric		$	608	$	545	Regulated electric		$	591	$	608
Regulated natural gas	Regulated natural gas		396		512		Regulated natural gas		326		396
Other	Other		1		10		Other		3		1
Total operating revenue	Total operating revenue		$	1,005	$	1,067	Total operating revenue		$	920	$	1,005

Operating income:	Operating income:						Operating income:
Regulated electric	Regulated electric		$	51	$	9	Regulated electric		$	50	$	51
Regulated natural gas	Regulated natural gas		49		39		Regulated natural gas		38		49

Total operating income	Total operating income		100		48		Total operating income		88		100
Interest expense	Interest expense		(82)		(78)		Interest expense		(84)		(82)
Allowance for borrowed funds	Allowance for borrowed funds		4		2		Allowance for borrowed funds		4		4
Allowance for equity funds	Allowance for equity funds		15		6		Allowance for equity funds		11		15
Other, net	Other, net		(4)		10		Other, net		28		(4)
Income (loss) before income tax benefit			$	33	$	(12)
Total income before income tax expense (benefit)							Total income before income tax expense (benefit)		$	47	$	33


		As of					As of
		March 31, 2022		December 31, 2021			March 31, 2023		December 31, 2022
Assets(1):	Assets(1):					Assets(1):
Regulated electric	Regulated electric	$	22,804	$	22,576	Regulated electric	$	23,282	$	23,283
Regulated natural gas	Regulated natural gas	1,816		1,950		Regulated natural gas	1,795		1,963
Other	Other	6		5		Other	10		8
Total assets	Total assets	$	24,626	$	24,531	Total assets	$	25,087	$	25,254


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

9094

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

The following is management's discussion and analysis of certain significant factors that have affected the consolidated financial condition and results of operations of MidAmerican Funding and its subsidiaries and MidAmerican Energy during the periods included herein. Information in Management's Discussion and Analysis related to MidAmerican Energy, whether or not segregated, also relates to MidAmerican Funding. Information related to other subsidiaries of MidAmerican Funding pertains only to the discussion of the financial condition and results of operations of MidAmerican Funding. Where necessary, discussions have been segregated under the heading "MidAmerican Funding" to allow the reader to identify information applicable only to MidAmerican Funding. Explanations include management's best estimate of the impact of weather, customer growth, usage trends and other factors. This discussion should be read in conjunction with MidAmerican Funding's historical unaudited Consolidated Financial Statements and Notes to Consolidated Financial Statements and MidAmerican Energy's historical unaudited Financial Statements and Notes to Financial Statements in Part I, Item 1 of this Form 10-Q. MidAmerican Funding's and MidAmerican Energy's actual results in the future could differ significantly from the historical results.

Results of Operations for the First Quarter of ~~2022~~2023 and ~~2021~~2022

Overview

MidAmerican Energy -

MidAmerican Energy's net income for the first quarter of ~~2022~~2023 was ~~$244~~$242 million, ~~an increase~~a decrease of ~~$97~~$2 million, or ~~66%~~1%, compared to ~~2021,~~2022, primarily due to higher ~~electric utility margin of $89 million, higher~~operations and maintenance expense, lower natural gas utility margin, ~~of $18 million, higher~~lower electric utility margin, lower allowance for equity funds, lower income tax benefit, of $52 million and higher allowances for equity and borrowed funds of $11 million, offset by higher depreciation and amortization expense of $43 million, unfavorable other, net of $14 million, lower nonregulated utility margins of $9 million, higher property and other taxes ~~of $4 million~~ and higher interest expense, ~~of $4 million.~~offset by favorable other, net and lower depreciation and amortization expense. Electric retail customer volumes increased 6%1% primarily due to higher customer usage for certain industrial customers, ~~and~~partially offset by the ~~favorable~~unfavorable impact of weather. Energy generated decreased 9%, due to lower wind-powered and coal-fueled generation, and energy purchased increased 17%. Wholesale electricity sales volumes ~~increased 31%~~decreased 18% due to ~~favorable~~unfavorable 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%~~decreased 10% due to the ~~favorable~~unfavorable impact of weather.

MidAmerican Funding -

MidAmerican Funding's net income for the first quarter of ~~2022~~2023 was ~~$241~~$249 million, an increase of ~~$97~~$8 million, or ~~67%~~3%, compared to ~~2021.~~2022. The ~~variances~~variance in net income ~~were~~was primarily due to a one-time gain on the sale of an investment of $10 million, partially offset by 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.

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							First Quarter
			2022			2021				Change						2023			2022			Change
Electric utility margin:	Electric utility margin:														Electric utility margin:
Operating revenue	Operating revenue			$	608		$	545			$	63	12	%	Operating revenue		$	591		$	608		$	(17)	(3)	%
Cost of fuel and energy	Cost of fuel and energy			125			151				(26)		(17)		Cost of fuel and energy		115			125			(10)		(8)
Electric utility margin	Electric utility margin			483			394				89		23	%	Electric utility margin		476			483			(7)		(1)	%

Natural gas utility margin:	Natural gas utility margin:														Natural gas utility margin:
Operating revenue	Operating revenue			396			512				(116)		(23)	%	Operating revenue		326			396			(70)		(18)	%
Natural gas purchased for resale	Natural gas purchased for resale			298			432				(134)		(31)		Natural gas purchased for resale		236			298			(62)		(21)
Natural gas utility margin	Natural gas utility margin			98			80				18		23	%	Natural gas utility margin		90			98			(8)		(8)	%

Utility margin	Utility margin			581			474				107		23	%	Utility margin		566			581			(15)		(3)	%

Other operating revenue	Other operating revenue			1			10				(9)		(90)	%	Other operating revenue		3			1			2		*

Operations and maintenance	Operations and maintenance			192			193				(1)		(1)		Operations and maintenance		205			192			13		7
Depreciation and amortization	Depreciation and amortization			250			207				43		21		Depreciation and amortization		234			250			(16)		(6)
Property and other taxes	Property and other taxes			40			36				4		11		Property and other taxes		42			40			2		5

Operating income	Operating income			$	100		$	48			$	52	*		Operating income		$	88		$	100		$	(12)	(12)	%

* Not meaningful.

9296

Electric Utility Margin

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


		First Quarter				First Quarter
			2022	2021			Change				2023				2022		Change
Utility margin (in millions):	Utility margin (in millions):													Utility margin (in millions):
Operating revenue	Operating revenue			$	608		$	545	$	63		12	%	Operating revenue	$	591	$	608	$	(17)	(3)	%
Cost of fuel and energy	Cost of fuel and energy			125			151		(26)			(17)		Cost of fuel and energy	115		125		(10)		(8)
Utility margin	Utility margin			$	483		$	394	$	89		23	%	Utility margin	$	476	$	483	$	(7)	(1)	%

Sales (GWhs):	Sales (GWhs):													Sales (GWhs):
Residential	Residential			1,853			1,738		115			7	%	Residential	1,793		1,853		(60)		(3)	%
Commercial	Commercial			1,013			938		75			8		Commercial	1,018		1,013		5		—
Industrial	Industrial			3,979			3,819		160			4		Industrial	4,102		3,979		123		3
Other	Other			403			370		33			9		Other	409		403		6		1
Total retail	Total retail			7,248			6,865		383			6		Total retail	7,322		7,248		74		1
Wholesale	Wholesale			5,325			4,051		1,274			31		Wholesale	4,352		5,325		(973)		(18)
Total sales	Total sales			12,573			10,916		1,657			15	%	Total sales	11,674		12,573		(899)		(7)	%

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)	818		810		8		1	%

Average revenue per MWh:	Average revenue per MWh:													Average revenue per MWh:
Retail	Retail			$	65.10		$	65.82	$	(0.72)		(1)	%	Retail	$	67.02	$	65.10	$	1.92	3	%
Wholesale	Wholesale			$	20.65		$	16.64	$	4.01		24	%	Wholesale	$	17.56	$	20.65	$	(3.09)	(15)	%

Heating degree days	Heating degree days			3,315			3,211		104			3	%	Heating degree days	2,992		3,315		(323)		(10)	%

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)	7,377		8,290		(913)		(11)	%
Coal	Coal			2,359			2,902		(543)			(19)		Coal	2,116		2,359		(243)		(10)
Nuclear	Nuclear			920			895		25			3		Nuclear	927		920		7		1
Natural gas	Natural gas			234			143		91			64		Natural gas	344		234		110		47
Total energy generated	Total energy generated			11,803			10,062		1,741			17		Total energy generated	10,764		11,803		(1,039)		(9)
Energy purchased	Energy purchased			962			1,018		(56)			(6)		Energy purchased	1,123		962		161		17
Total	Total			12,765			11,080		1,685			15	%	Total	11,887		12,765		(878)		(7)	%

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)	$	6.09	$	5.56	$	0.53	10	%
Energy purchased	Energy purchased			$	62.04		$	87.45	$	(25.41)		(29)	%	Energy purchased	$	43.72	$	62.04	$	(18.32)	(30)	%

(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~~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.

9397

Natural Gas Utility Margin

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

First Quarter
2022 2021 Change
Utility margin (in millions):
Operating revenue $ 396 $ 512 $ (116) (23) %
Natural gas purchased for resale 298 432 (134) (31)
Utility margin $ 98 $ 80 $ 18 23 %
Throughput (000's Dths):
Residential 27,099 25,282 1,817 7 %
Commercial 12,460 11,733 727 6
Industrial 1,844 1,437 407 28
Other 35 37 (2) (5)
Total retail sales 41,438 38,489 2,949 8
Wholesale sales 12,232 10,773 1,459 14
Total sales 53,670 49,262 4,408 9
Natural gas transportation service 31,313 29,640 1,673 6
Total throughput 84,983 78,902 6,081 8 %
Average number of retail customers (in thousands) 785 777 8 1 %
Average revenue per retail Dth sold $ 7.84 $ 11.70 $ (3.86) (33) %
Heating degree days 3,485 3,301 184 6 %
Average cost of natural gas per retail Dth sold $ 5.80 $ 9.87 $ (4.07) (41) %
Combined retail and wholesale average cost of natural gas per Dth sold $ 5.55 $ 8.76 $ (3.21) (37) %


	First Quarter
	2023		2022		Change
Utility margin (in millions):
Operating revenue	$	326	$	396	$	(70)	(18)	%
Natural gas purchased for resale	236		298		(62)		(21)
Utility margin	$	90	$	98	$	(8)	(8)	%

Throughput (000's Dths):
Residential	24,393		27,099		(2,706)		(10)	%
Commercial	11,352		12,460		(1,108)		(9)
Industrial	1,483		1,844		(361)		(20)
Other	34		35		(1)		(3)
Total retail sales	37,262		41,438		(4,176)		(10)
Wholesale sales	10,407		12,232		(1,825)		(15)
Total sales	47,669		53,670		(6,001)		(11)
Natural gas transportation service	29,585		31,313		(1,728)		(6)
Total throughput	77,254		84,983		(7,729)		(9)	%

Average number of retail customers (in thousands)	793		785		8		1	%

Average revenue per retail Dth sold	$	7.63	$	7.84	$	(0.21)	(3)	%

Heating degree days	3,132		3,485		(353)		(10)	%

Average cost of natural gas per retail Dth sold	$	5.58	$	5.80	$	(0.22)	(4)	%

Combined retail and wholesale average cost of natural gas per Dth sold	$	4.96	$	5.55	$	(0.59)	(11)	%

Quarter Ended March 31, ~~2022~~2023 Compared to Quarter Ended March 31, ~~2021~~2022

MidAmerican Energy -

Electric utility margin ~~increased $89~~decreased $7 million, or ~~23%~~(1)%, for the first quarter of ~~2022~~2023 compared to ~~2021,~~2022, primarily due to:

•a ~~$64~~$23 million ~~increase~~decrease in wholesale utility margin due to ~~higher~~lower volumes of 18.3% and lower margins per unit of ~~$58~~$7 million, reflecting lower ~~energy costs and higher~~ market ~~prices, and higher volumes of 31.4%; and~~prices; partially offset by

•a ~~$25~~$17 million increase in retail utility margin primarily due to ~~$17 million from higher customer usage; $9~~$14 million, net of energy costs, from higher recoveries through bill riders (offset in operations and maintenance expense and income tax benefit); and $1$7 million from higher customer usage; partially offset by $5 million from the ~~favorable~~unfavorable impact of weather. Retail customer volumes increased 1.0%.

Natural gas utility margin decreased $8 million, or 8%, for the first quarter of 2023 compared to 2022 primarily due to:

•a $5 million decrease from lower recoveries through a capital tracker mechanism;

•a $5 million decrease due to the unfavorable impact of weather; partially offset by $2

•a $3 million increase due to price impacts from changes in sales mix. ~~Retail customer volumes increased 5.6%.~~

~~Natural gas utility margin~~

Operations and maintenance increased ~~$18~~$13 million, or ~~23%~~7%, for the first quarter of ~~2022~~2023 compared to ~~2021 primarily due to:~~

•~~an $8 million increase from lower refunds related to amortization of excess accumulated deferred income taxes arising from 2017 Tax Reform (offset in income tax benefit);~~

•~~a $5 million increase from higher average prices~~2022 primarily due to ~~the timing~~higher technology and other administrative costs of ~~recoveries through a capital tracker mechanism;~~$6 million, higher other power and

•a steam power generation costs of $5 million, higher property insurance costs of $3 million and higher benefit costs of $2 million, partially offset by lower nuclear power generation costs of $4 ~~million increase from the favorable impact of weather.~~million.

9498

Depreciation and amortization decreased $16 million, or 6%, for the first quarter of ~~2022 increased $43 million, or 21%,~~2023 compared to ~~2021~~2022 primarily due to ~~$42~~$22 million from ~~higher~~lower Iowa revenue sharing accruals, ~~$7 million from wind-powered generating facilities~~ and ~~other plant placed in-service and $6~~$16 million from a regulatory mechanism that provides customers the retail energy benefits of certain wind-powered generation projects, partially offset by ~~$12~~$19 million from ~~a regulatory mechanism deferring certain~~wind-powered generating facilities and other plant placed in-service and $3 million from lower depreciation expense deferrals in ~~2022.~~2023.

Property and other taxes increased $2 million, or 5%, for the first quarter of 2023 compared to 2022 primarily due to $1 million from higher wind turbine property taxes and $1 million from higher replacement taxes.

Interest expense increased $2 million, or 3%, for the first quarter of 2023 compared to 2022 due to higher interest rates on variable rate long-term debt.

Allowance for ~~borrowed and~~ equity funds ~~increased $11~~decreased $4 million, or ~~138%~~27%, for the first quarter of ~~2022~~2023 compared to ~~2021 primarily~~2022 due to ~~higher~~lower construction work-in-progress balances related to wind- and solar-powered generation.

Other, net ~~decreased $14~~increased $19 million, or ~~127%~~633%, for the first quarter of ~~2022~~2023 compared to ~~2021~~2022 primarily due to ~~unfavorable~~favorable investment earnings, largely attributable to ~~lower~~higher cash surrender values of corporate-owned life insurance policies, and ~~higher~~lower non-service costs of ~~postretirement~~ employee benefit plans.

Income tax benefit ~~increased $52~~decreased $3 million, or ~~34%~~1%, for the first quarter of ~~2022~~2023 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~~lower PTCs ~~the timing of~~and state income tax ~~benefits and the effects of ratemaking, partially offset by higher pretax income.~~impacts. PTCs for the first quarter of 2023 and 2022 ~~and 2021~~ totaled ~~$203~~$202 million and ~~$151~~$203 million, respectively.

MidAmerican Funding -

Income tax benefit ~~increased $52~~decreased $6 million, or ~~33%~~3%, for the first quarter of ~~2022~~2023 compared to ~~2021, and the effective tax rate was (630)% for~~ 2022 ~~and 1,300% for 2021. The changes in the effective tax rates were~~ principally due to higher pretax income from a one-time gain on the ~~factors~~sale of an investment and the changes in MidAmerican Energy's income tax benefit discussed ~~for MidAmerican Energy.~~above.

Liquidity and Capital Resources

As of March 31, ~~2022,~~2023, the total net liquidity for MidAmerican Energy and MidAmerican Funding was as follows (in millions):


MidAmerican Energy:
Cash and cash equivalents	$	~~131~~57

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

Tax-exempt bond support	~~(370)~~(363)
Net credit facilities	~~1,135~~1,142

MidAmerican Energy total net liquidity	$	~~1,266~~1,199

MidAmerican Funding:
MidAmerican Energy total net liquidity	$	~~1,266~~1,199
Cash and cash equivalents	1
MHC, Inc. credit facility, maturing ~~2022~~2023	4
MidAmerican Funding total net liquidity	$	~~1,271~~1,204

Operating Activities

MidAmerican Energy's net cash flows from operating activities for the three-month periods ended March 31, 2023 and 2022, ~~and 2021,~~ were ~~$360~~$288 million and ~~$(85)~~$360 million, respectively. MidAmerican Funding's net cash flows from operating activities for the three-month periods ended March 31, 2023 and 2022, ~~and 2021,~~ were ~~$353~~$272 million and ~~$(92)~~$353 million, respectively. Cash flows from operating activities reflect higher payments to vendors, higher derivative collateral posted, higher property tax payments and lower utility margins for MidAmerican Energy's regulated electric and natural gas businesses, lower payments to vendors and lower derivative collateral posted, partially offset by higher interest expense. Higher utility margins are largely attributable to the recovery of higher natural gas costs caused by the February 2021 polar vortex weather event.businesses.

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 made for each payment date.

Investing Activities

MidAmerican Energy's net cash flows from investing activities for the three-month periods ended March 31, 2023 and 2022, ~~and 2021,~~ were ~~$(461)~~$(384) million and ~~$(303)~~$(461) million, respectively. MidAmerican Funding's net cash flows from investing activities for the three-month periods ended March 31, 2023 and 2022, ~~and 2021,~~ were ~~$(461)~~$(371) million and ~~$(303)~~$(461) million, respectively. Net cash flows from investing activities consist almost entirely of capital expenditures. Refer to "Future Uses of Cash" for further discussion of capital expenditures. Purchases and proceeds related to marketable securities substantially consist of activity within the Quad Cities Generating Station nuclear decommissioning trust and other trust investments.

Financing Activities

MidAmerican Energy's net cash flows from financing activities for the three-month periods ended March 31, 2023 and 2022 ~~and 2021~~ were $—$(108) million and ~~$387~~$— million, respectively. MidAmerican Funding's net cash flows from financing activities for the three-month periods ended March 31, 2023 and 2022, ~~and 2021,~~ were ~~$7 million and $394 million, respectively. Through its commercial paper program, MidAmerican Energy received $387 million in 2021. MidAmerican Funding received $8~~$(108) million and $7 million, respectively. In January 2023, MidAmerican Funding made a $100 million distribution to its sole member, BHE. MidAmerican Funding paid $— million and received $8 million in ~~2022~~2023 and ~~2021,~~2022, 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~~shelf registration statement with the SEC to issue ~~an indeterminate amount~~up to $3.25 billion of long-term debt securities and preferred stock through ~~June 13, 2024.~~March 10, 2026. 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~~million. MidAmerican Energy has authorization from the ~~Illinois Commerce Commission~~ICC through May 25, 2025, to issue long-term debt securities up to an aggregate of ~~$350 million through August 20, 2022. Additionally, MidAmerican Energy has authority from the Illinois Commerce Commission~~$2.2 billion and preferred stock up to an aggregate of $500 million; 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.~~2024; and through January 1, 2025, to issue $105 million of long-term debt securities for the purpose of refinancing three of its variable-rate tax-exempt bond series, including $57 million due in May 2023, $35 million due in October 2024 and $13 million due in January 2025.

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.

100

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'~~customer 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			Three-Month Periods				Annual
		Ended March 31,				Forecast			Ended March 31,				Forecast
		2021		2022		2022			2022		2023		2023

Wind generation	Wind generation	$	32	$	133	$	762	Wind generation	$	133	$	88	$	1,222
Electric distribution	Electric distribution	46		54		260		Electric distribution	54		73		296
Electric transmission	Electric transmission	23		21		171		Electric transmission	21		33		187
Solar generation	Solar generation	3		44		139		Solar generation	44		9		10
Other	Other	194		207		681		Other	207		179		609
Total	Total	$	298	$	459	$	2,013	Total	$	459	$	382	$	2,324

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

•Wind generation includes the construction, acquisition, repowering and operation of wind-powered generating facilities in Iowa.

◦Construction of wind-powered generating facilities totaling $75 million and $3 million for the three-month ~~period~~periods ended March 31, ~~2022.~~2023 and 2022, respectively. The timing and amount of forecast wind generation capital expenditures may be substantially impacted by the ultimate outcome of MidAmerican Energy's Wind PRIME filing. Planned spending for the construction of additional wind-powered generating facilities totals ~~$142~~$1,025 million for the remainder of ~~2022.~~2023.

◦Repowering of wind-powered generating facilities totaling ~~$120~~$5 million and ~~$24~~$120 million for the three-month periods ended March 31, ~~2022~~2023 and ~~2021,~~2022, respectively. Planned spending for the repowering of wind-powered generating facilities totals ~~$386~~$16 million for the remainder of ~~2022.~~2023. MidAmerican Energy expects its repowered facilities to meet Internal Revenue Service guidelines for the re-establishment of PTCs for 10 years from the date the facilities are placed in-service. The rate at which PTCs are re-established for a facility depends upon the date construction begins. Of the 812 MWs of current repowering projects not in-service as of March 31, 2022, 511 MWs are currently expected to qualify for 80% of the PTCs available for 10 years following each facility's return to service and 301 MWs are expected to qualify for 60% of such credits.

•Electric distribution includes expenditures for new facilities to meet retail demand growth and for replacement of existing facilities to maintain system reliability.

•Electric transmission includes expenditures to meet retail demand growth, upgrades to accommodate third-party generator requirements and replacement of existing facilities to maintain system reliability.

•Solar generation includes the construction and operation of solar-powered generating facilities, ~~totaling~~primarily consisting of 141 MWs of small- and utility-scale solar generation, ~~with total spend~~all of ~~$44 million and $3 million for~~which were placed in-service in 2022. For the three-month periods ended March 31, 2023 and 2022 solar generation spend totaled $9 million and ~~2021, respectively and planned~~$44 million, respectively. Planned spending ~~of $96~~totals $1 million for the remainder of ~~2022.~~2023.

•~~Remaining expenditures~~Other includes primarily ~~relate to~~ routine ~~expenditures~~projects for other generation, natural gas distribution, technology, facilities and other operational needs to serve existing and expected demand.

Material Cash Requirements

As of March 31, ~~2022,~~2023, 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.~~2022.

~~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.

~~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.~~

98101

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 air quality, climate change, ~~RPS, air and water quality,~~ emissions performance standards, water quality, coal ~~combustion byproduct~~ash 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.~~2022. There have been no significant changes in MidAmerican Energy's and MidAmerican Funding's assumptions regarding critical accounting estimates since December 31, ~~2021.~~2022.

99102

Nevada Power Company and its subsidiaries

Consolidated Financial Section

~~100~~103

PART I

Item 1.Financial Statements

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Shareholder of

Nevada Power Company

Results of Review of Interim Financial Information

We have reviewed the accompanying consolidated balance sheet of Nevada Power Company and subsidiaries ("Nevada Power") as of March 31, ~~2022,~~2023, the related consolidated statements of operations, changes in shareholder's equity, and cash flows for the three-month periods ended March 31, ~~2022~~2023 and ~~2021,~~2022, 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,~~2022, 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,~~24, 2023, 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,~~2022, 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, 2022~~May 5, 2023

~~101~~104

NEVADA POWER COMPANY AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS (Unaudited)

(Amounts in millions, except share data)


		As of					As of
		March 31,		December 31,			March 31,		December 31,
		2022		2021			2023		2022
ASSETS	ASSETS					ASSETS
Current assets:	Current assets:					Current assets:
Cash and cash equivalents	Cash and cash equivalents	$	47	$	33	Cash and cash equivalents	$	23	$	43
Trade receivables, net	Trade receivables, net	187		227		Trade receivables, net	301		388
Note receivable from affiliate						Note receivable from affiliate	—		100
Inventories	Inventories	61		64		Inventories	106		93

Regulatory assets	Regulatory assets	327		291		Regulatory assets	983		666
Prepayments		48		33

Other current assets	Other current assets	59		53		Other current assets	83		89
Total current assets	Total current assets	729		701		Total current assets	1,496		1,379

Property, plant and equipment, net	Property, plant and equipment, net	6,992		6,891		Property, plant and equipment, net	7,649		7,406

Regulatory assets	Regulatory assets	759		728		Regulatory assets	655		628
Other assets	Other assets	431		432		Other assets	390		388

Total assets	Total assets	$	8,911	$	8,752	Total assets	$	10,190	$	9,801

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	$	334	$	422
Accrued interest	Accrued interest	38		32		Accrued interest	51		40
Accrued property, income and other taxes	Accrued property, income and other taxes	30		29		Accrued property, income and other taxes	35		32

Short-term debt	Short-term debt	104		180		Short-term debt	33		—
Current portion of long-term debt						Current portion of long-term debt	300		—
Regulatory liabilities	Regulatory liabilities	49		49		Regulatory liabilities	45		45
Customer deposits	Customer deposits	45		44		Customer deposits	52		51

Derivative contracts	Derivative contracts	88		55		Derivative contracts	90		51
Other current liabilities	Other current liabilities	59		62		Other current liabilities	52		49
Total current liabilities	Total current liabilities	637		693		Total current liabilities	992		690

Long-term debt	Long-term debt	2,700		2,499		Long-term debt	2,895		3,195
Finance lease obligations	Finance lease obligations	306		310		Finance lease obligations	290		295
Regulatory liabilities	Regulatory liabilities	1,083		1,100		Regulatory liabilities	1,059		1,093
Deferred income taxes	Deferred income taxes	799		782		Deferred income taxes	878		875
Other long-term liabilities	Other long-term liabilities	358		338		Other long-term liabilities	318		299
Total liabilities	Total liabilities	5,883		5,722		Total liabilities	6,432		6,447

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

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	2,733		2,333
Retained earnings	Retained earnings	722		724		Retained earnings	1,026		1,022
Accumulated other comprehensive loss, net	Accumulated other comprehensive loss, net	(2)		(2)		Accumulated other comprehensive loss, net	(1)		(1)
Total shareholder's equity	Total shareholder's equity	3,028		3,030		Total shareholder's equity	3,758		3,354

Total liabilities and shareholder's equity	Total liabilities and shareholder's equity	$	8,911	$	8,752	Total liabilities and shareholder's equity	$	10,190	$	9,801

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~~105

NEVADA POWER COMPANY AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)

(Amounts in millions)


		Three-Month Periods					Three-Month Periods
		Ended March 31,					Ended March 31,
		2022		2021					2023		2022

Operating revenue	Operating revenue	$	415	$	370			Operating revenue	$	599	$	415

Operating expenses:	Operating expenses:							Operating expenses:
Cost of fuel and energy	Cost of fuel and energy	212		165				Cost of fuel and energy	384		212
Operations and maintenance	Operations and maintenance	65		63				Operations and maintenance	73		65
Depreciation and amortization	Depreciation and amortization	103		101				Depreciation and amortization	106		103
Property and other taxes	Property and other taxes	13		12				Property and other taxes	14		13
Total operating expenses	Total operating expenses	393		341				Total operating expenses	577		393

Operating income	Operating income	22		29				Operating income	22		22

Other income (expense):	Other income (expense):							Other income (expense):
Interest expense	Interest expense	(38)		(38)				Interest expense	(49)		(38)
Allowance for borrowed funds		1		1
Capitalized interest								Capitalized interest	2		1
Allowance for equity funds	Allowance for equity funds	3		1				Allowance for equity funds	4		3
Interest and dividend income	Interest and dividend income	9		5				Interest and dividend income	22		9
Other, net	Other, net	1		4				Other, net	4		1
Total other income (expense)	Total other income (expense)	(24)		(27)				Total other income (expense)	(17)		(24)

Net (loss) income		$	(2)	$	2
Income (loss) before income tax expense (benefit)								Income (loss) before income tax expense (benefit)	5		(2)
Income tax expense (benefit)								Income tax expense (benefit)	1		—
Net income (loss)								Net income (loss)	$	4	$	(2)

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~~106

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, December 31, 2020		1,000	$	—	$	2,308	$	634	$	(3)	$	2,939
Net income		—	—		—		2		—		2

Balance, March 31, 2021		1,000	$	—	$	2,308	$	636	$	(3)	$	2,941

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	Net loss	—	—		—		(2)		—		(2)		Net loss	—	—		—		(2)		—		(2)

Balance, March 31, 2022	Balance, March 31, 2022	1,000	$	—	$	2,308	$	722	$	(2)	$	3,028	Balance, March 31, 2022	1,000	$	—	$	2,308	$	722	$	(2)	$	3,028

Balance, December 31, 2022													Balance, December 31, 2022	1,000	$	—	$	2,333	$	1,022	$	(1)	$	3,354
Net income													Net income	—	—		—		4		—		4

Contributions													Contributions	—	—		400		—		—		400

Balance, March 31, 2023													Balance, March 31, 2023	1,000	$	—	$	2,733	$	1,026	$	(1)	$	3,758

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~~107

NEVADA POWER COMPANY AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)

(Amounts in millions)


		Three-Month Periods					Three-Month Periods
		Ended March 31,					Ended March 31,
		2022		2021			2023		2022
Cash flows from operating activities:	Cash flows from operating activities:					Cash flows from operating activities:
Net (loss) income		$	(2)	$	2
Adjustments to reconcile net income to net cash flows from operating activities:
Net income (loss)						Net income (loss)	$	4	$	(2)
Adjustments to reconcile net income (loss) to net cash flows from operating activities:						Adjustments to reconcile net income (loss) to net cash flows from operating activities:

Depreciation and amortization	Depreciation and amortization	103		101		Depreciation and amortization	106		103
Allowance for equity funds	Allowance for equity funds	(3)		(1)		Allowance for equity funds	(4)		(3)
Changes in regulatory assets and liabilities	Changes in regulatory assets and liabilities	(8)		(15)		Changes in regulatory assets and liabilities	(9)		(8)
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	(10)		5
Deferred energy	Deferred energy	(51)		41		Deferred energy	(370)		(51)
Amortization of deferred energy	Amortization of deferred energy	13		—		Amortization of deferred energy	52		13
Other, net	Other, net	4		(1)		Other, net	1		4
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	74		33
Inventories	Inventories	3		4		Inventories	(13)		3
Accrued property, income and other taxes	Accrued property, income and other taxes	(15)		3		Accrued property, income and other taxes	1		(15)
Accounts payable and other liabilities	Accounts payable and other liabilities	3		14		Accounts payable and other liabilities	(44)		3
Net cash flows from operating activities	Net cash flows from operating activities	85		179		Net cash flows from operating activities	(212)		85

Cash flows from investing activities:	Cash flows from investing activities:					Cash flows from investing activities:
Capital expenditures	Capital expenditures	(189)		(106)		Capital expenditures	(333)		(189)
Proceeds from repayment of affiliate note receivable						Proceeds from repayment of affiliate note receivable	100		—

Net cash flows from investing activities	Net cash flows from investing activities	(189)		(106)		Net cash flows from investing activities	(233)		(189)

Cash flows from financing activities:	Cash flows from financing activities:					Cash flows from financing activities:
Proceeds from long-term debt		200		—
Net (repayments of) proceeds from long-term debt						Net (repayments of) proceeds from long-term debt	(1)		200

Net repayment of short-term debt		(76)		—
Net (repayments of) proceeds from short-term debt						Net (repayments of) proceeds from short-term debt	33		(76)

Contributions from parent						Contributions from parent	400		—

Other, net	Other, net	(4)		(5)		Other, net	(5)		(4)
Net cash flows from financing activities	Net cash flows from financing activities	120		(5)		Net cash flows from financing activities	427		120

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	(18)		16
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	60		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	$	61	$	104	Cash and cash equivalents and restricted cash and cash equivalents at end of period	$	42	$	61

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~~108

NEVADA POWER COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

(1) General

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

The unaudited Consolidated Financial Statements have been prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP") for interim financial information and the United States Securities and Exchange Commission's rules and regulations for Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the disclosures required by GAAP for annual financial statements. Management believes the unaudited Consolidated Financial Statements contain all adjustments (consisting only of normal recurring adjustments) considered necessary for the fair presentation of the unaudited Consolidated Financial Statements as of March 31, ~~2022~~2023, and for the three-month periods ended March 31, ~~2022~~2023 and ~~2021.~~2022. The Consolidated Statements of Comprehensive Income have been omitted as net income equals comprehensive income for the three-month periods ended March 31, ~~2022~~2023 and ~~2021.~~2022. The results of operations for the three-month period ended March 31, ~~2022~~2023, 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~~2022, 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 accounting policies or its assumptions regarding significant accounting estimates ~~and policies~~ during the three-month period ended March 31, ~~2022.~~2023.

(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 inon 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,
		March 31,		December 31,			2023		2022
		2022		2021
Cash and cash equivalents	Cash and cash equivalents	$	47	$	33	Cash and cash equivalents	$	23	$	43
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	19		17
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	$	42	$	60

~~106~~109

(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			March 31,			December 31,
			2022			2021						2023			2022
Utility plant:	Utility plant:										Utility plant:
Generation	Generation	30 - 55 years		$	3,810		$	3,793	Generation	30 - 55 years			$	3,977		$	3,977
Transmission	Transmission	45 - 70 years		1,508			1,503		Transmission	45 - 70 years			1,569			1,562
Distribution	Distribution	20 - 65 years		3,979			3,920		Distribution	20 - 65 years			4,189			4,134
General and intangible plant	General and intangible plant	5 - 65 years		831			836		General and intangible plant	5 - 65 years			887			871
Utility plant	Utility plant			10,128			10,052		Utility plant				10,622			10,544
Accumulated depreciation and amortization	Accumulated depreciation and amortization			(3,478)			(3,406)		Accumulated depreciation and amortization				(3,677)			(3,624)
Utility plant, net	Utility plant, net			6,650			6,646		Utility plant, net				6,945			6,920
Other non-regulated, net of accumulated depreciation and amortization		45 years		1			1
Plant, net				6,651			6,647
Non-regulated, net of accumulated depreciation and amortization									Non-regulated, net of accumulated depreciation and amortization	45 years			1			1
													6,946			6,921
Construction work-in-progress	Construction work-in-progress			341			244		Construction work-in-progress				703			485
Property, plant and equipment, net	Property, plant and equipment, net			$	6,992		$	6,891	Property, plant and equipment, net				$	7,649		$	7,406

(4) Recent Financing Transactions

Long-Term Debt

In ~~January 2022,~~March 2023, Nevada Power repurchased and entered into a ~~$300~~re-offering of the following series of fixed-rate tax-exempt bonds: $40 million ~~secured delayed draw term loan facility maturing in January 2024. Amounts borrowed under the facility bear interest~~of its Coconino County, Arizona Pollution Control Corporation Revenue Bonds, Series 2017A, due 2032; $13 million of its Coconino County, Arizona Pollution Control Corporation Revenue Bonds, Series 2017B, due 2039; and $40 million of its Clark County, Nevada Revenue Bonds, Series 2017, due 2036. The Coconino Series 2017A bond was offered 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~~fixed rate of ~~0.55%. Nevada Power may draw all or none~~4.125% and the Coconino Series 2017B and Clark Series 2017 bonds were offered at a fixed rate of ~~the remaining unused commitment through June 2022. Nevada Power used the proceeds to repay amounts outstanding under its existing secured credit facility and for general corporate purposes.~~3.750%.

~~(5)~~(5) Income Taxes

A reconciliation of the federal statutory income tax rate to the effective income tax rate applicable to income (loss) before income tax expense (benefit) is as follows:


	Three-Month Period
	Ended March 31,
	2023

Federal statutory income tax rate	21	%
Effects of ratemaking	(9)

Income tax credits	(2)

Other	10
Effective income tax rate	20	%

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.

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 three-month periods ended March 31, 2023 and 2022, Nevada Power made no cash payments for federal income tax to BHE.

110

(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,			March 31,		December 31,
		2022		2021			2023		2022
Qualified Pension Plan:	Qualified Pension Plan:					Qualified Pension Plan:
Other non-current assets	Other non-current assets	$	42	$	42	Other non-current assets	$	26	$	27

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	(6)		(6)

Other Postretirement Plans:	Other Postretirement Plans:					Other Postretirement Plans:
Other non-current assets	Other non-current assets	8		8		Other non-current assets	7		7

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

Nevada Power has established a risk management process that is designed to identify, assess, manage and report on each of the various types of risk involved in its business. To mitigate a portion of its commodity price risk, Nevada Power uses commodity derivative contracts, which may include forwards, futures, options, swaps and other agreements, to effectively secure future supply or sell future production generally at fixed prices. Nevada Power manages its interest rate risk by limiting its exposure to variable interest rates primarily through the issuance of fixed-rate long-term debt and by monitoring market changes in interest rates. Additionally, Nevada Power may from time to time enter into interest rate derivative contracts, such as interest rate swaps or locks, to mitigate Nevada Power's exposure to interest rate risk. Nevada Power does not hedge all of its commodity price and interest rate risks, thereby exposing the unhedged portion to changes in market prices.

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

~~108~~

111

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
Other Contracts - Other
Current Current Long-term
Assets Liabilities Liabilities Total
As of March 31, 2022
Not designated as hedging contracts (1):
Commodity liabilities $ — $ (88) $ (80) $ (168)
Total derivative - net basis $ — $ (88) $ (80) $ (168)
As of December 31, 2021
Not designated as hedging contracts(1):
Commodity assets $ 4 $ — $ — $ 4
Commodity liabilities — (55) (62) (117)
Total derivative - net basis $ 4 $ (55) $ (62) $ (113)


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

As of March, 31 2023
Not designated as hedging contracts(1):
Commodity assets	$	4	$	—	$	—	$	4
Commodity liabilities	—		(90)		(30)		(120)





Total derivatives - net basis	$	4	$	(90)	$	(30)	$	(116)

As of December 31, 2022
Not designated as hedging contracts(1):
Commodity assets	$	23	$	—	$	—	$	23
Commodity liabilities	—		(51)		(24)		(75)




Total derivatives - net basis	$	23	$	(51)	$	(24)	$	(52)

(1)Nevada Power's commodity derivatives not designated as hedging contracts are included in regulated rates. As of March 31, ~~2022~~2023 a regulatory asset of ~~$168~~$116 million was recorded related to the net derivative liability of ~~$168~~$116 million. As of December 31, ~~2021~~2022 a regulatory asset of ~~$113~~$52 million was recorded related to the net derivative liability of ~~$113~~$52 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	March 31,	December 31,
		Measure	2022	2021		Measure	2023	2022

Electricity purchases	Electricity purchases	Megawatt hours	3	1	Electricity purchases	Megawatt hours	2	2
Natural gas purchases	Natural gas purchases	Decatherms	138	119	Natural gas purchases	Decatherms	155	109

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.

112

Collateral and Contingent Features

In accordance with industry practice, certain wholesale agreements, including derivative contracts, contain credit support provisions that in part base certain collateral requirements on credit ratings for senior unsecured debt as reported by one or more of the recognized credit rating agencies. These agreements may either specifically provide bilateral rights to demand cash or other security if credit exposures on a net basis exceed specified rating-dependent threshold levels "credit-risk-related contingent features") or provide the right for counterparties to demand "adequate assurance" if there is a material adverse change in Nevada Power's creditworthiness. These rights can vary by contract and by counterparty. As of March 31, ~~2022,~~2023, 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$10 million and $6$5 million as of March 31, ~~2022~~2023 and December 31, ~~2021,~~2022, 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~~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 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.

113

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


		Input Levels for Fair Value Measurements									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:
Assets:

Money market mutual funds		$	43	$	—	$	—	$	43
Investment funds		3		—		—		3
		$	46	$	—	$	—	$	46

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

As of December 31, 2021:
As of March 31, 2023:										As of March 31, 2023:
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	21		—		—		21
Investment funds	Investment funds	3		—		—		3		Investment funds	3		—		—		3
		$	37	$	—	$	4	$	41		$	24	$	—	$	4	$	28

Liabilities - commodity derivatives	Liabilities - commodity derivatives	$	—	$	—	$	(117)	$	(117)	Liabilities - commodity derivatives	$	—	$	—	$	(120)	$	(120)

As of December 31, 2022:										As of December 31, 2022:
Assets:										Assets:
Commodity derivatives										Commodity derivatives	$	—	$	—	$	23	$	23
Money market mutual funds										Money market mutual funds	34		—		—		34
Investment funds										Investment funds	3		—		—		3
											$	37	$	—	$	23	$	60

Liabilities - commodity derivatives										Liabilities - commodity derivatives	$	—	$	—	$	(75)	$	(75)

~~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, ~~2022~~2023 and December 31, ~~2021,~~2022, 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.

114

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
		Ended March 31,					Ended March 31,
		2022		2021			2023		2022

Beginning balance	Beginning balance	$	(113)	$	15	Beginning balance	$	(52)	$	(113)
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	(65)		(56)

Settlements	Settlements	1		1		Settlements	1		1
Ending balance	Ending balance	$	(168)	$	27	Ending balance	$	(116)	$	(168)

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 March 31, 2023				As of December 31, 2022
	Carrying		Fair		Carrying		Fair
	Value		Value		Value		Value

Long-term debt	$	3,195	$	3,241	$	3,195	$	3,114

~~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.

Legal Matters

~~(9)~~

115

(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
		Ended March 31,				Ended March 31,
		2022		2021				2023		2022
Customer Revenue:	Customer Revenue:						Customer Revenue:
Retail:	Retail:						Retail:
Residential	Residential	$	214	$	196		Residential	$	293	$	214
Commercial	Commercial	96		84			Commercial	136		96
Industrial	Industrial	78		63			Industrial	138		78
Other	Other	1		3			Other	6		1
Total fully bundled	Total fully bundled	389		346			Total fully bundled	573		389
Distribution only service	Distribution only service	5		5			Distribution only service	3		5
Total retail	Total retail	394		351			Total retail	576		394
Wholesale, transmission and other	Wholesale, transmission and other	16		14			Wholesale, transmission and other	18		16
Total Customer Revenue	Total Customer Revenue	410		365			Total Customer Revenue	594		410
Other revenue	Other revenue	5		5			Other revenue	5		5
Total revenue		$	415	$	370
Total operating revenue							Total operating revenue	$	599	$	415

~~112~~116

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

The following is management's discussion and analysis of certain significant factors that have affected the consolidated financial condition and results of operations of Nevada Power during the periods included herein. Explanations include management's best estimate of the impact of weather, customer growth, usage trends and other factors. This discussion should be read in conjunction with Nevada Power's historical unaudited Consolidated Financial Statements and Notes to Consolidated Financial Statements in Part I, Item 1 of this Form 10-Q. Nevada Power's actual results in the future could differ significantly from the historical results.

Results of Operations for the First Quarter of ~~2022~~2023 and ~~2021~~2022

Overview

Net ~~loss~~income for the first quarter of ~~2022~~2023 was $2$4 million, ~~a decrease~~an increase of $4$6 million, compared to ~~2021~~2022 primarily due to ~~$3 million of lower other, net,~~higher interest and dividend income, mainly ~~due to lower~~from higher carrying charges on regulatory balances, higher utility margin and higher cash surrender value of corporate-owned life insurance policies, ~~$2 million of lower utility margin, $2 million of~~partially offset by higher interest expense, primarily due to higher long-term debt, higher operations and maintenance expenses, mainly due to higher customer service operations expenses and higher plant operations and maintenance expenses, and ~~higher earnings sharing, and $2 million of~~ higher depreciation and amortization, mainly due to higher plant placed in-service. Utility margin ~~decreased~~increased primarily due to ~~lower regulatory-related revenue deferrals and lower~~higher retail customer volumes, higher other retail revenue ~~partially offset by~~and higher regulatory-related revenue deferrals. Retail customer volumes, including distribution only service customers, increased 3.3% primarily due to an increase in the average number of customers and the favorable ~~changes in customer usage patterns. These decreases are offset by $4 million~~impact of ~~higher interest and dividend income, mainly from carrying charges on regulatory balances.~~weather. Energy generated ~~decreased 6%~~increased 37% for the first quarter of ~~2022~~2023 compared to ~~2021 primarily~~2022 due to ~~lower~~higher natural gas-fueled generation. Wholesale electricity sales volumes ~~increased 49%~~decreased 50% and purchased electricity volumes ~~increased 30%~~decreased 35%.

Non-GAAP Financial Measure

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

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

Utility margin is not a measure calculated in accordance with GAAP and should be viewed as a supplement to, and not a substitute for, operating income which is the most directly comparable financial measure prepared in accordance with GAAP. The following table provides a reconciliation of utility margin to operating income (in millions):


		First Quarter								First Quarter
		2022		2021		Change						2023			2022			Change
Utility margin:	Utility margin:										Utility margin:
Operating revenue	Operating revenue	$	415	$	370	$	45	12	%		Operating revenue		$	599		$	415		$	184	44	%
Cost of fuel and energy	Cost of fuel and energy	212		165		47		28			Cost of fuel and energy		384			212			172		81
Utility margin	Utility margin	203		205		(2)		(1)			Utility margin		215			203			12		6
Operations and maintenance	Operations and maintenance	65		63		2		3			Operations and maintenance		73			65			8		12
Depreciation and amortization	Depreciation and amortization	103		101		2		2			Depreciation and amortization		106			103			3		3
Property and other taxes	Property and other taxes	13		12		1		8			Property and other taxes		14			13			1		8
Operating income	Operating income	$	22	$	29	$	(7)	(24)	%		Operating income		$	22		$	22		$	—	—	%

~~113~~117

Utility Margin

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


		First Quarter								First Quarter
		2022		2021		Change						2023			2022			Change
Utility margin (in millions):	Utility margin (in millions):										Utility margin (in millions):
Operating revenue	Operating revenue	$	415	$	370	$	45	12	%		Operating revenue		$	599		$	415		$	184	44	%
Cost of fuel and energy	Cost of fuel and energy	212		165		47		28			Cost of fuel and energy		384			212			172		81
Utility margin	Utility margin	$	203	$	205	$	(2)	(1)	%		Utility margin		$	215		$	203		$	12	6	%

Sales (GWhs):	Sales (GWhs):										Sales (GWhs):
Residential	Residential	1,585		1,587		(2)		—	%		Residential		1,636			1,585			51		3	%
Commercial	Commercial	998		954		44		5			Commercial		997			998			(1)		—
Industrial	Industrial	1,175		1,057		118		11			Industrial		1,242			1,175			67		6
Other	Other	46		47		(1)		(2)			Other		43			46			(3)		(7)
Total fully bundled(1)	Total fully bundled(1)	3,804		3,645		159		4			Total fully bundled(1)		3,918			3,804			114		3
Distribution only service	Distribution only service	569		516		53		10			Distribution only service		598			569			29		5
Total retail	Total retail	4,373		4,161		212		5			Total retail		4,516			4,373			143		3
Wholesale	Wholesale	125		84		41		49			Wholesale		63			125			(62)		(50)
Total GWhs sold	Total GWhs sold	4,498		4,245		253		6	%		Total GWhs sold		4,579			4,498			81		2	%

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)		999			995			4		—	%

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)		$	146.17		$	102.11		$	44.06	43	%

Wholesale	Wholesale	$	42.91	$	49.42	$	(6.51)	(13)	%		Wholesale		$	98.31		$	42.91		$	55.40	*

Heating degree days	Heating degree days	954		994		(40)		(4)	%		Heating degree days		1,310			954			356		37	%
Cooling degree days	Cooling degree days	49		6		43		*			Cooling degree days		3			49			(46)		(94)	%

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		3,263			2,378			885		37	%

Renewables	Renewables	14		16		(2)		(13)			Renewables		15			14			1		7
Total energy generated	Total energy generated	2,392		2,550		(158)		(6)			Total energy generated		3,278			2,392			886		37
Energy purchased	Energy purchased	1,761		1,355		406		30			Energy purchased		1,137			1,761			(624)		(35)
Total	Total	4,153		3,905		248		6	%		Total		4,415			4,153			262		6	%

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		$	90.64		$	41.92		$	48.72	*
Energy purchased	Energy purchased	$	63.27	$	93.84	$	(30.57)	(33)	%		Energy purchased		$	76.11		$	63.27		$	12.84	20	%

* 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~~283 GWhs and ~~683~~424 GWhs of gas generated energy that is purchased at cost by related parties for the first quarter of ~~2022~~2023 and ~~2021,~~2022, 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~~118

Quarter Ended March 31, ~~2022~~2023 Compared to Quarter Ended March 31, ~~2021~~2022

Utility margin ~~decreased $2~~increased $12 million, or 1%6%, for the first quarter of ~~2022~~2023 compared to ~~2021~~2022 primarily due to:

•~~$2 million of lower energy efficiency program rates (offset in operations and maintenance expense);~~

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

•~~$2 million of lower other retail revenue.~~

~~The decrease in utility margin was offset by:~~

•$3 million of higher electric retail utility margin ~~primarily~~ due to higher retail customer volumes. Retail customer volumes, including distribution only service customers, increased ~~5.1%~~3.3% primarily due to an increase in the average number of customers and ~~favorable changes in customer usage patterns, offset by~~ the ~~unfavorable~~favorable impact of weather;

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

•$3 million of higher other retail revenue; and

•$12 million of higher ~~transmission and wholesale revenue.~~regulatory-related revenue deferrals.

Operations and maintenance increased $2$8 million, or 3%12%, for the first quarter of ~~2022~~2023 compared to ~~2021~~2022 primarily due to higher ~~plant~~customer service operations ~~and maintenance~~ expenses, ~~and~~ higher ~~earnings sharing, partially offset by lower~~ energy efficiency program costs (offset in operating revenue). and higher plant operations and maintenance expenses.

Depreciation and amortization increased $2$3 million, or 2%3%, for the first quarter of ~~2022~~2023 compared to ~~2021~~2022 primarily due to higher plant placed in-service.

Interest ~~and dividend income~~expense increased $4$11 million, or ~~80%~~29%, for the first quarter of ~~2022~~2023 compared to ~~2021~~2022 primarily due to higher long-term debt.

Interest and dividend income increased $13 million for the first quarter of 2023 compared to 2022 primarily due to higher interest income, mainly from carrying charges on regulatory balances.

Other, net ~~decreased~~increased $3 million ~~or 75%,~~ for the first quarter of ~~2022~~2023 compared to ~~2021~~2022 primarily due to ~~lower~~higher cash surrender value of corporate-owned life insurance policies.

Liquidity and Capital Resources

As of March 31, ~~2022,~~2023, Nevada Power's total net liquidity was as follows (in millions):


Cash and cash equivalents	$	4723

Credit facility	400
Less -
Short-term debt	~~(104)~~(33)

Net credit facility	~~296~~

~~Delayed draw term loan facility~~	$	~~300~~
~~Less -~~
~~Long-term debt~~	~~(200)~~
~~Net delayed draw term loan facility~~	~~100~~367

Total net liquidity	$	~~443~~390
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 periods ended March 31, 2023 and 2022, ~~and 2021~~ were ~~$85~~$(212) million and ~~$179~~$85 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.

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

Investing Activities

Net cash flows from investing activities for the three-month periods ended March 31, 2023 and 2022, ~~and 2021~~ were ~~$(189)~~$(233) million and ~~$(106)~~$(189) million, respectively. The change was primarily due to increased capital ~~expenditures.~~expenditures, offset by the repayment of an affiliate note receivable. Refer to "Future Uses of Cash" for further discussion of capital expenditures.

119

Financing Activities

Net cash flows from financing activities for the three-month periods ended March 31, 2023 and 2022, ~~and 2021~~ were ~~$120~~$427 million and ~~$(5)~~$120 million, respectively. The change was primarily due to contributions from NV Energy, Inc. and higher proceeds from short-term debt, partially offset by lower proceeds from the issuance of long-term ~~debt, partially offset by higher repayments of short-term~~ debt.

Long-Term Debt

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~~up to $2.6 billion of general and refunding mortgage securities through ~~October 2022.~~November 2025.

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~~

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


		Three-Month Periods				Annual			Three-Month Periods				Annual
		Ended March 31,				Forecast			Ended March 31,				Forecast
		2021		2022		2022			2022		2023		2023

Electric distribution	Electric distribution	$	41	$	51	$	223	Electric distribution	$	51	$	69	$	285
Electric transmission	Electric transmission	13		21		168		Electric transmission	21		34		130
Solar generation	Solar generation	1		7		80		Solar generation	7		30		205
Electric battery storage								Electric battery storage	—		39		190
Other	Other	51		110		386		Other	110		161		528
Total	Total	$	106	$	189	$	857	Total	$	189	$	333	$	1,338

120

Nevada Power received PUCN approval through its ~~recent~~previous IRP filings for an increase in solar generation and electric ~~transmission.~~transmission and through the fourth amendment to its 2021 Joint IRP filing for the addition of peaking turbines at a generating facility. Nevada Power has included estimates from its previous and latest IRP ~~filing~~filings in its forecast capital expenditures for ~~2022.~~2023. 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~~Nevada Power 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;~~substation; and a 38-mile, 345-kV transmission line from the new Ft. Churchill substation to the Robinson Summit ~~substations.~~substation. 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.

•Electric battery storage includes two growth projects consisting of a 100-MW battery energy storage system co-located with a 150-MW solar photovoltaic facility that will be developed in Clark County, Nevada. Commercial operation is expected by the end of 2023. The second project is a 220-MW grid-tied battery energy storage system that will be developed on the site of the retired Reid Gardner generating facility in Clark County, Nevada. Commercial operation is expected by the end of 2023.

•Other includes both growth projects and operating expenditures. Growth projects primarily consist of an additional 400 MW of peaking combustion turbines that will be developed at the Silverhawk generating facility in Clark County, Nevada. Commercial operation is expected by the third quarter of 2024. Operating expenditures ~~consisting~~consist of turbine upgrades at several generating facilities, routine expenditures for generation, other operating projects and other infrastructure needed to serve existing and expected demand.

Material Cash Requirements

As of March 31, ~~2022,~~2023, 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.~~2022, 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~~

Regulatory Matters

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

Environmental Laws and Regulations

Nevada Power is subject to federal, state and local laws and regulations regarding air quality, climate change, ~~RPS, air and water quality,~~ emissions performance standards, water quality, coal ~~combustion byproduct~~ash 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.

121

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.~~2022. There have been no significant changes in Nevada Power's assumptions regarding critical accounting estimates since December 31, ~~2021.~~2022.

~~118~~122

Sierra Pacific Power Company and its subsidiaries

Consolidated Financial Section

~~119~~123

PART I

Item 1.Financial Statements

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Shareholder of

Sierra Pacific Power Company

Results of Review of Interim Financial Information

We have reviewed the accompanying consolidated balance sheet of Sierra Pacific Power Company and subsidiaries ("Sierra Pacific") as of March 31, ~~2022,~~2023, the related consolidated statements of operations, changes in shareholder's equity, and cash flows for the three-month periods ended March 31, ~~2022~~2023 and ~~2021,~~2022, 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,~~2022, 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,~~24, 2023, 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,~~2022, 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, 2022~~May 5, 2023

~~120~~124

SIERRA PACIFIC POWER COMPANY AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS (Unaudited)

(Amounts in millions, except share data)


		As of					As of
		March 31,		December 31,			March 31,		December 31,
		2022		2021			2023		2022
ASSETS	ASSETS					ASSETS
Current assets:	Current assets:					Current assets:
Cash and cash equivalents	Cash and cash equivalents	$	15	$	10	Cash and cash equivalents	$	8	$	49
Trade receivables, net	Trade receivables, net	120		128		Trade receivables, net	181		175

Inventories	Inventories	71		65		Inventories	83		79

Regulatory assets	Regulatory assets	164		177		Regulatory assets	310		357

Other current assets	Other current assets	36		35		Other current assets	34		50
Total current assets	Total current assets	406		415		Total current assets	616		710

Property, plant and equipment, net	Property, plant and equipment, net	3,386		3,340		Property, plant and equipment, net	3,622		3,587

Regulatory assets	Regulatory assets	282		263		Regulatory assets	261		254
Other assets	Other assets	205		205		Other assets	184		181

Total assets	Total assets	$	4,279	$	4,223	Total assets	$	4,683	$	4,732

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	$	162	$	224

Accrued property, income and other taxes		28		16
Short-term debt		57		159
Note payable to affiliate						Note payable to affiliate	—		70

Regulatory liabilities		20		19
Customer deposits		16		15
Derivative contracts		28		16
Short-term debt						Short-term debt	50		—
Current portion of long-term debt						Current portion of long-term debt	250		250

Other current liabilities	Other current liabilities	39		42		Other current liabilities	140		108
Total current liabilities	Total current liabilities	313		414		Total current liabilities	602		652

Long-term debt	Long-term debt	1,164		1,164		Long-term debt	898		898

Finance lease obligations						Finance lease obligations	98		100
Regulatory liabilities	Regulatory liabilities	440		444		Regulatory liabilities	428		436
Deferred income taxes	Deferred income taxes	401		402		Deferred income taxes	438		445
Other long-term liabilities	Other long-term liabilities	268		264		Other long-term liabilities	144		153
Total liabilities	Total liabilities	2,586		2,688		Total liabilities	2,608		2,684

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

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	1,576		1,576
Retained earnings	Retained earnings	453		425		Retained earnings	500		473
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	2,075		2,048

Total liabilities and shareholder's equity	Total liabilities and shareholder's equity	$	4,279	$	4,223	Total liabilities and shareholder's equity	$	4,683	$	4,732

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~~125

SIERRA PACIFIC POWER COMPANY AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)

(Amounts in millions)


		Three-Month Periods				Three-Month Periods
		Ended March 31,				Ended March 31,
				2022			2021			2023		2022
Operating revenue:	Operating revenue:								Operating revenue:
Regulated electric	Regulated electric			$	227		$	181	Regulated electric	$	304	$	227
Regulated natural gas	Regulated natural gas			52			39		Regulated natural gas	96		52
Total operating revenue	Total operating revenue			279			220		Total operating revenue	400		279

Operating expenses:	Operating expenses:								Operating expenses:
Cost of fuel and energy	Cost of fuel and energy			124			82		Cost of fuel and energy	181		124
Cost of natural gas purchased for resale	Cost of natural gas purchased for resale			34			21		Cost of natural gas purchased for resale	75		34
Operations and maintenance	Operations and maintenance			41			36		Operations and maintenance	56		41
Depreciation and amortization	Depreciation and amortization			36			36		Depreciation and amortization	46		36
Property and other taxes	Property and other taxes			6			6		Property and other taxes	7		6
Total operating expenses	Total operating expenses			241			181		Total operating expenses	365		241

Operating income	Operating income			38			39		Operating income	35		38

Other income (expense):	Other income (expense):								Other income (expense):
Interest expense	Interest expense			(13)			(14)		Interest expense	(16)		(13)
Allowance for borrowed funds	Allowance for borrowed funds			1			—		Allowance for borrowed funds	2		1
Allowance for equity funds	Allowance for equity funds			2			1		Allowance for equity funds	2		2
Interest and dividend income	Interest and dividend income			3			2		Interest and dividend income	7		3
Other, net	Other, net			2			4		Other, net	1		2
Total other income (expense)	Total other income (expense)			(5)			(7)		Total other income (expense)	(4)		(5)

Income before income tax expense				33			32
Income tax expense				5			4
Income before income tax expense (benefit)									Income before income tax expense (benefit)	31		33
Income tax expense (benefit)									Income tax expense (benefit)	4		5
Net income	Net income			$	28		$	28	Net income	$	27	$	28

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~~126

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

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

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	—	—		—		28		—		28

Contributions	Contributions	—	—		130		—		—		130		Contributions	—	—		130		—		—		130

Balance, March 31, 2022	Balance, March 31, 2022	1,000	$	—	$	1,241	$	453	$	(1)	$	1,693	Balance, March 31, 2022	1,000	$	—	$	1,241	$	453	$	(1)	$	1,693

Balance, December 31, 2022													Balance, December 31, 2022	1,000	$	—	$	1,576	$	473	$	(1)	$	2,048
Net income													Net income	—	—		—		27		—		27

Balance, March 31, 2023													Balance, March 31, 2023	1,000	$	—	$	1,576	$	500	$	(1)	$	2,075

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~~127

SIERRA PACIFIC POWER COMPANY AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)

(Amounts in millions)


		Three-Month Periods					Three-Month Periods
		Ended March 31,					Ended March 31,
		2022		2021			2023		2022
Cash flows from operating activities:	Cash flows from operating activities:					Cash flows from operating activities:
Net income	Net income	$	28	$	28	Net income	$	27	$	28
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	46		36
Allowance for equity funds	Allowance for equity funds	(2)		(1)		Allowance for equity funds	(2)		(2)
Changes in regulatory assets and liabilities	Changes in regulatory assets and liabilities	(4)		(13)		Changes in regulatory assets and liabilities	6		(4)
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	(11)		(3)
Deferred energy	Deferred energy	(7)		(18)		Deferred energy	2		(7)
Amortization of deferred energy	Amortization of deferred energy	23		(3)		Amortization of deferred energy	42		23

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	(5)		12
Inventories	Inventories	(6)		3		Inventories	(4)		(6)
Accrued property, income and other taxes	Accrued property, income and other taxes	7		(3)		Accrued property, income and other taxes	17		7
Accounts payable and other liabilities	Accounts payable and other liabilities	(21)		1		Accounts payable and other liabilities	(31)		(21)
Net cash flows from operating activities	Net cash flows from operating activities	63		42		Net cash flows from operating activities	87		63

Cash flows from investing activities:	Cash flows from investing activities:					Cash flows from investing activities:
Capital expenditures	Capital expenditures	(83)		(61)		Capital expenditures	(104)		(83)

Net cash flows from investing activities	Net cash flows from investing activities	(83)		(61)		Net cash flows from investing activities	(104)		(83)

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

Net (repayment of) proceeds from short-term debt		(102)		10

Net (repayments of) proceeds from short-term debt						Net (repayments of) proceeds from short-term debt	50		(102)

Contributions from parent	Contributions from parent	130		—		Contributions from parent	—		130
Repayments of affiliate note payable						Repayments of affiliate note payable	(70)		—
Other, net	Other, net	(2)		(2)		Other, net	(2)		(2)
Net cash flows from financing activities	Net cash flows from financing activities	26		8		Net cash flows from financing activities	(22)		26

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	(39)		6
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	56		16
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	$	17	$	22

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~~128

SIERRA PACIFIC POWER COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

(1) General

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

The unaudited Consolidated Financial Statements have been prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP") for interim financial information and the United States Securities and Exchange Commission's rules and regulations for Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the disclosures required by GAAP for annual financial statements. Management believes the unaudited Consolidated Financial Statements contain all adjustments (consisting only of normal recurring adjustments) considered necessary for the fair presentation of the unaudited Consolidated Financial Statements as of March 31, ~~2022~~2023, and for the three-month periods ended March 31, ~~2022~~2023 and ~~2021.~~2022. The Consolidated Statements of Comprehensive Income have been omitted as net income equals comprehensive income for the three-month periods ended March 31, ~~2022~~2023 and ~~2021.~~2022. The results of operations for the three-month period ended March 31, ~~2022~~2023, 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~~2022, 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 accounting policies or its assumptions regarding significant accounting estimates ~~and policies~~ during the three-month period ended March 31, ~~2022.~~2023.

(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 inon 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,
		March 31,		December 31,			2023		2022
		2022		2021
Cash and cash equivalents	Cash and cash equivalents	$	15	$	10	Cash and cash equivalents	$	8	$	49
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	9		7
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	$	17	$	56

~~125~~129

(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			March 31,			December 31,
			2022			2021						2023			2022
Utility plant:	Utility plant:										Utility plant:
Electric generation	Electric generation	25 - 60 years		$	1,169		$	1,163	Electric generation	25 - 70 years			$	1,301		$	1,298
Electric transmission	Electric transmission	50 - 100 years		937			940		Electric transmission	50 - 76 years			995			993
Electric distribution	Electric distribution	20 - 100 years		1,885			1,846		Electric distribution	20 - 76 years			1,999			1,983
Electric general and intangible plant	Electric general and intangible plant	5 - 70 years		206			204		Electric general and intangible plant	5 - 65 years			221			219
Natural gas distribution	Natural gas distribution	35 - 70 years		445			438		Natural gas distribution	35 - 70 years			459			455
Natural gas general and intangible plant	Natural gas general and intangible plant	5 - 70 years		14			14		Natural gas general and intangible plant	5 - 65 years			16			15
Common general	Common general	5 - 70 years		370			370		Common general	5 - 65 years			380			380
Utility plant	Utility plant			5,026			4,975		Utility plant				5,371			5,343
Accumulated depreciation and amortization	Accumulated depreciation and amortization			(1,878)			(1,854)		Accumulated depreciation and amortization				(2,024)			(1,992)
Utility plant, net				3,148			3,121
													3,347			3,351

Construction work-in-progress	Construction work-in-progress			238			219		Construction work-in-progress				275			236
Property, plant and equipment, net	Property, plant and equipment, net			$	3,386		$	3,340	Property, plant and equipment, net				$	3,622		$	3,587

~~(4) Recent Financing Transactions~~

~~Long-Term Debt~~

~~In April~~During 2022, Sierra Pacific ~~entered into~~revised its electric and gas depreciation rates effective January 2023 based on the results of a ~~$200 million unsecured loan with NV Energy payable upon demand.~~new depreciation study, the most significant impact of which was shorter average service lives for intangible software. The net ~~proceeds were used~~effect of this change along with various changes to ~~purchase certain tax-exempt refunding revenue bond obligations that were subject to mandatory purchase~~the average service lives of other utility plant groups will increase depreciation and amortization expense by ~~Sierra Pacific in April 2022. The loan has an underlying variable interest rate~~$19 million annually based on ~~30-day U.S. dollar deposits offered on~~depreciable plant balances at the ~~London Interbank Offer Rate market plus a spread~~time of ~~0.75%.~~

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

~~(5)~~(4) Income Taxes

A reconciliation of the federal statutory income tax rate to the effective income tax rate applicable to income before income tax expense (benefit) is as follows:


		Three-Month Periods				Three-Month Periods
		Ended March 31,				Ended March 31,
		2022		2021				2023		2022

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

Other	Other	1		2			Other	1		1
Effective income tax rate	Effective income tax rate	15	%	13	%		Effective income tax rate	13	%	15	%

~~126~~

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 three-month periods ended March 31, 2023 and 2022, Sierra Pacific made no cash payments for federal income tax to BHE.

~~(6)~~

130

(5) Employee Benefit Plans

Sierra Pacific is a participant in benefit plans sponsored by NV Energy. The NV Energy Retirement Plan includes a qualified pension plan ("Qualified Pension Plan") and a supplemental executive retirement plan and a restoration plan (collectively, "Non‑Qualified Pension Plans") that provide pension benefits for eligible employees. The NV Energy Comprehensive Welfare Benefit and Cafeteria Plan provides certain postretirement health care and life insurance benefits for eligible retirees ("Other Postretirement Plans") on behalf of Sierra Pacific. ~~Sierra Pacific contributed $2 million to the Other Postretirement Plans for the three-month period ended March 31, 2022.~~ Amounts attributable to Sierra Pacific were allocated from NV Energy based upon the current, or in the case of retirees, previous, employment location. Offsetting regulatory assets and liabilities have been recorded related to the amounts not yet recognized as a component of net periodic benefit costs that will be included in regulated rates. Net periodic benefit costs not included in regulated rates are included in accumulated other comprehensive loss, net.

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


		As of					As of
		March 31,		December 31,			March 31,		December 31,
		2022		2021			2023		2022
Qualified Pension Plan:	Qualified Pension Plan:					Qualified Pension Plan:

Other non-current assets	Other non-current assets	$	63	$	62	Other non-current assets	$	44	$	43

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	(5)		(5)

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

Other long-term liabilities	Other long-term liabilities	(8)		(10)		Other long-term liabilities	(2)		(2)

~~(7)~~(6) 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 87 for additional information on derivative contracts.

~~127~~131

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

As of March 31, 2022
As of March, 31 2023										As of March, 31 2023
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	—		(27)		(7)		(34)

Total derivative - net basis		$	1	$	(28)	$	(25)	$	(52)
Total derivatives - net basis										Total derivatives - net basis	$	1	$	(27)	$	(7)	$	(33)

As of December 31, 2021
As of December 31, 2022										As of December 31, 2022
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	$	8	$	—	$	—	$	8
Commodity liabilities	Commodity liabilities	—		(16)		(19)		(35)		Commodity liabilities	—		(14)		(7)		(21)

Total derivative - net basis		$	2	$	(16)	$	(19)	$	(33)
Total derivatives - net basis										Total derivatives - net basis	$	8	$	(14)	$	(7)	$	(13)

(1)Sierra Pacific's commodity derivatives not designated as hedging contracts are included in regulated rates. As of March 31, ~~2022 a net regulatory asset of $52 million was recorded related to the net derivative liability of $52 million. As of December 31, 2021~~2023 a net regulatory asset of $33 million was recorded related to the net derivative liability of $33 million. As of December 31, 2022 a net regulatory asset of $13 million was recorded related to the net derivative liability of $13 million.

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


		Unit of	March 31,	December 31,		Unit of	March 31,	December 31,
		Measure	2022	2021		Measure	2023	2022

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	67	52

Credit Risk

Sierra Pacific is exposed to counterparty credit risk associated with wholesale energy supply and marketing activities with other utilities, energy marketing companies, financial institutions and other market participants. Credit risk may be concentrated to the extent Sierra Pacific's counterparties have similar economic, industry or other characteristics and due to direct and indirect relationships among the counterparties. Before entering into a transaction, Sierra Pacific analyzes the financial condition of each significant wholesale counterparty, establishes limits on the amount of unsecured credit to be extended to each counterparty and evaluates the appropriateness of unsecured credit limits on an ongoing basis. To further mitigate wholesale counterparty credit risk, Sierra Pacific enters into netting and collateral arrangements that may include margining and cross-product netting agreements and obtain third-party guarantees, letters of credit and cash deposits. If required, Sierra Pacific exercises rights under these arrangements, including calling on the counterparty's credit support arrangement.

Collateral and Contingent Features

In accordance with industry practice, certain wholesale agreements, including derivative contracts, contain credit support provisions that in part base certain collateral requirements on credit ratings for senior unsecured debt as reported by one or more of the recognized credit rating agencies. These agreements may either specifically provide bilateral rights to demand cash or other security if credit exposures on a net basis exceed specified rating-dependent threshold levels ("credit-risk-related contingent features") or provide the right for counterparties to demand "adequate assurance" if there is a material adverse change in Sierra Pacific's creditworthiness. These rights can vary by contract and by counterparty. As of March 31, ~~2022,~~2023, 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~~132

The aggregate fair value of Sierra Pacific's derivative contracts in liability positions with specific credit-risk-related contingent features totaled $2$1 million and $— million as of March 31, ~~2022~~2023 and December 31, ~~2021,~~2022, 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)~~(7) Fair Value Measurements

The carrying value of Sierra Pacific's cash, certain cash equivalents, receivables, payables, accrued liabilities and short-term borrowings approximates fair value because of the short-term maturity of these instruments. Sierra Pacific has various financial assets and liabilities that are measured at fair value on the Consolidated ~~Balance Sheets~~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 Sierra Pacific has the ability to access at the measurement date.

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

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


		Input Levels for Fair Value Measurements									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 March 31, 2023:										As of March 31, 2023:
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	7		—		—		7
Investment funds	Investment funds	1		—		—		1		Investment funds	1		—		—		1
		$	14	$	—	$	1	$	15		$	8	$	—	$	1	$	9

Liabilities - commodity derivatives	Liabilities - commodity derivatives	$	—	$	—	$	(53)	$	(53)	Liabilities - commodity derivatives	$	—	$	—	$	(34)	$	(34)

As of December 31, 2021:
As of December 31, 2022:										As of December 31, 2022:
Assets:	Assets:									Assets:
Commodity derivatives	Commodity derivatives	$	—	$	—	$	2	$	2	Commodity derivatives	$	—	$	—	$	8	$	8
Money market mutual funds	Money market mutual funds	10		—		—		10		Money market mutual funds	49		—		—		49
Investment funds	Investment funds	1		—		—		1		Investment funds	1		—		—		1
		$	11	$	—	$	2	$	13		$	50	$	—	$	8	$	58

Liabilities - commodity derivatives	Liabilities - commodity derivatives	$	—	$	—	$	(35)	$	(35)	Liabilities - commodity derivatives	$	—	$	—	$	(21)	$	(21)

133

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 Sierra Pacific transacts. When quoted prices for identical contracts are not available, Sierra Pacific uses forward price curves. Forward price curves represent Sierra Pacific's estimates of the prices at which a buyer or seller could contract today for delivery or settlement at future dates. Sierra Pacific 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, Sierra Pacific 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 Sierra Pacific's nonperformance risk on its liabilities, which as of March 31, 2023 and December 31, 2022, had an immaterial impact to the fair value of its derivative contracts. As such, Sierra Pacific considers its derivative contracts to be valued using Level 3 inputs.

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
		Ended March 31,					Ended March 31,
		2022		2021			2023		2022

Beginning balance	Beginning balance	$	(33)	$	7	Beginning balance	$	(13)	$	(33)
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	(20)		(19)

Ending balance	Ending balance	$	(52)	$	12	Ending balance	$	(33)	$	(52)

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 March 31, 2023				As of December 31, 2022
	Carrying		Fair		Carrying		Fair
	Value		Value		Value		Value

Long-term debt	$	1,148	$	1,148	$	1,148	$	1,111

~~(9)~~(8) 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~~134

~~(10)~~Legal Matters

(9) 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 1110 (in millions):


		Three-Month Periods													Three-Month Periods
		Ended March 31,													Ended March 31,
		2022						2021							2023						2022
		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	$	115	$	60	$	175	$	85	$	32	$	117
Commercial	Commercial	70		15		85		54		10		64		Commercial	91		27		118		70		15		85
Industrial	Industrial	49		4		53		39		3		42		Industrial	63		9		72		49		4		53
Other	Other	1		—		1		1		—		1		Other	2		—		2		1		—		1
Total fully bundled	Total fully bundled	205		51		256		165		38		203		Total fully bundled	271		96		367		205		51		256
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	272		96		368		206		51		257
Wholesale, transmission and other	Wholesale, transmission and other	21		—		21		15		—		15		Wholesale, transmission and other	32		—		32		21		—		21
Total Customer Revenue	Total Customer Revenue	227		51		278		181		38		219		Total Customer Revenue	304		96		400		227		51		278
Other revenue	Other revenue	—		1		1		—		1		1		Other revenue	—		—		—		—		1		1
Total revenue		$	227	$	52	$	279	$	181	$	39	$	220
Total operating revenue														Total operating revenue	$	304	$	96	$	400	$	227	$	52	$	279

~~131~~

~~(11)~~(10) Segment Information

Sierra Pacific has identified 2two 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.

135

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


		Three-Month Periods					Three-Month Periods
		Ended March 31,					Ended March 31,
		2022		2021				2023		2022
Operating revenue:	Operating revenue:					Operating revenue:
Regulated electric	Regulated electric	$	227	$	181	Regulated electric		$	304	$	227
Regulated natural gas	Regulated natural gas	52		39		Regulated natural gas		96		52
Total operating revenue	Total operating revenue	$	279	$	220	Total operating revenue		$	400	$	279

Operating income:	Operating income:					Operating income:
Regulated electric	Regulated electric	$	30	$	31	Regulated electric		$	25	$	30
Regulated natural gas	Regulated natural gas	8		8		Regulated natural gas		10		8
Total operating income	Total operating income	38		39		Total operating income		35		38
Interest expense	Interest expense	(13)		(14)		Interest expense		(16)		(13)
Allowance for borrowed funds	Allowance for borrowed funds	1		—		Allowance for borrowed funds		2		1
Allowance for equity funds	Allowance for equity funds	2		1		Allowance for equity funds		2		2
Interest and dividend income	Interest and dividend income	3		2		Interest and dividend income		7		3
Other, net	Other, net	2		4		Other, net		1		2
Income before income tax expense		$	33	$	32
Total income before income tax expense (benefit)						Total income before income tax expense (benefit)		$	31	$	33


		As of						As of
			March 31,		December 31,				March 31,		December 31,
			2022		2021				2023		2022
Assets:	Assets:						Assets:
Regulated electric	Regulated electric		$	3,869	$	3,829	Regulated electric		$	4,193	$	4,224
Regulated natural gas	Regulated natural gas		375		365		Regulated natural gas		460		441
Other(1)	Other(1)		35		29		Other(1)		30		67
Total assets	Total assets		$	4,279	$	4,223	Total assets		$	4,683	$	4,732

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

~~132~~136

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

The following is management's discussion and analysis of certain significant factors that have affected the consolidated financial condition and results of operations of Sierra Pacific during the periods included herein. Explanations include management's best estimate of the impact of weather, customer growth, usage trends and other factors. This discussion should be read in conjunction with Sierra Pacific's historical unaudited Consolidated Financial Statements and Notes to Consolidated Financial Statements in Part I, Item 1 of this Form 10-Q. Sierra Pacific's actual results in the future could differ significantly from the historical results.

Results of Operations for the First Quarter of ~~2022~~2023 and ~~2021~~2022

Overview

Net income for the first quarter of ~~2022~~2023 was ~~$28~~$27 million, ~~consistent when~~a decrease of $1 million, or 4%, compared to ~~2021~~2022 primarily due to ~~$5 million of~~ higher operations and maintenance expenses, mainly due to higher plant operations and maintenance expenses and higher ~~earnings sharing,~~customer service operations expenses, higher depreciation and $2 million of lower other, net, mainly due to lower cash surrender value of corporate-owned life insurance policies, partially offset by $4 million of higher electric utility margin, mainly from higher transmission and wholesale revenue, partially offset by lower regulatory-related revenue deferrals, higher allowance for equity funds,amortization, mainly due to higher ~~construction work-in-progress,~~plant placed in-service and higher regulatory amortizations, and higher interest expense, primarily due to higher interest rates and debt, partially offset by higher utility margin and higher interest and dividend income, ~~mainly~~primarily from carrying charges on regulatory balances. Electric utility margin increased primarily due to higher retail rates due to the 2022 regulatory rate review with new rates effective January 2023, higher customer volumes and higher transmission and wholesale revenue. Electric retail customer volumes, including distribution only service customers, increased by 2.3% primarily due to the favorable impact of weather and an increase in the average number of customers. Natural gas utility margin increased primarily due to higher customer volumes from the favorable impact of weather. Energy generated increased 3%11% for the first quarter of ~~2022~~2023 compared to ~~2021~~2022 primarily due to higher ~~coal-fueled generation, partially offset by lower~~ natural ~~gas-fueled~~gas- and coal-fueled generation. Wholesale electricity sales volumes ~~increased 66%~~decreased 21% and purchased electricity volumes decreased ~~25%~~20%.

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~~137

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								First Quarter
		2022		2021		Change						2023			2022			Change
Electric utility margin:	Electric utility margin:										Electric utility margin:
Operating revenue	Operating revenue	$	227	$	181	$	46	25	%		Operating revenue		$	304		$	227		$	77	34	%
Cost of fuel and energy	Cost of fuel and energy	124		82		42		51			Cost of fuel and energy		181			124			57		46
Electric utility margin	Electric utility margin	103		99		4		4			Electric utility margin		123			103			20		19	%

Natural gas utility margin:	Natural gas utility margin:										Natural gas utility margin:
Operating revenue	Operating revenue	52		39		13		33	%		Operating revenue		96			52			44		85	%
Natural gas purchased for resale	Natural gas purchased for resale	34		21		13		62			Natural gas purchased for resale		75			34			41		*
Natural gas utility margin	Natural gas utility margin	18		18		—		—			Natural gas utility margin		21			18			3		17	%

Utility margin	Utility margin	121		117		4		3	%		Utility margin		144			121			23		19	%

Operations and maintenance	Operations and maintenance	41		36		5		14	%		Operations and maintenance		56			41			15		37	%
Depreciation and amortization	Depreciation and amortization	36		36		—		—			Depreciation and amortization		46			36			10		28
Property and other taxes	Property and other taxes	6		6		—		—			Property and other taxes		7			6			1		17
Operating income	Operating income	$	38	$	39	$	(1)	(3)	%		Operating income		$	35		$	38		$	(3)	(8)	%

* Not meaningful

~~134~~138

Electric Utility Margin

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


		First Quarter								First Quarter
		2022		2021		Change						2023			2022			Change
Utility margin (in millions):	Utility margin (in millions):										Utility margin (in millions):
Operating revenue	Operating revenue	$	227	$	181	$	46	25	%		Operating revenue		$	304		$	227		$	77	34	%
Cost of fuel and energy	Cost of fuel and energy	124		82		42		51			Cost of fuel and energy		181			124			57		46
Utility margin	Utility margin	$	103	$	99	$	4	4	%		Utility margin		$	123		$	103		$	20	19	%

Sales (GWhs):	Sales (GWhs):										Sales (GWhs):
Residential	Residential	663		671		(8)		(1)	%		Residential		732			663			69		10	%
Commercial	Commercial	700		677		23		3			Commercial		721			700			21		3
Industrial	Industrial	755		897		(142)		(16)			Industrial		646			755			(109)		(14)
Other	Other	4		4		—		—			Other		3			4			(1)		(25)
Total fully bundled(1)	Total fully bundled(1)	2,122		2,249		(127)		(6)			Total fully bundled(1)		2,102			2,122			(20)		(1)
Distribution only service	Distribution only service	585		397		188		47			Distribution only service		668			585			83		14
Total retail	Total retail	2,707		2,646		61		2			Total retail		2,770			2,707			63		2
Wholesale	Wholesale	291		175		116		66			Wholesale		229			291			(62)		(21)
Total GWhs sold	Total GWhs sold	2,998		2,821		177		6	%		Total GWhs sold		2,999			2,998			1		—	%

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)		372			369			3		1	%

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)		$	128.99		$	96.40		$	32.59	34	%

Wholesale	Wholesale	$	51.14	$	60.18	$	(9.04)	(15)	%		Wholesale		$	107.76		$	51.14		$	56.62	*

Heating degree days	Heating degree days	2,037		2,198		(161)		(7)	%		Heating degree days		2,652			2,037			615		30	%

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		1,066			990			76		8	%
Coal	Coal	153		29		124		*			Coal		201			153			48		31
Renewables~~(3)~~	Renewables~~(3)~~	5		6		(1)		(17)			Renewables~~(3)~~		4			5			(1)		(20)
Total energy generated	Total energy generated	1,148		1,117		31		3			Total energy generated		1,271			1,148			123		11
Energy purchased	Energy purchased	1,033		1,373		(340)		(25)			Energy purchased		823			1,033			(210)		(20)
Total	Total	2,181		2,490		(309)		(12)	%		Total		2,094			2,181			(87)		(4)	%

Average cost of energy per MWh(4):
Average cost of energy per MWh(3):											Average cost of energy per MWh(3):
Energy generated	Energy generated	$	59.86	$	25.23	$	34.63	*			Energy generated		$	102.35		$	59.86		$	42.49	71	%
Energy purchased	Energy purchased	$	53.19	$	38.93	$	14.26	37	%		Energy purchased		$	61.37		$	53.19		$	8.18	15	%

* 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~~139

Natural Gas Utility Margin

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


		First Quarter								First Quarter
		2022		2021		Change						2023			2022			Change
Utility margin (in millions):	Utility margin (in millions):										Utility margin (in millions):
Operating revenue	Operating revenue	$	52	$	39	$	13	33	%		Operating revenue		$	96		$	52		$	44	85	%
Natural gas purchased for resale	Natural gas purchased for resale	34		21		13		62			Natural gas purchased for resale		75			34			41		*
Utility margin	Utility margin	$	18	$	18	$	—	—	%		Utility margin		$	21		$	18		$	3	17	%

Sold (000's Dths):	Sold (000's Dths):										Sold (000's Dths):
Residential	Residential	4,552		4,658		(106)		(2)	%		Residential		5,866			4,552			1,314		29	%
Commercial	Commercial	2,512		2,304		208		9			Commercial		2,938			2,512			426		17
Industrial	Industrial	653		745		(92)		(12)			Industrial		1,066			653			413		63
Total retail	Total retail	7,717		7,707		10		—	%		Total retail		9,870			7,717			2,153		28	%

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)		182			179			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		$	9.74		$	6.69		$	3.05	46	%

Heating degree days	Heating degree days	2,037		2,198		(161)		(7)	%		Heating degree days		2,652			2,037			615		30	%

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		$	7.63		$	4.36		$	3.27	75	%

* Not meaningful

Quarter Ended March 31, ~~2022~~2023 Compared to Quarter Ended March 31, ~~2021~~2022

Electric utility margin increased $420 million, or 4%19%, for the first quarter of ~~2022~~2023 compared to ~~2021~~2022 primarily due to:

•$314 million of higher ~~transmission and wholesale revenue;~~

•~~$2 million of higher energy efficiency implementation rates; and~~

•~~$1 million of higher electric~~ retail ~~utility margin primarily~~rates due to the 2022 regulatory rate review with new rates effective January 2023 and higher ~~retail~~ customer volumes. Retail customer volumes, including distribution only service customers, increased by 2.3% primarily due to the favorable impact of weather and an increase in the average number of ~~customers, offset by the unfavorable impact of weather.~~

~~The increase in utility margin was offset by:~~

•~~$1 million of lower regulatory-related revenue deferrals;~~customers; and

•$16 million of ~~lower energy efficiency programs rates (offset in operations~~higher transmission and ~~maintenance expense).~~wholesale revenue.

Natural gas utility margin increased $3 million, or 17%, for the first quarter of 2023 compared to 2022 primarily due to higher customer volumes from the favorable impact of weather.

Operations and maintenance increased $5$15 million, or ~~14%~~37%, for the first quarter of ~~2022~~2023 compared to ~~2021~~2022 primarily due to higher plant operations and maintenance expenses, ~~and~~ higher ~~earnings sharing, partially offset by lower energy efficiency program costs~~regulatory-approved cost recovery for the ON Line reallocation (offset in operating revenue). and higher customer service operations expenses.

~~Allowance for equity funds~~Depreciation and amortization increased $1$10 million, or 28%, for the first quarter of ~~2022~~2023 compared to ~~2021~~2022 primarily due to higher ~~construction work-in progress.~~plant placed in-service and higher regulatory amortizations.

Interest expense increased $3 million, or 23%, for the first quarter of 2023 compared to 2022 primarily due to higher interest rates and debt.

Interest and dividend income increased $1$4 million, for the first quarter of ~~2022~~2023 compared to ~~2021~~2022 primarily due to higher interest income, mainly from carrying charges on regulatory balances.

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

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

~~136~~140

Liquidity and Capital Resources

As of March 31, ~~2022,~~2023, Sierra Pacific's total net liquidity was as follows (in millions):


Cash and cash equivalents	$	158

Credit facility	250
~~Less -~~Less:

Short-term debt	~~(57)~~(50)
Net credit facility	~~193~~200

Total net liquidity	$	208
Credit facility:
Maturity date	~~2024~~2025

Operating Activities

Net cash flows from operating activities for the three-month periods ended March 31, 2023 and 2022, ~~and 2021~~ were ~~$63~~$87 million and ~~$42~~$63 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~~costs.

The timing of ~~payments~~Sierra Pacific's income tax cash flows from period to period can be significantly affected by the estimated federal income tax payment methods and assumptions made for ~~operating costs.~~each payment date.

Investing Activities

Net cash flows from investing activities for the three-month periods ended March 31, 2023 and 2022, ~~and 2021~~ were ~~$(83)~~$(104) million and ~~$(61)~~$(83) million, respectively. The change was primarily due to increased capital expenditures. Refer to "Future Uses of Cash" for further discussion of capital expenditures.

Financing Activities

Net cash flows from financing activities for the three-month periods ended March 31, 2023 and 2022, ~~and 2021~~ were ~~$26~~$(22) million and $8$26 million, respectively. The change was primarily due to lower contributions from NV Energy, Inc., and higher repayments of an affiliate note payable, partially offset by higher ~~repayments of~~proceeds from short-term debt.

~~Long-Term Debt~~

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

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.

141

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'~~customer rates; outcomes of regulatory proceedings; changes in income tax laws; general business conditions; load projections; system reliability standards; the cost and efficiency of construction labor, equipment and materials; commodity prices; and the cost and availability of capital. Prudently incurred expenditures for compliance-related items such as pollution-control technologies, replacement generation and associated operating costs are generally incorporated into Sierra Pacific's regulated retail rates.

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


		Three-Month Periods				Annual			Three-Month Periods				Annual
		Ended March 31,				Forecast			Ended March 31,				Forecast
		2021		2022		2022			2022		2023		2023

Electric distribution	Electric distribution	$	20	$	20	$	125	Electric distribution	$	20	$	32	$	164
Electric transmission	Electric transmission	16		20		128		Electric transmission	20		19		73
Solar generation	Solar generation	—		—		1		Solar generation	—		—		3
Electric battery storage								Electric battery storage	—		—		8
Other	Other	25		43		171		Other	43		53		165
Total	Total	$	61	$	83	$	425	Total	$	83	$	104	$	413

Sierra Pacific received PUCN approval through its ~~recent~~previous 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.~~2023. These estimates may change as a result of the RFP process. Sierra Pacific's historical and forecast capital expenditures include the following:

•Electric distribution includes both growth projects and operating expenditures consisting of routine expenditures for distribution needed to serve existing and expected demand.

•Electric transmission includes both growth projects and operating expenditures. Growth projects primarily relate to the Nevada Utilities' Greenlink Nevada transmission expansion program. ~~In this project, the company~~Sierra Pacific 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;~~substation; and a 38-mile, 345-kV transmission line from the new Ft. Churchill substation to the Robinson Summit ~~substations.~~substation. Operating expenditures consist of routine expenditures for transmission and other infrastructure needed to serve existing and expected demand.

•Other includes both growth projects and operating expenditures consisting of turbine upgrades at the Tracy generating facility, routine expenditures for generation, other operating projects and other infrastructure needed to serve existing and expected demand.

Material Cash Requirements

As of March 31, ~~2022,~~2023, 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.~~2022.

~~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.

142

Environmental Laws and Regulations

Sierra Pacific is subject to federal, state and local laws and regulations regarding air quality, climate change, ~~RPS, air and water quality,~~ emissions performance standards, water quality, coal ~~combustion byproduct~~ash disposal ~~hazardous and solid waste disposal, protected species~~ and other environmental matters that have the potential to impact Sierra Pacific's current and future operations. In addition to imposing continuing compliance obligations, these laws and regulations provide regulators with the authority to levy substantial penalties for noncompliance including fines, injunctive relief and other sanctions. These laws and regulations are administered by various federal, state and local agencies. Sierra Pacific believes it is in material compliance with all applicable laws and regulations, although many are subject to interpretation that may ultimately be resolved by the courts. Environmental laws and regulations continue to evolve, and Sierra Pacific is unable to predict the impact of the changing laws and regulations on its operations and ~~consolidated~~ financial results.

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

Critical Accounting Estimates

Certain accounting measurements require management to make estimates and judgments concerning transactions that will be settled several years in the future. Amounts recognized on the Consolidated Financial Statements based on such estimates involve numerous assumptions subject to varying and potentially significant degrees of judgment and uncertainty and will likely change in the future as additional information becomes available. Estimates are used for, but not limited to, the accounting for the effects of certain types of regulation, derivatives, impairment of long-lived assets, income taxes and revenue recognition - unbilled revenue. For additional discussion of Sierra Pacific's critical accounting estimates, see Item 7 of Sierra Pacific's Annual Report on Form 10‑K for the year ended December 31, ~~2021.~~2022. There have been no significant changes in Sierra Pacific's assumptions regarding critical accounting estimates since December 31, ~~2021.~~2022.

~~139~~143

Eastern Energy Gas Holdings, LLC and its subsidiaries

Consolidated Financial Section

~~140~~144

PART I

Item 1.Financial Statements

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors of

Eastern Energy Gas Holdings, LLC

Results of Review of Interim Financial Information

We have reviewed the accompanying consolidated balance sheet of Eastern Energy Gas Holdings, LLC and subsidiaries ("Eastern Energy Gas") as of March 31, ~~2022,~~2023, the related consolidated statements of operations, comprehensive income, changes in equity and cash flows for the three-month periods ended March 31, ~~2022~~2023 and ~~2021,~~2022, 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,~~2022, 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,~~24, 2023, 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,~~2022, 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, 2022~~May 5, 2023

~~141~~145

EASTERN ENERGY GAS HOLDINGS, LLC AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS (Unaudited)

(Amounts in millions)


							As of
		As of					March 31,		December 31,
		March 31, 2022		December 31, 2021			2023		2022
ASSETS	ASSETS					ASSETS
Current assets:	Current assets:					Current assets:
Cash and cash equivalents	Cash and cash equivalents	$	54	$	22	Cash and cash equivalents	$	103	$	65

Trade receivables, net	Trade receivables, net	154		183		Trade receivables, net	177		202
Receivables from affiliates	Receivables from affiliates	32		47		Receivables from affiliates	29		30

Notes receivable from affiliates	Notes receivable from affiliates	122		7		Notes receivable from affiliates	629		536
Other receivables		3		9

Inventories	Inventories	124		122		Inventories	130		127

Prepayments and other deferred charges						Prepayments and other deferred charges	57		78
Natural gas imbalances	Natural gas imbalances	105		100		Natural gas imbalances	60		193
Other current assets	Other current assets	132		131		Other current assets	54		72
Total current assets	Total current assets	726		621		Total current assets	1,239		1,303

Property, plant and equipment, net	Property, plant and equipment, net	10,183		10,200		Property, plant and equipment, net	10,281		10,202
Goodwill	Goodwill	1,286		1,286		Goodwill	1,286		1,286

Investments	Investments	423		412		Investments	285		278

Other assets	Other assets	122		129		Other assets	94		95

Total assets	Total assets	$	12,740	$	12,648	Total assets	$	13,185	$	13,164

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

~~142~~146

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			March 31, 2023		December 31, 2022
LIABILITIES AND EQUITY	LIABILITIES AND EQUITY					LIABILITIES AND EQUITY
Current liabilities:	Current liabilities:					Current liabilities:
Accounts payable	Accounts payable	$	42	$	79	Accounts payable	$	42	$	86
Accounts payable to affiliates	Accounts payable to affiliates	13		38		Accounts payable to affiliates	8		10
Accrued interest	Accrued interest	54		19		Accrued interest	54		19
Accrued property, income and other taxes	Accrued property, income and other taxes	59		89		Accrued property, income and other taxes	69		77
Accrued employee expenses		21		13

Regulatory liabilities	Regulatory liabilities	44		40		Regulatory liabilities	34		126

Current portion of long-term debt						Current portion of long-term debt	650		649
Other current liabilities	Other current liabilities	110		87		Other current liabilities	144		146
Total current liabilities	Total current liabilities	343		365		Total current liabilities	1,001		1,113

Long-term debt	Long-term debt	3,899		3,906		Long-term debt	3,247		3,243

Regulatory liabilities	Regulatory liabilities	645		645		Regulatory liabilities	592		596

Other long-term liabilities	Other long-term liabilities	263		238		Other long-term liabilities	340		324
Total liabilities	Total liabilities	5,150		5,154		Total liabilities	5,180		5,276

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

Equity:	Equity:					Equity:
Member's equity:	Member's equity:					Member's equity:

Membership interests	Membership interests	3,595		3,501		Membership interests	4,109		3,983

Accumulated other comprehensive loss, net	Accumulated other comprehensive loss, net	(38)		(43)		Accumulated other comprehensive loss, net	(45)		(42)
Total member's equity	Total member's equity	3,557		3,458		Total member's equity	4,064		3,941
Noncontrolling interests	Noncontrolling interests	4,033		4,036		Noncontrolling interests	3,941		3,947
Total equity	Total equity	7,590		7,494		Total equity	8,005		7,888

Total liabilities and equity	Total liabilities and equity	$	12,740	$	12,648	Total liabilities and equity	$	13,185	$	13,164

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

~~143~~147

EASTERN ENERGY GAS HOLDINGS, LLC AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)

(Amounts in millions)


		Three-Month Periods				Three-Month Periods
		Ended March 31,				Ended March 31,
		2022		2021				2023		2022

Operating revenue	Operating revenue	$	482	$	486		Operating revenue	$	553	$	482

Operating expenses:	Operating expenses:						Operating expenses:

Excess gas		(1)		—
Cost of (excess) gas							Cost of (excess) gas	20		(1)
Operations and maintenance	Operations and maintenance	118		124			Operations and maintenance	143		118
Depreciation and amortization	Depreciation and amortization	85		80			Depreciation and amortization	80		85
Property and other taxes	Property and other taxes	29		39			Property and other taxes	37		29

Total operating expenses	Total operating expenses	231		243			Total operating expenses	280		231

Operating income	Operating income	251		243			Operating income	273		251

Other income (expense):	Other income (expense):						Other income (expense):
Interest expense	Interest expense	(36)		(44)			Interest expense	(37)		(36)

Allowance for equity funds	Allowance for equity funds	2		2			Allowance for equity funds	2		2

Interest and dividend income							Interest and dividend income	9		—

Other, net	Other, net	(1)		1			Other, net	—		(1)
Total other income (expense)	Total other income (expense)	(35)		(41)			Total other income (expense)	(26)		(35)

Income before income tax expense and equity income		216		202
Income tax expense		30		27
Equity income		19		16
Income before income tax expense (benefit) and equity income (loss)							Income before income tax expense (benefit) and equity income (loss)	247		216
Income tax expense (benefit)							Income tax expense (benefit)	39		30
Equity income (loss)							Equity income (loss)	32		19

Net income	Net income	205		191			Net income	240		205
Net income attributable to noncontrolling interests	Net income attributable to noncontrolling interests	111		102			Net income attributable to noncontrolling interests	118		111
Net income attributable to Eastern Energy Gas	Net income attributable to Eastern Energy Gas	$	94	$	89		Net income attributable to Eastern Energy Gas	$	122	$	94

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

~~144~~148

EASTERN ENERGY GAS HOLDINGS, LLC AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Unaudited)

(Amounts in millions)


		Three-Month Periods				Three-Month Periods
		Ended March 31,				Ended March 31,
		2022		2021				2023		2022

Net income	Net income	$	205	$	191		Net income	$	240	$	205

Other comprehensive income, net of tax:
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 $—	1		2			Unrecognized amounts on retirement benefits, net of tax of $— and $—	(1)		1

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 $1							Unrealized (losses) gains on cash flow hedges, net of tax of $(1) and $1	(2)		4
Total other comprehensive (loss) income, net of tax							Total other comprehensive (loss) income, net of tax	(3)		5

Comprehensive income	Comprehensive income	210		203			Comprehensive income	237		210
Comprehensive income attributable to noncontrolling interests	Comprehensive income attributable to noncontrolling interests	111		106			Comprehensive income attributable to noncontrolling interests	118		111
Comprehensive income attributable to Eastern Energy Gas	Comprehensive income attributable to Eastern Energy Gas	$	99	$	97		Comprehensive income attributable to Eastern Energy Gas	$	119	$	99

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

~~145~~149

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, December 31, 2020		$	2,957	$	(53)	$	4,091	$	6,995
Balance, December 31, 2021										Balance, December 31, 2021	$	3,501	$	(43)	$	4,036	$	7,494
Net income	Net income	89		—		102		191		Net income	94		—		111		205
Other comprehensive income	Other comprehensive income	—		8		4		12		Other comprehensive income	—		5		—		5

Contributions		11		—		—		11

Distributions	Distributions	(22)		—		(109)		(131)		Distributions	—		—		(114)		(114)

Balance, March 31, 2021		$	3,035	$	(45)	$	4,088	$	7,078
Balance, March 31, 2022										Balance, March 31, 2022	$	3,595	$	(38)	$	4,033	$	7,590

Balance, December 31, 2021		$	3,501	$	(43)	$	4,036	$	7,494
Balance, December 31, 2022										Balance, December 31, 2022	$	3,983	$	(42)	$	3,947	$	7,888
Net income	Net income	94		—		111		205		Net income	122		—		118		240
Other comprehensive income		—		5		—		5
Other comprehensive loss										Other comprehensive loss	—		(3)		—		(3)
Distributions										Distributions	(6)		—		(124)		(130)
Contributions										Contributions	10		—		—		10

Distributions		—		—		(114)		(114)

Balance, March 31, 2022		$	3,595	$	(38)	$	4,033	$	7,590
Balance, March 31, 2023										Balance, March 31, 2023	$	4,109	$	(45)	$	3,941	$	8,005

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

~~146~~150

EASTERN ENERGY GAS HOLDINGS, LLC AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)

(Amounts in millions)


		Three-Month Periods					Three-Month Periods
		Ended March 31,					Ended March 31,
		2022		2021			2023		2022
Cash flows from operating activities:	Cash flows from operating activities:					Cash flows from operating activities:
Net income	Net income	$	205	$	191	Net income	$	240	$	205
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	1		1
Depreciation and amortization	Depreciation and amortization	85		80		Depreciation and amortization	80		85
Allowance for equity funds	Allowance for equity funds	(2)		(2)		Allowance for equity funds	(2)		(2)
Equity income, net of distributions		(8)		(5)
Equity (income) loss, net of distributions						Equity (income) loss, net of distributions	(6)		(8)
Changes in regulatory assets and liabilities	Changes in regulatory assets and liabilities	(14)		6		Changes in regulatory assets and liabilities	(92)		(14)
Deferred income taxes	Deferred income taxes	27		30		Deferred income taxes	20		27
Other, net	Other, net	2		—		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	44		(56)		Trade receivables and other assets	40		40

Gas balancing activities						Gas balancing activities	19		4
Derivative collateral, net	Derivative collateral, net	2		2		Derivative collateral, net	1		2

Accrued property, income and other taxes	Accrued property, income and other taxes	(29)		(25)		Accrued property, income and other taxes	9		(29)

Accounts payable and other liabilities	Accounts payable and other liabilities	28		20		Accounts payable and other liabilities	7		28
Net cash flows from operating activities	Net cash flows from operating activities	341��		241		Net cash flows from operating activities	319		341

Cash flows from investing activities:	Cash flows from investing activities:					Cash flows from investing activities:
Capital expenditures	Capital expenditures	(75)		(55)		Capital expenditures	(59)		(75)

Repayment of loans by affiliates		3		—
Loans to affiliates		(117)		—
Repayment of notes by affiliates						Repayment of notes by affiliates	40		3
Notes to affiliates						Notes to affiliates	(134)		(117)

Other, net	Other, net	(5)		(1)		Other, net	(3)		(5)
Net cash flows from investing activities	Net cash flows from investing activities	(194)		(56)		Net cash flows from investing activities	(156)		(194)

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

Repayment of notes payable, net		—		(9)

Distributions		(114)		(109)

Distributions to noncontrolling interests						Distributions to noncontrolling interests	(124)		(114)

Net cash flows from financing activities	Net cash flows from financing activities	(114)		(118)		Net cash flows from financing activities	(124)		(114)

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	39		33
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	95		39
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	$	134	$	72

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

~~147~~151

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~~transmission systems 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.~~transmission system. Eastern Energy Gas is an indirect wholly owned subsidiary of Berkshire Hathaway Energy Company ("BHE"). BHE is a holding company based in Des Moines, Iowa that owns subsidiaries principally engaged in the energy industry. BHE is a consolidated subsidiary of Berkshire Hathaway Inc. ~~("Berkshire Hathaway").~~

The unaudited Consolidated Financial Statements have been prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP") for interim financial information and the United States Securities and Exchange Commission's rules and regulations for Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the disclosures required by GAAP for annual financial statements. Management believes the unaudited Consolidated Financial Statements contain all adjustments (consisting only of normal recurring adjustments) considered necessary for the fair presentation of the unaudited Consolidated Financial Statements as of March 31, ~~2022~~2023 and for the three-month periods ended March 31, ~~2022~~2023 and ~~2021.~~2022. The results of operations for the three-month period ended March 31, ~~2022~~2023 are not necessarily indicative of the results to be expected for the full year.

The preparation of the unaudited Consolidated Financial Statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the unaudited Consolidated Financial Statements and the reported amounts of revenue and expenses during the period. Actual results may differ from the estimates used in preparing the unaudited Consolidated Financial Statements. Note 2 of Notes to Consolidated Financial Statements included in Eastern Energy Gas' Annual Report on Form 10-K for the year ended December 31, ~~2021~~2022 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' accounting policies or its assumptions regarding significant accounting estimates ~~and policies~~ during the three-month period ended March 31, ~~2022.~~2023.

~~148~~152

(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,				March 31,		December 31,
		Depreciable Life	2022		2021			Depreciable Life	2023		2022
Utility Plant:
Utility plant:							Utility plant:

Interstate natural gas pipeline assets		21 - 44 years	$	8,776	$	8,675
Interstate natural gas transmission and storage assets							Interstate natural gas transmission and storage assets	21 - 52 years	$	9,053	$	8,922
Intangible plant	Intangible plant	5 - 10 years	110		110		Intangible plant	5 - 18 years	116		113
Utility plant in-service	Utility plant in-service		8,886		8,785		Utility plant in-service		9,169		9,035
Accumulated depreciation and amortization	Accumulated depreciation and amortization		(2,936)		(2,901)		Accumulated depreciation and amortization		(3,075)		(3,039)
Utility plant in-service, net	Utility plant in-service, net		5,950		5,884		Utility plant in-service, net		6,094		5,996

Nonutility Plant:
Nonutility plant:							Nonutility plant:

LNG facility	LNG facility	40 years	4,477		4,475		LNG facility	40 years	4,526		4,522
Intangible plant	Intangible plant	14 years	25		25		Intangible plant	14 years	25		25
Nonutility plant in-service			4,502		4,500
Nonutility plant							Nonutility plant		4,551		4,547
Accumulated depreciation and amortization	Accumulated depreciation and amortization		(454)		(423)		Accumulated depreciation and amortization		(574)		(542)
Nonutility plant in-service, net			4,048		4,077
Plant, net			9,998		9,961
Nonutility plant, net							Nonutility plant, net		3,977		4,005

									10,071		10,001
Construction work-in-progress	Construction work-in-progress		185		239		Construction work-in-progress		210		201
Property, plant and equipment, net	Property, plant and equipment, net		$	10,183	$	10,200	Property, plant and equipment, net		$	10,281	$	10,202

Construction work-in-progress includes ~~$151~~$192 million and ~~$209~~$181 million as of March 31, ~~2022~~2023 and December 31, ~~2021,~~2022, 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 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 transmission 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. In September 2022, a settlement agreement was filed with the FERC, which provided for increased service rates and decreased depreciation rates. Under the terms of the settlement agreement, EGTS' rates result in an increase to annual firm transmission and storage services revenues of approximately $160 million and a decrease in annual depreciation expense of approximately $30 million, compared to the rates in effect prior to April 1, 2022. EGTS' provision for rate refund for April 2022 through February 2023, including accrued interest, totaled $91 million. In November 2022, the FERC approved the settlement agreement and the rate refunds to customers were processed in late February 2023.

~~149~~153

~~(3)~~(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,			March 31,		December 31,
		2022		2021			2023		2022
Investments:	Investments:					Investments:
Investment funds	Investment funds	$	15	$	13	Investment funds	$	17	$	14

Equity method investments:	Equity method investments:					Equity method investments:
Iroquois	Iroquois	408		399		Iroquois	268		264

Total investments	Total investments	423		412		Total investments	285		278

Restricted cash and cash equivalents:	Restricted cash and cash equivalents:					Restricted cash and cash equivalents:
Customer deposits	Customer deposits	18		17		Customer deposits	31		30
Total restricted cash and cash equivalents	Total restricted cash and cash equivalents	18		17		Total restricted cash and cash equivalents	31		30

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	$	316	$	308

Reflected as:	Reflected as:					Reflected as:
Current assets	Current assets	$	18	$	17	Current assets	$	31	$	30
Noncurrent assets	Noncurrent assets	423		412		Noncurrent assets	285		278
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	$	316	$	308

Equity Method Investments

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

As of ~~both~~ March 31, ~~2022~~2023 and December 31, ~~2021,~~2022, 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~~$26 million and ~~$10~~$11 million for the three-month periods ended March 31, ~~2022~~2023 and ~~2021,~~2022, respectively.

~~150~~

Cash and Cash Equivalents and Restricted Cash and Cash Equivalents

Cash equivalents consist of funds invested in money market mutual funds, U.S. Treasury Bills and other investments with a maturity of three months or less when purchased. Cash and cash equivalents exclude amounts where availability is restricted by legal requirements, loan agreements or other contractual provisions. Restricted cash and cash equivalents consist of customer deposits as allowed under the FERC gas tariffs. A reconciliation of cash and cash equivalents and restricted cash and cash equivalents as presented inon 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,			March 31,		December 31,
		2022		2021			2023		2022

Cash and cash equivalents	Cash and cash equivalents	$	54	$	22	Cash and cash equivalents	$	103	$	65
Restricted cash and cash equivalents included in other current assets	Restricted cash and cash equivalents included in other current assets	18		17		Restricted cash and cash equivalents included in other current assets	31		30
Total cash and cash equivalents and restricted cash and cash equivalents	Total cash and cash equivalents and restricted cash and cash equivalents	$	72	$	39	Total cash and cash equivalents and restricted cash and cash equivalents	$	134	$	95

154

~~(4) Regulatory Matters~~

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

(5) Income Taxes

A reconciliation of the federal statutory income tax rate to the effective income tax rate applicable to income before income tax expense (benefit) is as follows:


		Three-Month Periods			Three-Month Periods
		Ended March 31,			Ended March 31,
			2022			2021			2023		2022

Federal statutory income tax rate	Federal statutory income tax rate		21	%		21	%	Federal statutory income tax rate	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	2		5

Equity interest	Equity interest		2			2		Equity interest	3		2
Effects of ratemaking	Effects of ratemaking		(4)			(1)		Effects of ratemaking	—		(4)

Noncontrolling interest	Noncontrolling interest		(11)			(11)		Noncontrolling interest	(10)		(11)

Other, net	Other, net		1			(1)		Other, net	—		1
Effective income tax rate	Effective income tax rate		14	%		13	%	Effective income tax rate	16	%	14	%

For the period ended March 31, ~~2022,~~2023, 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 $2 million and $3 million to the MidAmerican Energy Company Retirement Plan for the three-month periods ended March 31, 2023 and 2022, respectively, and $1 million to the MidAmerican Energy Company Welfare Benefit Plan for the three-month ~~period~~periods ended March 31, 2023 and 2022. Contributions related to these plans are reflected as net periodic benefit cost in operations and maintenance expense on the Consolidated Statements of Operations. Amounts attributable to Eastern Energy Gas were allocated from MidAmerican Energy in accordance with the intercompany administrative service agreement. Offsetting regulatory assets and liabilities have been recorded related to the amounts not yet recognized as a component of net periodic benefit costs that will be included in regulated rates. Net periodic benefit costs not included in regulated rates are included in accumulated other comprehensive loss, net. As of ~~both~~ March 31, ~~2022~~2023 and December 31, ~~2021,~~2022, 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~~$51 million.

(7) Fair Value Measurements

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

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

•Level 2 - Inputs include quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable for the asset or liability and inputs that are derived principally from or corroborated by observable market data by correlation or other means (market corroborated inputs).

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

~~152~~155

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 March 31, 2023:										As of March 31, 2023:
Assets:	Assets:									Assets:

Money market mutual funds	Money market mutual funds	$	28	$	—	$	—	$	28	Money market mutual funds	$	95	$	—	$	—	$	95
Equity securities:	Equity securities:									Equity securities:
Investment funds	Investment funds	15		—		—		15		Investment funds	17		—		—		17
		$	43	$	—	$	—	$	43		$	112	$	—	$	—	$	112

Liabilities:	Liabilities:									Liabilities:
Commodity derivatives		$	—	$	(2)	$	—	$	(2)

Foreign currency exchange rate derivatives	Foreign currency exchange rate derivatives	—		(3)		—		(3)		Foreign currency exchange rate derivatives	$	—	$	(20)	$	—	$	(20)

		$	—	$	(5)	$	—	$	(5)		$	—	$	(20)	$	—	$	(20)

As of December 31, 2021:
As of December 31, 2022:										As of December 31, 2022:
Assets:	Assets:									Assets:

Foreign currency exchange rate derivatives		$	—	$	3	$	—	$	3
Commodity derivatives										Commodity derivatives	$	—	$	1	$	—	$	1
Money market mutual funds										Money market mutual funds	42		—		—		42
Equity securities:	Equity securities:									Equity securities:
Investment funds	Investment funds	13		—		—		13		Investment funds	14		—		—		14
		$	13	$	3	$	—	$	16		$	56	$	1	$	—	$	57

Liabilities:	Liabilities:									Liabilities:

Foreign currency exchange rate derivatives	Foreign currency exchange rate derivatives	$	—	$	(3)	$	—	$	(3)	Foreign currency exchange rate derivatives	$	—	$	(20)	$	—	$	(20)

		$	—	$	(3)	$	—	$	(3)		$	—	$	(20)	$	—	$	(20)

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.

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~~156

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 March 31, 2023				As of December 31, 2022
	Carrying		Fair		Carrying		Fair
	Value		Value		Value		Value

Long-term debt	$	3,897	$	3,604	$	3,892	$	3,510

(8) Commitments and Contingencies

Environmental Laws and Regulations

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

Legal Matters

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

~~Environmental Laws and Regulations~~

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

(9) Revenue from Contracts with Customers

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


		Three-Month Periods			Three-Month Periods
		Ended March 31,			Ended March 31,
			2022			2021			2023		2022
Customer Revenue:	Customer Revenue:							Customer Revenue:
Regulated:	Regulated:							Regulated:
Gas transportation and storage			$	285		$	279
Wholesale			—			17
Gas transmission and storage								Gas transmission and storage	$	332	$	285

Other								Other	2		—
Total regulated	Total regulated		285			296		Total regulated	334		285

Nonregulated	Nonregulated		203			190		Nonregulated	217		203
Total Customer Revenue	Total Customer Revenue		488			486		Total Customer Revenue	551		488
Other revenue(1)	Other revenue(1)		(6)			—		Other revenue(1)	2		(6)
Total operating revenue	Total operating revenue		$	482		$	486	Total operating revenue	$	553	$	482

(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.

Eastern Energy Gas has recognized contract liabilities of $70 million and $80 million as of March 31, 2023 and December 31, 2022, respectively, due to the relationship between Eastern Energy Gas' performance and the customer's payment. Eastern Energy Gas recognizes revenue as it fulfills its obligations to provide services to its customers. During the three-month period ended March 31, 2023, Eastern Energy Gas recognized revenue of $22 million from the beginning contract liability balance.

~~154~~

157

Remaining Performance Obligations

The following table summarizes Eastern Energy Gas' revenue it expects to recognize in future periods related to significant unsatisfied remaining performance obligations for fixed contracts with expected durations in excess of one year as of March 31, ~~2022~~2023 (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	$	1,657	$	15,340	$	16,997

(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		$	(12)	$	(51)	$	10	$	(53)
Other comprehensive income (loss)		2		10		(4)		8
Balance, March 31, 2021		$	(10)	$	(41)	$	6	$	(45)

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		4		—		5
Balance, March 31, 2022	Balance, March 31, 2022	$	(5)	$	(38)	$	5	$	(38)	Balance, March 31, 2022	$	(5)	$	(38)	$	5	$	(38)

Balance, December 31, 2022										Balance, December 31, 2022	$	(1)	$	(43)	$	2	$	(42)
Other comprehensive loss										Other comprehensive loss	(1)		(2)		—		(3)
Balance, March 31, 2023										Balance, March 31, 2023	$	(2)	$	(45)	$	2	$	(45)

~~155~~158

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

The following is management's discussion and analysis of certain significant factors that have affected the consolidated financial condition and results of operations of Eastern Energy Gas during the periods included herein. This discussion should be read in conjunction with Eastern Energy Gas' historical Consolidated Financial Statements and Notes to Consolidated Financial Statements in Part I, Item 1 of this Form 10-Q. Eastern Energy Gas' actual results in the future could differ significantly from the historical results.

Results of Operations for the First Quarter of ~~2022~~2023 and ~~2021~~2022

Overview

Net income attributable to Eastern Energy Gas for the first quarter of ~~2022~~2023 was ~~$94~~$122 million, an increase of $5$28 million compared to ~~2021.~~2022. Net income increased primarily due to lower than estimated 2021 tax assessments of $10 million and lower interest expense of $8 million primarily due to the repayment of long-term debt in the second quarter of 2021. These increases were partially offset by lower marginshigher margin from EGTS' regulated gas ~~transportation~~transmission and storage operations of ~~$16~~$32 million and higher earnings from Iroquois due to ~~unfavorable natural gas prices~~favorable fixed negotiated rate agreements and ~~volumes.~~hedges, partially offset by higher operations and maintenance expenses.

Quarter Ended March 31, ~~2022~~2023 Compared to Quarter Ended March 31, ~~2021~~2022

Operating revenue ~~decreased $4~~increased $71 million, or 1%15%, for the first quarter of ~~2022~~2023 compared to ~~2021,~~2022, primarily due to an increase in regulated gas transmission and storage services revenues due to the settlement of EGTS' general rate case of $42 million, increased LNG revenues as a result of the timing of the release of contract liabilities from scheduled outage days in 2022 of $19 million, an increase in variable revenue related to park and loan activity of $10 million and derivative losses in 2022 of $7 million, partially offset by a net decrease in regulated gas ~~revenues for operational~~transmission and ~~system balancing purposes~~storage services revenues due to ~~decreased~~ volumes primarily from the expiration of ~~$17 million, partially offset by an increase~~the Appalachian Gateway Project contracts in ~~Cove Point liquefied natural gas variable revenue~~August 2022 of ~~$13~~$6 million.

~~Excess~~Cost of (excess) gas was an expense of $20 million for the first quarter of 2023 compared to a credit of $1 million for the first quarter of ~~2022,~~2022. The change is primarily from the unfavorable revaluation of the volumes retained prior to the effective date of the new fuel tracker, due to ~~a decrease in volumes sold of $14 million, partially offset by an unfavorable change in~~lower natural gas ~~prices of $9 million and increased volumes of $4 million.~~prices.

Operations and maintenance ~~decreased $6~~increased $25 million, or 5%21%, for the first quarter of ~~2022~~2023 compared to ~~2021,~~2022, primarily due to ~~a decrease~~higher corporate charges of $10 million, an increase in ~~postretirement benefit costs.~~salaries, wages and benefits of $6 million and an increase in Cove Point outside services of $4 million.

Depreciation and amortization ~~increased~~decreased $5 million, or 6%, for the first quarter of ~~2022~~2023 compared to ~~2021,~~2022, primarily due to the settlement of depreciation rates in EGTS' general rate case of $8 million, partially offset by higher plant placed ~~in-service.~~in-service of $3 million.

Property and other taxes ~~decreased $10~~increased $8 million, or ~~26%~~28%, for the first quarter of ~~2022~~2023 compared to ~~2021,~~2022, primarily due to lower ~~than estimated~~ 2021 tax ~~assessments.~~assessments that were finalized in 2022.

Interest ~~expense~~and dividend income ~~decreased~~$8increased $9 million ~~or 18%,~~ for the first quarter of ~~2022~~2023 compared to ~~2021,~~2022, primarily due to ~~the repayment of $500 million of long-term debt in the second quarter of 2021.~~higher outstanding borrowings and higher interest rates from BHE GT&S' intercompany revolving credit agreement with Eastern Energy Gas.

Income tax expense increased $3$9 million, or ~~11%~~30%, for the first quarter of ~~2022~~2023 compared to ~~2021~~2022, primarily due to higher pre-tax income. The effective tax rate was 16% for 2023 and 14% for 2022.

Equity income increased $13 million, or 68%, for the first quarter of 2023 compared to 2022, primarily due to higher earnings from Iroquois due to favorable fixed negotiated rate agreements and ~~13% for the first quarter of 2021.~~hedges.

Net income attributable to noncontrolling interests increased $9$7 million, or 9%6%, for the first quarter of ~~2022~~2023 compared to ~~2021,~~2022, primarily due to increased LNG revenues as a result of the timing of the release of contract liabilities from scheduled outage days in 2022, partially offset by an increase in Cove Point ~~liquefied natural gas variable revenue.~~outside services.

~~156~~159

Liquidity and Capital Resources

As of March 31, ~~2022,~~2023, Eastern Energy Gas' total net liquidity was ~~$454 million~~ as follows (in millions):


Cash and cash equivalents	$	54103

Intercompany revolving credit agreement	400





Total net liquidity	$	~~454~~503

Intercompany revolving credit agreement:
Maturity date	~~2022~~2024

Operating Activities

Net cash flows from operating activities for the three-month periods ended March 31, 2023 and 2022 ~~and 2021~~ were ~~$341~~$319 million and ~~$241~~$341 million, respectively. The change ~~was~~is primarily due to ~~increased cash receipts~~the repayment of EGTS rate refunds to customers, partially offset by the impacts from ~~receivables~~the rate increase in effect April 1, 2022 for the EGTS general rate case and other changes in working ~~capital adjustments.~~capital.

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 made for each payment date.

Investing Activities

Net cash flows from investing activities for the three-month periods ended March 31, 2023 and 2022 ~~and 2021~~ were ~~$(194)~~$(156) million and ~~$(56)~~$(194) million, respectively. The change ~~was~~is primarily due to an increase in repayments of loans by affiliates of $37 million and a decrease in capital expenditures of $16 million, partially offset by an increase in loans to its parent under an intercompany revolving credit agreement of ~~$117 million and an increase in capital expenditures of $20~~$17 million.

Financing Activities

Net cash flows from financing activities for the three-month period ended March 31, ~~2022~~2023 were ~~$(114) million. Uses of cash totaled $114~~$(124) million and consisted of distributions to noncontrolling interests from Cove Point.

Net cash flows from financing activities for the three-month period ended March 31, ~~2021~~2022 were ~~$(118) million. Uses of cash totaled $118~~$(114) million and consisted ~~primarily~~ of distributions to noncontrolling interests from Cove ~~Point of $109 million.~~Point.

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 transmission and storage and LNG export, import and storage industries.

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, new growth projects and the timing of growth projects; changes in environmental and other rules and regulations; impacts to ~~customers'~~customer rates; outcomes of regulatory proceedings; changes in income tax laws; general business conditions; system reliability standards; the cost and efficiency of construction labor, equipment and materials; commodity prices; and the cost and availability of capital.

~~157~~

160

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
Ended March 31, Forecast
2021 2022 2022
Natural gas transmission and storage $ 8 $ 7 $ 57
Other 47 68 319
Total $ 55 $ 75 $ 376


	Three-Month Periods				Annual
	Ended March 31,				Forecast
	2022		2023		2023

Natural gas transmission and storage	$	7	$	4	$	36
Other	68		55		390
Total	$	75	$	59	$	426

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

Material Cash Requirements

As of March 31, ~~2022,~~2023, 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.~~2022.

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 air quality, climate change, ~~RPS, air and water quality,~~ emissions performance standards, ~~hazardous and solid waste disposal, protected species~~water quality and other environmental matters that have the potential to impact ~~Eastern Energy Gas'~~its 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.~~2022. There have been no significant changes in Eastern Energy Gas' assumptions regarding critical accounting estimates since December 31, ~~2021.~~2022.

~~158~~161

Eastern Gas Transmission and Storage, Inc. and its subsidiaries

Consolidated Financial Section

162

PART I

Item 1.Financial Statements

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors of

Eastern Gas Transmission and Storage, Inc.

Results of Review of Interim Financial Information

We have reviewed the accompanying consolidated balance sheet of Eastern Gas Transmission and Storage, Inc. and subsidiaries ("EGTS") as of March 31, 2023, the related consolidated statements of operations, comprehensive income, changes in shareholder's equity and cash flows for the three-month periods ended March 31, 2023 and 2022, 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 EGTS as of December 31, 2022 and the related consolidated statements of operations, comprehensive income (loss), changes in equity, and cash flows for the year then ended (not presented herein); and in our report dated February 24, 2023 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, 2022, 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 EGTS' management. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to EGTS 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

May 5, 2023

163

EASTERN GAS TRANSMISSION AND STORAGE, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS (Unaudited)

(Amounts in millions)


	As of
	March 31,		December 31,
	2023		2022
ASSETS
Current assets:
Cash and cash equivalents	$	46	$	16
Restricted cash and cash equivalents	29		29
Trade receivables, net	84		113
Receivables from affiliates	13		13

Inventories	51		50

Prepayments and other deferred charges	34		36
Natural gas imbalances	62		193
Other current assets	12		30
Total current assets	331		480

Property, plant and equipment, net	4,604		4,504



Other assets	185		190

Total assets	$	5,120	$	5,174

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

164

EASTERN GAS TRANSMISSION AND STORAGE, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS (Unaudited) (continued)

(Amounts in millions, except share data)


	As of
	March 31, 2023		December 31, 2022
LIABILITIES AND SHAREHOLDER'S EQUITY
Current liabilities:
Accounts payable	$	30	$	46
Accounts payable to affiliates	5		5
Accrued interest	23		7
Accrued property, income and other taxes	59		71
Accrued employee expenses	19		13
Notes payable to affiliates	13		36
Regulatory liabilities	21		109
Customer and security deposits	29		29
Asset retirement obligations	22		25
Other current liabilities	31		32
Total current liabilities	252		373

Long-term debt	1,582		1,582
Regulatory liabilities	517		518
Other long-term liabilities	102		101
Total liabilities	2,453		2,574

Commitments and contingencies (Note 8)

Shareholder's equity:
Common stock - 75,000 shares authorized, $10,000 par value, 60,101 issued and outstanding	609		609
Additional paid-in capital	1,282		1,275
Retained earnings	805		746
Accumulated other comprehensive loss, net	(29)		(30)
Total shareholder's equity	2,667		2,600

Total liabilities and shareholder's equity	$	5,120	$	5,174

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

165

EASTERN GAS TRANSMISSION AND STORAGE, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)

(Amounts in millions)


	Three-Month Periods
	Ended March 31,
	2023		2022

Operating revenue	$	278	$	223

Operating expenses:
Cost of (excess) gas	20		(3)
Operations and maintenance	99		84
Depreciation and amortization	37		43
Property and other taxes	14		9

Total operating expenses	170		133

Operating income	108		90

Other income (expense):
Interest expense	(18)		(17)

Allowance for equity funds	1		1


Total other income (expense)	(17)		(16)

Income before income tax expense (benefit)	91		74
Income tax expense (benefit)	23		19
Net income	$	68	$	55

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

166

EASTERN GAS TRANSMISSION AND STORAGE, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Unaudited)

(Amounts in millions)


	Three-Month Periods
	Ended March 31,
	2023		2022

Net income	$	68	$	55

Other comprehensive income, net of tax:
Unrealized gains on cash flow hedges, net of tax of $— and $—	1		1

Total other comprehensive income, net of tax	1		1
Comprehensive income	$	69	$	56

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

167

EASTERN GAS TRANSMISSION AND STORAGE, INC. AND SUBSIDIARIES

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

(Amounts in millions, except shares)


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

Balance, December 31, 2021	60,101	$	609	$	1,241	$	721	$	(31)	$	2,540
Net income	—	—		—		55		—		55
Other comprehensive income	—	—		—		—		1		1



Balance, March 31, 2022	60,101	$	609	$	1,241	$	776	$	(30)	$	2,596

Balance, December 31, 2022	60,101	$	609	$	1,275	$	746	$	(30)	$	2,600
Net income	—	—		—		68		—		68
Other comprehensive income	—	—		—		—		1		1
Dividends declared	—	—		—		(9)		—		(9)
Contributions	—	—		7		—		—		7

Balance, March 31, 2023	60,101	$	609	$	1,282	$	805	$	(29)	$	2,667

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

168

EASTERN GAS TRANSMISSION AND STORAGE, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)

(Amounts in millions)


	Three-Month Periods
	Ended March 31,
	2023		2022
Cash flows from operating activities:
Net income	$	68	55
Adjustments to reconcile net income to net cash flows from operating activities:


Depreciation and amortization	37		43
Allowance for equity funds	(1)		(1)

Changes in regulatory assets and liabilities	(85)		(6)
Deferred income taxes	8		13
Other, net	1		3
Changes in other operating assets and liabilities:
Trade receivables and other assets	42		37
Receivables from affiliates	—		(9)
Gas balancing activities	17		(1)

Accrued property, income and other taxes	(15)		(18)
Accounts payable and other liabilities	21		20
Accounts payable to affiliates	—		(8)
Net cash flows from operating activities	93		128

Cash flows from investing activities:
Capital expenditures	(37)		(53)




Other, net	(3)		(3)
Net cash flows from investing activities	(40)		(56)

Cash flows from financing activities:



Repayment of notes payable to affiliates, net	(23)		(68)






Net cash flows from financing activities	(23)		(68)



Net change in cash and cash equivalents and restricted cash and cash equivalents	30		4
Cash and cash equivalents and restricted cash and cash equivalents at beginning of period	45		26
Cash and cash equivalents and restricted cash and cash equivalents at end of period	$	75	$	30

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

169

EASTERN GAS TRANSMISSION AND STORAGE, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

(1) General

Eastern Gas Transmission and Storage, Inc. and its subsidiaries ("EGTS") conduct business activities consisting of Federal Energy Regulatory Commission ("FERC")-regulated interstate natural gas transmission systems and underground storage. EGTS' operations include transmission assets located in Maryland, New York, Ohio, Pennsylvania, Virginia and West Virginia. EGTS also operates one of the nation's largest underground natural gas storage systems located in New York, Pennsylvania and West Virginia. EGTS is a wholly owned subsidiary of Eastern Energy Gas Holdings, LLC ("Eastern Energy Gas"), which 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.

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, 2023 and for the three-month periods ended March 31, 2023 and 2022. The results of operations for the three-month period ended March 31, 2023 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 EGTS' Annual Report on Form 10-K for the year ended December 31, 2022 describes the most significant accounting policies used in the preparation of the unaudited Consolidated Financial Statements. There have been no significant changes in EGTS' accounting policies or its assumptions regarding significant accounting estimates during the three-month period ended March 31, 2023.

(2) Property, Plant and Equipment, Net

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


		As of
		March 31,		December 31,
	Depreciable Life	2023		2022

Interstate natural gas transmission and storage assets	28 - 50 years	$	6,842	$	6,724
Intangible plant	12 - 20 years	80		79
Plant in-service		6,922		6,803
Accumulated depreciation and amortization		(2,465)		(2,440)
		4,457		4,363










Construction work-in-progress		147		141
Property, plant and equipment, net		$	4,604	$	4,504

170

(3) Regulatory Matters

(4) Investments and Restricted Cash and Cash Equivalents

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


	As of
	March 31,		December 31,
	2023		2022
Investments:
Investment funds	$	17	$	14


Restricted cash and cash equivalents:
Customer deposits	29		29
Total restricted cash and cash equivalents	29		29

Total investments and restricted cash and cash equivalents	$	46	$	43

Reflected as:
Current assets	$	29	$	29
Noncurrent assets	17		14
Total investments and restricted cash and cash equivalents	$	46	$	43

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 tariff. A reconciliation of cash and cash equivalents and restricted cash and cash equivalents as presented on 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,
	2023		2022

Cash and cash equivalents	$	46	$	16
Restricted cash and cash equivalents	29		29
Total cash and cash equivalents and restricted cash and cash equivalents	$	75	$	45

171

(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 (benefit) is as follows:


	Three-Month Periods
	Ended March 31,
	2023		2022

Federal statutory income tax rate	21	%	21	%
State income tax, net of federal income tax benefit	4		5













Effective income tax rate	25	%	26	%

(6) Employee Benefit Plans

EGTS 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 EGTS. EGTS contributed $2 million and $3 million to the MidAmerican Energy Company Retirement Plan for the three-month periods ended March 31, 2023 and 2022, respectively, and $1 million to the MidAmerican Energy Company Welfare Benefit Plan for the three-month period ended March 31, 2022. Contributions related to these plans are reflected as net periodic benefit cost in operations and maintenance expense on the Consolidated Statements of Operations. Amounts attributable to EGTS 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. As of March 31, 2023 and December 31, 2022, EGTS' amount due to MidAmerican Energy associated with these plans and reflected in other long-term liabilities on the Consolidated Balance Sheets was $47 million.

(7) Fair Value Measurements

The carrying value of EGTS' cash, certain cash equivalents, receivables, payables, accrued liabilities and short-term borrowings approximates fair value because of the short-term maturity of these instruments. EGTS 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 EGTS has the ability to access at the measurement date.

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

172

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


	Input Levels for Fair Value Measurements
	Level 1		Level 2		Level 3		Total
As of March 31, 2023:
Assets:

Money market mutual funds	$	40	$	—	$	—	$	40
Equity securities:
Investment funds	17		—		—		17
	$	57	$	—	$	—	$	57







As of December 31, 2022:
Assets:
Commodity derivatives	$	—	$	1	$	—	$	1

Money market mutual funds	8		—		—		8
Equity securities:
Investment funds	14		—		—		14
	$	22	$	1	$	—	$	23

EGTS' 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.

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

EGTS' long-term debt is carried at cost on the Consolidated Financial Statements. The fair value of EGTS' 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 following table presents the carrying value and estimated fair value of EGTS' long-term debt (in millions):


	As of March 31, 2023				As of December 31, 2022
	Carrying Value		Fair Value		Carrying Value		Fair Value

Long-term debt	$	1,582	$	1,393	$	1,582	$	1,337

173

(8) Commitments and Contingencies

Environmental Laws and Regulations

Legal Matters

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

(9) Revenue from Contracts with Customers

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


	Three-Month Periods
	Ended March 31,
	2023		2022
Customer Revenue:
Regulated:
Gas transmission	$	191	$	165
Gas storage	67		47

Other	2		—
Total regulated	260		212
Management service and other revenues	17		18
Total Customer Revenue	277		230
Other revenue(1)	1		(7)
Total operating revenue	$	278	$	223

Remaining Performance Obligations

The following table summarizes EGTS' 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, 2023 (in millions):


	Performance obligations expected to be satisfied
	Less than 12 months		More than 12 months		Total

EGTS	$	746	$	3,390	$	4,136

174

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

Results of Operations for the First Quarter of 2023 and 2022

Overview

Net income for the first quarter of 2023 was $68 million, an increase of $13 million, or 24%, compared to 2022. Net income increased primarily due to higher margin from regulated gas transmission and storage operations of $32 million and a decrease due to lower depreciation rates due to the settlement in EGTS' general rate case, partially offset by higher operations and maintenance expenses, lower 2021 tax assessments finalized in 2022 and an increase in income tax expense primarily due to higher pre-tax income.

Quarter Ended March 31, 2023 Compared to Quarter Ended March 31, 2022

Operating revenue increased $55 million, or 25%, for the first quarter of 2023 compared to 2022, primarily due to an increase in regulated gas transmission and storage services revenues due to the settlement of EGTS' general rate case of $42 million, an increase in variable revenue related to park and loan activity of $10 million and derivative losses in 2022 of $7 million, partially offset by a net decrease in regulated gas transmission and storage services revenues due to volumes primarily from the expiration of the Appalachian Gateway Project contracts in August 2022 of $6 million.

Cost of (excess) gas was an expense of $20 million for the first quarter of 2023 compared to a credit of $3 million for the first quarter of 2022. The change is primarily from the unfavorable revaluation of the volumes retained prior to the effective date of the new fuel tracker, due to lower natural gas prices.

Operations and maintenance increased $15 million, or 18%, for the first quarter of 2023 compared to 2022, primarily due to higher corporate charges of $6 million and an increase in salaries, wages and benefits of $5 million.

Depreciation and amortization decreased $6 million, or 14%, for the first quarter of 2023 compared to 2022, primarily due to the settlement of deprecation rates in EGTS' general rate case of $8 million, partially offset by higher plant placed in-service of $2 million.

Property and other taxes increased $5 million, or 56%, for the first quarter of 2023 compared to 2022, primarily due to lower 2021 tax assessments that were finalized in 2022.

Income tax expense increased $4 million, or 21%, for the first quarter of 2023 compared to 2022, primarily due to higher pre-tax income. The effective tax rate was 25% for 2023 and 26% for 2022.

175

Liquidity and Capital Resources

As of March 31, 2023, EGTS' total net liquidity was as follows (in millions):


Cash and cash equivalents	$	46

Intercompany revolving credit agreement	400
Less:
Notes payable to affiliates	13

Net intercompany revolving credit agreement	387

Total net liquidity	$	433

Intercompany credit agreement:
Maturity date	2024

Operating Activities

Net cash flows from operating activities for the three-month periods ended March 31, 2023 and 2022 were $93 million and $128 million, respectively. The change is primarily due to the repayment of EGTS rate refunds to customers, partially offset by the impacts from the rate increase in effect April 1, 2022 for the EGTS general rate case and other changes in working capital.

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

Investing Activities

Net cash flows from investing activities for the three-month periods ended March 31, 2023 and 2022 were $(40) million and $(56) million, respectively. The change is primarily due to a decrease in capital expenditures of $16 million.

Financing Activities

Net cash flows from financing activities for the three-month period ended March 31, 2023 were $(23) million and consisted of net repayment of notes payable to Eastern Energy Gas.

Net cash flows from financing activities for the three-month period ended March 31, 2022 were $(68) million and consisted of net repayment of notes payable to Eastern Energy Gas.

Future Uses of Cash

EGTS 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, 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 EGTS has access to external financing depends on a variety of factors, including regulatory approvals, EGTS' credit ratings, investors' judgment of risk and conditions in the overall capital markets, including the condition of the natural gas transmission and storage 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, new growth projects and the timing of growth projects; changes in environmental and other rules and regulations; impacts to customer rates; outcomes of regulatory proceedings; changes in income tax laws; general business conditions; system reliability standards; the cost and efficiency of construction labor, equipment and materials; commodity prices; and the cost and availability of capital.

176

EGTS' 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
	Ended March 31,				Forecast
	2022		2023		2023

Natural gas transmission and storage	$	6	$	3	$	27
Other	47		34		225
Total	$	53	$	37	$	252

Natural gas transmission and storage includes primarily growth capital expenditures related to planned regulated projects. Other includes primarily pipeline integrity work, automation and controls upgrades, underground storage, corrosion control, unit exchanges, compressor modifications and projects related to Pipeline Hazardous Materials Safety Administration natural gas storage rules. The amounts also include EGTS' asset modernization program, which includes projects for vintage pipeline replacement, compression replacement, pipeline assessment and underground storage integrity.

Material Cash Requirements

As of March 31, 2023, there have been no material changes in cash requirements from the information provided in Item 7 of EGTS' Annual Report on Form 10-K for the year ended December 31, 2022.

Regulatory Matters

EGTS 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 EGTS' current regulatory matters.

Environmental Laws and Regulations

EGTS is subject to federal, state and local laws and regulations regarding air quality, climate change, emissions performance standards, water quality and other environmental matters that have the potential to impact its 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. EGTS 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 EGTS 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, impairment of long-lived assets and income taxes. For additional discussion of EGTS' critical accounting estimates, see Item 7 of EGTS' Annual Report on Form 10-K for the year ended December 31, 2022. There have been no significant changes in EGTS' assumptions regarding critical accounting estimates since December 31, 2022.

177

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.~~2022. Each Registrant's exposure to market risk and its management of such risk has not changed materially since December 31, ~~2021.~~2022. 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 76 of the Notes to Consolidated Financial Statements of Sierra Pacific in Part I, Item 1 of this Form 10-Q for disclosure of the respective Registrant's derivative positions as of March 31, ~~2022.~~2023.

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 and Eastern Gas Transmission and Storage, Inc. carried out separate evaluations, under the supervision and with the participation of each such entity's management, including its Chief Executive Officer (principal executive officer) and its Chief Financial Officer (principal financial officer), or persons performing similar functions, of the effectiveness of the design and operation of its disclosure controls and procedures (as defined in Rule 13a-15(e) promulgated under the Securities Exchange Act of 1934, as amended). Based upon these evaluations, management of each such entity, including its Chief Executive Officer (principal executive officer) and its Chief Financial Officer (principal financial officer), or persons performing similar functions, in each case, concluded that the disclosure controls and procedures for such entity were effective to ensure that information required to be disclosed by such entity in the reports that it files or submits under the Securities Exchange Act of 1934, as amended, is recorded, processed, summarized and reported within the time periods specified in the United States Securities and Exchange Commission's rules and forms, and is accumulated and communicated to its management, including its Chief Executive Officer (principal executive officer) and its Chief Financial Officer (principal financial officer), or persons performing similar functions, in each case, as appropriate to allow timely decisions regarding required disclosure by it. Each such entity hereby states that there has been no change in its internal control over financial reporting during the quarter ended March 31, ~~2022~~2023 that has materially affected, or is reasonably likely to materially affect, its internal control over financial reporting.

~~159~~178

PART II

Item 1.Legal Proceedings

Berkshire Hathaway Energy and PacifiCorp

Multiple lawsuits, complaints and demands alleging similar claims totaling approximately $8.0 billion have been filed in Oregon and California related to the 2020 Wildfires. Multiple complaints have also been filed in California for the 2022 McKinney fire. Generally, the complaints filed in California do not specify damages sought. 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 9 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 9 of the Notes to Consolidated Financial Statements of PacifiCorp in Part I, Item 1 of this Form 10-Q.

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,~~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 Complex, 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. In January 2023, the Oregon Court of Appeals denied PacifiCorp's request for appeal. In February 2023, the plaintiffs filed a motion to amend the complaint to add punitive damages in an unspecified amount. On March 23, 2023, the plaintiffs filed an amended complaint seeking punitive damages with permission of the Circuit Court. Plaintiffs seek punitive damages at a five times multiplier to the amount of compensatory damages awarded. On April 24, 2023, the jury trial began in Multnomah County Circuit Court.

On August 20, 2021, a complaint against PacifiCorp was filed, captioned Shylo Salter et al. v. PacifiCorp, Case No. ~~21cv33595,~~21CV33595, Multnomah County, Oregon, in which two complaints, Case No. ~~21cv09339~~21CV09339 and Case No. ~~21cv09520,~~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,~~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~~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.

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

179

~~PacifiCorp~~

On March 17, 2022, a complaint against PacifiCorp was filed, captioned Roseburg Resources Co et al. v. PacifiCorp, Case No. 22CV09346, Circuit Court, Douglas County, Oregon. The complaint was filed by nine businesses and public pension plans that own and/or operate timberlands or possess property in Douglas County who allege damages, losses and injuries associated with their timberlands as a result of the French Creek, ~~Fire, the~~ Archie Creek, ~~Fire, the~~ Susan Creek ~~Fire~~ and ~~the~~ Smith Springs Road ~~Fire~~fires 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:~~damages as amended: (i) economic and property damages in excess of ~~$175~~$195 million under a determination of negligence or inverse condemnation; (ii) doubling of those economic damages to in excess of ~~$350~~$390 million under a determination of gross negligence pursuant to Oregon statutes; (iii) all costs of the lawsuit; (iv) prejudgment interest of $43 million and post-judgment interest as allowed by law; and (v) attorneys' fees of $105 million and other costs.

In May 2022, the Multnomah County 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.

On August 26, 2022, a putative class action complaint seeking declaratory and equitable relief against PacifiCorp was filed, captioned Margaret Dietrich et al. v. PacifiCorp, Case No. 22CV29187, Circuit Court, Multnomah County, Oregon. The complaint was filed by two Oregon residents individually and on behalf of a class initially defined to include residents of, business owners in, real or personal property owners in and any other individuals physically present in specified Oregon counties as of September 7, 2020 who experienced any harm, damage or loss as a result of the Santiam, Beachie Creek, Lionshead, Echo Mountain Complex, Two Four Two or South Obenchain fires in September 2020. The complaint was amended on September 6, 2022, to seek damages of over $900 million that were originally demanded on August 4, 2022, pursuant to Oregon Rule of Civil Procedure 32 H. The amended complaint alleges: (i) negligence due to alleged failure to comply with certain Oregon statutes and administrative rules; (ii) gross negligence due to alleged conscious indifference to or reckless disregard for the probable consequences of defendant's actions or inactions; (iii) private nuisance; (iv) public nuisance; (v) trespass; (vi) inverse condemnation; (vii) accounting/injunction; (viii) negligent infliction of emotional distress. The amended complaint seeks the following: (i) an order certifying the matter as a class action; (ii) economic damages not less than $400 million; (iii) double the amount of economic and property damages to the extent applicable under Oregon statute; (iv) reasonable costs of reforestation activities; (v) doubling and trebling of certain other damages to the extent applicable under certain Oregon statutes; (vi) noneconomic damages not less than $500 million; (vii) prejudgment interest; (viii) an order requiring an accounting with respect to the amount of damages; (ix) an order enjoining PacifiCorp from leaving power lines energized in areas of Oregon experiencing extremely critical fire conditions; (x) an award of reasonable attorney fees, costs, investigation costs, disbursements and expert witness fees; and (xi) other relief the court finds appropriate. The plaintiffs and proposed class demand a trial by jury. On December 19, 2022, the Dietrich case was consolidated into Jeanyne James et al. v. PacifiCorp et al., Case No. 20CV33885 (described above) and is currently stayed.

On September 1, 2022, a complaint against PacifiCorp was filed, captioned Martin Klinger et al. v. PacifiCorp, Case No. 22CV29674, Multnomah County, Oregon ("Klinger"). The complaint was filed by Oregon residents or Oregon property owners who allege damages resulting from the September 2020 Echo Mountain Complex fires. The allegations made and damages sought are described below.

On September 1, 2022, a complaint against PacifiCorp was filed, captioned Jeremiah E. Bowen et al. v. PacifiCorp, Case No. 22CV29681, Multnomah County, Oregon ("Bowen"). The complaint was filed by Oregon residents, occupants and real and personal property owners who allege injuries and damages resulting from the September 2020 Echo Mountain Complex fires. The allegations made and damages sought are described below.

On September 1, 2022, a complaint against PacifiCorp was filed, captioned James Weathers et al. v. PacifiCorp, Case No. 22CV29683, Multnomah County, Oregon ("Weathers"). The complaint was filed by Oregon residents, occupants and real and personal property owners who allege injuries and damages resulting from the September 2020 Echo Mountain Complex fires. The allegations made and damages sought are described below.

On September 6, 2022, a complaint against PacifiCorp was filed, captioned Blair Barnholdt et al. v. PacifiCorp, Case No. 22CV30097, Multnomah County, Oregon ("Barnholdt"). The complaint was filed by Oregon residents or Oregon property owners who allege damages resulting from the September 2020 Echo Mountain Complex fires. The allegations made and damages sought are described below.

~~160~~180

On September 7, 2022, a complaint against PacifiCorp was filed, captioned Estate of Nancy Darlene Hunter, et al. v. PacifiCorp, Case No. 22CV30214, Multnomah County, Oregon ("Hunter"). The complaint was filed by Oregon residents, occupants and real and personal property owners who allege injuries and damages resulting from the September 2020 Echo Mountain Complex fires. The allegations made and damages sought are described below.

On September 7, 2022, a complaint against PacifiCorp was filed, captioned Willard K. Pratt et al. v. PacifiCorp, Case No. 22CV30217, Multnomah County, Oregon ("Pratt"). The complaint was filed by Oregon residents, occupants and real and personal property owners who allege injuries and damages resulting from the September 2020 Echo Mountain Complex fires. The allegations made and damages sought are described below.

On September 7, 2022, a complaint against PacifiCorp was filed, captioned April Thompson et al. v. PacifiCorp, Case No. 22CV30451, Multnomah County, Oregon ("Thompson"). The complaint was filed by Oregon residents, occupants and real and personal property owners who allege injuries and damages resulting from the September 2020 Echo Mountain Complex fires. The allegations made and damages sought are described below.

The Klinger, Bowen, Weathers, Barnholdt, Hunter, Pratt and Thompson cases are in the process of being consolidated with Sparkset al. v. PacifiCorp, Case No. 21CV48022 ("Sparks")and Russieet al. v. PacifiCorp, Case No. 22CV15840 ("Russie") into Ashley Andersen et al. v. PacifiCorp, Case No. 21CV36567 ("Andersen"). The Klinger, Bowen, Weathers, Barnholdt, Pratt and Thompson complaints each allege: (i) negligence due in part to alleged failure to comply with certain Oregon statutes and administrative rules, including those issued by the OPUC; (ii) gross negligence alleged in the form of willful, wanton and reckless disregard of known risks to the public; (iii) trespass; (iv) nuisance; and (v) inverse condemnation. The Klinger, Bowen, Weathers, Barnholdt, Pratt and Thompson complaints each seek the following damages: (i) economic and property related damages of $83 million; (ii) doubling of those economic and property related damages to $167 million to the extent eligible for doubling of damages under the specified Oregon statute; (iii) non-economic damages to the plaintiffs' persons in an amount not less than $83 million for physical injury, mental suffering, emotional distress and other damages; (iv) loss of wages, loss of earnings capacity, evacuation expenses, displacement expenses and similar damages; (v) attorneys' fees and other costs; and (vii) pre-judgment interest. The plaintiffs for each Klinger, Bowen, Weathers, Barnholdt, Pratt and Thompson request a trial by jury and have reserved their right to amend the complaint to add a claim for punitive damages. The Hunter complaint seeks $50 million in damages and alleges claims for: (i) negligence, (ii) trespass, (iii), nuisance, (iv) inverse condemnation, and (v) wrongful death. The Andersen case was filed by 50 individuals as amended in August 2022 seeking $250 million in economic and noneconomic damages, as well as claims for statutory doubling or trebling of damages, attorneys' fees and other costs and pre-judgment interest. The Sparks case was filed by 17 individuals in December 2021 claiming $125 million in economic and noneconomic damages, as well as claims for statutory doubling or trebling of damages, attorneys' fees and other costs and pre- judgment interest. The Russie case was filed by 45 individuals as amended in September 2022 seeking $250 million in economic and noneconomic damages, as well as claims for statutory doubling or trebling of damages, attorneys' fees and other costs and pre-judgment interest.

On September 1, 2022, a complaint against PacifiCorp was filed, captioned Aaron Macy-Wyngarden et al. v. PacifiCorp, Case No. 22CV29684, Multnomah County, Oregon ("Macy-Wyngarden"). The complaint was filed by Oregon residents or Oregon property owners who allege injuries and damages resulting from the September 2020 Beachie Creek, Santiam Canyon, Lionshead and Riverside fires. The allegations made and damages sought are described below.

On September 22, 2022, a complaint against PacifiCorp was filed, captioned Zachary Bogle et al. v. PacifiCorp, Case No. 22CV29717, Multnomah County, Oregon ("Bogle"). The complaint was filed by Oregon residents who allege injuries and damages resulting from the September 2020 Beachie Creek, Santiam Canyon, Lionshead and Riverside fires. The allegations made and damages sought are described below.

The Macy-Wyngarden and Bogle complaints each allege: (i) negligence due in part to alleged failure to comply with certain Oregon statutes and administrative rules, including those issued by the OPUC; (ii) gross negligence alleged in the form of willful, wanton and reckless disregard of known risks to the public; (iii) trespass; (iv) nuisance; and (v) inverse condemnation. The Macy-Wyngarden and Bogle complaints each seek the following damages: (i) economic and property related damages of $83 million; (ii) doubling of those economic and property related damages to $167 million to the extent eligible for doubling of damages under the specified Oregon statute; (iii) non-economic damages to the plaintiffs' persons in an amount not less than $83 million for physical injury, mental suffering, emotional distress and other damages; (iv) loss of wages, loss of earnings capacity, evacuation expenses, displacement expenses and similar damages; (v) attorneys' fees and other costs; and (vii) pre-judgment interest. The plaintiffs for each Macy-Wyngarden and Bogle request a trial by jury and have reserved their right to amend the complaint to add a claim for punitive damages.

181

On September 2, 2022, a complaint against PacifiCorp was filed, captioned Logan et al. v. PacifiCorp, Case No. 22CV29859, Multnomah County, Oregon ("Logan"). The Logan complaint was filed by Oregon residents or Oregon property owners who allege injuries and damages resulting from the September 2020 Echo Mountain Complex fires. The Logan case is in the process of being consolidated with Cady et al. v. PacifiCorp, Case No. 22CV13946 ("Cady") into Jeanyne James et al. v. PacifiCorp et al., Case No. 20CV33885 (described above). The Logan and Cady complaints each allege: (i) negligence; (ii) trespass; (iii) nuisance, and (iv) inverse condemnation. The Logan case was filed by five individuals claiming $10 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. The Cady case was filed by 21 individuals as amended in April 2022 claiming $10 million in economic and noneconomic damages, as well as claims for statutory doubling or trebling of damages, attorneys' fees and other costs and pre-judgment interest.

On October 14, 2022, the Multnomah County Circuit Court consolidated 21st Century Centennial Insurance Company, et al. v. PacifiCorp, Case No. 22CV26326 ("21st Century") and Allstate Vehicle and Property Insurance Company, et al. v. PacifiCorp, Case No. 22CV29976 into Jeanyne James et al. v. PacifiCorp et al., Case No. 20CV33885 (described above). The 21st Century and Allstate complaints were each filed by subrogated insurance carriers alleging claims of (i) negligence, (ii) gross negligence, and (iii) inverse condemnation resulting from the September 2020 Santiam Canyon, Echo Mountain Complex, 242, and South Obenchain fires. The 21st Century case was filed in August 2022 by 177 insurance carriers seeking $20 million in damages. The Allstate case was filed in September 2022 by 11 insurance carriers seeking $40 million in damages.

On October 17, 2022, the Multnomah County Circuit Court consolidated Michael Bell, et al. v. PacifiCorp, Case No. 22CV30450 ("Bell") into Jeanyne James et al. v. PacifiCorp et al., Case No. 20CV33885 (described above). The Bell case was filed in Oregon Circuit Court in Multnomah County, Oregon on September 7, 2022, by 59 plaintiffs seeking $35 million in damages for claims of (i) negligence, (ii) trespass, (iii) nuisance, and (iv) inverse condemnation.

On October 19, 2022, the Multnomah County Circuit Court consolidated Freres Timber, Inc. v. PacifiCorp, Case No. 22CV29694 ("Freres") into Jeanyne James et al. v. PacifiCorp et al., Case No. 20CV33885 (described above). The Freres case was filed in Oregon Circuit Court in Multnomah County, Oregon on September 1, 2022, by one plaintiff and seeks $40 million for claims of (i) negligence, (ii) gross negligence, and (iii) inverse condemnation.

On November 1, 2022, three complaints were filed against PacifiCorp, captioned Moore et al. v. PacifiCorp, No. 22CV37302; Blodgett et al. v. PacifiCorp, No. 22CV37306; and Ellis et al. v. PacifiCorp, No. 22CV37304. Three additional cases were filed December 5, 2022, captioned Tague et al. v. PacifiCorp, No. 22CV41242; Long, et al. v. PacifiCorp, No. 22CV41283; and Moyers et al. v. PacifiCorp, No. 22CV41293. On January 6, 2023, an additional complaint was filed against PacifiCorp captioned Meyer et al. v. PacifiCorp, No. 23CV00748. On January 17, 2023, seven additional cases were filed, captioned Foster et al. v. PacifiCorp, No. 23CV02142; Hall et al. v. PacifiCorp, No. 23CV02184; Joneset al. v. PacifiCorp, No. 23CV02110; Price et al. v. PacifiCorp, No. 23CV02175; Minottet al. v. PacifiCorp, No. 23CV02203; Webbet al. v. PacifiCorp, No. 23CV02202; and Keithet al. v. PacifiCorp, No. 23CV02200. On January 24, 2023, three additional cases were filed captioned Kiddet al. v. PacifiCorp, No. 23CV03318; Parkeret al. v. PacifiCorp, No. 23CV03317; and Diazet al. v. PacifiCorp, No. 23CV03313. These complaints were filed in Circuit Courts, Douglas County and Multnomah County, Oregon with substantially similar allegations as those of the Roseburg Resources Co case with the exception that certain of the complaints do not allege inverse condemnation. On February 9, 2023, in an oral ruling, the Circuit Court ordered these seventeen cases consolidated for trial as to certain specified issues, along with the above mentioned Roseburg Resources Co case; the precise scope of the trial will be determined in a later order. Collectively, these eighteen cases seek in excess of $1,300 million in damages, inclusive of the $573 million Roseburg Resources Co case. On February 14, 2023, the Circuit Court ordered that all plaintiffs' claims for inverse condemnation be dismissed; a written order is forthcoming.

On December 6, 2022, CW Specialty Lumber, Inc., et al. v. PacifiCorp, Case No. 22CV41640 ("CW Specialty") was filed in Oregon Circuit Court in Multnomah County, Oregon by two plaintiffs seeking $28.6 million in damages for claims of (i) negligence, (ii) gross negligence, (iii) trespass, and (iv) inverse condemnation. The CW Specialty case is in the process of being consolidated into Jeanyne James et al. v. PacifiCorp et al., Case No. 20CV33885 (described above).

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.2022.

Item 2.Unregistered Sales of Equity Securities and Use of Proceeds

Not applicable.

182

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~~183


Exhibit No.			Description

BERKSHIRE HATHAWAY ENERGY


~~4.1~~10.1			~~Seventeenth Supplemental Indenture,~~First Amending Agreement to the Credit Agreement, dated April 27, 2021, among AltaLink Investments, L.P., as ~~of April~~ ~~21, 2022, by and between Berkshire Hathaway Energy Company and The~~borrower, AltaLink Investment Management Ltd., as general partner, Royal Bank of ~~New York Mellon Trust Company, N.A.,~~Canada, as ~~trustee, relating to the 4.600% Senior Notes due 2053~~administrative agent, and Lenders ~~(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~~10.2			~~Trust Deed,~~Second Amending Agreement to the Credit Agreement, dated ~~as of~~ April 1,27, 2022, among ~~Northern Powergrid (Northeast) plc~~AltaLink Investments, L.P., as borrower, AltaLink Investment Management Ltd., as general partner, Royal Bank of Canada, as administrative agent, and ~~HSBC Corporate Trustee Company (UK) Limited, relating~~Lenders.

10.3			Third Amending Agreement to the ~~£350,000,000 in principal amount~~Credit Agreement, dated April 27, 2023, among AltaLink Investments, L.P., as borrower, AltaLink Investment Management Ltd., as general partner, Royal Bank of ~~the 3.250% Bonds due 2052.~~Canada, as administrative agent, and Lenders.

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


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.

184


Exhibit No.			Description

MIDAMERICAN FUNDING


31.7			Principal Executive Officer Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.8			Principal Financial Officer Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32.7			Principal Executive Officer Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

32.8			Principal Financial Officer Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

~~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.

SIERRA PACIFIC


~~10.1~~			~~$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.~~

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.

EASTERN ENERGY GAS


10.4			Amended and Restated $400,000,000 Inter-Company Credit Agreement, dated as of March 1 , 2023, by and between BHE GT&S, LLC and Eastern Energy Gas Holdings, LLC.

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.

185


Exhibit No.			Description

EASTERN GAS TRANSMISSION AND STORAGE


10.5			Amended and Restated $400,000,000 Inter-Company Credit Agreement, dated as of March 1, 2023, by and between Eastern Energy Gas Holdings, LLC and Eastern Gas Transmission and Storage, Inc.

10.6			Amended and Restated $400,000,000 Inter-Company Credit Agreement, dated as of March 1, 2023, by and between Eastern Gas Transmission and Storage, Inc. and Eastern Energy Gas Holdings, LLC.

31.15			Principal Executive Officer Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.16			Principal Financial Officer Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32.15			Principal Executive Officer Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

32.16			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, ~~2022,~~2023, 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~~186

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, each registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


			BERKSHIRE HATHAWAY ENERGY COMPANY

Date: ~~April 29, 2022~~May 5, 2023			/s/ Calvin D. Haack
			Calvin D. Haack
			Senior Vice President and Chief Financial Officer
			(principal financial and accounting officer)

			PACIFICORP

Date: ~~April 29, 2022~~May 5, 2023			/s/ Nikki L. Kobliha
			Nikki L. Kobliha
			Vice President, Chief Financial Officer and Treasurer
			(principal financial and accounting officer)

			MIDAMERICAN FUNDING, LLC
			MIDAMERICAN ENERGY COMPANY

Date: ~~April 29, 2022~~May 5, 2023			/s/ Thomas B. Specketer
			Thomas B. Specketer
			Vice President and Controller
			of MidAmerican Funding, LLC and
			Vice President and Chief Financial Officer
			of MidAmerican Energy Company
			(principal financial and accounting officer)

			NEVADA POWER COMPANY

Date: ~~April 29, 2022~~May 5, 2023			/s/ Michael ~~E. Cole~~J. Behrens
			Michael ~~E. Cole~~J. Behrens
			~~Senior~~ Vice President and Chief Financial Officer ~~and Treasurer~~
			(principal financial and accounting officer)

			SIERRA PACIFIC POWER COMPANY

Date: ~~April 29, 2022~~May 5, 2023			/s/ Michael ~~E. Cole~~J. Behrens
			Michael ~~E. Cole~~J. Behrens
			~~Senior~~ Vice President and Chief Financial Officer ~~and Treasurer~~
			(principal financial and accounting officer)

			EASTERN ENERGY GAS HOLDINGS, LLC

Date: ~~April 29, 2022~~May 5, 2023			/s/ Scott C. Miller
			Scott C. Miller
			Vice President, Chief Financial Officer and Treasurer
			(principal financial and accounting officer)

			EASTERN GAS TRANSMISSION AND STORAGE, INC.

Date: May 5, 2023			/s/ Scott C. Miller
			Scott C. Miller
			Vice President, Chief Financial Officer and Treasurer
			(principal financial and accounting officer)

~~164~~187


Item 1.	Legal Proceedings	~~160~~179
Item 1A.	Risk Factors	~~161~~182
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	~~161~~182
Item 3.	Defaults Upon Senior Securities	~~161~~183
Item 4.	Mine Safety Disclosures	~~161~~183
Item 5.	Other Information	~~161~~183
Item 6.	Exhibits	~~161~~183
Signatures		~~164~~187