10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

[X] Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the quarterly period ended September 30, 2005

or

[ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the transition period from _________to _________

Commission	Exact name of registrant as specified in its charter	IRS Employer
File Number	State or other jurisdiction of incorporation or organization	Identification No.
333-90553	MIDAMERICAN FUNDING, LLC	47-0819200
	(An Iowa Limited Liability Company)
	666 Grand Avenue, PO Box 657
	Des Moines, Iowa 50303
333-15387	MIDAMERICAN ENERGY COMPANY	42-1425214
	(An Iowa Corporation)
	666 Grand Avenue, PO Box 657
	Des Moines, Iowa 50303
(515) 242-4300
(Registrant’s telephone number, including area code)
(Former name, former address and former fiscal year, if changed since last report)

Indicate by check mark whether the registrants (1) have 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 registrants were required to file such reports), and (2) have been subject to such filing requirements for the past 90 days. Yes T No o

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

Yes o No T

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

Yes ¨ No T

As of October 21, 2005, all of the member’s equity of MidAmerican Funding, LLC was held by its parent company, MidAmerican Energy Holdings Company.

As of October 21, 2005, all 70,980,203 outstanding shares of MidAmerican Energy Company’s voting stock were held by its parent company, MHC Inc., a direct, wholly owned subsidiary of MidAmerican Funding, LLC.

MidAmerican Funding, LLC (“MidAmerican Funding”) and MidAmerican Energy Company (“MidAmerican Energy”) separately file this combined Form 10-Q. Information relating to each individual registrant is filed by such registrant on its own behalf. Except for its subsidiary, MidAmerican Energy makes no representation as to information relating to any other subsidiary of MidAmerican Funding.

TABLE OF CONTENTS

PART I - FINANCIAL INFORMATION

Item 1.	Financial Statements	3
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	23
Item 3	Quantitative and Qualitative Disclosures About Market Risk	39
Item 4.	Controls and Procedures	39
PART II - OTHER INFORMATION
Item 1.	Legal Proceedings	40
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	40
Item 3.	Defaults Upon Senior Securities	40
Item 4.	Submission of Matters to a Vote of Security Holders	40
Item 5.	Other Information	40
Item 6.	Exhibits	40
Signatures		41
Exhibit Index		42

2

PART I - FINANCIAL INFORMATION

Item 1.   Financial Statements.

MidAmerican Energy Company and Subsidiary
Report of Independent Registered Public Accounting Firm	4
Consolidated Balance Sheets	5
Consolidated Statements of Operations	6
Consolidated Statements of Cash Flows	7
Notes to Consolidated Financial Statements	8
MidAmerican Funding, LLC and Subsidiaries
Report of Independent Registered Public Accounting Firm	15
Consolidated Balance Sheets	16
Consolidated Statements of Operations	17
Consolidated Statements of Cash Flows	18
Notes to Consolidated Financial Statements	19

3

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Shareholder

MidAmerican Energy Company

Des Moines, Iowa

We have reviewed the accompanying consolidated balance sheet of MidAmerican Energy Company and subsidiary (the “Company”) as of September 30, 2005, and the related consolidated statements of operations for the three-month and nine-month periods ended September 30, 2005 and 2004, and of cash flows for the nine-month periods ended September 30, 2005 and 2004. These interim financial statements are the responsibility of the Company's management.

We conducted our reviews in accordance with the standards of the Public Company Accounting Oversight Board (United States). 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 Public Company Accounting Oversight Board (United States), 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.

Based on our reviews, we are not aware of any material modifications that should be made to such consolidated interim financial statements for them 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), the consolidated balance sheet and statement of capitalization (not presented herein) of MidAmerican Energy Company and subsidiary as of December 31, 2004, and the related consolidated statements of operations, comprehensive income, retained earnings, and cash flows for the year then ended (not presented herein); and in our report dated February 25, 2005, 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, 2004 is fairly stated, in all material respects, in relation to the consolidated balance sheet from which it has been derived.

/s/ Deloitte & Touche LLP

Des Moines, Iowa

October 21, 2005

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MIDAMERICAN ENERGY COMPANY AND SUBSIDIARY

CONSOLIDATED BALANCE SHEETS

(In thousands)

	As of
	September 30,			December 31,
	2005			2004
	(Unaudited)
ASSETS
Utility Plant, Net
Electric	$	5,827,892		$	5,498,878
Gas		985,495			957,011
		6,813,387			6,455,889
Accumulated depreciation and amortization		(3,096,128	)		(2,956,856	)
		3,717,259			3,499,033
Construction work in progress		516,789			369,406
		4,234,048			3,868,439
Current Assets
Cash and cash equivalents		47,488			88,113
Short-term investments		-			39,500
Receivables, net		240,001			332,759
Inventories		92,371			89,646
Other		127,338			22,080
		507,198			572,098
Investments and Nonregulated Property, Net		356,554			333,360
Regulatory Assets		223,981			227,997
Other Assets		123,680			110,057
Total Assets	$	5,445,461		$	5,111,951
CAPITALIZATION AND LIABILITIES
Capitalization
Common shareholder’s equity	$	1,694,587		$	1,527,468
MidAmerican Energy preferred securities		30,329			30,329
Long-term debt, excluding current portion		1,171,796			1,331,509
		2,896,712			2,889,306
Current Liabilities
Current portion of long-term debt		160,135			91,018
Accounts payable		233,690			241,836
Taxes accrued		84,073			70,810
Interest accrued		21,857			13,842
Other		100,538			83,949
		600,293			501,455
Other Liabilities
Deferred income taxes		478,510			486,970
Investment tax credits		45,007			48,143
Asset retirement obligations		176,603			166,845
Regulatory liabilities		839,922			677,489
Other		408,414			341,743
		1,948,456			1,721,190
Total Capitalization and Liabilities	$	5,445,461		$	5,111,951

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

5

MIDAMERICAN ENERGY COMPANY AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands)

	Three Months						Nine Months
	Ended September 30,						Ended September 30,
	2005			2004			2005			2004
				(Unaudited)
Operating Revenues
Regulated electric	$	467,586		$	391,751		$	1,127,434		$	1,099,310
Regulated gas		181,228			117,190			858,671			684,430
Nonregulated		72,843			56,312			209,158			195,416
		721,657			565,253			2,195,263			1,979,156
Operating Expenses
Regulated:
Cost of fuel, energy and capacity		145,600			91,474			336,950			304,387
Cost of gas sold		145,641			82,490			699,594			526,707
Other operating expenses		94,060			93,656			279,844			276,209
Maintenance		32,996			36,018			104,810			110,412
Depreciation and amortization		77,102			71,618			214,150			221,685
Property and other taxes		23,555			22,220			71,237			69,999
		518,954			397,476			1,706,585			1,509,399
Nonregulated:
Cost of sales		67,981			48,416			188,058			170,861
Other		4,518			4,102			12,225			12,826
		72,499			52,518			200,283			183,687
Total operating expenses		591,453			449,994			1,906,868			1,693,086
Operating Income		130,204			115,259			288,395			286,070
Non-Operating Income
Interest and dividend income		939			1,130			3,344			2,360
Other income		9,783			6,920			22,305			16,838
Other expense		(1,403	)		(699	)		(3,155	)		(2,775	)
		9,319			7,351			22,494			16,423
Fixed Charges
Interest on long-term debt		18,769			16,516			58,086			51,141
Other interest expense		2,100			1,393			5,959			4,109
Allowance for borrowed funds		(3,199	)		(2,205	)		(7,771	)		(5,404	)
		17,670			15,704			56,274			49,846
Income Before Income Taxes		121,853			106,906			254,615			252,647
Income Taxes		39,485			40,748			83,684			93,031
Net Income		82,368			66,158			170,931			159,616
Preferred Dividends		312			312			935			933
Earnings on Common Stock	$	82,056		$	65,846		$	169,996		$	158,683

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

6

MIDAMERICAN ENERGY COMPANY AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

	Nine Months
	Ended September 30,
	2005			2004
	(Unaudited)
Net Cash Flows From Operating Activities
Net income	$	170,931		$	159,616
Adjustments to reconcile net income to net cash provided:
Depreciation and amortization		215,130			222,625
Deferred income taxes and investment tax credit, net		(13,204	)		78,782
Amortization of other assets and liabilities		20,014			5,001
Impact of changes in working capital:
Receivables, net		103,701			95,717
Inventories		(2,725	)		(12,185	)
Accounts payable		(10,941	)		(33,219	)
Taxes accrued		13,263			(49,374	)
Other current assets and liabilities		16,303			28,916
Other, net		(2,890	)		(753	)
Net cash provided by operating activities		509,582			495,126
Net Cash Flows From Investing Activities
Utility construction expenditures		(497,411	)		(345,730	)
Quad Cities Station decommissioning trust fund		(6,224	)		(6,224	)
Purchases of available-for-sale securities		(133,518	)		-
Proceeds from sales of available-for-sale securities		173,018			-
Other, net		1,287			17
Net cash used in investing activities		(462,848	)		(351,937	)
Net Cash Flows From Financing Activities
Dividends paid		(935	)		(933	)
Retirement of long-term debt, including reacquisition cost		(90,851	)		(56,021	)
Reacquisition of preferred securities		-			(1,430	)
Net decrease in notes payable		-			(48,000	)
Other		4,427			275
Net cash used in financing activities		(87,359	)		(106,109	)
Net Increase (Decrease) in Cash and Cash Equivalents		(40,625	)		37,080
Cash and Cash Equivalents at Beginning of Period		88,113			3,151
Cash and Cash Equivalents at End of Period	$	47,488		$	40,231
Supplemental Disclosure:
Interest paid, net of amounts capitalized	$	45,126		$	41,757
Income taxes paid	$	67,384		$	45,124

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

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MIDAMERICAN ENERGY COMPANY AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

1. General

The consolidated financial statements included herein have been prepared by MidAmerican Energy Company (“MidAmerican Energy”), without audit, pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to such rules and regulations. In the opinion of MidAmerican Energy, all adjustments, consisting of normal recurring adjustments, have been made to present fairly the financial position, the results of operations and the changes in cash flows for the periods presented. Prior year amounts have been reclassified to a basis consistent with the current year presentation, including the reclassification of auction rate securities. All significant intercompany transactions have been eliminated. Although MidAmerican Energy believes that the disclosures are adequate to make the information presented not misleading, it is suggested that these financial statements be read in conjunction with the consolidated financial statements and the notes thereto included in MidAmerican Energy’s latest Annual Report on Form

10-K.

The accompanying Consolidated Balance Sheet as of December 31, 2004, reflects a $39.5 million reclassification of instruments used in MidAmerican Energy’s cash management program from Cash and Cash Equivalents to Short-Term Investments. This reclassification is to present auction rate securities as short-term investments rather than as cash equivalents due to the stated maturities of these investments. These instruments are classified as available-for-sale securities as management does not intend to hold them to maturity nor are they bought and sold with the objective of generating profits on short-term differences in price. The carrying value of these instruments approximates their fair value.

MidAmerican Energy is a public utility with electric and natural gas operations and is the principal subsidiary of MHC Inc. (“MHC”). MHC is a direct, wholly owned subsidiary of MidAmerican Funding, LLC (“MidAmerican Funding”), whose sole member is MidAmerican Energy Holdings Company.

2. New Accounting Pronouncements

In March 2005, the Financial Accounting Standards Board (“FASB”) issued FASB Interpretation No. 47, “Accounting for Conditional Asset Retirement Obligations, an interpretation of FASB Statement No. 143” (“FIN 47”). FIN 47 clarifies that the term conditional asset retirement obligation as used in Statement of Financial Accounting Standards No. 143, “Accounting for Asset Retirement Obligations,” refers to a legal obligation to perform an asset retirement activity in which the timing and/or method of settlement are conditional on a future event that may or may not be within the control of the entity. Accordingly, an entity is required to recognize a liability for the fair value of a conditional asset retirement obligation if the fair value of the liability can be reasonably estimated. Uncertainty about the timing and/or method of settlement of a conditional asset retirement obligation should be factored into the measurement of the liability when sufficient information exists. FIN 47 also clarifies when an entity would have sufficient information to reasonably estimate the fair value of an asset retirement obligation. MidAmerican Energy and MidAmerican Funding are required to adopt the provisions of FIN 47 by December 2005. Adoption of FIN 47 is not expected to have a material effect on MidAmerican Energy’s or MidAmerican Funding’s financial position, results of operations or cash flows.

3. Commitments and Contingencies

(a) Air Quality

MidAmerican Energy’s generating facilities are subject to applicable provisions of the Clean Air Act and related air quality standards promulgated by the United States Environmental Protection Agency (“EPA”). The Clean Air Act provides the framework for regulation of certain air emissions and permitting and monitoring associated with those emissions. MidAmerican Energy believes it is in material compliance with current air quality requirements.

The EPA has in recent years implemented more stringent national ambient air quality standards for ozone and new standards for fine particulate matter. These standards set the minimum level of air quality that must be met throughout the United States. Areas that achieve the standards, as determined by ambient monitoring, are characterized as being in attainment of the standard. Areas that fail to meet the standard are designated as being nonattainment areas. Generally, once an area has been designated as a nonattainment area, sources of emissions in the area that contribute to the failure to achieve the ambient air quality standards are required to make emissions reductions. The EPA has concluded that the entire state of Iowa is in attainment of the ozone standards and the fine particulate matter standards.

8

On March 10, 2005, the EPA released the final Clean Air Interstate Rule (“CAIR”), calling for reductions of sulfur dioxide (“SO₂”) and nitrogen oxides (“NO_x”) in the eastern United States through a market-based cap and trade system. While the state of Iowa has been determined to be in attainment of the ozone and fine particulate standards, Iowa has been found to significantly contribute to nonattainment of the fine particulate standard in Cook County, Illinois; Lake County, Indiana; Madison County, Illinois; St. Clair County, Illinois; and Marion County, Indiana. The EPA has also concluded that emissions from Iowa significantly contribute to ozone nonattainment in Kenosha and Sheboygan counties in Wisconsin and Macomb County, Michigan. Under the final CAIR, the first phase reductions of SO₂ emissions are effective on January 1, 2010, with the second phase reductions effective January 1, 2015. For NO_x, the first phase emissions reductions are effective January 1, 2009, and the second phase reductions are effective January 1, 2015. The CAIR calls for overall reductions of SO₂ and NO_x in Iowa of 68% and 67%, respectively, by 2015. The CAIR will impact MidAmerican Energy’s generating facilities and will require MidAmerican Energy to either reduce emissions from those facilities through the installation of emission controls or purchase additional emission allowances, or some combination thereof.

On March 15, 2005, the EPA released the final Clean Air Mercury Rule (“CAMR”). The CAMR utilizes a market-based cap and trade mechanism to reduce mercury emissions from coal-burning power plants from the current nationwide level of 48 tons to 15 tons at full implementation. The CAMR’s two-phase reduction program requires initial reductions of mercury emission in 2010 and an overall reduction in mercury emissions from coal-burning power plants of 70% by 2018. The CAMR will impact MidAmerican Energy’s coal-burning generating facilities and will require MidAmerican Energy to either reduce emissions from those facilities through the installation of emission controls or purchase additional emission allowances, or some combination thereof.

The CAIR or the CAMR could, in whole or in part, be superseded or made more stringent by one of a number of multi-pollutant emission reduction proposals currently under consideration at the federal level, including the “Clear Skies Initiative,” and other pending legislative proposals that contemplate 70% to 90% reductions of SO₂, NO_X and mercury, as well as possible new federal regulation of carbon dioxide and other gases that may affect global climate change. In addition to any federal legislation that could be enacted by Congress to supersede the CAIR and the CAMR, the rules could be changed or overturned as a result of litigation. Both the CAIR and CAMR have been legally challenged in the United States District Court for the District of Columbia. Until the court makes a determination regarding the merits of the challenges to the CAIR and CAMR, the full impact of the rules on MidAmerican Energy cannot be determined.

MidAmerican Energy has implemented a planning process that forecasts the site-specific controls and actions that may be required to meet emissions reductions as promulgated by the EPA. In accordance with an Iowa law passed in 2001, MidAmerican Energy has on file with the Iowa Utilities Board (“IUB”) its current multi-year plan and budget for managing SO₂ and NO_X from its generating facilities in a cost-effective manner. The plan, which is required to be updated every two years, provides specific actions to be taken at each coal-fired generating facility and the related costs and timing for each action. On July 17, 2003, the IUB issued an order that affirmed an administrative law judge’s approval of the initial plan filed April 1, 2002, as amended. On October 4, 2004, the IUB issued an order approving MidAmerican Energy’s second biennial plan as revised in a settlement MidAmerican Energy entered into with the Iowa Office of Consumer Advocate (“OCA”). That plan covers the time period from April 1, 2004 through December 31, 2006. Neither IUB order resulted in any changes to electric rates for MidAmerican Energy. The effect of the orders is to approve the prudence of expenditures made consistent with the plans. Pursuant to an unrelated rate settlement agreement approved by the IUB on October 17, 2003, if prior to January 1, 2011, capital and operating expenditures to comply with environmental requirements cumulatively exceed $325 million, then MidAmerican Energy may seek to recover the additional expenditures from customers. Based on a review of the final CAIR and CAMR, MidAmerican Energy does not expect the qualified expenditures to exceed $325 million through January 1, 2011.

Under the existing New Source Review (“NSR”) provisions of the Clean Air Act, a utility is required to obtain a permit from the EPA or a state regulatory agency prior to (1) beginning construction of a new major stationary source of an NSR-regulated pollutant or (2) making a physical or operational change to an existing facility that potentially increases emissions, unless the changes are exempt under the regulations (including routine maintenance, repair and replacement of equipment). In general, projects subject to NSR regulations are subject to pre-construction review and permitting under the Prevention of Significant Deterioration (“PSD”) provisions of the Clean Air Act. Under the PSD program, a project that emits threshold levels of regulated pollutants must undergo a Best Available Control Technology analysis and evaluate the most effective emissions controls. These controls must be installed in order to receive a permit. Violations of NSR regulations, which may be alleged by the EPA, states, and environmental groups, among others, potentially subject a utility to material expenses for fines and other sanctions and remedies including requiring installation of enhanced pollution controls and funding supplemental environmental projects.

9

In recent years, the EPA has requested from several utilities information and support regarding their capital projects for various generating plants. The requests were issued as part of an industry-wide investigation to assess compliance with the NSR and the New Source Performance Standards of the Clean Air Act. In December 2002 and April 2003, MidAmerican Energy received requests from the EPA to provide documentation related to its capital projects from January 1, 1980, to April 2003 for a number of its generating plants. MidAmerican Energy has submitted information to the EPA in responses to these requests, and there are currently no outstanding data requests pending from the EPA. MidAmerican Energy cannot predict the outcome of these requests at this time.

In 2002 and 2003, the EPA proposed various changes to its NSR rules that clarify what constitutes routine repair, maintenance and replacement for purposes of triggering NSR requirements. These changes have been subject to legal challenge and, until such time as the legal challenges are resolved and the rules are effective, MidAmerican Energy will continue to manage projects at its generating plants in accordance with the rules in effect prior to 2002. On October 13, 2005, the EPA proposed a rule that would change its NSR permitting program for existing power plants and opened a 60-day public comment period. The impact of these proposed changes on MidAmerican Energy cannot be determined until after the rule is finalized and implemented.

(b) Nuclear Decommissioning Costs

Expected nuclear decommissioning costs for Quad Cities Station have been developed based on a site-specific decommissioning study that includes decontamination, dismantling, site restoration, dry fuel storage cost and an assumed shutdown date. Quad Cities Station nuclear decommissioning costs are included in base rates in MidAmerican Energy’s Iowa tariffs.

MidAmerican Energy’s share of estimated decommissioning costs for Quad Cities Station as of September 30, 2005 and December 31, 2004, was $160.8 million and $154.2 million, respectively, and is reflected in Asset Retirement Obligations on the Consolidated Balance Sheet. Refer to Note (14) of MidAmerican Energy’s most recently filed Form 10-K for a discussion of asset retirement obligations. MidAmerican Energy has established trusts for the investment of funds for decommissioning the Quad Cities Station. The fair value of the assets held in the trusts as of September 30, 2005 and December 31, 2004, was $225.3 million and $207.5 million, respectively, and is reflected in Investments and Nonregulated Property, Net on the Consolidated Balance Sheets.

(c) Manufactured Gas Plant Facilities

The EPA and the state environmental agencies have determined that contaminated wastes remaining at decommissioned manufactured gas plant facilities may pose a threat to the public health or the environment if such contaminants are in sufficient quantities and at such concentrations as to warrant remedial action.

MidAmerican Energy has evaluated all known properties that were, at one time, sites of gas manufacturing plants for which it may be a potentially responsible party. The purpose of these evaluations was to determine whether waste materials are present, whether the materials constitute a health or environmental risk, and whether MidAmerican Energy has any responsibility for remedial action. MidAmerican Energy has actively worked with the regulatory agencies and has received regulatory closure on fourteen sites. MidAmerican Energy is continuing to work with the agencies to obtain regulatory closure on an additional ten sites.

MidAmerican Energy estimates the range of possible costs for investigation, remediation and monitoring for the sites discussed above to be approximately $4 million to $8 million. As of September 30, 2005 and December 31, 2004, MidAmerican Energy had recorded a liability of $4.8 million and $9.3 million, respectively, for these sites and a corresponding regulatory asset for future recovery through the regulatory process. MidAmerican Energy projects that these amounts will be incurred or paid within the next two years.

10

The estimated liability is determined through a site-specific cost evaluation process. The estimate includes incremental direct costs of remediation, site monitoring costs and costs of compensation to employees for time expected to be spent directly on the remediation effort. The estimated recorded liabilities for these properties are based upon preliminary data. Thus, actual costs could vary significantly from the estimates. The estimate could change materially based on facts and circumstances derived from site investigations, changes in required remedial action and changes in technology relating to remedial alternatives. Insurance recoveries have been received for some of the sites under investigation. Those recoveries are intended to be used principally for accelerated remediation, as specified by the IUB and are recorded as a regulatory liability.

Although the timing of potential incurred costs and recovery of such costs in rates may affect the results of operations in individual periods, management believes that the outcome of these issues will not have a material adverse effect on MidAmerican Energy’s financial position, results of operations or cash flows.

4. Rate Matters

Under three settlement agreements between MidAmerican Energy, the OCA and other intervenors approved by the IUB, MidAmerican Energy has agreed not to seek a general increase in electric rates prior to 2012 unless, beginning in 2006, its Iowa jurisdictional electric return on equity for any year falls below 10%. Prior to filing for a general increase in electric rates, MidAmerican Energy is required to conduct 30 days of good faith negotiations with the signatories to the settlement agreements to attempt to avoid a general increase in such rates. As a party to the settlement agreements, the OCA has agreed not to request or support any decrease in MidAmerican Energy’s Iowa electric rates prior to January 1, 2012. The settlement agreements specifically allow the IUB to approve or order electric rate design or cost of service rate changes that could result in changes to rates for specific customers as long as such changes do not result in an overall increase in revenues for MidAmerican Energy. The settlement agreements also each provide that portions of revenues associated with Iowa retail electric returns on equity within specified ranges will be recorded as a regulatory liability.

Under the first settlement agreement, which was approved by the IUB on December 21, 2001, and is effective through December 31, 2005, an amount equal to 50% of revenues associated with returns on equity between 12% and 14%, and 83.33% of revenues associated with returns on equity above 14%, in each year is recorded as a regulatory liability. The second settlement agreement, which was filed in conjunction with MidAmerican Energy’s application for ratemaking principles on its wind power project and was approved by the IUB on October 17, 2003, provides that during the period January 1, 2006 through December 31, 2010, an amount equal to 40% of revenues associated with returns on equity between 11.75% and 13%, 50% of revenues associated with returns on equity between 13% and 14%, and 83.3% of revenues associated with returns on equity above 14%, in each year will be recorded as a regulatory liability.

The third settlement agreement was approved by the IUB on January 31, 2005, in conjunction with MidAmerican Energy’s proposed expansion of its wind power project by up to 90 megawatts (“MW”). This settlement extended through 2011 MidAmerican Energy’s commitment not to seek a general increase in electric rates unless its Iowa jurisdictional electric return on equity falls below 10%. It also extended the revenue sharing mechanism through 2011, and the OCA agreed to commit not to seek any decrease in Iowa electric base rates to become effective before January 1, 2012. The total capacity to be added as the result of the wind expansion project is currently projected to be 50 MW.

The regulatory liabilities created by the three settlement agreements are recorded as a regulatory charge in depreciation and amortization expense when the liability is accrued. Additionally, interest expense is accrued on the portion of the regulatory liability balance recorded in prior years. The regulatory liabilities created for the years through 2010 are expected to be reduced as they are credited against plant in service associated with generating plant additions. As a result of the credit applied to generating plant balances from the reduction of the regulatory liabilities, future depreciation will be reduced. As of September 30, 2005 and December 31, 2004, the related regulatory liability reflected on the Consolidated Balance Sheets was $222.1 million and $181.2 million, respectively. The regulatory liability accrued for 2011, if any, will be credited to customer bills in 2012.

Illinois bundled electric rates are frozen until 2007, subject to certain exceptions allowing for increases, at which time bundled rates may be increased or decreased by the ICC. Illinois law provides that, through 2006, Illinois earnings above a computed level of return on common equity are to be shared equally between regulated retail electric customers and MidAmerican Energy. MidAmerican Energy’s computed level of return on common equity is based on a rolling two-year average of the Monthly Treasury Long-Term Average Rate, as published by the Federal Reserve System, plus a premium of 8.5% for 2000 through 2004 and a premium of 12.5% for 2005 and 2006. The two-year average above which sharing must occur for 2005 is 15.41%, which reflects a blend of the premiums for 2004 and 2005. The law allows MidAmerican Energy to mitigate the sharing of earnings above the threshold return on common equity through accelerated recovery of electric assets.

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5. Retirement Plans

MidAmerican Energy sponsors a noncontributory defined benefit pension plan covering substantially all employees of MidAmerican Energy Holdings Company and its domestic energy subsidiaries. MidAmerican Energy also sponsors certain postretirement health care and life insurance benefits covering substantially all retired employees of MidAmerican Energy Holdings Company and its domestic energy subsidiaries. Non-union employees hired after June 30, 2004, are not eligible for postretirement benefits other than pensions. Net periodic benefit cost for the pension, including supplemental retirement, and postretirement benefit plans of MidAmerican Energy and the aforementioned affiliates included the following components for the three months and nine months ended September 30, (in thousands):

	Three Months						Nine Months
	Ended September 30,						Ended September 30,
	2005			2004			2005			2004
Pension
Components of net periodic benefit cost:
Service cost	$	6,459		$	6,312		$	19,817		$	19,256
Interest cost		9,539			8,696			27,942			26,463
Expected return on plan assets		(10,239	)		(9,444	)		(29,293	)		(28,816	)
Amortization of net transition balance		-			(196	)		-			(597	)
Amortization of prior service cost		740			690			2,089			2,070
Amortization of prior year loss		193			392			960			1,177
Net periodic benefit cost	$	6,692		$	6,450		$	21,515		$	19,553
Postretirement
Components of net periodic benefit cost:
Service cost	$	1,786		$	1,992		$	5,081		$	6,057
Interest cost		3,074			3,992			10,251			12,139
Expected return on plan assets		(2,680	)		(2,143	)		(7,322	)		(6,517	)
Amortization of net transition balance		603			834			1,831			2,536
Amortization of prior service cost		-			75			-			229
Amortization of prior year loss		342			838			1,184			2,547
Net periodic benefit cost	$	3,125		$	5,588		$	11,025		$	16,991

MidAmerican Energy expects to contribute $6.6 million and $15.8 million in 2005 to its pension and postretirement plans, respectively. For the nine months ended September 30, 2005, $4.3 million and $12.1 million of contributions were made to the pension and postretirement plans, respectively.

6. Segment Information

MidAmerican Energy has identified four reportable operating segments based principally on management structure. The generation segment derives most of its revenue from the sale of regulated and nonregulated wholesale electricity and natural gas. The energy delivery segment derives its revenue principally from the sale and delivery of regulated retail electricity and natural gas, while the transmission segment obtains most of its revenue from the sale of electric transmission capacity. The unregulated retail services segment receives its revenue principally from nonregulated retail sales of natural gas and electricity. Common operating costs, interest income, interest expense and income tax expense are allocated to each segment based on MidAmerican Energy allocators most related to the nature of the cost.

The energy delivery and transmission segments and substantially all of the generation segment are regulated as to rates, and other factors, related to services to external customers. Regulated electric retail revenues are billed to external customers by the energy delivery segment based on bundled tariffs that do not segregate components for the other segments. For internal segment reporting purposes, MidAmerican Energy has developed transfer prices to transfer the appropriate portion of those revenues to the other segments. The transfer prices are based on cost of service or tariffed rates, except for the generation segment which receives the residual.

12

MidAmerican Energy’s external revenues by product and service are displayed on the Consolidated Statements of Operations.

The following tables provide MidAmerican Energy’s operating revenues, earnings on common stock and total assets on a reportable operating segment basis (in thousands):

	Three Months						Nine Months
	Ended September 30,						Ended September 30,
	2005			2004			2005			2004
Segment Profit Information
Operating revenues:
External revenues -
Generation	$	182,185		$	107,808		$	494,251		$	430,046
Energy delivery		459,561			397,853			1,476,774			1,343,548
Transmission		10,149			7,145			26,339			20,843
Unregulated retail services		69,762			52,447			197,899			184,719
Total		721,657			565,253			2,195,263			1,979,156
Intersegment revenues -
Generation		244,062			205,400			548,331			505,515
Energy delivery		(258,743	)		(220,171	)		(592,374	)		(549,828	)
Transmission		14,681			14,771			44,043			44,313
Total		-			-			-			-
Consolidated	$	721,657		$	565,253		$	2,195,263		$	1,979,156
Earnings on common stock:
Generation	$	63,358		$	47,553		$	82,395		$	80,832
Energy delivery		9,364			9,445			59,102			52,599
Transmission		10,223			8,303			27,960			22,783
Unregulated retail services		(889	)		545			539			2,469
Consolidated	$	82,056		$	65,846		$	169,996		$	158,683

	As of
	September 30,			December 31,
	2005			2004
Segment Asset Information
Total assets:
Generation	$	2,580,662		$	2,229,909
Energy delivery		2,530,135			2,625,081
Transmission		330,229			277,771
Unregulated retail services		64,718			42,725
Total		5,505,744			5,175,486
Reclassifications and intersegment eliminations (a)		(60,283	)		(63,535	)
Consolidated	$	5,445,461		$	5,111,951

(a) Reclassifications and intersegment eliminations relate principally to the reclassification of income tax balances in accordance with generally accepted accounting principles and the elimination of intersegment accounts receivables and payables.

13

7. Total Comprehensive Income

MidAmerican Energy’s total comprehensive income for the three months ended September 30, 2005 and 2004, was $82.1 million and $65.8 million, respectively. MidAmerican Energy’s total comprehensive income for the nine months ended September 30, 2005 and 2004, was $167.1 million and $158.3 million, respectively. The difference from Earnings on Common Stock for the nine months ended September 30, 2004, was due to the effective portion of net gains and losses, net of income taxes, on MidAmerican Energy’s derivative instruments classified as cash flow hedges. For the nine months ended September 30, 2005, the difference from Earnings on Common Stock was due to a minimum pension liability adjustment, net of income taxes. Accumulated other comprehensive loss, net, was $2.9 million and $- million as of September 30, 2005, and December 31, 2004, respectively.

14

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Managers and Member

MidAmerican Funding, LLC

Des Moines, Iowa

We have reviewed the accompanying consolidated balance sheet of MidAmerican Funding, LLC and subsidiaries (the “Company”) as of September 30, 2005, and the related consolidated statements of operations for the three-month and nine-month periods ended September 30, 2005 and 2004, and of cash flows for the nine-month periods ended September 30, 2005 and 2004. These interim financial statements are the responsibility of the Company’s management.

We conducted our reviews in accordance with the standards of the Public Company Accounting Oversight Board (United States). 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 Public Company Accounting Oversight Board (United States), 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.

Based on our reviews, we are not aware of any material modifications that should be made to such consolidated interim financial statements for them 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), the consolidated balance sheet and statement of capitalization (not presented herein) of MidAmerican Funding, LLC and subsidiaries as of December 31, 2004, and the related consolidated statements of operations, comprehensive income, retained earnings, and cash flows for the year then ended (not presented herein); and in our report dated February 25, 2005, 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, 2004 is fairly stated, in all material respects, in relation to the consolidated balance sheet from which it has been derived.

/s/ Deloitte & Touche LLP

Des Moines, Iowa

October 21, 2005

15

MIDAMERICAN FUNDING, LLC AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(In thousands)

	As of
	September 30,			December 31,
	2005			2004
	(Unaudited)
ASSETS
Utility Plant, Net
Electric	$	5,827,892		$	5,498,878
Gas		985,495			957,011
		6,813,387			6,455,889
Accumulated depreciation and amortization		(3,096,128	)		(2,956,856	)
		3,717,259			3,499,033
Construction work in progress		516,789			369,406
		4,234,048			3,868,439
Current Assets
Cash and cash equivalents		48,570			88,367
Short-term investments		-			39,500
Receivables, net		245,126			337,333
Inventories		92,371			89,646
Other		127,632			22,585
		513,699			577,431
Investments and Nonregulated Property, Net		378,004			375,230
Goodwill		1,265,979			1,268,082
Regulatory Assets		223,981			227,997
Other Assets		123,688			110,065
Total Assets	$	6,739,399		$	6,427,244
CAPITALIZATION AND LIABILITIES
Capitalization
Member’s equity	$	2,188,025		$	2,042,403
MidAmerican Energy preferred securities		30,329			30,329
Long-term debt, excluding current portion		1,871,796			2,031,509
		4,090,150			4,104,241
Current Liabilities
Note payable to affiliate		61,000			31,500
Current portion of long-term debt		160,135			91,018
Accounts payable		234,412			242,966
Taxes accrued		89,384			77,388
Interest accrued		25,995			29,612
Other		100,683			84,032
		671,609			556,516
Other Liabilities
Deferred income taxes		494,901			518,004
Investment tax credits		45,007			48,143
Asset retirement obligations		176,603			166,845
Regulatory liabilities		839,922			677,489
Other		421,207			356,006
		1,977,640			1,766,487
Total Capitalization and Liabilities	$	6,739,399		$	6,427,244

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

16

MIDAMERICAN FUNDING, LLC AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands)

	Three Months						Nine Months
	Ended September 30,						Ended September 30,
	2005			2004			2005			2004
				(Unaudited)
Operating Revenues
Regulated electric	$	467,586		$	391,751		$	1,127,434		$	1,099,310
Regulated gas		181,228			117,190			858,671			684,430
Nonregulated		74,494			57,507			213,195			199,175
		723,308			566,448			2,199,300			1,982,915
Operating Expenses
Regulated:
Cost of fuel, energy and capacity		145,600			91,474			336,950			304,387
Cost of gas sold		145,641			82,490			699,594			526,707
Other operating expenses		94,060			93,656			279,844			276,209
Maintenance		32,996			36,018			104,810			110,412
Depreciation and amortization		77,102			71,618			214,150			221,685
Property and other taxes		23,555			22,220			71,237			69,999
		518,954			397,476			1,706,585			1,509,399
Nonregulated:
Cost of sales		68,415			48,691			189,062			171,856
Other		5,693			5,046			15,486			15,938
		74,108			53,737			204,548			187,794
Total operating expenses		593,062			451,213			1,911,133			1,697,193
Operating Income		130,246			115,235			288,167			285,722
Non-Operating Income
Interest and dividend income		988			1,156			3,475			2,440
Other income		10,973			7,972			34,834			20,990
Other expense		(15,416	)		(755	)		(19,118	)		(3,029	)
		(3,455	)		8,373			19,191			20,401
Fixed Charges
Interest on long-term debt		30,543			28,293			93,408			86,423
Other interest expense		2,561			1,516			6,982			4,372
Preferred dividends of subsidiaries		312			312			935			933
Allowance for borrowed funds		(3,199	)		(2,205	)		(7,771	)		(5,404	)
		30,217			27,916			93,554			86,324
Income Before Income Taxes		96,574			95,692			213,804			219,799
Income Taxes		29,653			36,069			65,317			84,065
Net Income	$	66,921		$	59,623		$	148,487		$	135,734

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

17

MIDAMERICAN FUNDING, LLC AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

	Nine Months
	Ended September 30,
	2005			2004
	(Unaudited)
Net Cash Flows From Operating Activities
Net income	$	148,487		$	135,734
Adjustments to reconcile net income to net cash provided:
Depreciation and amortization		215,279			222,775
Deferred income taxes and investment tax credit, net		(28,207	)		77,484
Amortization of other assets and liabilities		18,576			4,093
Gain on sale of securities, assets and other investments		(10,648	)		(316	)
Loss from impairment of assets and other investments		15,841			-
Impact of changes in working capital:
Receivables, net		103,150			90,314
Inventories		(2,725	)		(12,185	)
Accounts payable		(11,349	)		(33,481	)
Taxes accrued		11,996			(50,468	)
Other current assets and liabilities		4,944			16,906
Other, net		2,544			6,577
Net cash provided by operating activities		467,888			457,433
Net Cash Flows From Investing Activities
Utility construction expenditures		(497,411	)		(345,730	)
Quad Cities Station decommissioning trust fund		(6,224	)		(6,224	)
Purchases of available-for-sale securities		(133,518	)		-
Proceeds from sales of available-for-sale securities		174,631			1,511
Proceeds from sales of assets and other investments		11,100			7
Other, net		661			4,294
Net cash used in investing activities		(450,761	)		(346,142	)
Net Cash Flows From Financing Activities
Retirement of long-term debt, including reacquisition cost		(90,851	)		(56,021	)
Reacquisition of preferred securities		-			(1,430	)
Note payable to affiliate		29,500			29,800
Net decrease in notes payable		-			(48,000	)
Other		4,427			275
Net cash used in financing activities		(56,924	)		(75,376	)
Net Increase (Decrease) in Cash and Cash Equivalents		(39,797	)		35,915
Cash and Cash Equivalents at Beginning of Period		88,367			4,558
Cash and Cash Equivalents at End of Period	$	48,570		$	40,473
Supplemental Disclosure:
Interest paid, net of amounts capitalized	$	93,111		$	89,081
Income taxes paid	$	63,198		$	33,884

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

18

MIDAMERICAN FUNDING, LLC AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

1. General

The consolidated financial statements included herein have been prepared by MidAmerican Funding, LLC (“MidAmerican Funding”), without audit, pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to such rules and regulations. In the opinion of MidAmerican Funding, all adjustments, consisting of normal recurring adjustments, have been made to present fairly the financial position, the results of operations and the changes in cash flows for the periods presented. Prior year amounts have been reclassified to a basis consistent with the current year presentation, including the reclassification of auction rate securities. All significant intercompany transactions have been eliminated. Although MidAmerican Funding believes that the disclosures are adequate to make the information presented not misleading, it is suggested that these financial statements be read in conjunction with the consolidated financial statements and the notes thereto included in MidAmerican Funding’s latest Annual Report on Form 10-K.

The accompanying Consolidated Balance Sheet as of December 31, 2004, reflects a $39.5 million reclassification of instruments used in MidAmerican Energy’s cash management program from Cash and Cash Equivalents to Short-Term Investments. This reclassification is to present auction rate securities as short-term investments rather than as cash equivalents due to the stated maturities of these investments. These instruments are classified as available-for-sale securities as management does not intend to hold them to maturity nor are they bought and sold with the objective of generating profits on short-term differences in price. The carrying value of these instruments approximates their fair value.

MidAmerican Funding is an Iowa limited liability company with MidAmerican Energy Holdings Company as its sole member. 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, MidAmerican Funding and MidAmerican Energy Holdings Company are exempt public utility holding companies headquartered in Des Moines, Iowa. MHC’s principal subsidiary is MidAmerican Energy Company, a public utility with electric and natural gas operations. Other direct, wholly owned subsidiaries of MHC include InterCoast Capital Company, Midwest Capital Group, Inc., MidAmerican Services Company and MEC Construction Services Co.

2. New Accounting Pronouncements

Refer to Note 2 of MidAmerican Energy’s Notes to Consolidated Financial Statements for information regarding MidAmerican Funding’s new accounting pronouncements

3. Commitments and Contingencies

Refer to Note 3 of MidAmerican Energy’s Notes to Consolidated Financial Statements for information regarding MidAmerican Funding’s commitments and contingencies.

4. Rate Matters

Refer to Note 4 of MidAmerican Energy’s Notes to Consolidated Financial Statements for information regarding MidAmerican Funding’s rate matters.

5. Retirement Plans

Refer to Note 5 of MidAmerican Energy’s Notes to Consolidated Financial Statements for information regarding MidAmerican Funding's retirement plans.

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6. Segment Information

MidAmerican Funding has identified four reportable operating segments based principally on management structure. The generation segment derives most of its revenue from the sale of regulated and nonregulated wholesale electricity and natural gas. The energy delivery segment derives its revenue principally from the sale and delivery of regulated retail electricity and natural gas, while the transmission segment obtains most of its revenue from the sale of electric transmission capacity. The unregulated retail services segment receives its revenue principally from nonregulated retail sales of natural gas and electricity. Common operating costs, interest income, interest expense and income tax expense are allocated to each segment based on MidAmerican Energy allocators most related to the nature of the cost.

The energy delivery and transmission segments and substantially all of the generation segment are regulated as to rates, and other factors, related to services to external customers. Regulated electric retail revenues are billed to external customers by the energy delivery segment based on bundled tariffs that do not segregate components for the other segments. For internal segment reporting purposes, MidAmerican Energy has developed transfer prices to transfer the appropriate portion of those revenues to the other segments. The transfer prices are based on cost of service or tariffed rates, except for the generation segment which receives the residual.

MidAmerican Funding’s external revenues by product and service are displayed on the Consolidated Statements of Operations.

20

The following tables provide MidAmerican Funding’s operating revenues, net income and total assets on a reportable operating segment basis (in thousands):

	Three Months						Nine Months
	Ended September 30,						Ended September 30,
	2005			2004			2005			2004
Segment Profit Information
Operating revenues:
External revenues -
Generation	$	182,185		$	107,808		$	494,251		$	430,046
Energy delivery		459,561			397,853			1,476,774			1,343,548
Transmission		10,149			7,145			26,339			20,843
Unregulated retail services		69,762			52,447			197,899			184,719
Other		1,651			1,195			4,037			3,759
Total		723,308			566,448			2,199,300			1,982,915
Intersegment revenues -
Generation		244,062			205,400			548,331			505,515
Energy delivery		(258,743	)		(220,171	)		(592,374	)		(549,828	)
Transmission		14,681			14,771			44,043			44,313
Total		-			-			-			-
Consolidated	$	723,308		$	566,448		$	2,199,300		$	1,982,915
Net income:
Generation	$	63,358		$	47,553		$	82,395		$	80,832
Energy delivery		9,364			9,445			59,102			52,599
Transmission		10,223			8,303			27,960			22,783
Unregulated retail services		(889	)		545			539			2,469
Other		(15,135	)		(6,223	)		(21,509	)		(22,949	)
Consolidated	$	66,921		$	59,623		$	148,487		$	135,734

	As of
	September 30,			December 31,
		2005			2004
Segment Asset Information
Total assets (a):
Generation	$	3,501,995		$	3,153,106
Energy delivery		2,791,271			2,886,213
Transmission		413,739			361,524
Unregulated retail services		64,718			42,725
Other		247,876			227,258
Total		7,019,599			6,670,826
Reclassifications and intersegment eliminations (b)		(280,200	)		(243,582	)
Consolidated	$	6,739,399		$	6,427,244

(a)	Total assets by operating segment reflect the assignment of goodwill to applicable reporting units in accordance with Statement of Financial Accounting Standards No. 142, “Goodwill and Other Intangible Assets.”
(b)	Reclassifications and intersegment eliminations relate principally to the reclassification of income tax balances in accordance with generally accepted accounting principles and the elimination of intersegment accounts receivables and payables.

21

7. Total Comprehensive Income

MidAmerican Funding’s total comprehensive income for the three months ended September 30, 2005 and 2004, was $66.9 million and $59.4 million, respectively. MidAmerican Funding’s total comprehensive income for the nine months ended September 30, 2005 and 2004, was $145.6 million and $135.0 million, respectively. The difference from Net Income for the nine months ended September 30, 2004, was due to the effective portion of net gains and losses, net of income taxes, on MidAmerican Energy’s derivative instruments classified as cash flow hedges. For the nine months ended September 30, 2005, the difference from Net Income was substantially due to a minimum pension liability adjustment, net of income taxes. Accumulated other comprehensive loss, net, was $2.8 million and $- million as of September 30, 2005, and December 31, 2004, respectively.

8. Goodwill

For the nine months ended September 30, 2005, MidAmerican Funding adjusted goodwill for a change in deferred income taxes due to resolution of a tax matter existing at the time of its purchase of MHC. The following table shows the change in the carrying amount of goodwill by reportable operating segment for the nine months ended September 30, 2005 (in thousands):

				Energy
	Generation			Delivery			Transmission			Total
Balance at January 1, 2005	$	922,859		$	261,575		$	83,648		$	1,268,082
Income tax adjustment		(1,526	)		(439	)		(138	)		(2,103	)
Balance at September 30, 2005	$	921,333		$	261,136		$	83,510		$	1,265,979

9. Impairments of Commercial Aircraft

MidAmerican Funding has investments in commercial passenger aircraft leased to major domestic airlines, which are accounted for as leveraged leases.  During the third quarter of 2005, two major airline carriers filed for bankruptcy. MidAmerican Funding evaluated its investments in commercial passenger aircraft and recognized losses totaling $14.0 million, or $8.8 million after tax, for other-than-temporary impairments of those investments in the third quarter of 2005. During the first quarter of 2005, MidAmerican Funding recognized a $1.8 million loss, or a $0.3 million after-tax gain, for an other-than-temporary impairment of its investment in other commercial passenger aircraft as a result of the bankruptcy filing of another major carrier. The losses for the impairments are reflected in Other Expense on the Consolidated Statements of Operations and in Other for segment reporting purposes. 

22

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

MidAmerican Energy Company (“MidAmerican Energy”) is a public utility with electric and natural gas operations and is the principal subsidiary within MidAmerican Funding, LLC (“MidAmerican Funding”).

Management’s Discussion and Analysis (“MD&A”) addresses the financial statements of MidAmerican Funding and its subsidiaries and MidAmerican Energy and its subsidiary as presented in this joint filing. Information in MD&A 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 to MidAmerican Funding, excluding MidAmerican Energy.

MD&A should be read in conjunction with the financial statements included in this Form 10-Q and the notes to those statements, together with MD&A in MidAmerican Energy’s and MidAmerican Funding’s most recently filed Annual Report on Form 10-K.

Forward-Looking Statements

From time to time, MidAmerican Funding, or one of its subsidiaries individually, including MidAmerican Energy, may make forward-looking statements within the meaning of the federal securities laws that involve judgments, assumptions and other uncertainties beyond the control of MidAmerican Funding or any of its subsidiaries individually. These forward-looking statements may include, among others, statements concerning revenue and cost trends, cost recovery, cost reduction strategies and anticipated outcomes, pricing strategies, changes in the utility industry, planned capital expenditures, financing needs and availability, statements of MidAmerican Funding’s expectations, beliefs, future plans and strategies, anticipated events or trends and similar comments concerning matters that are not historical facts. These types of forward-looking statements are based on current expectations and involve a number of known and unknown risks and uncertainties that could cause the actual results and performance of MidAmerican Funding to differ materially from any expected future results or performance, expressed or implied, by the forward-looking statements. In connection with the safe harbor provisions of the Private Securities Litigation Reform Act of 1995, MidAmerican Funding has identified important factors that could cause actual results to differ materially from those expectations, including weather effects on sales volumes and revenues, fuel prices, fuel transportation and other operating uncertainties, acquisition uncertainty, uncertainties relating to economic and political conditions and uncertainties regarding the impact of regulations, changes in government policy, utility industry deregulation and competition. Neither MidAmerican Funding, nor any one of its subsidiaries individually, assumes any responsibility to update forward-looking information contained herein.

Executive Summary

The earnings of MidAmerican Energy and MidAmerican Funding increased for both the three months and nine months ended September 30, 2005, over the comparable periods of 2004.The following events and changes, as discussed in more detail herein, highlight some factors that had an effect on MidAmerican Energy’s and MidAmerican Funding’s operating results, liquidity and capital resources:

·    Electric retail gross margin increased $15.0 million in the third quarter of 2005 over the third quarter of 2004 due to temperatures that were 24.6% higher than normal for the period compared to temperatures that were 24.9% lower than normal in the third quarter of 2004. Increased electric retail margins in the third quarter of 2005 offset unfavorable variances in electric wholesale margins in the first quarter of 2005 compared to the comparable periods in 2004 that were due primarily to the unavailability of certain base load generation resources and resulted in lost sale opportunities and more costly replacement power costs.

·    During the nine months ended September 30, 2005, MidAmerican Funding recognized pre-tax losses of $15.8 million, or $8.5 million after-tax, on its commercial aircraft leveraged leases, reflecting continued deterioration in the airline industry. These losses more than offset $9.9 million of gains, or $6.4 million after-tax, recognized in the first quarter of 2005 on the sale of non-strategic nonregulated investments. The remaining carrying values of MidAmerican Funding’s commercial aircraft leveraged leases are not material.

23

·    MidAmerican Energy is currently constructing a 790-megawatt (“MW”)(expected accreditation) super-critical-temperature, coal-fired generation project and a 360-MW (nameplate rating) wind power project in Iowa and expects to invest approximately $1.1 billion in the projects through 2007. Through September 30, 2005, $622.0 million of the $1.1 billion had been invested. In December 2004, 160.5 MW of the wind power project was completed and placed in service. During the third quarter of 2005, another 150.0 MW of wind power was placed in service. The remaining 50 MW of the wind power project is expected to be completed in the fourth quarter of 2005.

Results of Operations for the Quarter Ended September 30, 2005 and 2004

Earnings Overview

MidAmerican Energy’s earnings on common stock increased $16.3 million to $82.1 million for the third quarter of 2005 compared to $65.8 million for the third quarter of 2004. MidAmerican Funding’s net income increased $7.3 million to $66.9 million for the third quarter of 2005 compared to $59.6 million for the third quarter of 2004.

Following is a discussion of various factors that affected earnings. Explanations include management's best estimate of the impact of weather, customer growth and other factors.

Regulated Electric Gross Margin

	Quarter
	Ended September 30,
	2005		2004
Gross margin (in millions):
Operating revenues	$	467.6	$	391.8
Less cost of fuel, energy and capacity		145.6		91.5
Electric gross margin	$	322.0	$	300.3
Sales (gigawatt-hours):
Residential		1,928		1,527
Small general service		1,157		1,063
Large general service		1,940		1,898
Other		390		360
Total retail		5,415		4,848
Wholesale		2,154		1,942
Total		7,569		6,790

Electric gross margin for the third quarter of 2005 increased $21.7 million compared to the third quarter of 2004. Gross margin on electric retail sales increased $15.0 million, transmission revenues increased $3.0 million, cost of sales for electric capacity purchases decreased $1.9 million, and gross margin on electric wholesale sales increased $2.6 million.

The increase in gross margin on electric retail sales is due to an 11.7% increase in sales volumes compared to the third quarter of 2004. The effect of temperature conditions during the third quarter of 2005 compared to the third quarter of 2004 resulted in a $26.8 million increase in electric retail gross margin. A 1.3% increase in the average number of retail customers improved electric retail gross margin by $3.5 million compared to the third quarter of 2004, while electricity usage factors not dependent on weather, such as changes in individual customer usage patterns, increased electric margin by $3.4 million. An increase in fuel costs related to Iowa retail electric sales decreased electric retail gross margin by $18.7 million compared to the third quarter of 2004 due principally to MidAmerican Energy’s increased use of gas-fired generation and higher prices for purchased energy.

Sales of energy to other utilities, municipalities and marketers inside and outside of MidAmerican Energy's delivery system are classified as wholesale. The increase in gross margin on electric wholesale energy sales is due to a 10.9% increase in sales volumes compared to the third quarter of 2004, which resulted in a $3.2 million increase in electric wholesale gross margin. This increase was partially offset by a $0.6 million decrease due to a reduction in the average margin per megawatt hour sold as a result of a higher cost of energy.

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Regulated Gas Gross Margin

	Quarter
	Ended September 30,
	2005		2004
Gross margin (in millions)
Operating revenues	$	181.2	$	117.2
Less cost of gas sold		145.6		82.5
Gas gross margin	$	35.6	$	34.7
Sales (000’s decatherms):
Residential		3,041		2,895
Small general service		1,809		1,718
Large general service		1,066		271
Other		2		62
Total retail		5,918		4,946
Wholesale		10,170		6,897
Total		16,088		11,843

Regulated gas revenues include purchased gas adjustment clauses through which MidAmerican Energy is allowed to recover the cost of gas sold from its retail gas utility customers. Consequently, fluctuations in the cost of gas sold do not affect gross margin or net income because revenues reflect comparable fluctuations through the purchased gas adjustment clauses. Compared to the third quarter of 2004, MidAmerican Energy’s average per-unit cost of gas sold increased 30.0%, resulting in a $33.6 million increase in cost of gas sold for the quarter. The remainder of the increase in cost of gas sold was due to the increase in sales volumes.

The following table summarizes the variance in gas operating revenues, including the impact of the fluctuation in the cost of gas sold. The variances in gas operating revenues other than the fluctuation in cost of gas sold have the same impact on gross margin.

	Quarter Ended
	September 30,
	2005 vs. 2004
		(In millions)
Change in cost of gas sold:
Cost per unit	$	33.6
Sales volumes		29.5
Total		63.1
Weather		(0.5	)
Other gas usage factors		0.9
Customer growth		0.4
Other		0.1
Total revenue variance	$	64.0

Other gas usage factors, such as changes in individual customer usage patterns, increased gas margin, while warmer temperatures decreased gas margin. MidAmerican Energy's average number of gas retail customers increased 1.3% compared to the third quarter of 2004.

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Regulated Operating Expenses

Maintenance expenses for the third quarter of 2005 decreased $3.0 million compared to the third quarter of 2004 due to a $4.4 million decrease in fossil fuel generating maintenance as a result of the timing of preventive maintenance. The decrease was partially offset by increases in distribution and general plant maintenance.

Depreciation and amortization expense for the third quarter of 2005 increased $5.5 million compared to the third quarter of 2004 in part due to a $3.5 million increase in regulatory expense related to a revenue sharing arrangement in Iowa due to improved Iowa electric equity returns. Refer to the “Utility Regulatory Matters” section for an explanation of the revenue sharing arrangement. Additionally, utility plant depreciation and amortization increased $2.2 million in part due to phase two of the Greater Des Moines Energy Center and the wind power facilities placed in service in December 2004.

Nonregulated Gross Margin

	Quarter
	Ended September 30,
	2005		2004
	(In millions)
MidAmerican Energy -
Nonregulated operating revenues	$	72.8	$	56.3
Less nonregulated cost of sales		68.0		48.4
Nonregulated gross margin	$	4.8	$	7.9
MidAmerican Funding Consolidated -
Nonregulated operating revenues	$	74.5	$	57.5
Less nonregulated cost of sales		68.4		48.7
Nonregulated gross margin	$	6.1	$	8.8

MidAmerican Energy’s nonregulated retail electric marketing services provide electric supply services to retail customers in Illinois, Ohio and Michigan. A 37.0% increase in nonregulated retail electric sales volumes combined with increases in the average revenue and cost per megawatt hour sold resulted in increases in related revenues and cost of sales totaling $16.0 million and $16.1 million, respectively.

MidAmerican Energy’s nonregulated retail gas marketing services operate in Iowa, Illinois, Ohio and South Dakota. MidAmerican Energy purchases gas from producers and third party marketers and sells it directly to large commercial end-users. In addition, MidAmerican Energy manages gas supplies for a number of smaller commercial end-users, which includes the sale of gas to these customers to meet their supply requirements. A 16.3% decrease in nonregulated retail gas sales volumes compared to the third quarter of 2004, offset partially by increases in the average revenue and cost per unit sold, resulted in decreases in related revenues and cost of sales of $3.4 million and $3.7 million, respectively. The decrease in nonregulated retail gas sales volumes was due in large part to the non-renewal of sales contracts as a result of a related regulatory issue in Illinois. Refer to “Rate Matters” for a discussion of the issue.

Gross margin on nonregulated wholesale gas sales decreased $3.1 million compared to the third quarter of 2004 due to the timing of net earnings and losses on gas transportation contracts.

Other Income and Expense

MidAmerican Energy -

As a regulated public utility, MidAmerican Energy is allowed to capitalize, and record as income, a cost of construction for equity funds used, based on guidelines set forth by the Federal Energy Regulatory Commission (“FERC”). Other income for the capitalized allowance on equity funds used during construction totaled $7.8 million and $5.2 million in the third quarter of 2005 and 2004, respectively. MidAmerican Energy expects to continue to record higher-than-normal income for the allowance on equity funds used during construction through 2007 while the announced generating facilities are constructed.

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MidAmerican Funding -

Other expense for the third quarter of 2005 includes write-downs of MidAmerican Funding’s investments in commercial passenger aircraft, which it accounts for as leveraged leases. MidAmerican Funding’s evaluation of its investments in these aircraft resulted in write-downs totaling $14.0 million, or $8.8 million after-tax, in the third quarter of 2005. The write-downs reflect a continued deterioration in the airline industry, including the bankruptcy filings of two major carriers during the third quarter of 2005.

Fixed Charges

The increase in interest on long-term debt was due to interest on the $350.0 million of MidAmerican Energy long-term debt issued on October 1, 2004, offset partially by the maturity of higher rate debt in 2005. Other interest expense increased due to a higher balance of the Iowa revenue sharing liability. MidAmerican Energy is allowed to capitalize, and record as a reduction to fixed charges, a cost of construction for debt funds used, based on guidelines set forth by the FERC. Allowance for borrowed funds increased due to increased utility construction expenditures. MidAmerican Energy expects to continue to record higher-than-normal allowance for borrowed funds used during construction through 2007 while the announced generating facilities are constructed.

Income Taxes

In October 2004, federal law was enacted that extends the federal production tax credit for electricity produced by wind energy facilities placed in service prior to January 1, 2006. Accordingly, in 2005, MidAmerican Energy’s income taxes for the three months ended September 30, 2005, were reduced $4.4 million by the production tax credits related to energy produced by its wind power facilities.

State utility rate regulation in Iowa requires that the tax effect of certain timing differences be flowed through immediately to customers. Accordingly, amounts that would otherwise have been recognized in income tax expense have been included as changes in regulatory assets. This flow-through treatment of such timing differences impacts the effective tax rates from year to year.

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Results of Operations for the Nine Months Ended September 30, 2005 and 2004

Earnings Overview

MidAmerican Energy’s earnings on common stock increased $11.3 million to $170.0 million for the first nine months of 2005 compared to $158.7 million for the first nine months of 2004. MidAmerican Funding’s net income increased $12.8 million to $148.5 million for the first nine months of 2005 compared to $135.7 million for the first nine months of 2004.

Following is a discussion of various factors that affected earnings. Explanations include management's best estimate of the impact of weather, customer growth and other factors.

Regulated Electric Gross Margin

	Nine Months
	Ended September 30,
	2005		2004
Gross margin (in millions):
Operating revenues	$	1,127.4	$	1,099.3
Less cost of fuel, energy and capacity		337.0		304.4
Electric gross margin	$	790.4	$	794.9
Sales (gigawatt-hours):
Residential		4,520		4,098
Small general service		3,114		2,980
Large general service		5,624		5,445
Other		1,098		1,031
Total retail		14,356		13,554
Wholesale		5,922		7,192
Total		20,278		20,746

Electric gross margin for the first nine months of 2005 decreased $4.5 million compared to the first nine months of 2004 due to a $39.7 million decrease in gross margin on wholesale sales primarily as a result of generation outages in the first quarter of 2005. The decrease in wholesale gross margin was substantially offset by a $15.2 million decrease in MidAmerican Energy’s cost of sales for electric capacity purchases, a $13.7 million increase in retail gross margin as a result of warmer weather in the third quarter of 2005 and customer growth, and a $5.5 million increase in transmission revenues.

Sales of energy to other utilities, municipalities and marketers inside and outside of MidAmerican Energy's delivery system are classified as wholesale. A change in the mix of higher-priced on-peak and lower-priced off-peak sales and a higher average cost of energy caused a decrease in the average electric wholesale margin per megawatt hour sold, reducing electric wholesale gross margin by $22.7 million compared to the first nine months of 2004. Additionally, a 17.7% decrease in wholesale sales volumes reduced electric wholesale gross margin by $17.0 million. The timing of planned generation outages, mainly for the Louisa Generating Station, and the loss of generating capacity at the OGS Unit No. 1, which experienced a failure of its step-up transformer on February 20, 2005, resulted in lost wholesale sales opportunities. OGS Unit No. 1 returned to service on May 3, 2005. An increase in electric retail sales also reduced the availability of competitively priced generation, contributing to the decrease in wholesale sales volumes.

Gross margin on electric retail sales increased $13.7 million, with electric retail sales volumes increasing 5.9% compared to the first nine months of 2004. The effect of temperature conditions during the first nine months of 2005 compared to the first nine months of 2004 resulted in a $31.7 million increase in electric retail gross margin. A 1.3% increase in the average number of retail customers improved electric retail gross margin by $9.8 million compared to the first nine months of 2004, while electricity usage factors not dependent on weather, such as changes in individual customer usage patterns, increased electric margin by $7.3 million. Revenues from the recovery of energy efficiency program costs increased $2.9 million compared to the first nine months of 2004. Changes in these revenues are substantially matched with corresponding changes in other operating expenses. An increase in fuel costs related to Iowa retail electric sales decreased electric retail gross margin by $37.1 million compared to the first nine months of 2004 due in part to the cost of replacement power as a result of the generating station outages mentioned above.

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Regulated Gas Gross Margin

	Nine Months
	Ended September 30,
	2005		2004
Gross margin (in millions)
Operating revenues	$	858.7	$	684.4
Less cost of gas sold		699.6		526.7
Gas gross margin	$	159.1	$	157.7
Sales (000’s decatherms):
Residential		31,726		33,402
Small general service		15,547		16,013
Large general service		3,680		1,666
Other		37		236
Total retail		50,990		51,317
Wholesale		41,112		32,779
Total		92,102		84,096

Regulated gas revenues include purchased gas adjustment clauses through which MidAmerican Energy is allowed to recover the cost of gas sold from its retail gas utility customers. Consequently, fluctuations in the cost of gas sold do not affect gross margin or net income because revenues reflect comparable fluctuations through the purchased gas adjustment clauses. Compared to the first nine months of 2004, MidAmerican Energy’s average per-unit cost of gas sold increased 21.3%, resulting in a $122.7 million increase in cost of gas sold for the first nine months. The remainder of the increase in cost of gas sold was due to an increase in sales to wholesale customers.

The following table summarizes the variance in gas operating revenues, including the impact of the fluctuation in the cost of gas sold. The variances in gas operating revenues other than the fluctuation in cost of gas sold have the same impact on gross margin.

	Nine Months
	Ended September 30,
	2005 vs. 2004
		(In millions)
Change in cost of gas sold:
Cost per unit	$	122.7
Sales volumes		50.2
Total		172.9
Weather		(3.3	)
Other gas usage factors		(0.4	)
Energy efficiency cost recoveries		2.1
Customer growth		2.5
Other		0.5
Total revenue variance	$	174.3

The decrease in gas gross margin due to weather was the result of mild temperature conditions in the first nine months of 2005 compared to the first nine months in 2004. Other gas usage factors, such as changes in individual customer usage patterns and reaction to prices, also decreased gas margin. MidAmerican Energy's average number of gas retail customers increased 1.5% compared to the first nine months of 2004. Changes in energy efficiency revenues are substantially matched with corresponding changes in other operating expenses.

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Regulated Operating Expenses

Other operating expenses increased $3.6 million compared to the first nine months of 2004 due to a $5.1 million increase in costs related to energy efficiency programs and a $3.4 million increase in distribution operations expense. These increases were partially offset by a $4.8 million decrease in postretirement benefit expense compared to the first nine months of 2004 due to the impact of the Medicare Prescription Drug, Improvement and Modernization Act of 2003 and a plan amendment effective July 1, 2004. Increases in energy efficiency programs costs are substantially matched by increases in related electric and gas revenues.

Maintenance expenses for the first nine months of 2005 decreased $5.6 million compared to the first nine months of 2004 due principally to an $8.7 million decrease in fossil fuel generating maintenance, mostly as a result of additional preventive maintenance in 2004, and a $1.7 million increase in distribution maintenance.

Depreciation and amortization expense for the first nine months of 2005 decreased $7.5 million compared to the first nine months of 2004 due to a $13.5 million decrease in regulatory expense related to a revenue sharing arrangement in Iowa due to lower Iowa electric equity returns. Refer to the “Utility Regulatory Matters” section for an explanation of the revenue sharing arrangement. The decrease in regulatory expense was partially offset by a $6.6 million increase in utility plant depreciation due in part to phase two of the Greater Des Moines Energy Center and the wind power facilities placed in service in December 2004.

Nonregulated Gross Margin

	Nine Months
	Ended September 30,
	2005		2004
	(In millions)
MidAmerican Energy -
Nonregulated operating revenues	$	209.2	$	195.4
Less nonregulated cost of sales		188.1		170.9
Nonregulated gross margin	$	21.1	$	24.5
MidAmerican Funding Consolidated -
Nonregulated operating revenues	$	213.2	$	199.2
Less nonregulated cost of sales		189.1		171.9
Nonregulated gross margin	$	24.1	$	27.3

MidAmerican Energy’s nonregulated retail electric marketing services provide electric supply services to retail customers in Illinois, Ohio and Michigan. Increases in the average revenue and cost per megawatt hour sold combined with a 14.1% increase in nonregulated retail electric sales volumes resulted in increases in related revenues and cost of sales totaling $28.2 million and $29.1 million, respectively.

MidAmerican Energy’s nonregulated gas retail marketing services operate in Iowa, Illinois, Ohio and South Dakota. MidAmerican Energy purchases gas from producers and third party marketers and sells it directly to large commercial end-users. In addition, MidAmerican Energy manages gas supplies for a number of smaller commercial end-users, which includes the sale of gas to these customers to meet their supply requirements. A 26.8% decrease in nonregulated retail gas sales volumes compared to the first nine months of 2004, offset partially by increases in the revenue and cost per unit sold, resulted in decreases in related revenues and cost of sales of $12.8 million and $11.5 million, respectively. The decrease in nonregulated retail gas sales volumes was due in large part to the non-renewal of sales contracts as a result of a related regulatory issue in Illinois. Refer to “Rate Matters” for a discussion of the issue.

Gross margin on nonregulated wholesale gas sales decreased $2.3 million compared to the first nine months of 2004 due to the timing of net earnings and losses on gas transportation contracts.

These decreases in nonregulated gross margin were partially offset by increases in earnings from sharing arrangements related to MidAmerican Energy’s regulated natural gas operations.

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Other Income and Expense

MidAmerican Energy -

As a regulated public utility, MidAmerican Energy is allowed to capitalize, and record as income, a cost of construction for equity funds used, based on guidelines set forth by the FERC. Other income for the capitalized allowance on equity funds used during construction totaled $17.7 million and $13.0 million in the first nine months of 2005 and 2004, respectively. MidAmerican Energy expects to continue to record higher-than-normal income for the allowance on equity funds used during construction through 2007 while the announced generating facilities are constructed.

MidAmerican Funding -

Other income for the first nine months of 2005 includes $9.9 million of gains from the sale of two non-strategic, passive investments. These gains were partially offset by a decrease in income from other alternative energy capital investments.

Other expense for the first nine months of 2005 includes write-downs of MidAmerican Funding’s investments in commercial passenger aircraft, which it accounts for as leveraged leases. MidAmerican Funding’s evaluation of its investments in these aircraft resulted in $15.8 million of pre-tax write-downs in the first nine months of 2005. The write-downs reflect a continued deterioration in the airline industry, including the bankruptcy filings of two major carriers during the third quarter of 2005.

Fixed Charges

The increase in interest on long-term debt was due to interest on the $350.0 million of MidAmerican Energy long-term debt issued on October 1, 2004, offset partially by maturities of higher rate debt in 2004 and 2005. Other interest expense increased due to a higher balance of the Iowa revenue sharing liability. MidAmerican Energy is allowed to capitalize, and record as a reduction to fixed charges, a cost of construction for debt funds used, based on guidelines set forth by the FERC. Allowance for borrowed funds increased due to increased utility construction expenditures. MidAmerican Energy expects to continue to record higher-than-normal allowance for borrowed funds used during construction through 2007 while the announced generating facilities are constructed.

Income Taxes

MidAmerican Energy -

In October 2004, federal law was enacted that extends the federal production tax credit for electricity produced by wind energy facilities placed in service prior to January 1, 2006. Accordingly, in 2005, MidAmerican Energy’s income taxes for the nine months ended September 30, 2005, were reduced $9.0 million by the production tax credits related to energy produced by its wind power facilities.

State utility rate regulation in Iowa requires that the tax effect of certain timing differences be flowed through immediately to customers. Accordingly, amounts that would otherwise have been recognized in income tax expense have been included as changes in regulatory assets. This flow-through treatment of such timing differences impacts the effective tax rates from year to year.

During the first quarter of 2004, MidAmerican Energy settled an income tax audit with the Internal Revenue Service and recorded as income a tax liability previously established for the settled issue, resulting in an $8.5 million reduction to MidAmerican Energy’s income tax expense for the first nine months of 2004.

MidAmerican Funding -

A significant portion of MidAmerican Energy’s tax liability for the settled issue above was originally established in 1999 when MidAmerican Energy's parent company, MHC Inc., was acquired by MidAmerican Funding. This change in estimate of an income tax uncertainty that resulted from a purchase business combination was accounted for as an adjustment to the remaining balance of goodwill attributable to the acquisition. Accordingly, in the first quarter of 2004, MidAmerican Funding decreased goodwill and increased income tax expense by $4.7 million to reflect the settlement of that portion of the income tax liability recognized at the time of the acquisition of MHC.

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Liquidity and Capital Resources

MidAmerican Energy and MidAmerican Funding have available a variety of sources of liquidity and capital resources, both internal and external. These resources provide funds required for current operations, construction expenditures, dividends, debt retirement and other capital requirements.

As reflected on the Consolidated Statements of Cash Flows, MidAmerican Energy’s net cash provided by operating activities was $509.6 million and $495.1 million for the first nine months of 2005 and 2004, respectively. MidAmerican Funding’s net cash provided by operating activities was $467.9 million and $457.4 million for the first nine months of 2005 and 2004, respectively.

Utility Construction Expenditures

MidAmerican Energy’s primary need for capital is utility construction expenditures. For the first nine months of 2005, utility construction expenditures incurred totaled $535.9 million, including allowance for funds used during construction and Quad Cities Station nuclear fuel purchases. Utility construction expenditures include non-cash and accrued amounts, which include $29.0 million in the first nine months of 2005 for MidAmerican Energy’s share of deferred payments related to the Council Bluffs Energy Center Unit No. 4 (“CBEC Unit 4”) generation project. Under a contract with the general contractor on that project, MidAmerican Energy is allowed to defer payments, including the other owners’ shares, for up to $200.0 million of billed construction costs through the end of the project. Another non-cash expenditure included in utility construction expenditures relates to a computed cost of equity funds. As a regulated public utility, MidAmerican Energy is allowed to capitalize, and record as income, a cost of construction for equity funds used, based on guidelines set forth by the FERC.

Forecasted utility construction expenditures, including allowance for funds used during construction and completion of the wind power project discussed below, are $797 million for 2005. Capital expenditure needs are reviewed regularly by management and may change significantly as a result of such reviews. MidAmerican Energy expects to meet these capital expenditures with cash flows from operations and the issuance of long-term debt.

MidAmerican Energy anticipates a continuing increase in demand for electricity from its regulated customers. To meet anticipated demand and ensure adequate electric generation in its service territory, MidAmerican Energy is currently constructing CBEC Unit 4, a 790-MW (expected accreditation) super-critical-temperature, coal-fired facility, and a 360-MW (nameplate rating) wind power project in Iowa, of which 310 MW was in service as of September 30, 2005. The projects will provide service to regulated retail electricity customers. MidAmerican Energy has obtained regulatory approval to include the Iowa portion of the actual costs of the generation projects in its Iowa rate base as long as actual costs do not exceed the agreed caps that MidAmerican Energy has deemed to be reasonable. If the caps are exceeded, MidAmerican Energy has the right to demonstrate the prudence of the expenditures above the caps, subject to regulatory review. Wholesale sales may also be made from the projects to the extent the power is not immediately needed for regulated retail service. MidAmerican Energy expects to invest approximately $1.1 billion in the CBEC Unit 4 and wind generation projects, of which $622.0 million has been invested through September 30, 2005.

MidAmerican Energy will operate CBEC Unit 4 and hold an undivided ownership interest as a tenant in common with the other owners of the plant. MidAmerican Energy's ownership interest is 60.67%, equating to 479 MW of output. MidAmerican Energy expects its share of the estimated cost of the project, including transmission facilities, to be approximately $737 million, excluding allowance for funds used during construction. Municipal, cooperative and public power utilities will own the remainder, which is a typical ownership arrangement for large base-load plants in Iowa. On February 12, 2003, MidAmerican Energy executed a contract with Mitsui & Co. Energy Development, Inc. for engineering, procurement and construction of the plant. On September 9, 2003, MidAmerican Energy began construction of the plant, which it expects to be completed in the summer of 2007. On December 29, 2004, MidAmerican Energy received an order from the IUB approving construction of the associated transmission facilities and is proceeding with construction.

The wind power project currently under construction consists of wind power facilities located at two sites in north central Iowa totaling 360 MW (nameplate rating), including a 50-MW expansion of the original project. In December 2004, wind turbines totaling 160.5 MW were completed and in service, and in August and September 2005, wind turbines totaling 150.0 MW were placed in service. The remaining turbines are expected to be completed by the end of 2005. Generally speaking, accredited capacity ratings for wind power facilities are considerably less than the nameplate ratings due to the varying nature of wind. The current projected accredited capacity for the 360 MW of wind power facilities is approximately 61 MW. MidAmerican Energy will own and operate these facilities, which, including transmission facilities, are expected to cost approximately $386 million, excluding allowance for funds used during construction. On January 31, 2005, the IUB approved ratemaking principles related to the expansion of the wind power project. Refer to the “Rate Matters” discussion below for information regarding the rate aspects of related settlement agreements.

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Nuclear Decommissioning

Each licensee of a nuclear facility is required to provide financial assurance for the cost of decommissioning its licensed nuclear facility. In general, decommissioning of a nuclear facility means to safely remove the facility from service and restore the property to a condition allowing unrestricted use by the operator.

MidAmerican Energy currently contributes $8.3 million annually to trusts established for the investment of funds for decommissioning Quad Cities Station. Approximately 70% of the fair value of the trusts’ funds is now invested in domestic corporate debt and common equity securities. The remainder is invested in investment grade municipal and U.S. Treasury bonds. Funding for Quad Cities Station nuclear decommissioning is reflected as depreciation expense in the Consolidated Statements of Operations. Quad Cities Station decommissioning costs charged to Iowa customers are included in base rates, and recovery of increases in those amounts must be sought through the normal ratemaking process.

Contractual Obligations and Commercial Commitments

MidAmerican Energy and MidAmerican Funding have various contractual obligations and commercial commitments. There have been no material changes in the amount of such obligations and commitments from what was disclosed in the “Liquidity and Capital Resources” section of MD&A in MidAmerican Energy’s and MidAmerican Funding’s most recently filed Form 10-K.

Debt Redemption and Issuance

MidAmerican Energy’s 7% series of mortgage bonds, totaling $90.5 million, matured on February 15, 2005. MidAmerican Energy expects to issue long-term debt in 2005 to support construction of its electric generation projects and for general corporate purposes.

Debt Authorizations and Credit Facilities

MidAmerican Energy has authority from the FERC to issue through April 14, 2007, short-term debt in the form of commercial paper and bank notes aggregating $500.0 million. MidAmerican Energy currently has in place a $425.0 million revolving credit facility that supports its $304.6 million commercial paper program and its variable rate pollution control revenue obligations. The facility expires November 18, 2009.

MidAmerican Energy currently has the following authorizations to issue additional long-term securities. MidAmerican Energy has on file with the Securities and Exchange Commission registration statements providing for the issuance of $530.0 million in various forms of senior and subordinated long-term debt and preferred securities. MidAmerican Energy has authorization from the FERC to issue various forms of long-term debt in the amount of $880.0 million through November 30, 2005, and $425.0 million for December 1, 2005 through November 30, 2006. Under the FERC authorization, such funds would be used to refinance maturing debt and to finance a portion of the cost of the generation projects noted above. MidAmerican Energy has authority from the Illinois Commerce Commission (“ICC”) to issue up to $546.4 million of long-term debt for refinancing purposes and capital expenditures.

In conjunction with the March 1999 merger, MidAmerican Energy committed to the IUB to use commercially reasonable efforts to maintain an investment grade rating on its long-term debt and to maintain its common equity level above 42% of total capitalization unless circumstances beyond its control result in the common equity level decreasing to below 39% of total capitalization. MidAmerican Energy must seek the approval of the IUB of a reasonable utility capital structure if MidAmerican Energy's common equity level decreases below 42% of total capitalization, unless the decrease is beyond the control of MidAmerican Energy. MidAmerican Energy is also required to seek the approval of the IUB if MidAmerican Energy's equity level decreases to below 39%, even if the decrease is due to circumstances beyond the control of MidAmerican Energy. If MidAmerican Energy's common equity level were to drop below the required thresholds, MidAmerican Energy's ability to issue debt could be restricted.

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Other Financing Information

MidAmerican Funding or one of its subsidiaries, including MidAmerican Energy, may from time to time seek to retire its outstanding debt through cash purchases and/or exchanges for other securities, in open market purchases, privately negotiated transactions or otherwise. The repurchases or exchanges, if any, will depend on prevailing market conditions, the issuing company’s liquidity requirements, contractual restrictions and other factors. The amounts involved may be material.

Credit Ratings Risks

Debt and preferred securities of MidAmerican Funding and MidAmerican Energy are rated by nationally recognized credit rating agencies. Assigned credit ratings are based on each rating agency’s assessment of MidAmerican Funding’s or MidAmerican Energy’s ability to, in general, meet the obligations of the debt or preferred securities issued by the rated company. The credit ratings are not a recommendation to buy, sell or hold securities, and there is no assurance that a particular credit rating will continue for any given period of time. Other than the energy trading agreements discussed below, neither MidAmerican Funding nor MidAmerican Energy has any credit agreements that require termination or a material change in collateral requirements or payment schedule in the event of a downgrade in the credit ratings of the respective company’s securities.

In conjunction with its risk management activities, MidAmerican Energy must meet credit quality standards as required by counterparties. MidAmerican Energy has energy trading agreements that, in accordance with industry practice, either specifically require it to maintain investment grade credit ratings or provide the right for counterparties to demand “adequate assurances” in the event of a material adverse change in MidAmerican Energy’s creditworthiness. If one or more of MidAmerican Energy’s credit ratings decline below investment grade, MidAmerican Energy may be required to post cash collateral, letters of credit or other similar credit support to facilitate ongoing wholesale marketing and trading activities. As of September 30, 2005, MidAmerican Energy’s estimated potential collateral requirements totaled approximately $165 million. MidAmerican Energy’s collateral requirements could fluctuate considerably due to seasonality, market price volatility, and a loss of key MidAmerican Energy generating facilities or other related factors.

Utility Regulatory Matters

Rate Matters

Under three settlement agreements between MidAmerican Energy, the Iowa Office of Consumer Advocate (“OCA”) and other intervenors approved by the IUB, MidAmerican Energy has agreed not to seek a general increase in electric rates prior to 2012 unless, beginning in 2006, its Iowa jurisdictional electric return on equity for any year falls below 10%. Prior to filing for a general increase in electric rates, MidAmerican Energy is required to conduct 30 days of good faith negotiations with the signatories to the settlement agreements to attempt to avoid a general increase in such rates. As a party to the settlement agreements, the OCA has agreed not to request or support any decrease in MidAmerican Energy’s Iowa electric rates prior to January 1, 2012. The settlement agreements specifically allow the IUB to approve or order electric rate design or cost of service rate changes that could result in changes to rates for specific customers as long as such changes do not result in an overall increase in revenues for MidAmerican Energy. The settlement agreements also each provide that portions of revenues associated with Iowa retail electric returns on equity within specified ranges will be recorded as a regulatory liability.

Under the first settlement agreement, which was approved by the IUB on December 21, 2001, and is effective through December 31, 2005, an amount equal to 50% of revenues associated with returns on equity between 12% and 14%, and 83.33% of revenues associated with returns on equity above 14%, in each year is recorded as a regulatory liability. The second settlement agreement, which was filed in conjunction with MidAmerican Energy’s application for ratemaking principles on its wind power project and was approved by the IUB on October 17, 2003, provides that during the period January 1, 2006 through December 31, 2010, an amount equal to 40% of revenues associated with returns on equity between 11.75% and 13%, 50% of revenues associated with returns on equity between 13% and 14%, and 83.3% of revenues associated with returns on equity above 14%, in each year will be recorded as a regulatory liability.

The third settlement agreement was approved by the IUB on January 31, 2005, in conjunction with MidAmerican Energy’s proposed expansion of its wind power project by up to 90 MW. This settlement extended through 2011 MidAmerican Energy’s commitment not to seek a general increase in electric rates unless its Iowa jurisdictional electric return on equity falls below 10%. It also extended the revenue sharing mechanism through 2011, and the OCA agreed to commit not to seek any decrease in Iowa electric base rates to become effective before January 1, 2012. The total capacity to be added as the result of the wind expansion project is currently projected to be 50 MW.

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The regulatory liabilities created by the three settlement agreements are recorded as a regulatory charge in depreciation and amortization expense when the liability is accrued. Additionally, interest expense is accrued on the portion of the regulatory liability balance recorded in prior years. The regulatory liabilities created for the years through 2010 are expected to be reduced as they are credited against plant in service associated with generating plant additions. As a result of the credit applied to generating plant balances from the reduction of the regulatory liabilities, future depreciation will be reduced. As of September 30, 2005 and December 31, 2004, the related regulatory liability reflected on the Consolidated Balance Sheets was $222.1 million and $181.2 million, respectively. The regulatory liability accrued for 2011, if any, will be credited to customer bills in 2012.

In an order issued September 27, 2004, the IUB requires MidAmerican Energy to file various plans to fully equalize and consolidate its class zonal electric rates by the end of each of the years 2007 through 2010. On October 18, 2004, MidAmerican Energy filed a motion for reconsideration opposing full rate equalization and proposing a series of rate reductions. On March 21, 2005, the IUB required MidAmerican Energy to file additional information about potential rate changes concerning phased equalization or consolidation of existing zonal rate differences that could have the effect of bringing rates together on a basis designed to have no impact on the overall revenues MidAmerican Energy receives from its Iowa electric customers. MidAmerican Energy filed the requested information on April 11, 2005. In the same proceeding, MidAmerican Energy has a pending request to reduce rates for some residential customers by approximately $4.0 million in 2008 and $3.0 million in 2009 for a total annualized reduction of $7.0 million in addition to the reductions to be offset by cost decreases related to existing contracts. The $7.0 million reduction in revenues may begin to be offset by a rate increase for other residential customers starting in 2011. The IUB has not taken any action subsequent to MidAmerican Energy’s April 11, 2005 filing.

Illinois bundled electric rates are frozen until 2007, subject to certain exceptions allowing for increases, at which time bundled rates may be increased or decreased by the ICC. Illinois law provides that, through 2006, Illinois earnings above a computed level of return on common equity are to be shared equally between regulated retail electric customers and MidAmerican Energy. MidAmerican Energy’s computed level of return on common equity is based on a rolling two-year average of the Monthly Treasury Long-Term Average Rate, as published by the Federal Reserve System, plus a premium of 8.5% for 2000 through 2004 and a premium of 12.5% for 2005 and 2006. The two-year average above which sharing must occur for 2005 is 15.41%, which reflects a blend of the premiums for 2004 and 2005. The law allows MidAmerican Energy to mitigate the sharing of earnings above the threshold return on common equity through accelerated recovery of electric assets.

In 2004, the ICC issued a declaratory ruling finding that MidAmerican Energy’s competitive sales of gas to retail customers within the state of Illinois were not authorized under the Illinois Public Utilities Act. In its ruling, the ICC left for subsequent proceedings issues related to the financial implications of these sales. To date, these issues have been addressed by ICC staff in its testimony in the purchased gas adjustment reconciliation proceedings covering 2001 and 2002. In that testimony, the ICC staff expressed its position that MidAmerican Energy must reduce gas costs recovered from Illinois regulated gas customers through the purchased gas adjustment by the gross margins earned from MidAmerican Energy’s Illinois nonregulated retail customers since 1996. Gross margin is the difference between the revenue and the related cost of gas for MidAmerican Energy’s nonregulated sales of gas to retail customers in the entire state of Illinois. The ICC has not yet ruled in either case. In addition, MidAmerican Energy believes it is possible that the gross margins earned in earlier periods in final purchased gas adjustment reconciliation proceedings back to 1996 may be subject to challenge. If the ICC accepts the adjustments proposed by its staff and makes the same adjustment for the years 2003 - 2004, the total cumulative adjustment through November 30, 2004, including the adjustments since 1996, would be $7.8 million. In its declaratory ruling, the ICC decided to open a separate proceeding, in addition to the purchased gas adjustment reconciliation proceedings, to determine an appropriate remedy to impose upon MidAmerican Energy for making competitive sales throughout the state of Illinois without statutory or regulatory authorization. In its order initiating this separate proceeding, the ICC stated there would not be any further litigation of the ICC conclusions arrived at in the declaratory ruling proceeding, despite the lack of an evidentiary hearing in that proceeding. The ruling of the ICC in the declaratory ruling proceeding, including its determination not to conduct an evidentiary hearing, is now on appeal in the Illinois Appellate Court. Additional grounds of appeal are whether the ICC misinterpreted its authority in ruling that the Illinois Public Utilities Act does not authorize competitive sales of gas, whether MidAmerican Energy was retroactively authorized to make these sales as a result of passage of SB 2525, and whether the ruling interferes with MidAmerican Energy’s rights to use nonpublic utility assets.

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In November 2004, the Illinois legislature overrode the Governor’s veto of SB 2525. That law allows MidAmerican Energy to continue its competitive gas sales in Illinois subject to ICC regulation. The ICC still must resolve the historical issues in the on-going purchase gas adjustment and related proceedings noted above.

The Governor and Attorney General of Illinois have objected to proposals put forth by certain Illinois utilities regarding the use of a "reverse auction" process for procuring the wholesale electric power needed to serve their Illinois retail electric customers starting in 2007. The utilities impacted do not own generation assets. MidAmerican Energy presently owns sufficient generation resources to serve its Illinois customers and has a fuel adjustment clause mechanism to recover the cost of fuel and purchased energy. While the final outcome of the reverse auction issue cannot be predicted at this time, it is not expected to materially affect MidAmerican Energy's financial results.

Transmission Developments

The FERC has undertaken several measures to increase competition in the markets for wholesale electric energy, including efforts to foster the development of regional transmission organizations (“RTO”) in its Order No. 2000 issued December 1999 and its July 2002 proposed rulemaking that would implement a standard market design (“SMD”) for wholesale electric markets.

If implemented, the FERC’s July 2002 proposed rule for SMD would have required sweeping changes to the use and expansion of the interstate transmission and wholesale bulk power systems in the United States. On July 19, 2005, the FERC issued an order terminating the rulemaking. Nevertheless, it is likely that there will be further regulatory actions by the FERC impacting the provision of transmission services. Any FERC action could impact the costs of MidAmerican Energy’s electricity and transmission products. Such FERC action could directly or indirectly influence how transmission services are priced, the availability of transmission services, how transmission services are obtained, and market prices for electricity in markets in which MidAmerican Energy buys and sells electricity. Although MidAmerican Energy is not presently a member of an RTO, three RTO’s - Midwest Independent Transmission System Operator, Inc., PJM Interconnection L.L.C. and Southwest Power Pool, Inc. - are directly interconnected with MidAmerican Energy’s transmission facilities. MidAmerican Energy cannot predict what impact, if any, the evolution of these RTO’s, or others, may have on how transmission services and wholesale electricity is bought and sold, as well as the geographic scope of the marketplace in which MidAmerican Energy buys and sells transmission services and wholesale electricity.

On June 3, 2004, the FERC’s Division of Operational Investigations of the Office of Market Oversight and Investigations informed MidAmerican Energy that it was commencing an audit to determine whether and how MidAmerican Energy and its subsidiaries and affiliates are complying with (1) requirements of the standards of conduct and open access same-time information system of the FERC’s regulations, (2) codes of conduct, and (3) transmission practices. The FERC commenced several such audits of utilities in 2003 and 2004 and recently completed its audit of MidAmerican Energy. MidAmerican Energy has agreed to implement the recommendations of the FERC relative to its audit. Accordingly, MidAmerican Energy will build $9.2 million in previously unscheduled transmission system upgrades. That capital expenditure will be excluded from MidAmerican Energy’s rate base for six years during which time MidAmerican Energy will not earn a return on the transmission upgrades. In addition, MidAmerican Energy has agreed to accelerate $14.7 million of scheduled transmission system upgrades.

On June 22, 2005, MidAmerican Energy made a filing with the FERC requesting its approval to establish a transmission service coordinator (“TSC”). The TSC would be an outsource administrator of various MidAmerican Energy Open Access Transmission Tariff-related functions for transmission service. If approved, MidAmerican Energy will enter into a contract with a to-be-determined independent contractor that would become responsible for many day-to-day transmission operation services. In addition, the TSC would assume some oversight responsibilities and participate in the transmission planning process. MidAmerican Energy envisions entering into a three-year contract with a TSC. While the costs of entering into a contract with the TSC are unknown, at this time, MidAmerican Energy does not believe that the incremental costs will have a material impact on its results of operations, financial position or cash flows. Any TSC selected would not likely commence service until the latter half of 2006.

Electric Trading Developments

On July 13, 2004, the FERC issued an order requiring MidAmerican Energy to conduct a study to determine whether MidAmerican Energy or its affiliates possess generation market power. MidAmerican Energy is being required to show the absence of generation market power in order to be allowed to continue to sell wholesale electric power at market-based rates. The FERC order is intended to have MidAmerican Energy conform to what has become the FERC’s general practice for utilities given authorization to make wholesale market-based sales. Under this general practice, utilities authorized to make market-based electric sales must submit a new market power study to the FERC every three years. MidAmerican Energy filed the required study on October 29, 2004. On June 1, 2005, the FERC issued an order setting for investigation the reasonableness of MidAmerican Energy’s market-based rates within its control area. The order also terminated the previously established November 1, 2004, refund date and required market-based sales made by MidAmerican Energy within its control area beginning August 7, 2005, be subject to refund until the matter is resolved. The FERC also required MidAmerican Energy to file additional information by July 1, 2005, and August 1, 2005. In its August 1, 2005 filing, MidAmerican Energy filed a proposed cost-based sales tariff applicable to sales made within its control area to replace its market-based sales tariff. The FERC is currently reviewing the proposed tariff. MidAmerican Energy does not expect the outcome of this issue to have a material effect on its results of operations, financial position or cash flows.

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The Energy Policy Act of 2005

On August 8, 2005, the Energy Policy Act of 2005 (“Energy Policy Act”) was signed into law. That law potentially impacts many segments of the energy industry. The law will result in the FERC issuing new regulations and regulatory decisions in areas such as electric system reliability, electric transmission expansion and pricing, regulation of utility holding companies, and enforcement authority. While most key decisions have yet to be issued, MidAmerican Energy currently does not believe that the Energy Policy Act will have a material impact on its results of operations, financial conditions or cash flows.

Environmental Matters

MidAmerican Energy’s generating facilities are subject to applicable provisions of the Clean Air Act and related air quality standards promulgated by the United States Environmental Protection Agency (“EPA”). The Clean Air Act provides the framework for regulation of certain air emissions and permitting and monitoring associated with those emissions. MidAmerican Energy believes it is in material compliance with current air quality requirements. Refer to Note (3)(a) of Notes to Consolidated Financial Statements in this Form 10-Q for further discussion of air quality standards affecting MidAmerican Energy.

On February 16, 2005, the Kyoto Protocol became effective, requiring 35 developed countries to reduce greenhouse gas emissions by approximately 5% between 2008 and 2012. While the United States did not ratify the protocol, the ratification and implementation of its requirements in other countries has resulted in increased attention on the climate change issue in the United States. The Senate has adopted a “sense of the Senate” resolution that puts the Senate on record that Congress should enact a comprehensive and effective national program of mandatory, market-based limits and incentives on emissions of greenhouse gases that slow, stop, and reverse the growth of such emissions at a rate and in a manner that will not significantly harm the United States economy; and will encourage comparable action by other nations that are major trading partners and key contributors to global emissions. It is anticipated that the resolution may be further addressed in 2005.

The United States Circuit Court of Appeals for the District of Columbia dismissed a lawsuit on July 15, 2005, that sought to force the EPA to issue mandatory controls for carbon dioxide and other greenhouse gas emissions from new cars and trucks. While litigation was filed in the federal district court for the southern district of New York seeking to require reductions of carbon dioxide emissions from generating facilities of five large electric utilities, the court dismissed the public nuisance suit, holding that such critical issues affecting the United States such as greenhouse gas emissions reductions are not the domain of the court and should be resolved by the Executive Branch and the U.S. Congress. The judge’s ruling has been appealed to the Second Circuit Court of Appeals. While debate continues at the national level over the direction of domestic climate policy, several states are developing state-specific or regional legislative initiatives to reduce greenhouse gas emissions. The outcome of climate change litigation and federal and state initiatives cannot be determined at this time; however, adoption of stringent limits on greenhouse gas emissions could significantly impact MidAmerican Energy’s facilities and, therefore, its results of operations.

The EPA and the state environmental agencies have determined that contaminated wastes remaining at decommissioned manufactured gas plant facilities may pose a threat to the public health or the environment if such contaminants are in sufficient quantities and at such concentrations as to warrant remedial action.

MidAmerican Energy has evaluated all known properties that were, at one time, sites of gas manufacturing plants for which it may be a potentially responsible party. The purpose of these evaluations was to determine whether waste materials are present, whether the materials constitute an environmental or health risk, and whether MidAmerican Energy has any responsibility for remedial action. As of September 30, 2005, MidAmerican Energy has recorded a $4.8 million liability for these sites and a corresponding regulatory asset for future recovery through the regulatory process. Refer to Note (3)(c) of Notes to Consolidated Financial Statements in this Form 10-Q for further discussion of MidAmerican Energy’s environmental activities related to manufactured gas plant sites and cost recovery.

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Although the timing of potential incurred costs and recovery of such costs in rates may affect the results of operations in individual periods, management believes that the outcome of these issues will not have a material adverse effect on MidAmerican Energy’s financial position, results of operations or cash flows.

Generating Capability

On July 20, 2005, retail customer usage of electricity caused a new record hourly peak demand of 4,040 MW on MidAmerican Energy’s electric system, 105 MW greater than the previous record set in August 2003. MidAmerican Energy is interconnected with Iowa and neighboring utilities and is party to an electric generation and transmission pooling agreement administered by the Mid-Continent Area Power Pool (“MAPP”). Each MAPP participant is required to maintain for emergency purposes a net generating capability reserve of at least 15% above its system peak demand. For the 2005 cooling season, MidAmerican Energy’s reserve was approximately 26% above its system peak demand.

MidAmerican Energy believes it has adequate electric capacity reserve through 2009, including capacity provided by the generating projects discussed above. However, significantly higher-than-normal temperatures during the cooling season could cause MidAmerican Energy’s reserve to fall below the 15% minimum. If MidAmerican Energy fails to maintain the appropriate reserve, significant penalties could be contractually imposed by the MAPP.

MidAmerican Energy is financially exposed to movements in energy prices since it does not recover its energy costs through an energy adjustment clause in Iowa. Although MidAmerican Energy believes it has sufficient generation under typical operating conditions for its retail electric needs, a loss of adequate generation by MidAmerican Energy requiring the purchase of replacement power at a time of high market prices could subject MidAmerican Energy to losses on its energy sales.

The transmission developments addressed under “Utility Regulatory Matters” above also can impact MidAmerican Energy's wholesale electric purchases and sales. In addition, organized markets for the sale of energy may impact the price MidAmerican Energy pays for wholesale electricity as well as the prices it receives for wholesale sales. The FERC has other proceedings underway which may influence the wholesale electric marketplace. Because of the uncertainties as to future regulatory policy governing transmission service and pricing, and regulation of wholesale electric sales, MidAmerican Energy is uncertain whether past wholesale costs and revenues will be representative of future wholesale costs and revenues.

New Accounting Pronouncements

In March 2005, the Financial Accounting Standards Board (“FASB”) issued FASB Interpretation No. 47, “Accounting for Conditional Asset Retirement Obligations, an interpretation of FASB Statement No. 143” (“FIN 47”). FIN 47 clarifies that the term conditional asset retirement obligation as used in Statement of Financial Accounting Standards No. 143, “Accounting for Asset Retirement Obligations,” refers to a legal obligation to perform an asset retirement activity in which the timing and/or method of settlement are conditional on a future event that may or may not be within the control of the entity. Accordingly, an entity is required to recognize a liability for the fair value of a conditional asset retirement obligation if the fair value of the liability can be reasonably estimated. Uncertainty about the timing and/or method of settlement of a conditional asset retirement obligation should be factored into the measurement of the liability when sufficient information exists. FIN 47 also clarifies when an entity would have sufficient information to reasonably estimate the fair value of an asset retirement obligation. MidAmerican Energy and MidAmerican Funding are required to adopt the provisions of FIN 47 by December 2005. Adoption of FIN 47 is not expected to have a material effect on MidAmerican Energy’s or MidAmerican Funding’s financial position, results of operations or cash flows.

Critical Accounting Policies and Estimates

MidAmerican Energy’s and MidAmerican Funding’s significant accounting policies are described in their respective Note (1) of Notes to Consolidated Financial Statements in Item 8 of their most recently filed Annual Report on Form 10-K. For a discussion of their critical accounting policies and estimates, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in their most recently filed Annual Report on Form 10-K. MidAmerican Energy’s and MidAmerican Funding’s critical accounting policies have not changed materially since December 31, 2004.

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Item 3.   Quantitative and Qualitative Disclosures About Market Risk.

MidAmerican Energy’s management of its exposure to market risk has not changed materially from December 31, 2004. The scope of its use of financial instruments for both hedging and proprietary trading purposes has also not changed materially from December 31, 2004. During the first nine months of 2005, market prices for natural gas have increased significantly. Accordingly, MidAmerican Energy has updated the fair values of its derivative instruments in the table below. Reference is made to MidAmerican Energy’s and MidAmerican Funding’s most recently filed Form 10-K, and in particular, Item 7A. Quantitative and Qualitative Disclosures About Market Risk.

As of September 30, 2005, MidAmerican Energy held derivative instruments used for non-trading and trading purposes with the following fair values (in thousands):

	Maturity
	By			October 1, 2006-			After
	September 30,			September 30,			September 30,
Contract Type	2006			2008			2008			Total
Non-trading:
Regulated electric assets	$	473		$	158		$	-		$	631
Regulated electric (liabilities)		(26,524	)		(5,376	)		-			(31,900	)
Regulated gas assets		97,062			-			-			97,062
Regulated gas (liabilities)		(589	)		-			-			(589	)
Interest rate (liabilities)		(2,839	)		-			-			(2,839	)
Nonregulated electric assets		3,869			-			-			3,869
Nonregulated electric (liabilities)		(1,817	)		-			-			(1,817	)
Nonregulated gas assets		15,235			5,954			163			21,352
Nonregulated gas (liabilities)		(18,389	)		(5,970	)		(58	)		(24,417	)
Total		66,481			(5,234	)		105			61,352
Trading:
Nonregulated gas assets		1,508			-			-			1,508
Nonregulated gas (liabilities)		(1,602	)		-			-			(1,602	)
Nonregulated electric assets		747			-			-			747
Nonregulated electric (liabilities)		(723	)		-			-			(723	)
Total		(70	)		-			-			(70	)
Total MidAmerican Energy assets	$	118,894		$	6,112		$	163		$	125,169
Total MidAmerican Energy (liabilities)	$	(52,483	)	$	(11,346	)	$	(58	)	$	(63,887	)

Item 4. Controls and Procedures.

With the supervision and participation of MidAmerican Funding’s and MidAmerican Energy’s management, including the respective persons acting as chief executive officer and chief financial officer, each company performed an evaluation regarding the effectiveness of the design and operation of its disclosure controls and procedures (as defined in Rule 13a-15(e) promulgated under the Securities and Exchange Act of 1934, as amended) as of September 30, 2005. Based on that evaluation, MidAmerican Funding’s and MidAmerican Energy’s management, including the respective persons acting as chief executive officer and chief financial officer, concluded that their respective disclosure controls and procedures were effective. There have been no changes during the quarter covered by this report in MidAmerican Funding’s or MidAmerican Energy’s internal control over financial reporting that has materially affected, or is reasonably likely to materially affect, its internal control over financial reporting.

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PART II - OTHER INFORMATION

Item 1.  Legal Proceedings.

MidAmerican Energy is one of dozens of companies named as defendants in a January 20, 2004 consolidated class action lawsuit filed in the United States District Court for the Southern District of New York. The suit alleges that the defendants have engaged in unlawful manipulation of the prices of natural gas futures and options contracts traded on the New York Mercantile Exchange (“NYMEX”) during the period of January 1, 2000 to December 31, 2002. MidAmerican Energy is mentioned as a company that has engaged in wash trades on Enron Online (an electronic trading platform) that had the effect of distorting prices for gas trades on the NYMEX. The plaintiffs to the class action do not specify the amount of alleged damages. As discussed below, MidAmerican Energy has executed a settlement agreement with the plaintiffs.

The original complaint in this matter, Cornerstone Propane Partners, L.P. v. Reliant, et al. (“Cornerstone”), was filed on August 18, 2003 in the United States District Court, Southern District of New York naming MidAmerican Energy. On October 1, 2003, a second complaint, Roberto, E. Calle Gracey, et al. (“Calle Gracey”), was filed in the same court but did not name MidAmerican Energy. On November 14, 2003, a third complaint, Dominick Viola (“Viola”), et al., was filed in the same court and named MidAmerican Energy as a defendant. On December 5, 2003, the court entered Pretrial Order No. 1, which among other procedural matters, ordered the consolidation of the Cornerstone, Calle Gracey and Viola complaints and permitted plaintiffs to file an amended complaint in this matter. On January 20, 2004, plaintiffs filed In Re: Natural Gas Commodity Litigation as the amended complaint reasserting their previous allegations. On February 19, 2004, MidAmerican Energy filed a Motion to Dismiss and joined with several other defendants to file a joint Motion to Dismiss. The plaintiffs filed a response on May 19, 2004, contesting both Motions to Dismiss. On September 24, 2004, the pending motions to dismiss were denied. On October 14, 2004, plaintiffs filed an amended complaint to add certain defendants’ affiliates as defendants and reasserted their previous allegations. MidAmerican Energy and the other defendants filed their respective answers to the complaint on October 28, 2004.

On September 6, 2005, MidAmerican Energy and counsel for the plaintiffs executed a stipulation and agreement of settlement, which upon final approval by the court following notice to all class members, MidAmerican Energy will be dismissed from the lawsuit. MidAmerican Energy agreed to the settlement in order to avoid the expense and uncertainty associated with the ongoing litigation. If accepted by the court, the settlement will not have a material impact upon MidAmerican Energy.

Other than the litigation described above, MidAmerican Funding and its subsidiaries currently have no material legal proceedings. Information on MidAmerican Energy’s environmental matters is included in the “Environmental Matters” section of MD&A in Item 2 of this Form 10-Q. Information regarding MidAmerican Energy's regulatory matters is included in the “Legislation and Utility Regulatory Matters” section of MD&A in Item 2 of this Form 10-Q.

Item 2.  Unregistered Sales of Equity Securities and Use of Proceeds.

Not applicable.

Item 3.   Defaults Upon Senior Securities.

Not applicable.

Item 4.   Submission of Matters to a Vote of Security Holders.

Not applicable.

Item 5. Other Information.

Not applicable.

Item 6.  Exhibits.

Reference is made to the accompanying Exhibit Index for a list of exhibits filed as a part of this Quarterly Report.

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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.

	MIDAMERICAN FUNDING, LLC
	MIDAMERICAN ENERGY COMPANY
	(Registrants)
Date: October 21, 2005	/s/ Patrick J. Goodman
	Patrick J. Goodman
	Vice President and Treasurer
	of MidAmerican Funding, LLC
	(principal financial and accounting officer)
	/s/ Thomas B. Specketer
	Thomas B. Specketer
	Vice President and Controller
	of MidAmerican Energy Company
	(principal financial and accounting officer)

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EXHIBIT INDEX

Exhibit No.	Description
MidAmerican Energy
12	Computation of Ratios of Earnings to Fixed Charges and Computation of Ratios of Earnings to Fixed Charges Plus Preferred Stock Dividend Requirements
15	Awareness Letter of Independent Registered Pubic Accounting Firm
31.1	Chief executive officer certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2	Chief financial officer certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1	Chief executive officer certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.2	Chief financial officer certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
MidAmerican Funding
31.3	Chief executive officer certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.4	Chief financial officer certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.3	Chief executive officer certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.4	Chief financial officer certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

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EX-12

EXHIBIT 12
MIDAMERICAN ENERGY COMPANY
COMPUTATION OF RATIOS OF EARNINGS TO FIXED CHARGES
AND COMPUTATION OF RATIOS OF EARNINGS TO FIXED CHARGES
PLUS PREFERRED STOCK DIVIDEND REQUIREMENTS
(In Thousands)
(Unaudited)
	Nine Months
	Ended		Twelve Months Ended December 31,
	Sept. 30, 2005		2004		2003		2002		2001		2000
Net income from continuing operations	$	170,931	$	210,455	$	188,597	$	175,821	$	152,778	$	165,456
Add (Deduct):
Total income taxes		83,684		102,155		131,261		120,230		112,452		110,461
Interest on long-term debt		58,086		71,949		72,207		71,401		60,880		61,120
Other interest charges		5,959		5,728		3,813		3,412		8,401		9,056
Preferred stock dividends of subsidiary
trust		-		-		-		1,574		7,980		7,980
Interest on leases		104		155		108		201		137		154
		147,833		179,987		207,389		196,818		189,850		188,771
Earnings available for fixed charges		318,764		390,442		395,986		372,639		342,628		354,227
Fixed Charges:
Interest on long-term debt		58,086		71,949		72,207		71,401		60,880		61,120
Other interest charges		5,959		5,728		3,813		3,412		8,401		9,056
Preferred stock dividends of subsidiary
trust		-		-		-		1,574		7,980		7,980
Interest on leases		104		155		108		201		137		154
Total fixed charges		64,149		77,832		76,128		76,588		77,398		78,310
Ratio of earnings to fixed charges		4.97		5.02		5.20		4.87		4.43		4.52
Preferred stock dividends	$	935	$	1,245	$	1,416	$	2,933	$	4,544	$	4,955
Ratio of net income before income taxes
to net income		1.4896		1.4854		1.6960		1.6838		1.7360		1.6676
Preferred stock dividend requirements
before income tax		1,393		1,849		2,402		4,939		7,888		8,263
Fixed charges plus preferred stock
dividend requirements		65,542		79,681		78,530		81,527		85,286		86,573
Ratio of earnings to fixed charges plus
preferred stock dividend requirements
(pre-income tax basis)		4.86		4.90		5.04		4.57		4.02		4.09

EX-15

EXHIBIT 15

AWARENESS LETTER OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

MidAmerican Energy Company

Des Moines, Iowa

We have made a review, in accordance with the standards of the Public Company Accounting Oversight Board (United States), of the unaudited consolidated interim financial information of MidAmerican Energy Company and subsidiary for the three-month and nine-month periods ended September 30, 2005 and 2004, as indicated in our report dated October 21, 2005; because we did not perform an audit, we expressed no opinion on that information.

We are aware that our report referred to above, which is included in your Quarterly Report on Form 10-Q for the quarter ended September 30, 2005, is incorporated by reference in Registration Statement Nos. 333-101800 and 333-110398 on Form S-3.

We also are aware that the aforementioned report, pursuant to Rule 436(c) under the Securities Act of 1933, is not considered a part of the Registration Statements prepared or certified by an accountant or a report prepared or certified by an accountant within the meaning of Sections 7 and 11 of that Act.

/s/ Deloitte & Touche LLP

Des Moines, Iowa

October 21, 2005

EX-31.1

EXHIBIT 31.1

CERTIFICATION PURSUANT TO

SECTION 302 OF THE

SARBANES-OXLEY ACT OF 2002

CERTIFICATIONS

I, Todd M. Raba, certify that:

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

Date: October 21, 2005	/s/ Todd M. Raba
	Todd M. Raba
	President
	(chief executive officer)

EX-31.2

EXHIBIT 31.2

CERTIFICATION PURSUANT TO

SECTION 302 OF THE

SARBANES-OXLEY ACT OF 2002

CERTIFICATIONS

I, Thomas B. Specketer, certify that:

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

Date: October 21, 2005	/s/ Thomas B. Specketer
	Thomas B. Specketer
	Vice President and Controller
	(chief financial officer)

EX-31.3

EXHIBIT 31.3

CERTIFICATION PURSUANT TO

SECTION 302 OF THE

SARBANES-OXLEY ACT OF 2002

CERTIFICATIONS

I, David L. Sokol, certify that:

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

Date: October 21, 2005	/s/ David L. Sokol
	David L. Sokol
	Chief Executive Officer

EX-31.4

EXHIBIT 31.4

CERTIFICATION PURSUANT TO

SECTION 302 OF THE

SARBANES-OXLEY ACT OF 2002

CERTIFICATIONS

I, Patrick J. Goodman, certify that:

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

Date: October 21, 2005	/s/ Patrick J. Goodman
	Patrick J. Goodman
	Vice President and Treasurer
	(chief financial officer)

EX-32.1

EXHIBIT 32.1

CERTIFICATION PURSUANT TO

SECTION 906 OF THE

SARBANES-OXLEY ACT OF 2002

I, Todd M. Raba, President of MidAmerican Energy Company (the “Company”), certify, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350, that to the best of my knowledge:

(1)	the Quarterly Report on Form 10-Q of the Company for the quarterly period ended September 30, 2005 (the “Report”) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m or 78o(d)); and
(2)	the information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company.

Dated: October 21, 2005	/s/ Todd M. Raba
	Todd M. Raba
	President
	(chief executive officer)

EX-32.2

EXHIBIT 32.2

CERTIFICATION PURSUANT TO

SECTION 906 OF THE

SARBANES-OXLEY ACT OF 2002

I, Thomas B. Specketer, Vice President and Controller of MidAmerican Energy Company (the “Company”), certify, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350, that to the best of my knowledge:

(1)	the Quarterly Report on Form 10-Q of the Company for the quarterly period ended September 30, 2005 (the “Report”) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m or 78o(d)); and
(2)	the information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company.

Dated: October 21, 2005	/s/ Thomas B. Specketer
	Thomas B. Specketer
	Vice President and Controller
	(chief financial officer)

EX-32.3

EXHIBIT 32.3

CERTIFICATION PURSUANT TO

SECTION 906 OF THE

SARBANES-OXLEY ACT OF 2002

I, David L. Sokol, Chief Executive Officer of MidAmerican Funding, LLC (the “Company”), certify, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350, that to the best of my knowledge:

(1)	the Quarterly Report on Form 10-Q of the Company for the quarterly period ended September 30, 2005 (the “Report”) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m or 78o(d)); and
(2)	the information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company.

Dated: October 21, 2005	/s/ David L. Sokol
	David L. Sokol
	Chief Executive Officer

EX-32.4

EXHIBIT 32.4

CERTIFICATION PURSUANT TO

SECTION 906 OF THE

SARBANES-OXLEY ACT OF 2002

I, Patrick J. Goodman, Vice President and Treasurer of MidAmerican Funding, LLC (the “Company”), certify, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350, that to the best of my knowledge:

(1)	the Quarterly Report on Form 10-Q of the Company for the quarterly period ended September 30, 2005 (the “Report”) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m or 78o(d)); and
(2)	the information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company.

Dated: October 21, 2005	/s/ Patrick J. Goodman
	Patrick J. Goodman
	Vice President and Treasurer
	(chief financial officer)