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Fair Value Measurements

12 Months Ended

Dec. 31, 2021

Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]

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

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

•Level 2 - Inputs include quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable for the asset or liability and inputs that are derived principally from or corroborated by observable market data by correlation or other means (market corroborated inputs).

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

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


	Input Levels for Fair Value Measurements
	Level 1		Level 2		Level 3		Other(1)		Total
As of December 31, 2021:
Assets:
Commodity derivatives	$	5	$	271	$	73	$	(47)	$	302
Foreign currency exchange rate derivatives	—		3		—		—		3
Interest rate derivatives	1		3		20		—		24
Mortgage loans held for sale	—		1,263		—		—		1,263
Money market mutual funds	554		—		—		—		554
Debt securities:
United States government obligations	232		—		—		—		232
International government obligations	—		2		—		—		2
Corporate obligations	—		90		—		—		90
Municipal obligations	—		3		—		—		3
Agency, asset and mortgage-backed obligations	—		2		—		—		2

Equity securities:
United States companies	428		—		—		—		428
International companies	7,703		—		—		—		7,703
Investment funds	237		—		—		—		237
	$	9,160	$	1,637	$	93	$	(47)	$	10,843
Liabilities:
Commodity derivatives	$	(2)	$	(113)	$	(224)	$	73	$	(266)
Foreign currency exchange rate derivatives	—		(3)		—		—		(3)
Interest rate derivatives	—		(7)		(1)		—		(8)
	$	(2)	$	(123)	$	(225)	$	73	$	(277)




As of December 31, 2020:
Assets:
Commodity derivatives	$	1	$	73	$	135	$	(21)	$	188
Foreign currency exchange rate derivatives	—		20		—		—		20
Interest rate derivatives	—		—		62		—		62
Mortgage loans held for sale	—		2,001		—		—		2,001
Money market mutual funds	873		—		—		—		873
Debt securities:
United States government obligations	200		—		—		—		200
International government obligations	—		5		—		—		5
Corporate obligations	—		73		—		—		73
Municipal obligations	—		2		—		—		2
Agency, asset and mortgage-backed obligations	—		6		—		—		6

Equity securities:
United States companies	381		—		—		—		381
International companies	5,906		—		—		—		5,906
Investment funds	201		—		—		—		201
	$	7,562	$	2,180	$	197	$	(21)	$	9,918
Liabilities:
Commodity derivatives	$	(1)	$	(90)	$	(19)	$	56	$	(54)
Foreign currency exchange rate derivatives	—		(2)		—		—		(2)
Interest rate derivatives	(5)		(60)		—		—		(65)
	$	(6)	$	(152)	$	(19)	$	56	$	(121)

(1)Represents netting under master netting arrangements and a net cash collateral receivable of $26 million and $35 million as of December 31, 2021 and 2020, respectively.

Derivative contracts are recorded on the Consolidated Balance Sheets as either assets or liabilities and are stated at estimated fair value unless they are designated as normal purchases or normal sales and qualify for the exception afforded by GAAP. When available, the fair value of derivative contracts is estimated using unadjusted quoted prices for identical contracts in the market in which the Company transacts. When quoted prices for identical contracts are not available, the Company uses forward price curves. Forward price curves represent the Company's estimates of the prices at which a buyer or seller could contract today for delivery or settlement at future dates. The Company bases its forward price curves upon market price quotations, when available, or internally developed and commercial models, with internal and external fundamental data inputs. Market price quotations are obtained from independent brokers, exchanges, direct communication with market participants and actual transactions executed by the Company. Market price quotations are generally readily obtainable for the applicable term of the Company's outstanding derivative contracts; therefore, the Company's forward price curves reflect observable market quotes. Market price quotations for certain electricity and natural gas trading hubs are not as readily obtainable due to the length of the contract. Given that limited market data exists for these contracts, as well as for those contracts that are not actively traded, the Company uses forward price curves derived from internal models based on perceived pricing relationships to major trading hubs that are based on unobservable inputs. The estimated fair value of these derivative contracts is a function of underlying forward commodity prices, interest rates, currency rates, related volatility, counterparty creditworthiness and duration of contracts.

The Company's mortgage loans held for sale are valued based on independent quoted market prices, where available, or the prices of other mortgage whole loans with similar characteristics. As necessary, these prices are adjusted for typical securitization activities, including servicing value, portfolio composition, market conditions and liquidity.

The Company's investments in money market mutual funds and debt and equity securities are stated at fair value. When available, a readily observable quoted market price or net asset value of an identical security in an active market is used to record the fair value. In the absence of a quoted market price or net asset value of an identical security, the fair value is determined using pricing models or net asset values based on observable market inputs and quoted market prices of securities with similar characteristics.

The following table reconciles the beginning and ending balances of the Company's financial assets and liabilities measured at fair value on a recurring basis using significant Level 3 inputs for the years ended December 31 (in millions):


	Commodity Derivatives						Interest Rate Derivatives
	2021		2020		2019		2021		2020		2019

Beginning balance	$	116	$	97	$	99	$	62	$	14	$	10
Changes included in earnings(1)	(43)		(10)		10		(43)		48		4
Changes in fair value recognized in OCI	(13)		—		(1)		—		—		—
Changes in fair value recognized in net regulatory assets	(118)		(17)		(26)		—		—		—

Purchases	(76)		5		6		—		—		—


Settlements	(34)		41		9		—		—		—
Transfers to Level 2	17		—		—		—		—		—

Ending balance	$	(151)	$	116	$	97	$	19	$	62	$	14

(1)Changes included in earnings for interest rate derivatives are reported net of amounts related to the satisfaction of the associated loan commitment.

The Company's long-term debt is carried at cost, including fair value adjustments and unamortized premiums, discounts and debt issuance costs as applicable, on the Consolidated Financial Statements. The fair value of the Company's long-term debt is a Level 2 fair value measurement and has been estimated based upon quoted market prices, where available, or at the present value of future cash flows discounted at rates consistent with comparable maturities with similar credit risks. The carrying value of the Company's variable-rate long-term debt approximates fair value because of the frequent repricing of these instruments at market rates. The following table presents the carrying value and estimated fair value of the Company's long-term debt as of December 31 (in millions):


	2021				2020
	Carrying		Fair		Carrying		Fair
	Value		Value		Value		Value

Long-term debt	$	49,762	$	57,189	$	49,866	$	60,633

PAC

Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]

Fair Value Measurements

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

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

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

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


	Input Levels for Fair Value Measurements
	Level 1		Level 2		Level 3		Other(1)		Total
As of December 31, 2021:
Assets:
Commodity derivatives	$	—	$	104	$	—	$	(8)	$	96
Money market mutual funds	181		—		—		—		181
Investment funds	27		—		—		—		27
	$	208	$	104	$	—	$	(8)	$	304

Liabilities - Commodity derivatives	$	—	$	(51)	$	—	$	13	$	(38)

As of December 31, 2020:
Assets:
Commodity derivatives	$	—	$	36	$	—	$	(3)	$	33
Money market mutual funds	6		—		—		—		6
Investment funds	25		—		—		—		25
	$	31	$	36	$	—	$	(3)	$	64

Liabilities - Commodity derivatives	$	—	$	(53)	$	—	$	27	$	(26)

(1)Represents netting under master netting arrangements and a net cash collateral receivable of $5 million and $24 million as of December 31, 2021 and 2020, respectively.

Derivative contracts are recorded on the Consolidated Balance Sheets as either assets or liabilities and are stated at estimated fair value unless they are designated as normal purchases or normal sales and qualify for the exception afforded by GAAP. When available, the fair value of derivative contracts is estimated using unadjusted quoted prices for identical contracts in the market in which PacifiCorp transacts. When quoted prices for identical contracts are not available, PacifiCorp uses forward price curves. Forward price curves represent PacifiCorp's estimates of the prices at which a buyer or seller could contract today for delivery or settlement at future dates. PacifiCorp bases its forward price curves upon market price quotations, when available, or internally developed and commercial models, with internal and external fundamental data inputs. Market price quotations are obtained from independent energy brokers, exchanges, direct communication with market participants and actual transactions executed by PacifiCorp. Market price quotations for certain major electricity and natural gas trading hubs are generally readily obtainable for the first three years; therefore, PacifiCorp's forward price curves for those locations and periods reflect observable market quotes. Market price quotations for other electricity and natural gas trading hubs are not as readily obtainable for the first three years. Given that limited market data exists for these contracts, as well as for those contracts that are not actively traded, PacifiCorp uses forward price curves derived from internal models based on perceived pricing relationships to major trading hubs that are based on unobservable inputs. The estimated fair value of these derivative contracts is a function of underlying forward commodity prices, interest rates, currency rates, related volatility, counterparty creditworthiness and duration of contracts. Refer to Note 12 for further discussion regarding PacifiCorp's risk management and hedging activities.

PacifiCorp's investments in money market mutual funds and investment funds are stated at fair value. When available, PacifiCorp uses a readily observable quoted market price or net asset value of an identical security in an active market to record the fair value. In the absence of a quoted market price or net asset value of an identical security, the fair value is determined using pricing models or net asset values based on observable market inputs and quoted market prices of securities with similar characteristics.

PacifiCorp's long-term debt is carried at cost on the Consolidated Balance Sheets. The fair value of PacifiCorp's long-term debt is a Level 2 fair value measurement and has been estimated based upon quoted market prices, where available, or at the present value of future cash flows discounted at rates consistent with comparable maturities with similar credit risks. The carrying value of PacifiCorp's variable-rate long-term debt approximates fair value because of the frequent repricing of these instruments at market rates. The following table presents the carrying value and estimated fair value of PacifiCorp's long-term debt as of December 31 (in millions):


	2021				2020
	Carrying		Fair		Carrying		Fair
	Value		Value		Value		Value

Long-term debt	$	8,730	$	10,374	$	8,612	$	10,995

MEC

Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]

Fair Value Measurements

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

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

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

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


	Input Levels for Fair Value Measurements
	Level 1		Level 2		Level 3		Other(1)		Total
As of December 31, 2021:
Assets:
Commodity derivatives	$	—	$	32	$	3	$	(7)	$	28


Money market mutual funds	228		—		—		—		228
Debt securities:
United States government obligations	232		—		—		—		232
International government obligations	—		2		—		—		2
Corporate obligations	—		90		—		—		90
Municipal obligations	—		3		—		—		3
Agency, asset and mortgage-backed obligations	—		2		—		—		2

Equity securities:
United States companies	428		—		—		—		428
International companies	10		—		—		—		10
Investment funds	18		—		—		—		18
	$	916	$	129	$	3	$	(7)	$	1,041

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



As of December 31, 2020
Assets:
Commodity derivatives	$	—	$	4	$	5	$	(5)	$	4


Money market mutual funds	41		—		—		—		41
Debt securities:
United States government obligations	200		—		—		—		200
International government obligations	—		5		—		—		5
Corporate obligations	—		73		—		—		73
Municipal obligations	—		2		—		—		2
Agency, asset and mortgage-backed obligations	—		6		—		—		6

Equity securities:
United States companies	381		—		—		—		381
International companies	9		—		—		—		9
Investment funds	17		—		—		—		17
	$	648	$	90	$	5	$	(5)	$	738

Liabilities - commodity derivatives	$	—	$	(4)	$	(3)	$	5	$	(2)

(1)Represents netting under master netting arrangements and a net cash collateral receivable of $5 million and $— million as of December 31, 2021 and 2020, respectively.

MidAmerican Energy's investments in money market mutual funds and debt and equity securities are stated at fair value, with debt securities accounted for as available-for-sale securities. When available, a readily observable quoted market price or net asset value of an identical security in an active market is used to record the fair value. In the absence of a quoted market price or net asset value of an identical security, the fair value is determined using pricing models or net asset values based on observable market inputs and quoted market prices of securities with similar characteristics.

MidAmerican Energy's long-term debt is carried at cost on the Financial Statements. The fair value of MidAmerican Energy's long-term debt is a Level 2 fair value measurement and has been estimated based upon quoted market prices, where available, or at the present value of future cash flows discounted at rates consistent with comparable maturities with similar credit risks. The carrying value of MidAmerican Energy's variable-rate long-term debt approximates fair value because of the frequent repricing of these instruments at market rates. The following table presents the carrying value and estimated fair value of MidAmerican Energy's long-term debt as of December 31 (in millions):


	2021				2020
	Carrying Value		Fair Value		Carrying Value		Fair Value

Long-term debt	$	7,721	$	9,037	$	7,210	$	9,130

MidAmerican Funding, LLC

Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]

Fair Value Measurements

Refer to Note 12 of MidAmerican Energy's Notes to Financial Statements.

MidAmerican Funding's long-term debt is carried at cost on the Consolidated Financial Statements. The fair value of MidAmerican Funding's long-term debt is a Level 2 fair value measurement and has been estimated based upon quoted market prices, where available, or at the present value of future cash flows discounted at rates consistent with comparable maturities with similar credit risks. The carrying value of MidAmerican Funding's variable-rate long-term debt approximates fair value because of the frequent repricing of these instruments at market rates. The following table presents the carrying value and estimated fair value of MidAmerican Funding's long-term debt as of December 31 (in millions):


	2021				2020
	Carrying Value		Fair Value		Carrying Value		Fair Value

Long-term debt	$	7,961	$	9,350	$	7,450	$	9,466

NPC

Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]

Fair Value Measurements

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

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

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

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


	Input Levels for Fair Value Measurements
	Level 1		Level 2		Level 3		Total
As of December 31, 2021:
Assets:
Commodity derivatives	$	—	$	—	$	4	$	4
Money market mutual funds	34		—		—		34
Investment funds	3		—		—		3
	$	37	$	—	$	4	$	41

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

As of December 31, 2020:
Assets:
Commodity derivatives	$	—	$	—	$	26	$	26
Money market mutual funds	21		—		—		21
Investment funds	2		—		—		2
	$	23	$	—	$	26	$	49

Liabilities - commodity derivatives	$	—	$	—	$	(11)	$	(11)

Derivative contracts are recorded on the Consolidated Balance Sheets as either assets or liabilities and are stated at estimated fair value unless they are designated as normal purchases or normal sales and qualify for the exception afforded by GAAP. When available, the fair value of derivative contracts is estimated using unadjusted quoted prices for identical contracts in the market in which Nevada Power transacts. When quoted prices for identical contracts are not available, Nevada Power uses forward price curves. Forward price curves represent Nevada Power's estimates of the prices at which a buyer or seller could contract today for delivery or settlement at future dates. Nevada Power bases its forward price curves upon internally developed models, with internal and external fundamental data inputs. Market price quotations for certain electricity and natural gas trading hubs are not as readily obtainable due to markets that are not active. Given that limited market data exists for these contracts, Nevada Power uses forward price curves derived from internal models based on perceived pricing relationships to major trading hubs that are based on unobservable inputs. The model incorporates a mid-market pricing convention (the mid‑point price between bid and ask prices) as a practical expedient for valuing its assets and liabilities measured and reported at fair value. The determination of the fair value for derivative contracts not only includes counterparty risk, but also the impact of Nevada Power's nonperformance risk on its liabilities, which as of December 31, 2021, had an immaterial impact to the fair value of its derivative contracts. As such, Nevada Power considers its derivative contracts to be valued using Level 3 inputs.

Nevada Power's investments in money market mutual funds and equity securities are accounted for as available-for-sale securities and are stated at fair value. When available, a readily observable quoted market price or net asset value of an identical security in an active market is used to record the fair value.

The following table reconciles the beginning and ending balances of Nevada Power's net commodity derivative assets or liabilities measured at fair value on a recurring basis using significant Level 3 inputs for the years ended December 31 (in millions):


	2021		2020		2019
Beginning balance	$	15	$	(8)	$	3
Changes in fair value recognized in regulatory assets or liabilities	(90)		(17)		(21)

Settlements	(38)		40		10
Ending balance	$	(113)	$	15	$	(8)

Nevada Power's long-term debt is carried at cost on the Consolidated Balance Sheets. The fair value of Nevada Power's long-term debt is a Level 2 fair value measurement and has been estimated based upon quoted market prices, where available, or at the present value of future cash flows discounted at rates consistent with comparable maturities with similar credit risks. The following table presents the carrying value and estimated fair value of Nevada Power's long-term debt as of December 31 (in millions):


	2021				2020
	Carrying		Fair		Carrying		Fair
	Value		Value		Value		Value

Long-term debt	$	2,499	$	3,067	$	2,496	$	3,245

SPPC

Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]

Fair Value Measurements

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

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

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

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


	Input Levels for Fair Value Measurements
	Level 1		Level 2		Level 3		Total
As of December 31, 2021:
Assets:
Commodity derivatives	$	—	$	—	$	2	$	2
Money market mutual funds	10		—		—		10
Investment funds	1		—		—		1
	$	11	$	—	$	2	$	13

Liabilities - commodity derivatives	$	—	$	—	$	(35)	$	(35)

As of December 31, 2020:
Assets:
Commodity derivatives	$	—	$	—	$	9	$	9
Money market mutual funds	17		—		—		17
	$	17	$	—	$	9	$	26

Liabilities - commodity derivatives	$	—	$	—	$	(2)	$	(2)

Sierra Pacific's investments in money market mutual funds and equity securities are accounted for as available-for-sale securities and are stated at fair value. When available, a readily observable quoted market price or net asset value of an identical security in an active market is used to record the fair value.

Derivative contracts are recorded on the Consolidated Balance Sheets as either assets or liabilities and are stated at estimated fair value unless they are designated as normal purchases or normal sales and qualify for the exception afforded by GAAP. When available, the fair value of derivative contracts is estimated using unadjusted quoted prices for identical contracts in the market in which Sierra Pacific transacts. When quoted prices for identical contracts are not available, Sierra Pacific uses forward price curves. Forward price curves represent Sierra Pacific's estimates of the prices at which a buyer or seller could contract today for delivery or settlement at future dates. Sierra Pacific bases its forward price curves upon internally developed models, with internal and external fundamental data inputs. Market price quotations for certain electricity and natural gas trading hubs are not as readily obtainable due to markets that are not active. Given that limited market data exists for these contracts, Sierra Pacific uses forward price curves derived from internal models based on perceived pricing relationships to major trading hubs that are based on unobservable inputs. The model incorporates a mid-market pricing convention (the mid‑point price between bid and ask prices) as a practical expedient for valuing its assets and liabilities measured and reported at fair value. The determination of the fair value for derivative contracts not only includes counterparty risk, but also the impact of Sierra Pacific's nonperformance risk on its liabilities, which as of December 31, 2021, had an immaterial impact to the fair value of its derivative contracts. As such, Sierra Pacific considers its derivative contracts to be valued using Level 3 inputs.

The following table reconciles the beginning and ending balances of Sierra Pacific's net commodity derivative assets or liabilities measured at fair value on a recurring basis using significant Level 3 inputs for the years ended December 31 (in millions):


	2021		2020		2019
Beginning balance	$	7	$	(1)	$	2
Changes in fair value recognized in regulatory assets or liabilities	(25)		(2)		(5)

Settlements	(15)		10		2
Ending balance	$	(33)	$	7	$	(1)

Sierra Pacific's long-term debt is carried at cost on the Consolidated Balance Sheets. The fair value of Sierra Pacific's long-term debt is a Level 2 fair value measurement and has been estimated based upon quoted market prices, where available, or at the present value of future cash flows discounted at rates consistent with comparable maturities with similar credit risks. The following table presents the carrying value and estimated fair value of Sierra Pacific's long-term debt as of December 31 (in millions):


	2021				2020
	Carrying		Fair		Carrying		Fair
	Value		Value		Value		Value

Long-term debt	$	1,164	$	1,316	$	1,164	$	1,358

EEGH

Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]

Fair Value Measurements

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

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

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

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


	Input Levels for Fair Value Measurements
	Level 1		Level 2		Level 3		Total
As of December 31, 2021
Assets:
Foreign currency exchange rate derivatives	$	—	$	3	$	—	$	3

Investment funds	13		—		—		13
	$	13	$	3	$	—	$	16

Liabilities:

Foreign currency exchange rate derivatives	$	—	$	(3)	$	—	$	(3)

	$	—	$	(3)	$	—	$	(3)

As of December 31, 2020
Assets:
Foreign currency exchange rate derivatives	$	—	$	20	$	—	$	20


	$	—	$	20	$	—	$	20

Liabilities:
Commodity derivatives	$	—	$	(1)	$	—	$	(1)
Foreign currency exchange rate derivatives	—		(2)		—		(2)
Interest rate derivatives	—		(6)		—		(6)
	$	—	$	(9)	$	—	$	(9)

Derivative contracts are recorded on the Consolidated Balance Sheets as either assets or liabilities and are stated at estimated fair value unless they are designated as normal purchase or normal sales and qualify for the exception afforded by GAAP. When available, the fair value of derivative contracts is estimated using unadjusted quoted prices for identical contracts in the market in which Eastern Energy Gas transacts. When quoted prices for identical contracts are not available, Eastern Energy Gas uses forward price curves. Forward price curves represent Eastern Energy Gas' estimates of the prices at which a buyer or seller could contract today for delivery or settlement at future dates. Eastern Energy Gas bases its forward price curves upon market price quotations, when available, or internally developed and commercial models, with internal and external fundamental data inputs. Market price quotations are obtained from independent brokers, exchanges, direct communication with market participants and actual transactions executed by Eastern Energy Gas. Market price quotations are generally readily obtainable for the applicable term of Eastern Energy Gas' outstanding derivative contracts; therefore, Eastern Energy Gas' forward price curves reflect observable market quotes. Market price quotations for certain natural gas trading hubs are not as readily obtainable due to the length of the contracts. Given that limited market data exists for these contracts, as well as for those contracts that are not actively traded, Eastern Energy Gas uses forward price curves derived from internal models based on perceived pricing relationships to major trading hubs that are based on unobservable inputs. The estimated fair value of these derivative contracts is a function of underlying forward commodity prices, interest rates, currency rates, related volatility, counterparty creditworthiness and duration of contracts.

Eastern Energy Gas' long-term debt is carried at cost, including unamortized premiums, discounts and debt issuance costs as applicable, on the Consolidated Financial Statements. The fair value of Eastern Energy Gas' long-term debt is a Level 2 fair value measurement and has been estimated based upon quoted market prices, where available, or at the present value of future cash flows discounted at rates consistent with comparable maturities with similar credit risks. The carrying value of Eastern Energy Gas' variable-rate long-term debt approximates fair value because of the frequent repricing of these instruments at market rates. The following table presents the carrying value and estimated fair value of Eastern Energy Gas' long-term debt as of December 31 (in millions):


	2021				2020
	Carrying		Fair		Carrying		Fair
	Value		Value		Value		Value

Long-term debt	$	3,906	$	4,266	$	4,425	$	5,012

- Definition

The entire disclosure for the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments as well as disclosures related to the fair value of non-financial assets and liabilities. Such disclosures about the financial instruments, assets, and liabilities would include: (1) the fair value of the required items together with their carrying amounts (as appropriate); (2) for items for which it is not practicable to estimate fair value, disclosure would include: (a) information pertinent to estimating fair value (including, carrying amount, effective interest rate, and maturity, and (b) the reasons why it is not practicable to estimate fair value; (3) significant concentrations of credit risk including: (a) information about the activity, region, or economic characteristics identifying a concentration, (b) the maximum amount of loss the entity is exposed to based on the gross fair value of the related item, (c) policy for requiring collateral or other security and information as to accessing such collateral or security, and (d) the nature and brief description of such collateral or security; (4) quantitative information about market risks and how such risks are managed; (5) for items measured on both a recurring and nonrecurring basis information regarding the inputs used to develop the fair value measurement; and (6) for items presented in the financial statement for which fair value measurement is elected: (a) information necessary to understand the reasons for the election, (b) discussion of the effect of fair value changes on earnings, (c) a description of [similar groups] items for which the election is made and the relation thereof to the balance sheet, the aggregate carrying value of items included in the balance sheet that are not eligible for the election; (7) all other required (as defined) and desired information.

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